2 Understanding the Environment HUMAN RESOURCE MANAGEMENT – UB – 2015 Objectives : You should be able to 1. Explain the strategic importance of understanding the external & organizational environments. 2. Explain the roles & responsibilities of the HR Triad for better understanding the external & organizational environments. 3. Describe some implications of economic globalization for managing human resources. 4. Describe the global labor markets. 5. Explain several ways in which country cultures differ & can influence the way organizations manage HR. 1 Week Objectives (cont’d) 6. Discuss the relationship between technology & managing human resources. 7. Explain the components of company cultures. 8. Describe how business strategies influence the managing of human resources. 9. Discuss two current issues in understanding the external & organizational environments. The Strategic Importance of Understanding The External & Organizational Environments “HR professionals need to scan the environment everyday –whether by Internet, newspapers, or magazines. Everything has the potential to impact everything we do.” Charles Tharp HR Consultant 2 External Environment Encompasses local, national, & multinational conditions that confront an organization. Economic globalization. The political landscape Labor markets. Country cultures. Legal institutions. Unions. Organizational Environment Technology conditions within the organization itself. Company culture. Strategy. 3 The Role of the HR Triad Line Managers HR Professionals Employees • Stay informed. • Stay informed. • Stay informed. • Support new HRM technology. • Educate the organization. • Take responsibility for self-development • Understand new structures. • Keep others informed about implications for skills development, career management, HRM • Help employees from other cultures. • Develop new skills; e.g., managing alliances. • Be prepared for disruptions. 4 Economic Globalization Competing on costs versus competing on knowledge Worldwide operations Managing human resources around the world. Economic Cycles Diversifying product & service offerings. Describes the fluctuation in economic activity that occurs over long periods of time in developed market economies. Regional Trade zones Trade relations & regional cooperations. Regional Trade Zones North American Free Trade Agreement (NAFTA) Created free trade zone among Canada, Mexico & the United States. Implications: Maquiladoras. Canadian brain drain. Economic benefits issues. Other controversies. 5 Regional Trade Zones (cont’d) European Union (EU) Created single market with removal of trade barriers. Allows free movement of people across borders. Provides directives related to employment issues. Instituted the euro to: Reduce costs of currency conversions. Increase economic stability. Association of Southeast Asian Nations (ASEAN) Members account for nearly 30% of world trade. The Political Landscape Firms are affected by local politics in every country where they operate. Governments regulate business in areas including: Taxation & tariffs. Pollution. Labor practices. International Labor Organization (ILO) Draws up and oversees international labor standards. 6 The Political Landscape (cont’d) Social Accountability International (SAI) World Trade Organization Certification standards include child labor, forced labor, health & safety, collective bargaining, discrimination, disciplinary action, working hours, & compensation. Promotes trade negotiations and harmonization. Most favored nation principle—trade concessions must be applied to all members. Watchdogs & Activists Focus on a specific issue, such as labor rights. Try to change corporate practices. Labor Markets Slow Growth Multi- Immigrants generational Workforce Competition for Employees Change in the Labor Market Skill Shortage 7 Multigenerational Workplace • Four generations in the workforce population Traditionalists – Born 1929-1945 Baby Boomers – Born 1946-1964 Generation X – Born 1965-1981 Millennials – Born 1982 – 1999. • It is important for HR professionals to be aware of the values & attitudes of each generation & determine their possible impact in shaping HR policies & practices. Generations Present in the Workforce When they were Born Label Used 1945 or before Traditionalists 1946–1964 Characteristics Prize loyalty. Prefer top-down management approach & information provided on a need-to-know basis. Optimistic and idealistic. Achieve success by Baby Boomers challenging authority & creating open lines of communication. 1965–1977 Generation X More skeptical than other generations. Often distrust institutions & prize individualism. Value work-life balance. 1978–1989 Generation Y Approach work with realization that they will change employers many times & may also change the type of work they do. 1990–2000 Internet Generation Just entering the workforce with the most early-life exposure to interactive video games & the Internet. 2000–2020 New Silent Generation Comfortable with activities that allow for deeply personal interactions over the Internet. 8 Global Labor Markets Where the Skills Are Labor Costs Global Labor Market Factors Health Issues Hourly Compensation Costs (in U.S. Dollars) for Production Workers in Selected Countries (2008) Source: U.S. Bureau of Labor Statistics, November 2006. 9 Country Cultures Cultural Differences How companies are managed. How work is designed. How employees expect to be treated. How managers manage (styles). Consequences of Country Cultures The need for HR practices to be congruent with the country culture to enable global success Use of incentives Attitudes towards work Empowerment. Dimensions for Comparing National Cultures Cultural Dimension Behaviors That Society Encourages and Rewards Assertiveness Toughness, confrontation, competitiveness (vs. modesty, tenderness). Future Orientation Planning, investing in future, delaying gratification. Gender Differentiation Males & females expected to behave differently & be treated differently (vs. accepting gender neutral behavior). Uncertainty Avoidance Orderliness, consistency, following formal procedures & laws. Power Distance Recognizing and showing respect for people & groups with greater authority, prestige, status, material possessions than oneself. Institutional Collectivism Participating in legislative, economic, & political processes (vs. personal autonomy). Behaviors that support the collective good are encouraged through formal institutions, taxes, etc. In-Group Collectivism Taking pride in one’s membership in smaller groups such as family, circle of close friends, employer. Performance Orientation Performance improvements & excellence, acceptance of feedback. Humane Orientation Being fair, generous, altruistic, kind toward others. 10 Technologies Technology Factories and Mass Production Technologies The process of making and using tools & equipment plus the knowledge used in the process. Introduced standardized procedures, routine & depersonalized work. Created the need for skilled workers & managers. Computer Technologies: Robotics. Information Technologies Devices. Virtual Workforce. Mobile Implications: productivity. Increased Customized products. Empowered workforce. HR Information Systems & Electronic HRM HR Information Management (HRIM) System When computer technologies are used to gather, analyze, and distribute information about job applicants & employees. Electronic HRM Refers to the use of IT for conducting HRM activities & for social networking among employees. 11 Implications of Information Technology (IT) Expert systems capture & store data for employee’s personal development plans. Can be used to develop long term workforce & succession planning. Communicates a company’s values & strategy. Facilitates worldwide coordination. Company Culture Company Culture Defined The unique pattern of shared assumptions, values, & norms that shape the socialization activities, language, symbols, & ceremonies of people in the organization. Assumptions, values, & norms that form the base of a culture can only be inferred from a culture’s more visible elements –its socialization activities, language, symbols, & ceremonies. 12 Leadership’s Role in Shaping a Company’s Culture Creating its Vision Defining its Mission Leadership Upholding its Values Excerpts of Global Citizenship at Deere & Company Core Values : Our efforts are guided by our core values– integrity, quality, commitment, & innovation. Corporate Governance : Review our governance guidelines, executive biographies, & committee charters. Environment, Health & Safety : Every day, we strive to safeguard our employees, customers, & the environment. Community Involvement : We strive to improve the quality of life in the communities where we live & work. Diversity / Inclusion : We support and encourage diversity and inclusion throughout our global operations. 13 Company Culture (cont’d) Company Subculture Exists when assumptions, values, & norms are shared by some –but not all– organizational members. Diversity benefits: problem analysis & problem solving. Challenges: Loss of status & influence to majority culture; glass ceiling perceptions. Multicultural Organization A workforce committed to utilizing fully its human resources represented by the full mix of cultures found in the population at large. Business Strategies Business Strategy Strategy Map A set of integrated and coordinated commitments and actions intended to achieve stated business goals. Shows the cause-and-effect relationships that ultimately determine firm performance. Competitive Strategy Describes how a particular business or business unit competes against direct rivals who offer the same products & services. 14 Business Strategies Total Quality Low Cost Competitive Strategies Customer Service Innovation Current Issues Mergers & Acquisitions Companies need to be fast growing, efficient, profitable, flexible, adaptable, future-ready, & dominant in market position. Many firms evolve and grow through mergers & acquisitions. MNCs Today, virtually all organizations, regardless of size, must adapt to the process of economic globalization. 15 Key HR Activities in the Mergers & Acquisition Process Stage 3 Stage 1 Stage 2 Precombination Combination Vertical Integration Key HR Issues & Activities in the Implementation of Mergers & Acquisitions HR Issues Key HR Activities Stage 1—Precombination • • • • • • • • • • Identify reasons for the M&A. Form M&A team/leader. Search for potential partners. Select a partner. Plan for managing the process. Plan to learn from the process. Participate in preselection assessment of target firm. Assist in conducting thorough due diligence assessment. Participate in planning for combination. Assist in developing HR practices that support rapid learning & knowledge transfer. Stage 2 — Combination • Select the integration manager(s). • Design/implement transition teams. • Create the new structure/strategies/ leadership. • Retain key employees. • Manage the change process. • Communicate and involve stakeholders. • Develop new policies and practices. • Assist in recruiting and selecting integration manager(s). • Assist with transition team design and staffing. • Develop retention strategies and communicate to top talent. • Assist in deciding who goes. • Facilitate establishment of a new culture. • Provide assistance to ensure implementation of HR policies & practices. Stage 3—Solidification & Assessment • • • • • • Solidify leadership and staffing. Assess the new strategies & structures. Assess the new culture. Assess the concerns of stakeholders. Revise as needed. Learn from the process. • Participate in establishing criteria and procedures for assessing staff effectiveness. • Monitor the culture and recommend approaches to strengthen it. • Participate in stakeholder satisfaction. • Assist in developing and implementing plans for continuous adjustment and learning. 16 Key HR Issues & Activities in the Implementation of Mergers & Acquisitions HR Issues Key HR Activities Stage 1 –Precombination • • • • • Identify reasons for the M&A. Form M&A team/leader. Search for potential partners. Select a partner. Plan for managing the process. • Plan to learn from the process. • Participate in preselection assessment of target firm. • Assist in conducting thorough due diligence assessment. • Participate in planning for combination. • Assist in developing HR practices that support rapid learning & knowledge transfer. Key HR Issues & Activities in the Implementation of Mergers & Acquisitions HR Issues Key HR Activities Stage 2 – Combination • Select the integration manager(s). • Design/implement transition teams. • Create the new structure/strategies/ leadership. • Retain key employees. • Manage the change process. • Communicate & involve stakeholders. • Develop new policies & practices. • Assist in recruiting & selecting integration manager(s). • Assist with transition team design & staffing. • Develop retention strategies & communicate to top talent. • Assist in deciding who goes. • Facilitate establishment of a new culture. • Provide assistance to ensure implementation of HR policies & practices. 17 Key HR Issues & Activities in the Implementation of Mergers & Acquisitions HR Issues Key HR Activities Stage 3 – Solidification & Assessment • Solidify leadership & staffing. • Assess the new strategies & structures. • Assess the new culture. • Assess the concerns of stakeholders. • Revise as needed. • Learn from the process. • Participate in establishing criteria & procedures for assessing staff effectiveness. • Monitor the culture & recommend approaches to strengthen it. • Participate in stakeholder satisfaction. • Assist in developing & implementing plans for continuous adjustment & learning. The HR Implications of MNC´s Societal level • Globalization will open new markets & create new economies to enter. • CEO’s will be concerned about multiple stakeholders. • There is a need to be socially sensitive. Strategic level • Gaining global competitive advantage depends on effective HR practices. • Consider the context of all HR policies & practices. • Systematically link HR policies & practices horizontally & vertically to the MNC. (…) 18 The HR Implications of MNC´s (cont´d) (…) Workforce level • There is a heightened need to transnational & diverse teams. • High quality managers will be in big demand – those who can motivate to innovate. • Global mind sets & cross-cultural competencies will be needed. HR Professional & MNC level • All companies need to think of themselves as MNCs & act accordingly. • HR professionals (leaders & staff) can play a major role in all of this. • All employees need to think of themselves as part of the global workforce. Asia-Pacific Economic Cooperation (APEC). Association of Southeast Asian Nations (ASEAN). Business strategy. Central American Free Trade Agreement (CAFTA). Company culture and Company subculture. Competitive strategy. Electronic human resource management (e-HRM). European Union (EU). Human Resource Information Management (HRIM). External environment. International Labor Organization (ILO). Mission statement. Multicultural organization. North American Free Trade Agreement (NAFTA). Organizational environment. Social Accountability International (SAI). Strategy map. Technology. Values. Virtual workforce. Vision. World Trade Organization (WTO). TERMS TO REMEMBER 19 SOURCES: BELCOURT, M.; BOHLANDER, G.; & SNELL, S. (2011) Managing Human Resources. Thomson. 8th Edition. WERNER, S., SHULLER, R., & JACKSON, S.; (2012) Human Resource Management. Thomson. 11h Edition. Social Audit Criteria Considered by Levi Strauss & Company – CASE STUDY – 1 Stakeholder Group Owners & investors Customers Criteria used when Assessing Performance (examples) • Financial soundness. • Consistency in meeting shareholder expectations. • Sustained profitability. • Average return on assets over five-year period. • Timely & accurate disclosure of financial information. • Corporate reputation & image. • Product or service quality, innovativeness, & availability. • Responsible management of defective or harmful products or services. • Safety records for products or services. • Pricing policies & practices. • Honest, accurate, & responsible advertising. (…) 20 Social Audit Criteria Considered by Levi Strauss & Company – CASE STUDY – 2 Stakeholder Group (…) Organization members Community Criteria used when Assessing Performance (examples) • Nondiscriminatory, merit-based hiring & promotion. • Diversity of the workforce. • Wage and salary levels & equitable distribution. • Availability of training & development. • Workplace safety & privacy. • Environmental issues. • Environmental sensitivity in packaging & product design. • Recycling efforts & use of recycled materials. • Pollution prevention. • Global application of environmental standards. • Community involvement. • Percentage of profits designated for cash contributions. • Innovation & creativity in philanthropic efforts. • Product donations. • Availability of facilities & other assets for community use. • Support for employee volunteer efforts. 21