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
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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.
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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.
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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.
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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.
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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
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
(…)
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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
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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.
(…)
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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.
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