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Chapter 1

MHR 523 Chapter Notes - Chapter 1: Contingent Work, Telecommuting, Employee Benefits


Department
Human Resources
Course Code
MHR 523
Professor
Rasha Narsa
Chapter
1

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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

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In 2005, Canada was the 5th most competitive nation in the world,
and has fallen to 8th.
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

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- 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
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