Module 7
Workforce Management: Employment
Relationships in Changing Organizations
PowerPoint Presentation by Charlie Cook
Copyright © 2005 South-Western. All rights reserved.
Overview
• Old model of employment:
 Bounded, hierarchical, fixed, homogeneous, and local
• New model of employment:
 Networked, flat, flexible, diverse, and global
Overview
Copyright © 2005 South-Western. All rights reserved.
7–2
Overview (cont’d)
• As organizations move from bounded to
networked
 Plus: Opportunities arise for collaboration with new
colleagues across boundaries
 Minus: Careers will involve a patchwork of jobs in
different organizations
 Question: How can managers maintain loyalty
between employees and companies and between
employees and teams as memberships are in flux?
Overview
Copyright © 2005 South-Western. All rights reserved.
7–3
Overview (cont’d)
• As organizations move from hierarchical to flat
 Plus: More employees at all levels have access to
decision-critical information
 Minus: Fewer vertical promotion paths and confusion
about what “career success” means
 Question: How can managers motivate employees
without the traditional promise of promotions?
Overview
Copyright © 2005 South-Western. All rights reserved.
7–4
Overview (cont’d)
• As organizations move from fixed to flexible
 Plus: Employees have a range of ways to organize the
time and space in which they work
 Minus: It may be difficult to coordinate the efforts of
employees working under different arrangements
 Question: How can managers balance flexibility and
coordination?
Overview
Copyright © 2005 South-Western. All rights reserved.
7–5
Overview (cont’d)
• As organizations move from homogeneous to
diverse
 Plus: A range of new approaches to work will be
stimulated as new groups are included
 Minus: Differences may breed contests between
groups
 Question: How can managers be responsive to diverse
constituencies in ways that respect differences but are
also fair and consistent?
Overview
Copyright © 2005 South-Western. All rights reserved.
7–6
Overview (cont’d)
• As organizations move from local to global
 Plus: New ways to include multiple stakeholders will
be added to the menu
 Minus: Range of choices will make it more challenging
to present any one choice as legitimate
 Question: How can managers learn from different
global examples?
Overview
Copyright © 2005 South-Western. All rights reserved.
7–7
“Old” Versus “New”
Employment Relationship
• From World War II through the 1970s
 Sustained period of shared prosperity
 Many employees worked in “internal labor markets”
Long-term employment with one employer
 Internal advancement up a company job ladder
 Well-defined jobs linked in a progression that defined a career
 Individual compensation based on merit, seniority

• From the mid-1970s to the mid-1990s
 Productivity growth slowed
 Real wages stagnated
 Restructuring produced significant white-collar layoffs
Class Note: Managing a Changing Workforce in Turbulent Times
Copyright © 2005 South-Western. All rights reserved.
7–8
“Old” Versus “New”
Employment Relationship (cont’d)
• Today more jobs are filled by turning to the
external market rather than promoting from within
• The new employment relationship is “market
mediated” rather than an internal labor market
process
Class Note: Managing a Changing Workforce in Turbulent Times
Copyright © 2005 South-Western. All rights reserved.
7–9
“Old” Versus “New”
Employment Relationship (cont’d)
• Employment security
 From the 1950s to the 1970s, U.S. employees and
employers expected employment relationship to be
long term
 During the 1980s, this “implicit contract” changed;
large companies began to lay off employees as part of
restructuring efforts
 At the same time, these companies were also hiring
new employees
Class Note: Managing a Changing Workforce in Turbulent Times
Copyright © 2005 South-Western. All rights reserved.
7–10
“Old” Versus “New”
Employment Relationship (cont’d)
• Reasons for restructuring and reorganizing:
 Globalization and international competition
 Changing technologies
 Easier to hire new workers than retrain employees
 The wage bill was the first to be cut
 Getting rid of “dead wood”
 Competition prompted companies to do more with
fewer people
 Declining union power
 Subcontractors, temporary workers, outsourcing
Class Note: Managing a Changing Workforce in Turbulent Times
Copyright © 2005 South-Western. All rights reserved.
7–11
“Old” Versus “New”
Employment Relationship (cont’d)
• Advancement
 Traditionally, employees spent a career advancing
within a company
 Flattening of job ladders resulted in fewer or different
types of advancement
 Lateral advancement or advancement up the levels of
a skill set are now common
Class Note: Managing a Changing Workforce in Turbulent Times
Copyright © 2005 South-Western. All rights reserved.
7–12
“Old” Versus “New”
Employment Relationship (cont’d)
• Jobs and compensation:
 Traditional organization chart with strict hierarchical
links has been replaced by a web of interconnecting
tasks and relationships
 Individual jobs are increasingly multiskilled
 Employees are encouraged to cross-train and learn a
variety of tasks to allow for job rotation
 Compensation systems need to shift from individual
incentives tied to specific job titles to rewards for
learning new skills and working effectively in teams
Class Note: Managing a Changing Workforce in Turbulent Times
Copyright © 2005 South-Western. All rights reserved.
7–13
Changes in the Distribution of the U.S. Labor
Force by Subgroup, 1994–2005
(number in thousands, percent in parentheses)
Class Note: Managing a Changing Workforce in Turbulent Times
Source: From Judith Friedman and Nancy DiTomaso, “Myths About Diversity; What Managers Need to Know
About Changes in the U.S. Labor Force.” Copyright © 1996, by The Regents of the University of California.
Reprinted from the California Management Review, vol. 38, no. 4. By permission of the Regents.
Copyright © 2005 South-Western. All rights reserved.
* Does not add up to zero due to rounding error.
Figure 7.1
7–14
Flexibility
• Demand for flexibility in work often traced to
entrance of women into paid workforce
• Rise of women into higher organizational
positions prompted new dialogues on balancing
work and family
• Dialogue expanded from “women’s issue” to
include:
 Parental leave time
 Flexible time arrangements for caring for parents or ill
family members
Class Note: Managing a Changing Workforce in Turbulent Times
Copyright © 2005 South-Western. All rights reserved.
7–15
Flexibility (cont’d)
• Flexibility choices:
 Flexible space

Telecommuting, virtual offices
 Flexible time and allocation of tasks

Flex time, part-time work, job sharing
 Flexible career paths

Challenge is to overcome fear that flexible work arrangements
will damage career opportunities
 Flexible workforce size and firm boundaries

Reliance on temporary workers may result in loss of employee
loyalty and commitment
Class Note: Managing a Changing Workforce in Turbulent Times
Copyright © 2005 South-Western. All rights reserved.
7–16
Human Assets and 21st Century
Organizational Forms
• Labor costs are normally the largest variable cost
in most firms, so employee costs are tightly
controlled
• When employees leave, they may take significant
portions of a firm’s assets (knowledge and
clients) with them
• Organizations need to find ways to retain critical
knowledge workers
Class Note: Managing a Changing Workforce in Turbulent Times
Copyright © 2005 South-Western. All rights reserved.
7–17
Contrasting Assumptions in Twentiethand Twenty-First-Century Organizations
Class Note: Managing a Changing Workforce in Turbulent Times
Source: Thomas A. Kochan, Wanda Orlikowski, and Joel Cutcher Gershenfeld, “Beyond McGregor’s Theory Y:
Human Capital and Knowledge Work in the 21st Century Organization,” MIT Sloan School of Management, 2002.
Copyright © 2005 South-Western. All rights reserved.
Figure 7.2
7–18
The Evolving Focus of Strategy
The Press: Building Competitive Advantage Through People
Copyright © 2005 South-Western. All rights reserved.
7–19
The Evolving Role of Human Resources
The Press: Building Competitive Advantage Through People
Copyright © 2005 South-Western. All rights reserved.
7–20