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Chapter 1

Chapter 1 - Importance of HRM.docx

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Human Resources
MHR 523
Rasha Narsa

Chapter 1- The Strategic Importance of Human Resource Management - People are the common element in all social organizations. They create the objectives, the innovations, and the accomplishments for which organizations are praised - From the perspective of the organization, people are resources - They aren’t inanimate resources like land and capital. They are human resources and without them, organizations wouldn’t exist - Organizational success depends upon careful attention to HR - The best-managed and most successful organizations are those that effectively make employees meet organizational challenges creatively. - HR practices are intertwined with the organizations strategies to meet its various challenges Challenges Facing Canadian Organizations - Challenges: economic (recession), technological (computerization), political (new government policies), social (concern for our environment), demographic (changing composition of our workforce), legal (changes in minimum wage laws), cultural (ethnic diversity), or in nature - The five major challenges facing a Canadian organization especially those that affect HRM: 1) Economic Challenges: - Canadians face 3 critical economic challenges: o Surviving a recessionary cycle: capitalist economics go through boom and bust cycles  Have to carry out the unpleasant task of planning, communicating, and implementing employee layoff  Wage concessions have to be taken from labour for the survival of the firm. (Ex. General motors and Chrysler)  Supplementary employee counseling may become necessary  At times, entire organization may assume a crisis management, creating new challengers for HRM in policy formulation, communication and implementation o Facing the Global Trade Challenge: international trade has been critical to Canada’s prosperity and growth  Canada ranks high among exporting nations: on a per capital basis, we export more than the US or Japan  Combination of a small population and a large natural resource base gives us an advantage in international trade  To capture the growing market opportunities, Canadian organizations are opening new plants and expanding activities in foreign countries that are closer to their customers or where labour is cheaper  US is our largest trading partners  In 2005, Canada was the 5 most competitive nation in the world, th. and has fallen to 8  Canada has become an important global player in high-tech and nontraditional exports. Our bio-tech, transportation, banking and engineering industries have been increasingly making their way into foreign markets  Canada’s highly skilled, multicultural workforce has given them a competitive advantage in dealing with other countries, cultures, anticipating their needs and concerns and proactively responding to them  To attract and involve highly skilled, innovative employees, progressive HR practices have to be adopted o Meeting the Challenge of Productivity Improvement:  Productivity refers to the ratio of an organization’s outputs (goods and services) to its inputs (people, capital, material, and energy)  In a business environment, productivity improvement is essential for long-run success  Through gains in productivity, managers can reduce costs, save scarce resources, and enhance profits  Improved profits allow an organization to provide better pay, benefits and working conditions. The result can be a higher quality of work life for employees, who are more likely to be motivated further improvements in productivity  HRM contribute to improved productivity directly by finding better, more efficient ways to meet their objectives and indirectly by improving the quality of work life for employees  Productivity = outputs/inputs  For practical use, productivity measures of each of the major components of production may be more useful. Ex. Labour productivity, productivity of machinery  Employee productivity can be measured using output per worker or output per hour, while productivity of equipment and machinery can be measured by sales or production per dollar of investment in equipment. - Major challenge  productivity improvement while maintaining a high quality of work life for the employees. Cost pressures are not new, but strength and relative permanence of these competitive pressures are. - Huge gap in the productivity levels of Canada and the US. If the gap in overall productivity growth persists, it would reduce Canadian living standards from 61% to 52% - Canadian managers and policy makers have recognized the urgency of improving Canadian productivity, so as a consequence, the Canadian economy has learned to produce more outputs with fewer workers - Workplace innovation and redesign of jobs to achieve high productivity levels are two popular means used to attain these objectives - If Canada improves, or maintains its competitiveness, innovation on people management and technology are a must - Since a large % of Canadian production is geared for highly competitive export markets, updating technology to increase our productivity levels is a high-priority task - Improved overall global competitiveness, but still have to scope for improvement - High standard of living depends on our ability to maintain and improve our world competitiveness - The jobs lost aren’t temporary to adjust to the business cycle or to make short-term adjustments to competition, they’re lost forever - By the late 1990s, more then 350,000 manufacturing jobs disappeared - After the 2009 recession, 357,000 jobs were eliminated - Outsourcing is getting increasingly popular because it cuts costs, which indirectly raises the productivity figures. Outsourcing enables organizations to reduce the number of workers on permanent payroll and to contract out tasks to outside agencies and when needs arise, reducing total wage bill. - Outsourcing has major implications for HRM. Reduced employee morale caused by job insecurity is a major issue especially during contract negotiations with unions - To meet employee goals, a HR department may have to initiate restraining for displaced workers (to take up other jobs) or help them find new jobs. This is referred to as outplacement 2) Technological Challenges: technology influences organizations and the way people work - Technology of cars and airplanes grew and created demand for more employees and training. Career opportunities for employees improved substantially - Railway companies reduced revenues and limited growth opportunities reduced the advancement opportunities for employees - Customers preferences for fuel efficient cars have resulted in GM and Chrysler to lay off workers - HR departments have to reduce the workforce and cut the overall labour costs - Technology innovations may cause fundamental shifts in our lifestyles, how and where we work, and what we do - Two major technological changes that have revolutionized Canadian businesses: computerization and automation - Computerization: Canada has experienced rapid growth in computerization and access to high-speed info transmission systems - Computerized technology gives alternative ways of designing and performing tasks - Processing Large Volumes of info on a Timely Basis: computers make it possible to process and provide large amounts of data to managers - Info through computers is available with great speed - Computers can list events in summary fashion, the info has timeliness - Flexible Work Design and Telecommuting: computers bring flexibility as it allows employees to work without leaving their home. - Telecommuting has cut employee stress and boosts worker productivity in several instances, and reduces costs of operations - The major obstacle to telecommuting is that conservative management fear they might lose control over employees who aren’t physically near them - Lack of concrete policies and procedures can lead to communication and performance related problems and inadequate training of managers who are entrusted with supervising telecommuters - Smart strategy to do a pilot program when implementing telecommuting so early bugs can be removed before implementing it in full scale - Information Sharing and Knowledge Management: computers allow organizations to manage their operations innovatively, reducing costs or capitalizing on new opportunities - Intranets or private info networks increase the speed of decision making and the speed of response to customers, employees and other stakeholders as its accessible to all members - Knowledge management – the process of capturing organizational knowledge and making it available for sharing and building new knowledge - Intranets and integrated info systems help store and access info speedily and accurately - Use of eportfolios – a collection of digital artifacts and reflections saved on electronic media which captures what an employee learns and evidence of performance improvement - When performance interview is conducted, an eportfolio can identify the on-the-job competencies of an employee. The skill sets and competencies of employees helps the organization manage human capital more effectively - Computerization results in a faster, multiway of communication, nontraditional marketing strategies, improved quality control, and more online inventory control - Requires new HR practices in areas of hiring, compensation, training, performance evaluation and employee relations - Automation: computers eliminated several routine jobs. Highly skilled programmers who can process data and program computers are needed - Organizations automate various activities for speed. Competition has made it important to improve manufacturing practices to stay competitive. The desire to control labour cost and increase productivity drives automation - Automation also provides better service to customers, to increase predictability in operations and to achieve higher standards of quality in production. Machines don’t go on strike or ask for raises - Automation allows flexibility since time, cost and effort involved in changing setups is minimal for small production batches. This allows firms to focus on the needs of customers, market segments and speed up delivery schedules - For automation to be beneficial, it should allow meshing of existing and new technologies 3) Demographic Challenges: the composition of the workforce: education levels, age levels, % of population participating in the workforce and other population characteristics - Demographic changes influence organizational decisions: o Trend 1: the increasing number of women in the workforce o Trend 2: shift toward knowledge workers  Shift in primary and extractive industries (mining and fishing) to service, technical and professional jobs  People in highly skilled occupations normally require a university education and specialized training  Workface is divided into two categories: information and non- information workers  Information workers are divided into two groups: data workers and knowledge workers  Data occupations: involve the manipulation of symbolic info  Knowledge occupations: involve the development of ideas or expert opinions  Data workers (clerical occupations) use, transmit, or manipulate knowledge, while knowledge workers (scientists, engineers, management consultants) produce it  non-information workers: is composed of persons working in the manufacturing and service sectors (machine operators and assemblers, security guards and babysitters) o Trend 3: educational attainment workers  Increased dramatically in the last few decades  Economy needs highly skilled, well educated workers  Primary and secondary education systems play a key role in generating the new supply of skills needed by out post-industrial society  Employability skills consist of basic academic skills (communication, thinking, learning) personal management skills (positive attitudes and behavior, accept responsibility, adapt to new challenges) and teamwork skills (working with others, leading a team)  Workplace literacy has become a serious issue and proactive action has taken place  About 45% are either functionally illiterate or can only deal with simple, uncomplicated material o Trend 4: employment of older workers  Old age crisis: 65+ will expand rapidly, by a low birth rate and longer life expectancy  Consequences and challenges for HR people:  Increasingly hectic scramble for jobs (esp. the traditional sectors) because of post-retirement poverty fear motivates employees to keep their jobs. This may create holdups in professional and unionized industries  Expanded retirement benefits, variable work schedules, coordination of government benefits (pension plans) with company benefits  New challenges bring opportunities. Aging population affects HR functions in recruitment and selection, job design, training, appraisal, and compensation benefits administration o Trend 5: more part-time, contract, and contingent workers  More part-time workers than ever before. This has raised new concerns about pay inequity and provided momentum to the “equal pay for work of equal value” concept  Part-timers (women 25+ in lower-paying sales or service jobs) are likely to get the benefits of the increased demand and pay for highly skilled jobs  Increasing trend to use contract (or contingent workers), organizations can benefit from the services of trained personal without increasing their payroll costs in a permanent fashion  Contract workers are of two types:  Freelancers: employees who work for the employer through independent contract arrangements  Leased employees: typically former company employees who are members of a leasing firm and work for the previous employer on an as-needed basis  Contractors are often more productive and efficient than in-house employees because freelancers don’t spend a lot of time complying with company bureaucracy and attending meetings  They provide fresh perspective on things  Contractor’s loyalty to the firm is limited, especially if they are working for several different clients 4) Cultural Challenges: a) Work-related Attitudes: increasing entry of women and educated young people into the labour force has changed employee expectations - Old cultural value that “men work and women stay at home” has changed - Due to changing attitudes toward work and leisure, HR departments have been confronted with requests for longer vacations, more holidays and varied workweeks. - Generation X and Y o X isn’t opposed to hard work, but place a premium on work life balance and like to participate in decision-making. o They disregard the “command and rule” culture and take their work as a job, not a career like Y o X is unfazed by power and authority, while boomers are impressed and attracted to it o X doesn’t trust business practices, boomers instituted many of them o X are self-reliant, boomers are team-orientated - Demand for more ethical contract of business - Ethics are moral principles that guide human behaviours and are often based on society’s cultural values, norms, customs and beliefs. - Different cultures and individuals have different standards of behaviours. - Differentiating right from wrong, good from bad is adopted by postures b) Ethnic Diversity: the dozens of national, racial, and ethnic groups, each with unique cultural and social background, makes a cultural mosaic - Business immigrants increased economic growth - allophones: other speaking c) Attitudes Toward Governments - Government health care and education was more important to Canadians than Americans - Growing view that the government is an economic facilitator that provides the appropriate infrastructure for prosperity - They have the ability and wisdom to steer the economy - Basic shifts in how government and public view unemployment insurance, family allowances, welfare payments and the overall focus of regional development plants - The firms that will succeed will have to survive global competition and meet the challenges and changes in technology, changing social expectations, and the diverse workforce Objectives of HRM - To improve the productive contribution of individuals while attempting to attain other social and individual employee objectives - Focuses on what managers do and should do - Influences strategy and supervisor’s treatment of employees - HRM is critical to success, because they create a motivated, skilled workforce - HRM activities carried out: - There are three key objectives that the HRD attempt to achieve, which are benchmarks against which actions are evaluated. These objectives are: organizational, societal a
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