Living in the 21st century, the world of human resource management is changing more rapidly than can be imagined. As such, HRM in many organizations are facing constant challenges as a result of constant environmental changes ahead of time. Given the new emphasis on adding value as an organizational player, the role of the human resource department has become considerably more multidimensional in m. firms. This essay will reinforce and argue on why HRM today; must respond by taking advantage of gradual yet profound changes in the nature of the field, current practices, and overall human resource management policies, mission and vision .
The paper will first start off with the definition of Human Resource Management and its roles in an organization. It will then analyze how HR activities add value and contribute to organizations’ overall effectiveness. Last but not least, it will bring us through the trends happening in the labor market force in recent years; followed by its impact on HRM practices in the world today. Kossek and Block, (2000, Pg 3. 18) have classified HR activities into four distinct roles- transactions, translations, transitions and transformations.
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The transaction and translation roles are more focused on people and have a short term view whereas the transition and transformation roles are more oriented towards improvement or transformation of new processes;where organizational processes are realigned to support customer and market demands, have a future orientation. In short, transaction roles includes HR activities like hiring and firing people, protecting employee’s welfare, ensuring on-time pay as well as handling grievances.
In this role, HR works to build an efficient infrastructure by acting as an administrative expert. (Kossek & Block p. 3. 19) Moving on to the second major role, the translation role simply refers to the communication responsibilities associated with the listening and responding to employees and customer concerns, as well as explaining to and implementing for employees the policies established by higher management. In this role, HR also act as an employee champion and advocate by ensuring that their views and rights are being expressed. Ulrich, 2005) Some of the HR activities under this role include communicating to employee’s human resource policy relating to matters like opportunities laws, business operating objectives and customer needs. Third in place comes the transition role which simply refers to the execution of human resource activities, policies and practices to make necessary on going changes to support or improve business operational and strategic objectives. Typically, this role focuses on the implementation of new or revised HR practices and long term procedural changes in the HR policies and practices.
Lastly; under the transformational role, HR acts as an agent and realigns systems to support massive organizational change. Other than the above roles stated by Kossek and Block, HR roles; according to Ulrich, could be also be categorized into administrative experts, employee champions, change agent and also strategic approach respectively. It also represents a sweeping attempt to overcome the negative counter images of the personnel function and re-invent a new set of proactive roles for HR professionals (Ulrich, 1998 p. 24) Trends in Labor Market Affecting Human Resource Management in Organizations Asian subsidiaries of US based companies were the first to feel the effects of the worldwide trend towards mergers and consolidation. Now, the trend has grown to encompass a large proportion of European and Asian Firms. An article ‘ M&As poised to rise in Asia-Pac: survey’ extracted from the business times in year 2006 also projected that M activities are to set rise in Asia Pacific during the next few years.
The study of Asia Pacific by Hewitt also shows that 44 percent of companies in Asia Pacific intend to step up their M activities in the next three years, while 29 percent expect to see a slight increase in such activities. In addition, the last two decades have also been characterized by Mergers and Acquisitions (M) of most unbelievable proportion as well as other corporate reorganizations. (Fisher, Schoenfeld & Shaw, 1999 p. 93) According to Hewitt (2006), most of these activities are likely to be in pursuit of improved market access, combined business creation and coordinated strategies.
Increasing number of organizations also sees M as a potential way to generate revenue through the sharing of employee talents, technology and ideas. ”A recent study on mergers and acquisitions also reveals that fund investors at some 80% of LBO firms enjoyed returns equal or greater than their cost of capital on their M acquisitions. ” (Harvard, 2000) For example, the DBS and POSB merger in 1998 has brought a total cost savings of 17. 6 million within operations. Additionally, POSB substantial liquidity had benefited from DBS’ expertise in treasury. Singh, Pangarkar & Heracleous, 2003 p. 221) Despite the attractive business opportunities that M&A activities may bring, the occurrence of a merger or takeover can create a variety of problems for an organization like; demoralized workers due to loss of jobs and other benefits, conflicts due to different cultures and working style in employees, change in cooperate culture and loss of identity and unclear operational and policy changes in employees. ( Marks & Mirvis, 2000). Many a times, the failure in an M&A may be due to companies not paying enough attention to the human factor.
Although companies realize the importance of HR issues such as cultural fit and leadership assessment, long term objectives are being neglected in favor of short term objectives (e. g. : financial and legal transaction) due to diligence. But these are precisely the areas which risks to the ultimate success of an W&A deal lies (Hewitt ,2006) Therefore, HR plays a vital role in encouraging cultural fit, effective leadership assessment and selection, strategic alignment, effective communication across the management and employees, retention of key employees and harmonization of compensation and benefits plan.
Only by developing an action oriented plan of fulfilling the above objectives, organizations can see the success of an M&A. In this competitive scenario where there is immense demand for people and the talent pool is shrinking, Human Resource Management plays a vital role in an organization. Rapid growth in economy these years has created more and more jobs which lead to jobs created increasingly required technical skills or managerial experience. Thus, it could be seen that the growth in the talent pool could not keep up with the demand.
Recruitment and retention of employees is becoming a challenge as well as a concern area for all HR managers. Recruiting and developing a skilled labor is important for any company concerned about competitiveness, productivity, quality and managing a diverse workforce. (John, 2001)Therefore, organizations have found the need for talent management, the ability to expertly attract, recruit, motivate, develop and retain staff. The introduction of E-recruitment, workforce planning and other talent management technologies have been implemented in organizations as well.
Employers also have to specify and vet qualifications and competencies more rigorously in order to secure the right candidates that are right for the job. At the same time, companies have to provide highly attractive employment packages, not only in terms of compensation, but also training, development and career opportunities to capture the best talent on a regional or global basis. Besides HR, government policies for HR functions could also help capture talents. Being an island nation with only 3 million people, Singapore faces a different set of labor problems and the need to hire talents across the borders.
The government’s policy on the import of skilled and professional workers has always been liberal. (Tan & Torrington, 1998) Singapore welcomes talents from abroad and it offers several schemes under which these people can be permanent residents. (Singapore, 1994) Its economic development board has an international Manpower Division which scouts for talents overseas and helps to match job seekers with employers in Singapore. Government polices and schemes in Singapore have helped HR departments in organizations in looking for talents.
A long term trend with profound and far reaching implications of HR professionals is that of a global economy. Intensified and international competition in goods and services is forcing major economies into a global affiliation. (Fisher, Schoenfeld & Shaw, 1999) . Sachs and Warner (1999) of Harvard University has also discovered that developing countries with open global economies grew by 4. 5%per year in the past 20 years. From a HR perspective, this trend has represented a monumental challenge.
More and more HR professionals are primarily responsible for helping and to make efforts at business globalization activities. As global market help create competition that yields better goods and services at better prices, people all over the world will have better opportunities and better paying jobs that never existed in non global economies. (Micheal, 1999) Additionally, global success depends upon utilizing the resources and diverse talents and capabilities of the broadest spectrum ever (Micheal, 1999 p. 2) The need to identify and place employees in foreign subsidiaries is one of the more important challenges of the global economy. Human resources manager of today must ensure that the appropriate mix of employees in terms of knowledge, skills and cultural adaptability is available to handle the global assignments. According to Stephen (1999), the dynamics of global business development need to be explored and anticipated. The more effective HR departments monitor the company, the better they can anticipate the organization’s changing needs. John, 2001) Global standardization also facilitates the movement of individuals from one country to another, as well as permitting the sharing of ‘best practice’ from one country to another. (Torrington, Hall & Taylor, 2001, p. 19) In principle it is often considered desirable to standardize policy, practices and philosophy so as to develop a clear, single international identity and corporate culture. However, a difference in several factors like tax regimes and qualification systems has made this a challenge within HR functions.
Most importantly, HRM must adopt a global view of all functions including HR planning, training and development, recruitment and selection in order to remain competitive in the changing world. (Nelson & Campbell, 1996, p. 22) The increasing use of technology is changing the way HRM work, the roles HRM undertake, and the interactions through which work gets done. Developments in the fields of technology, telecommunications, biotechnology and laser-based applications, often used in collaboration continue to provide opportunities as well as posing problems. (Torrington, Hall & Taylor, 2001, p. 0) Advancements in technology has brought in the use of E-HRM, telecommuting, computerized monitoring systems within organizations, online recruitment methods, the development of intranet as means of T&D for employees, computerized HR planning and payroll administration and many more. As such, it as seen that technology has helped make daily operational activities much more convenient and effective, cutting down on costs and manpower required. (Thomason, 1998) Therefore, technology changes more generally to an organization in terms of its structure, work allocation and even its culture.
With new technologies being brought into use within the company, T&D is essential in educating employees. And here comes the challenge to managers to ensure that the new technology is put into productive use by employees. The third way in which technological developments affect HRM activities relates to the need to find new ways of managing staff who are employed in the research and development functions, and whose job is to drive technological development to the advantage of the organization.
Most importantly, managers must cope with the rapidly changing technology and the need to put technology into optimum use. (Nelson & Campbell, 1996) It is predicted that the workforce diversity of the 21st century will have greater cultural, gender and age diversity than before. This phenomenon may be due to the increasing number of companies entering into global markets in the recent years. HR professionals have to bear in mind that the changing nature of workforce is not simply numerical.
Diverse employees bring different perspective, cultures, lifestyle, values, attitudes and needs. The president of Boeing company once said ‘It is only by finding ways to harness the diverse skills of all its employees in pursuit of mutual goals that a company can achieve its full potential. ‘ Thus, organizations are faced with the challenge of transforming a homogenous work environment into a heterogeneous one that values all employees. The increased diversity of workforce today has also caused organization to re-examine policies, practices and values.
Additionally, the shift in economy from manufacturing based to service and information based in the 21st century is also one of the factors contributing to a diverse workforce. (Kossek & Block, 2000) In the service economy, person to person contact dominates. Essentially, the ability of companies to interact effectively with a diverse marketplace will become increasingly important to an organization’s success. If a firm manages diversity well, organizational waste should decrease due to fewer lawsuits and conflicts and improved morale.
Achieving diversity at management and executive levels requires that organizational practices re-enforce the idea of differences as assets. (Nelson & Campbell, 1996, p. 26) Therefore, it is vital that HR personnel carry out diversity processes across the management levels like cultural audits, cultural awareness training, skill building training and diversity enlargement hiring strategies (Kossek & Block, 2000) these processes help employees understand each owns cultural differences with the objective of accepting each individual.
Ultimately, the challenge of managing diversity is to develop human resource practices and organizational systems that value and reinforce rather than hinder the full participation of all organizational members irregardless of identity. (Kossek & Block, 2000) Another issue with regards to workforce diversity is the problem of aging workforce. The aging of Singapore workforce is already having a dramatic effect on the workforce; with workers aged 65 close to eight hundred thousand by the year 2030.
As values tend to change from one generation to another, it will be a challenge for HR to institute new values into them. Additionally, organizations will struggle with ways to control costs and will have to find way to attract, retain and prepare the youth labor force. Another challenge for HRM will be training of the senior workforce to upgrade the skills in face of technological change. It is also important that the younger generation have opportunities for career growth and promotion despite the large number of senior workers in the workforce.
The above has brought us through a series of trends that have created an impact on the HRM. In conclusion, the advancement in technology, enlargement in workforce diversity, rapid globalization and increase in M activities have produced responses in the approach made by industry to HRM. This also means that the traditional personnel function of managing HR could no longer work in the 21st century. Today, it is only important that HRM are integrated into strategic management; with the objective of utilizing the human resource to achieve those strategic management objectives.
Thus, the very concept of HRM is itself seen by some as one response, implying a need to move away from a soft, welfare linked conception of personnel management to and towards a harder business oriented approach to management of the labor workforce. Driven by a number of significant internal and external environmental forces, HRM has progressed from a largely maintenance function, with little if any bottom line impact, to what many scholars and practitioners today regard as the source of sustained competitive advantage for organizations operating in a global economy.
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