Free «Managing Human Resources» Essay Sample
Globalization processes, which have intensified in the global economy, are reflected in activities of organizations all over the world. Currently, the most powerful influence on the enterprise itself, its customers, and owners comes from the radical transformation in areas of technology, economics, and law, as well as serious changes in demographics. At the same time, all these trends and processes are taking place in the context of globalization. Efficient HR management system should not only reflect, but also affect these business realities. A comprehensive study of the current trends and understanding of their impact on functioning of an organization, as a whole, and the HR management system, in particular, allows designing and developing technologies and practices that meet the context of business environment and contribute to the existing competitive advantages of the enterprise, as well as uncover the new ones. The following work attempts to identify the main global trends of socio-economic development that affect the HR management of companies, as well as the changes of its role in the life of organization in terms of its significance and strategic value.
In the last half of the 20th century, almost all aspects of production and economic relations have become more international in their nature, and the world as a whole has been perceived as a global village. The vast majority of organizations are currently competing with each other on the international scale, since the obstacles to capital movement, tariff restrictions, and other factors that limit the possibility of entering the global market were significantly reduced. Thus, in the modern conditions, globalization has become the reality, which has a direct impact on any business entity in both private and public sectors of the economy. Even in case it does not affect an organization in the usual way, i.e. through the foreign competition on the local market, it brings a new culture, which focuses on the comparison of company with leaders of a particular industry segment or sector of the economy, the so-called culture of benchmarking. In turn, according to the theory of international relations, it permeates all of the business processes, including the ones related to management of human resources (Stahl, Bjorkman, & Morris, 2012). As a result, the adoption of almost any business decisions is performed through the use of methods that allow comparing performance of a particular enterprise not only with local data but also with indicators of other organizations around the world. However, human capital of the firm remains a major factor for its growth, development, and success. The strict economic conditions force managers of commercial organizations to pay attention to the objectively existing relationship between business results and the HR processes (Ozbilgin, Groutsis, & Harvey, 2014). As a result, the place of HR management in an organization is bound to change.
Moreover, the global trends start challenging many traditional business models and modify almost all management subsystems of a company. Along with the reproduction and omnipresence of technology, there are new segments of the global market. Accordingly, there are new key management requirements, namely the ones related to the global integration and coordination. Thus, there are changes in personnel management systems of companies around the world. In turn, it is possible to assume that there is a causal relationship between the global trends and processes and the modern HR management practices, which significantly affect significance of the latter.
Globalization and information technologies have changed the notions of time and place for the business entity. In particular, time has become compressed, while the territorial boundaries of business have expanded more than ever. In turn, these trends have various effects on the economy, as a whole, namely its democratization and the pressure on the government to provide more rights for workers, as well as further liberalization and deregulation of markets. Competition on the investment market also increases, being complemented by the increasing economic interdependence of states. As a result, the flows of capital, information, and technology between them become more intense, leading to the internationalization of enterprises, namely through the processes of mergers and acquisitions (Deloitte & Touche, 2011). The markets have become consumer-oriented, both on the global and local scale, while retaining their segmentation. Finally, competitiveness starts based on knowledge and innovation, as well as skills and performance of the personnel, rather than the comparative advantages provided by low labor costs and cheap natural resources, which are common to the Third World countries. Thus, it is clear that the globalized environment presents various challenges for organizations.
The success of companies that operate on the global scale largely depends on their ability to organize flows of information, capital, labor and other resources, while taking into account both national and cultural boundaries. As a result, they have to react accordingly, implementing measures and strategies, such as the transfer of production to the areas with a favorable economic climate, in order to reduce costs and enhance organization’s ability to respond more quickly to the specific conditions of the regional markets. At the same time, they often resort to the extensive use of outsourcing and contracting practices. In particular, outsourcing of a corporate function allows organizations to concentrate on its core business and increases the efficiency of service and support functions. Moreover, they have to provide more opportunities for temporary and part-time work to the potential employees, especially in the conditions of flexible and deregulated labor market, thus strengthening the focus on quality and efficiency of operations even further. Additionally, there is a need for greater involvement of workers in the processes of development of working process as a whole. Finally, they have to shift the focus from national or sectoral levels in the process of collective bargaining to that of a particular organization (Deloitte & Touche, 2011). Naturally, under such conditions, the role of the HR management becomes much more important, especially from the strategic point of view. For example, the transfer of production mentioned above requires an extensive knowledge of the labor culture of a particular area, as well as the ability to attract the local workforce. At the same time, outsourcing requires the establishment of contacts with workers from the outside, while the introduction of part-time work calls for the changes in working schedule. Finally, the involvement of employees in the managerial processes presents the need for establishment of a democratic culture within a company. All these tasks are to be handled by HR managers, contributing to the significance of their functions in the globalized environment.
Moreover, globalization has resulted in a steady growth of cumulative knowledge and skills of employees. In particular, the number of skilled workers in countries, such as India and China is rapidly growing. This trend is happening against the background of significant migration flows, since labor mobility has also become higher. However, the intensity of population displacement increases the risk of emergence and spread of epidemics (e.g. Ebola virus disease). These factors ultimately determine the fact of growth of costs related to the maintenance of health of employees on a high level (Stahl et al., 2012). Naturally, they may be quite burdensome for the state (through the social security systems) and corporate budgets (through voluntary health insurance systems). As a result, there is a need to take preventive measures, which are to be developed by the HR managers. In turn, it is possible to say that this branch of management allows preventing strain on the budget of organization in the globalized environment, thus ensuring its survival.
In addition to the trends described above, globalization has resulted in a decline in labor supply in the industrialized countries, especially in terms of the skilled professionals. As a result, companies throughout the world had to react by introducing new forms of regulation of social and labor relations, as well as the employment, including part-time work, flexible contracts, and remuneration system. Moreover, there was a need for the introduction of long-term unpaid leave by employees and regulated career breaks (Briscoe, Schuler, & Tarique, 2012). All these measures are within the scope of HR management function, making organizations more adaptable to the changes in the globalized labor market. In turn, it is possible to say that it ensures competitiveness of companies in the long-term (i.e. strategic) perspective.
At the same time, nowadays, there is a proliferation of the different types of employment contracts, namely the ones providing for a certain flexibility of labor functions of an employee. In other words, a worker that has a wide range of knowledge and skills is no longer tied to the fulfillment of a single function. The use of such practices allows an employer to minimize the costs associated with the absence of people and make a range of services more attractive to the labor content. Additionally, there is a reduction in the number of workers on an indefinite employment contract, especially in the developed countries, due to the introduction of flexible working hours, ranging from the short working weeks (4-day or 40-hour schedules) to the programs, in which workers can organize their 7- or 8-hour working day within the 12-14 hour range (Briscoe et al., 2012). Moreover, due to the proliferation of personal computers and the development of telecommunications infrastructure, a growing number of employees can work either at home or at the office, depending on their choice. Globalization and information technology made the job more mobile, creating opportunities to perform productive tasks in different parts of the world without having to create the usual jobs. At the same time, such distant workers are to be monitored on the constant basis to ensure their high productivity. The development and maintenance of connection between a company and employees working under the flexible contracts mentioned above are among the HR management functions, with this fact contributing to its significance in the modern conditions.
Moreover, nowadays, HR management has to pay special attention to the problem of compensation, since modern remuneration systems are becoming more individualized and innovative, as a result of globalization. For example, market leaders often offer various benefits to their employees, such as caring for older members of the worker’s family, concierge services, etc. The proposed compensation packages are becoming more and more varied and rich in order to satisfy the needs of people and attract a diverse workforce. In turn, companies have to engage in flexible compensation plans. In particular, there are remuneration schemes which are based on the presence of two elements, a fixed and a derivative, the latter of which depends on the performance of a company, a group of workers, and the individual, i.e. the so-called performance-based system (Briscoe et al., 2012). At the same time, there is a vector in the direction of efficient teamwork and collaboration in the workplace, by means of the new technologies in infrastructure, such as social networking. Moreover, there is a decrease in the formalization of the entire workflow (Deloitte & Touche, 2011). Under such conditions, there is a need to rethink the relationship between an employer and employees, with HR management function being of paramount importance for a company.
At the same time, globalization has resulted in the use of virtual working groups by organizations. These are teams working through teleconferencing, instant electronic and text messaging. Nowadays, one can witness a gradual reduction of the traditional channels of communication and more intensive use of the short messaging system and e-mail. Such a familiar communication tool as the telephone is gradually losing its dominating position within the system of internal corporate communication. This trend, coupled with an increasing demand for flexibility in the terms of adaptation to market changes, has led to the reorganization of production systems and management practices. First of all, there is a reduction in the narrow classification of work and production tasks, as well as the lack of a clear demarcation between managers and the rest of employees. Second, employees become more involved in the processes of conception, development, implementation, and monitoring of their work. Third, there is a focus on the development of new company’s policies related to human resource management and modification of the existing ones in order to stimulate knowledge transfer. Moreover, bilateral communication becomes dominating in the internal corporate channels, i.e. descending and ascending communication flows and constant feedback (Briscoe et al., 2012). These trends reinforce the need for employers to invest more resources in the staff training as well as its encouragement to participate in these programs and to take some responsibility for their own development. Without HR management practices and methods, such task will be impossible to achieve.
The other changes in the process of management of personnel are only partially influenced by globalization, but somehow, they have a significant influence on the modern HR management practices. It is important to mention that the expanding service sector replaces the industrial one in the developed and rapidly developing economies, thus requiring diverse and skilled workforce. Moreover, there is a strong influx of women into the labor force, with them often occupying more than a half of newly emerging jobs. There is also an increasing number of individuals who do not work in an organization but rather for it – in other words, the shift of value orientations of an employee. Finally, there is an erosion of previously clear boundaries between work and personal life, as well as the growing problem of balance between these two aspects (Ozbilgin et al., 2014). As a result, experts in human resource management have to face not only such issues as the changing demographics of the workforce and changes in socio-psychological sphere, but also define the way in which the HR function of a company is to be transformed and organized to respond to the changing business environment and the needs of the modern business world.
Globalization has resulted in the modern HR management system functioning in a more regulated legal field. This statement is especially true with regard to the environmental legislation as well as the one related to discrimination, sexual, and other harassment. From a practical standpoint, HR department of an organization has traditionally been one of the most dependent in terms of government regulation. In particular, it had to represent a company in courts in relation to the cases involving violations of labor legislation. In turn, the clarity of the work in a legal context is important to maintain the competitiveness of an organization. However, recently, the compliance of the enterprise with ethical business practices has become the most pressing issue for HR managers (Deloitte & Touche, 2011). In particular, the case of Enron Corporation (the use of accounting loopholes to conceal failed deals) demonstrated the risks of conflict of interests, as well as the abuse of power, presenting the problem of professional ethics. As a result, society itself demanded to reform the business sphere (McLean & Elkind, 2013). Under such conditions, the role of HR management becomes even more strategic as it ensures credibility of an organization by upholding the corporate code of ethics.
The modern global trends have had a significant impact on the HR management practice of organizations around the world. At the same time, this influence can be primarily perceived in international companies, which, being major players in today’s global economy, are forced not only to maintain the achieved levels of efficiency but also look for the ways to increase their competitiveness. In this aspect, HR management is important for managerial subsystems since the process of personnel management acts as an internal mechanism for coordination and control of operations of a globalized company. In turn, the ability of the enterprise to organize an efficient system of HR management becomes one of its primary competitive advantages, which ensures its survivability in the long-term perspective. As a result, the processes of globalization have increased the significance and strategic value of HR managerial functions immensely.