The changing role of Human Resource (HR) management in response to trends in globalization, technology, diversity, e-business, and ethics.

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Fundamentals of Human Resources Companies, 2003
Resource Management




Chapter
Managing Human
1
Resources
What Do I Need to Know? After reading this chapter, you should be able to:


1. Define human resource management and explain how HRM contributes to an
organization's performance.
2. Identify the responsibilities of human resource departments.
3. Summarize the types of skills needed for human resource management.
4. Explain the role of supervisors in human resource management.
5. Discuss ethical issues in human resource management.
6. Describe typical careers in human resource management.



Introduction
Can a company operate without people? Moffatt/Rosenthal, a Portland, Oregon, ad
agency, came dangerously close to finding out. Toward the end of the 1990s, when the
search for talented employees was a challenge for almost any company, all but one of
the agency's 13 employees left. Some were lured to the exciting world of Internet
commerce; others were laid off when clients shifted work to other agencies, as often
happens in the advertising business. Employees move on to new opportunities all the
time, but agency founders Al Moffatt and Rob Rosenthal were stunned by the impact
on their firm. Almost too late, they realized they needed to focus on their staff, not
just on their clients.
Moffatt and Rosenthal committed themselves to finding and keeping good people.
To make room in the budget for a top-notch business development executive, the

1
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Resource Management




2 CHAPTER 1 Managing Human Resources

partners cut their own salaries. They studied the company's history and concluded
that employees who initially had been stimulated by the challenge of building a new
company had grown bored once the company had established itself with a few big ac-
counts. The partners now found new employees and set out to make them want to
stay. They began to encourage greater employee creativity, taking on pro bono (char-
itable) assignments and giving employees free rein in creating promotional pieces for
the agency. They selected a challenging mission for Moffatt/Rosenthal--focusing on
LO1 brand promotion, a prestigious advertising specialty--to stimulate excitement and
long-term commitment among the new set of employees. Two years later, Moffatt/
Rosenthal had earned its biggest profits ever and was planning a big party to celebrate
its 10th anniversary.1
human resource The changes that revitalized Moffatt/Rosenthal centered around human resource
management management (HRM), the policies, practices, and systems that influence employees'
(HRM) behavior, attitudes, and performance. Many companies refer to HRM as involving
The policies, "people practices." Figure 1.1 emphasizes that there are several important HRM prac-
practices, and tices: analyzing work and designing jobs, attracting potential employees (recruiting),
systems that
choosing employees (selection), teaching employees how to perform their jobs and
influence
preparing them for the future (training and development), evaluating their perfor-
employees'
behavior, attitudes, mance (performance management), rewarding employees (compensation), creating a
and performance. positive work environment (employee relations), and supporting the organization's
strategy (HR planning and change management). An organization performs best
when all of these practices are managed well. At companies with effective HRM, em-
ployees and customers tend to be more satisfied, and the companies tend to be more
innovative, have greater productivity, and develop a more favorable reputation in the
community.2
In this chapter, we introduce the scope of human resource management. We begin
by discussing why human resource management is an essential element of an organi-
zation's succcess. We then turn to the elements of managing human resources: the
roles and skills needed for effective human resource management. Next, the chapter
describes how all managers, not just human resource professionals, participate in the
activities related to human resource management. The following section of the chap-

FIGURE 1.1
Human Resource Management Practices
Strategic HRM
organization's strategy
Supporting the
design of work




Compensation
development



management
Performance
Analysis and




Training and
Recruiting
Employee




Selection
relations




Company
Performance
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Fundamentals of Human Resources Companies, 2003
Resource Management




CHAPTER 1 Managing Human Resources 3

ter addresses some of the ethical issues that arise with regard to human resource man-
agement. We then provide an overview of careers in human resource management.
The chapter concludes by highlighting the HRM practices covered in the remainder
of this book.


Human Resources and Company Performance
Managers and economists traditionally have seen human resource management as a
necessary expense, rather than as a source of value to their organizations. Economic
value is usually associated with capital--equipment, technology, and facilities. How-
ever, research has demonstrated that HRM practices can be valuable.3 Decisions such
as whom to hire, what to pay, what training to offer, and how to evaluate employee
performance directly affect employees' motivation and ability to provide goods and
services that customers value. Companies that attempt to increase their competitive-
ness by investing in new technology and promoting quality throughout the organiza-
tion also invest in state-of-the-art staffing, training, and compensation practices.4
The concept of "human resource management" implies that employees are re-
sources of the employer. As a type of resource, human capital means the organization's human capital
employees, described in terms of their training, experience, judgment, intelligence, An organization's
relationships, and insight--the employee characteristics that can add economic value employees,
to the organization. In other words, whether it manufactures automobiles or forecasts described in terms
the weather, for an organization to succeed at what it does, it needs employees with of their training,
certain qualities, such as particular kinds of training and experience. This view means experience,
judgment,
employees in today's organizations are not interchangeable, easily replaced parts of a
intelligence,
system but the source of the company's success or failure. By influencing who works relationships, and
for the organization and how those people work, human resource management there- insight.
fore contributes to such basic measures of an organization's success as quality, prof-
itability, and customer satisfaction. Figure 1.2 shows this relationship.
Athleta Corporation, a catalog and Internet retailer of sports apparel, based in
Petaluma, California, demonstrates the importance of human capital to the company's


FIGURE 1.2
Type of Human Capital Impact of Human
· Training Resource Management
· Experience
· Judgment
· Intelligence
· Relationships
· Insight Organizational
Performance
Human Resource · Quality
Management · Profitability
· Customer satisfaction

Behavior of Human Capital
· Motivation
· Effort
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4 CHAPTER 1 Managing Human Resources

At Southwest Airlines,
the company's focus is
on keeping employees
loyal, motivated, trained,
and compensated. In
turn, there is a low
turnover rate and a high
rate of customer
satisfaction.




bottom line. Athleta's workforce is so committed to the company that turnover is less
than 1 percent (1 out of 100 employees leave the company in an average year), pro-
ductivity (output per worker) is increasing, and the company's growth is skyrocket-
ing--it grew by five times in 2000 alone. One way the company has built a commit-
ted workforce is by cultivating a positive work environment. Most of Athleta's 60
employees set their own work schedules and are permitted to take personal time dur-
ing the day. Employees take the initiative to learn one another's jobs, so they can fill
in for one another during the day. Those who take time off for personal reasons will-
ingly work odd hours. The company encourages employees to take breaks for physi-
cal activity, and employees can even bring along their dogs, which join employees
outside for a run or to play catch. Employees use the open space preserve behind Ath-
leta's facility to run, or they work out with the gym equipment set up in the company's
storage area.5
Human resource management is critical to the success of organizations because
human capital has certain qualities that make it valuable. In terms of business
strategy, an organization can succeed if it has a sustainable competitive advantage (is bet-
ter than competitors at something, and can hold that advantage over a sustained pe-
riod of time). Therefore, we can conclude that organizations need the kind of re-
sources that will give them such an advantage. Human resources have these necessary
qualities:
· Human resources are valuable. High-quality employees provide a needed service as
they perform many critical functions.
· Human resources are rare in the sense that a person with high levels of the needed
skills and knowledge is not common. An organization may spend months looking
for a talented and experienced manager or technician.
· Human resources cannot be imitated. To imitate human resources at a high-
performing competitor, you would have to figure out which employees are provid-
ing the advantage and how. Then you would have to recruit people who can do
precisely the same thing and set up the systems that enable those people to imitate
your competitor.
· Human resources have no good substitutes. When people are well trained and
highly motivated, they learn, develop their abilities, and care about customers. It
is difficult to imagine another resource that can match committed and talented
employees.
These qualities imply that human resources have enormous potential. An organization
realizes this potential through the ways it practices human resource management.
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CHAPTER 1 Managing Human Resources 5

Effective management of human resources can form the foundation of a high- high-performance
performance work system--an organization in which technology, organizational work system
structure, people, and processes all work together to give an organization an advan- An organization in
tage in the competitive environment. As technology changes the ways organizations which technology,
organizational
manufacture, transport, communicate, and keep track of information, human re-
structure, people,
source management must ensure that the organization has the right kinds of people and processes all
to meet the new challenges. Maintaining a high-performance work system may in- work together to
clude development of training programs, recruitment of people with new skill sets, give an organization
and establishment of rewards for such behaviors as teamwork, flexibility, and learn- an advantage in the
ing. In the next chapter, we will see some of the changes that human resource man- competitive
agers are planning for, and Chapter 16 examines high-performance work systems in environment.
greater detail.


Responsibilities of Human LO2

Resource Departments
In all but the smallest organizations, a human resource department is responsible for
the functions of human resource management. On average, an organization has one
HR staff person for every 100 employees served by the department. Table 1.1 details
the responsibilities of human resource departments. These responsibilities include the
practices introduced in Figure 1.1 plus two areas of responsibility that support those
practices: (1) establishing and administering personnel policies and (2) ensuring
compliance with labor laws.

TABLE 1.1
FUNCTION RESPONSIBILITIES
Responsibilities of
HR Departments
Analysis and Work analysis; job design; job descriptions
design of work
Recruitment Recruiting; job postings; interviewing; testing; coordinating use
and selection of temporary labor
Training and Orientation; skills training; career development programs
development
Performance Performance measures; preparation and administration of
management performance appraisals; discipline
Compensation Wage and salary administration; incentive pay; insurance;
and benefits vacation leave administration; retirement plans; profit sharing;
stock plans
Employee Attitude surveys; labor relations; employee handbooks;
relations company publications; labor law compliance; relocation and
outplacement services
Personnel Policy creation; policy communication; record keeping; HR
policies information systems
Compliance Policies to ensure lawful behavior; reporting; posting
with laws information; safety inspections; accessibility accommodations
Support for Human resource planning and forecasting; change management
strategy

SOURCE: Based on SHRM-BNA Survey No. 66, "Policy and Practice Forum: Human Resource
Activities, Budgets, and Staffs, 2000­2001," Bulletin to Management, Bureau of National Affairs
Policy and Practice Series (Washington, DC: Bureau of National Affairs, June 28, 2001).
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6 CHAPTER 1 Managing Human Resources

Although the human resource department has responsibility for these areas, many
of the tasks may be performed by supervisors or others inside or outside the organiza-
tion. No two human resource departments have precisely the same roles because of
differences in organization sizes and characteristics of the workforce, the industry, and
management's values. In some companies, the HR department handles all the activ-
ities listed in Table 1.1. In others, it may share the roles and duties with managers of
other departments such as finance, operations, or information technology. In some
companies, the HR department actively advises top management. In others, the de-
partment responds to top-level management decisions and implements staffing, train-
ing, and compensation activities in light of company strategy and policies.
Let's take an overview of the HR functions and some of the options available for
carrying them out. Human resource management involves both the selection of
which options to use and the activities of using those options. Later chapters of the
book will explore each function in greater detail.


Analyzing and Designing Jobs
job analysis To produce their given product or service (or set of products or services) companies
The process of require that a number of tasks be performed. The tasks are grouped together in vari-
getting detailed ous combinations to form jobs. Ideally, the tasks should be grouped in ways that help
information about the organization to operate efficiently and to obtain people with the right qualifica-
jobs. tions to do the jobs well. This function involves the activities of job analysis and job
design. Job analysis is the process of getting detailed information about jobs. Job de-
job design sign is the process of defining the way work will be performed and the tasks that a
The process of given job requires.
defining the way In general, jobs can vary from having a narrow range of simple tasks to having a
work will be broad array of complex tasks requiring multiple skills. At one extreme is a worker on
performed and the
an assembly line at a poultry-processing facility; at the other extreme is a doctor in an
tasks that a given
job requires.
emergency room. In the past, many companies have emphasized the use of narrowly
defined jobs to increase efficiency. With many simple jobs, a company can easily find
recruitment
workers who can quickly be trained to perform the jobs at relatively low pay. How-
The process through ever, greater concern for innovation and quality have shifted the trend to more use of
which the broadly defined jobs. Also, as we will see in Chapters 2 and 4, some organizations as-
organization seeks sign work even more broadly, to teams instead of individuals.
applicants for
potential
employment. Recruiting and Hiring Employees
Based on job analysis and design, an organization can determine the kinds of em-
selection ployees it needs. With this knowledge, it carries out the function of recruiting and
The process by hiring employees. Recruitment is the process through which the organization seeks
which the applicants for potential employment. Selection refers to the process by which the or-
organization ganization attempts to identify applicants with the necessary knowledge, skills, abili-
attempts to identify ties, and other characteristics that will help the organization achieve its goals. An or-
applicants with the
ganization makes selection decisions in order to add employees to its workforce, as
necessary
knowledge, skills,
well as to transfer existing employees to new positions. Selecting employees for over-
abilities, and other seas assignments can be especially challenging, as described in the nearby "Best Prac-
characteristics that tices" box.
will help the Approaches to recruiting and selection involve a variety of alternatives. The or-
organization achieve ganization may actively recruit from many external sources, such as Internet job post-
its goals. ings, newspaper want-ads, and college recruiting events. Other organizations may rely
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Fundamentals of Human Resources Companies, 2003
Resource Management




BEST
PRACTICES
Success in Global Fast Food Depends on Good
Selection for Overseas Assignments
As companies expand globally, Chicken, Pizza Hut, and Taco personality characteristics
they are spending more time Bell restaurants. The company needed include empathy,
and energy assessing has 100 expatriates, including adaptability, and the ability to
employees' cultural fit for 20 Americans working overseas. interact with others (sociability).
overseas assignments. By one Rather than choosing If candidates pass the interview,
estimate, the cost of a failed candidates who are merely their peers and manager
overseas assignment ranges excited about an overseas complete a feedback survey
from $200,000 to $500,000. assignment and who have the about their strengths and
These costs result from lost technical skills to perform the weaknesses to provide an
productivity, relocation, job, Tricon is taking a closer evaluation of their skills.
recruitment, and severance pay. look at whether the candidates If the evaluation is positive,
The most common reason for a also have the necessary the company sends the
failed overseas assignment is personality characteristics. In candidates and their families
choosing people who have the particular, Tricon looks for the overseas for a week. During the
technical skills needed to ability to adapt to different visit, local managers evaluate
perform the job but lack the situations and the family each candidate while the family
necessary personality support needed to succeed in evaluates the community. The
characteristics and family overseas assignments. family spends time touring local
support. In other words, To identify employees for schools, exploring potential
overseas assignments typically overseas assignments, Tricon housing locations, and meeting
fail because the employee or interviews candidates about the with other expatriates in the
family becomes homesick, or position, the country's culture, country, who tell them about
the employee cannot interact and its marketplace. If there is the local culture and
well with people in a different any doubt whether the environment. If the local
culture. candidate can make the managers find the candidate
Tricon Restaurants adjustment, the company hires acceptable, the candidate, with
International has planned a consulting firm to further input from his or her family, can
extensively to avoid these assess whether the candidate accept or reject the position.
pitfalls. Dallas-based Tricon is has the personality needed to SOURCE: Based on C. Patton, "Match
the franchiser for over 10,000 succeed in an overseas Game," Human Resource Executive,
overseas Kentucky Fried assignment. Some of the 2001, pp. 36­41.




heavily on promotions from within and applicants referred by current employees. The
choice of recruiting methods is influenced by the types of positions to be be filled, as
well as by characteristics of the employer. A well-known employer in a large city may
receive so many applications for entry-level jobs that it need not recruit very actively.
Other positions are harder to fill. For ATX Forms, a developer of tax software, the big
challenge is the company's location in cold, out-of-the way Caribou, Maine--not the
destination of choice for the majority of college graduates. ATX decided to focus its
recruiting on people who already have ties to the area. The company publicized
its generous pay for programmers, as well as a $5,000 bonus for signing on. ATX
7
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8 CHAPTER 1 Managing Human Resources

TABLE 1.2
Top 10 Qualities 1. Communication skills (verbal and written)
Employers Seek in 2. Honesty/integrity
Job Candidates 3. Teamwork skills
4. Interpersonal skills
5. Strong work ethic
6. Motivation/initiative
7. Flexibility/adaptability
8. Analytical skills
9. Computer skills
10. Organizational skills

SOURCE: National Association of Colleges and Employers, "Job Outlook 2002," online version,
www.jobweb.com.



employees and their neighbors began encouraging their adult children to return to
Caribou; other adults who had planned to move away changed their minds in favor
of taking positions with ATX.6
At some organizations the selection process may focus on specific skills, such as ex-
perience with a particular programming language or type of equipment. At other or-
ganizations, selection may focus on general abilities, such as the ability to work as part
of a team or find creative solutions. The focus an organization favors will affect many
choices, from the way the organization measures ability, to the questions it asks in in-
terviews, to the places it recruits. Table 1.2 lists the top 10 qualities that employers
say they are looking for in job candidates, based on a survey by the National Associ-
ation of Colleges and Employers.


Training and Developing Employees
Although organizations base hiring decisions on candidates' existing qualifications,
most organizations provide ways for their employees to broaden or deepen their
knowledge, skills, and abilities. To do this, organizations provide for employee train-
training ing and development. Training is a planned effort to enable employees to learn job-
A planned effort to related knowledge, skills, and behavior. For example, many organizations offer safety
enable employees training to teach employees safe work habits. Development involves acquiring
to learn job-related knowledge, skills, and behavior that improve employees' ability to meet the chal-
knowledge, skills, lenges of a variety of new or existing jobs, including the client and customer demands
and behavior.
of those jobs. Development programs often focus on preparing employees for man-
agement responsibility. Likewise, if a company plans to set up teams to manufacture
development
products, it might offer a development program to help employees learn the ins and
The acquisition of
knowledge, skills,
outs of effective teamwork. Figure 1.3 illustrates examples of training and develop-
and behaviors that ment designed to increase the value of an organization's human capital.
improve an Decisions related to training and development include whether the organization
employee's ability to will emphasize enabling employees to perform their current jobs, preparing them for
meet changes in job future jobs, or both. An organization may offer programs to a few employees in whom
requirements and in the organization wants to invest, or it may have a philosophy of investing in the train-
customer demands. ing of all its workers. Some organizations, especially large ones, may have extensive
formal training programs, including classroom sessions and training programs on CD-
ROM. Other organizations may prefer a simpler, more flexible approach of encourag-
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Fundamentals of Human Resources Companies, 2003
Resource Management




CHAPTER 1 Managing Human Resources 9

FIGURE 1.3
How Training and Development Can Increase the Value of Human Capital
Example 1
Teach how to New skill:
safely spot Spotting hazards
hazards Results:
Safety Training · Safety-conscious
employees
New behavior: · Fewer accidents
Teach significance
Noticing and
of safe practices
correcting hazards




Example 2
New knowledge:
Teach principles of
How listening
active listening
affects results Results:
Development of Better
Listening Skills communication
for teamwork
New skill: Careful or management
Practice active
listening with
listening
feedback




ing employees to participate in outside training and development programs as needs
are identified.


Managing Performance
Managing human resources includes keeping track of how well employees are per-
forming relative to objectives such as job descriptions and goals for a particular posi-
tion. The process of ensuring that employees' activities and outputs match the orga-
nization's goals is called performance management. The activities of performance performance
management include specifying the tasks and outcomes of a job that contribute to the management
organization's success. Then various measures are used to compare the employee's per- The process of
formance over some time period with the desired performance. Often, rewards--the ensuring that
topic of the next section--are developed to encourage good performance. employees' activities
and outputs match
The human resource department may be responsible for developing or obtaining
the organization's
questionnaires and other devices for measuring performance. The performance mea- goals.
sures may emphasize observable behaviors (for example, answering the phone by the
second ring), outcomes (number of customer complaints and compliments), or both.
When the person evaluating performance is not familiar with the details of the job,
outcomes tend to be easier to evaluate than specific behaviors.7 The evaluation may
focus on the short term or long term and on individual employees or groups. Typically,
the person who completes the evaluation is the employee's supervisor. Often employ-
ees also evaluate their own performance, and in some organizations, peers and subor-
dinates participate, too.
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10 CHAPTER 1 Managing Human Resources

Planning and Administering Pay and Benefits
The pay and benefits that employees earn play an important role in motivating them.
This is especially true when rewards such as bonuses are linked to the individual's or
group's achievements. Decisions about pay and benefits also can support other aspects
of an organization's strategy. For example, a company that wants to provide an ex-
ceptional level of service or be exceptionally innovative might pay significantly more
than competitors in order to attract and keep the best employees. At other compa-
nies, a low-cost strategy requires knowledge of industry norms, so that the company
does not spend more than it must.
Planning pay and benefits involves many decisions, often complex and based
on knowledge of a multitude of legal requirements. An important decision is how
much to offer in salary or wages, as opposed to bonuses, commissions, and other
performance-related pay. Other decisions involve which benefits to offer, from retire-
ment plans to various kinds of insurance to time off with pay. All such decisions have
implications for the organization's bottom line, as well as for employee motivation.
Pay and benefits have the greatest impact when they are based on what employees
really want and need. Sherman Assembly Systems, located in San Antonio, Texas,
hires many unskilled workers, including a large number who moved off the welfare
rolls to take jobs at Sherman. These employees need benefits that help them enter the
world of earning a regular paycheck. Sherman arranges to have its bank send repre-
sentatives to the worksite to help employees apply for checking accounts with low
minimum balances. In addition, the company gives workers without a high school
diploma an opportunity to take Internet-based courses so they can earn their GED.8
The work situation at Cronin and Company, a small advertising agency in Glaston-
bury, Connecticut, is far different. With Cronin's offices located midway between
Boston and New York, the challenge is to keep talent from leaving for the many at-
tractions of those major cities. Cronin's benefits therefore include making the work-
place attractive, with an environment that makes people want to linger. The com-
pany has built a posh employee lounge featuring leather chairs, piped-in jazz, and a
cappucino machine. The lounge is meant to be an opportunity to stimulate creative
interaction, as well as a way to keep employees happy.9
Administering pay and benefits is another big responsibility. Organizations need
systems for keeping track of each employee's earnings and benefits. Employees need
information about their health plan, retirement plan, and other benefits. Keeping
track of this involves extensive record keeping and reporting to management, em-
ployees, the government, and others.

In December 2001, Jason
Giambi smiles during a
press conference in
which the New York
Yankees announced they
had signed Giambi to a
seven-year, $120 million
contract. The employer
(the Yankees) is paying
so much because it
believes Giambi will
contribute more to the
organization than
anyone else could.
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Fundamentals of Human Resources Companies, 2003
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CHAPTER 1 Managing Human Resources 11

Maintaining Positive Employee Relations
Organizations often depend on human resource professionals to help them identify
and perform many of the tasks related to maintaining positive relations with employ-
ees. This function often includes providing for communications to employees. Many
organizations prepare and distribute employee handbooks that detail company poli-
cies, and large organizations often have company publications, such as a monthly
newsletter or a website on the organization's intranet (an Internet service limited to
use within the organization). Preparing these communications may be a regular task
for employees in the human resource department.
The human resource department also can expect to handle certain kinds of com-
munications from individual employees. Employees turn to this department for an-
swers to questions about benefits and company policy. If employees feel they have
been discriminated against, see safety hazards, or have other problems and are dissat-
isfied with their supervisor's response, they may turn to the HR department for help.
Members of the department should be prepared with a way to address such problems.
In organizations where employees belong to a union, employee relations entails ad-
ditional responsibilities. The organization periodically conducts collective bargaining
to negotiate an employment contract with union members. The HR department also
maintains communication with union representatives to ensure that problems are re-
solved as they arise.


Establishing and Administering Personnel Policies
All the human resource activities described so far require fair and consistent deci-
sions, and most require substantial record keeping. Organizations depend on their HR
department to help establish policies related to hiring, discipline, promotions, bene-
fits, and the other activities of human resource management. For example, if the com-
pany has a policy in place that an intoxicated worker will be immediately terminated,
the company can handle such a situation more fairly and objectively than if it ad-
dressed such incidents on a case-by-case basis. The company can communicate the
policy to every employee, so that everyone knows its importance. And if anyone vi-
olates the rule, the supervisor can quickly intervene--confident that the employee
knew the consequences and that any other employee would be treated the same way.
Such policies not only promote fair decision making, they also promote other objec-
tives, such as workplace safety and customer service.
All aspects of human resource management require careful and discreet record
keeping. From the preparation of employee handbooks, to processing job applica-
tions, performance appraisals, benefits enrollment, and government-mandated re-
ports, handling records about employees requires accuracy as well as sensitivity to em-
ployee privacy. Whether the organization keeps records in file cabinets or on a
sophisticated computer information system, it must have methods for ensuring accu-
racy and for balancing privacy concerns with easy access for those who need infor-
mation and are authorized to see it.


Ensuring Compliance with Labor Laws
As we will discuss in later chapters, especially Chapter 3, the government has many
laws and regulations concerning the treatment of employees. These laws govern such
matters as equal employment opportunity, employee safety and health, employee pay
and benefits, employee privacy, and job security. Requirements include filing reports
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12 CHAPTER 1 Managing Human Resources

and displaying posters, as well as avoiding unlawful behavior. Most managers depend
on human resource professionals to help them keep track of these requirements.
Ensuring compliance with laws requires that human resource personnel keep
watch over a rapidly changing legal landscape. For example, the increased use of and
access to electronic databases by employees and employers suggest that in the near fu-
ture legislation will be needed to protect employee privacy rights. Currently, no fed-
eral laws outline how to use employee databases in order to protect employees' pri-
vacy while also meeting employers' and society's concern for security.
The requirement that employers give people with disabilities access to the work-
place is a topic of continuing debate and court action. The Americans with Disabili-
ties Act (ADA), discussed in Chapter 3, covers access of disabled persons to the phys-
ical work environment and attempts to eliminate discrimination against these
persons in hiring and other HRM practices. However, no law helps eliminate disabled
persons' disadvantages in access to technology such as the Internet, cell phones, and
other electronic devices. Disabled people's computer usage and Internet access are
only about half the level of persons without disabilities. Future laws may require that
persons with disabilities receive access to such technology.10 Accessibility might in-
clude adding screen readers to websites, providing voice recognition technology to
computer users, or changing computer design to make computers easier for employees
with limited mobility to use.
Another area of continued debate likely will be laws designed to prohibit discrim-
ination by employers and health insurers against employees based on their genetic
makeup. Advances in medicine and genetics allow scientists to predict from DNA
samples a person's likelihood of contracting certain diseases. To reduce health care
costs, companies may want to use this information to screen out job candidates or re-
assign current employees who have a genetic predisposition to a disease that is trig-
gered by exposure to certain working conditions. Congress has debated laws that re-
strict genetic testing to monitoring the adverse effects of exposure to hazardous
workplace substances (such as chemicals) and that prohibit employers from requiring
employees or job candidates to provide predictive genetic information.
Also in the realm of fair employment practices, we are likely to see more chal-
lenges to sex and race discrimination focusing on lack of access to training and de-
velopment opportunities needed for an employee to be considered for top manage-
ment. Although women and minorities are advancing into top management
positions, "glass ceilings" still exist between top management and female and minor-
ity employees. A recent survey showed that 97 percent of top U.S. managers are
white, and at least 95 percent are male.11
Another subject of lawsuits that will continue to have a major influence on HRM
practices is job security. As companies are forced to close facilities and lay off em-
ployees because of economic or competitive conditions, cases dealing with the illegal
discharge of employees have increased. The issue of what constitutes "employment at
will"--that is, the principle that an employer may terminate employment at any time
without notice--will be debated. As the age of the overall workforce increases, as de-
scribed in the next chapter, the number of cases dealing with age discrimination in
layoffs, promotions, and benefits will likely rise. Employers will need to review work
rules, recruitment practices, and performance evaluation systems, revising them if
necessary to ensure that they do not falsely communicate employment agreements
the company does not intend to honor (such as lifetime employment) or discriminate
on the basis of age.
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Resource Management




CHAPTER 1 Managing Human Resources 13

Supporting the Organization's Strategy
At one time, human resource management was primarily an administrative function.
The HR department focused on filling out forms and processing paperwork. However,
as more organizations have come to appreciate the significance of highly skilled
human resources, many HR departments have taken on a more active role in sup-
porting the organization's strategy.
An important element of this responsibility is human resource planning, identi- human resource
fying the numbers and types of employees the organization will require in order to planning
meet its objectives. Using these estimates, the human resource department helps the Identifying the
organization forecast its needs for hiring, training, and reassigning employees. Plan- numbers and types
ning also may show that the organization will need fewer employees to meet antici- of employees the
organization will
pated needs. In that situation, human resource planning includes how to handle or
require in order to
avoid layoffs. The "HR How To" box draws on several companies' experience to de- meet its objectives.
scribe some ways of planning for human resource needs.
Often, an organization's strategy requires some type of change--for example,
adding, moving, or closing facilities; applying new technology; or entering markets in
other regions or countries. Common reactions to change include fear, anger, and con-
fusion. The organization may turn to its human resource department for help in man-
aging the change process. Skilled human resource professionals can apply knowledge
of human behavior, along with performance management tools, to help the organiza-
tion manage change constructively.


Skills of HRM Professionals LO3
With such varied responsibilities, the human resource department needs to bring to-
gether a large pool of skills. These skills fall into the four basic categories shown in
Figure 1.4: human relations skills, decision-making skills, leadership skills, and tech-
nical skills.
FIGURE 1.4
Skills of HRM
Professionals




Human Decision-
Relations Making
Skills Skills

Leadership Technical
Skills Skills
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Fundamentals of Human Resources Companies, 2003
Resource Management




HR
HOW TO
Winning the War for Talent
Throughout the 1990s, a company gym. The company Teach Managers to Keep
booming economy and rapidly also promised that after a year, Employees. Macy's West has
changing technology Cisco would pay an additional developed a comprehensive
transformed the task of two months' salary to help pay retention strategy that includes
recruiting employees into a war for a job search inside Cisco. three elements: (1) advising
for talent. Even with an managers on how to run
Lure Them Back. Other
economic slowdown at the meetings and conduct
companies that have cut back
beginning of the 21st century, performance evaluations in a
have tried to stay connected to
the war for talent continues in way that will motivate
former employees, so they will
many fields. How can HR associates; (2) flexible work
want to return when times
practices help a company win schedules; and (3) development
improve. Charles Schwab is
that war? Here are strategies opportunities to prepare
promising a $7,500 rehiring
that have worked for several associates to be managers.
bonus to any of the 2,100
companies: Executives at Macy's are also
employees laid off who return
held accountable for retention
Avoid Layoffs. When money is within 18 months. Many
of the employees who report to
tight, avoiding layoffs requires companies are considering
them.
creativity. Sun Microsystems has rehiring retired employees on a
tried closing plants only over part-time basis or as consultants, Create a Positive Work
the summer. Cisco Systems and rather than offering all-or- Environment. SAS Institute
didn't quite cut ties with none retirement programs, they makes employees want to stay
employees, even when it are allowing employees to by giving them an opportunity
concluded it needed layoffs. gradually phase out of work. For to do interesting work in a
Cisco is paying some of them example, Monsanto Corporation comfortable environment that
one-third of their previous has developed its own in-house gives them time for their
salaries and continuing to temporary employment agency, personal lives. SAS Institute is a
provide full benefits, including the Retiree Resource privately held worldwide
health insurance, use of a Corporation (RRC), to utilize company that develops and
laptop, and access to the retirees' talents. markets statistical software (80




Human Relations Skills
The ability to understand and work well with other people is important to virtually any
career, but human relations skills have taken on new significance for human resource
management today. As organizations' managers increasingly appreciate the signifi-
cance of human resources, many are calling for HRM to become the "source of people
expertise" in the organization.12 HR managers therefore need knowledge of how peo-
ple can and do play a role in giving the organization an advantage against the compe-
tition, as well as of the policies, programs, and practices that can help the organiza-
tion's people do so. Some of the human relations skills that are particularly important
for today's HR professionals are communicating, negotiating, and team development.
14
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Fundamentals of Human Resources Companies, 2003
Resource Management




percent of the Fortune 500 are has low turnover. The it is difficult to find and retain
customers). SAS Institute company's work environment the same type of employees,
operates on the basis of trust. encourages employees to stay and pay and benefits tend to
The company's policy for sick even if they have opport

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Fundamentals of Human Environment Resource Management Companies, 2003
Resource Management




Chapter
Trends in Human
2
Resource Management Know?


What Do I Need to Know? After reading this chapter, you should be able to:


1. Describe trends in the labor force composition and how they affect human
resource management.
2. Summarize areas in which human resource management can support the goal
of creating a high-performance work system.
3. Define employee empowerment and explain its role in the modern
organization.
4. Identify ways HR professionals can support organizational strategies for
quality, growth, efficiency, and international operations.
5. Summarize the role of human resource management in an Internet economy.
6. Discuss how technological developments are affecting human resource
management.
7. Explain how the nature of the employment relationship is changing.
8. Discuss how the need for flexibility affects human resource management.



Introduction
The early years of the 21st century have shaken the complacency of U.S. workers and
forced them to take a fresh look at the ways they are working. A decade of turbulent
economic growth gave way to decline, or at least stagnation. Terrorist attacks on U.S.
soil forced a new sense of life's uncertainties. And a revolution in information tech-
30
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Resource Management




CHAPTER 2 Trends in Human Resource Management 31

nology has redefined such fundamental notions as what it means to be "in touch" or
"at work." More and more voices at the workplace, in the community, and in the
media tell of people who are mulling over why they work the way they do--and
whether they want to keep working that way.
Jessica Hsu is a case in point. At age 25, Hsu was experiencing an economic slow-
down for the first time, and she questioned her past role as an ad writer for a dot-com
business. Says Hsu, " I was writing ads to convince people to buy things they really
did not need." She decided to switch to more meaningful work and signed up with
the Peace Corps. She was far from the only one. According to the Peace Corps, en-
rollment has surged since the stocks of Internet companies plunged in 2001. Some of
these volunteers had lost their jobs, but others just said they were sick of the intense
pace of work and wanted to do something more significant.1
Difficult times have given business owner Richard Schachtman more appreciation
for his employees. Schachtman, who runs the six-store Now! Audio Video chain in
North Carolina, struggled to avoid laying off workers. For 27 years, he had never
made any cuts in his payroll. But after the September 11, 2001, attacks intensified the
economic slowdown, his business simply could not support all his employees. He laid
off three employees and reduced or eliminated annual bonuses for the rest. At the end
of the year, he spent hours trying to write a heartfelt thank-you to the remaining 132
employees. Says Schachtman, "We're a family company, and these people deserved
thousands [of dollars in bonuses], but were getting just hundreds." The employees re-
sponded to the situation with an understanding that Schachtman calls "almost
noble."2
Other employees are holding onto their jobs--and barely holding onto their non-
work lives. In fact, their jobs seem to be creeping out of the workplace and into their
homes and cars. People are using the latest technology to make phone calls and check
e-mail wherever they can carry a cell phone or pager. Multitasking has become a new
buzzword as people become increasingly creative with their travel time. One New
York official even admitted to a Wall Street Journal columnist that he has figured
out how to change his pants while driving (he insists he has a safe driving record).
On a more serious note, many workers have turned their cars into traveling confer-
ence centers. Greg Xikes and coworkers at a company that provides networking ser-
vices have carried on conference calls from Xikes's car, with all of them dialing into
the same number from their cell phones. Not everyone likes multitasking, though. A
sales manager in Rhode Island works from his car, even though he hates it, because
he believes it is a necessary part of keeping up with the competition. Kimberly
Cooper, a data analyst in Florida, simply decided not to participate in this aspect
of modern life. She leaves her car at home and rides a bike to work. Cooper says


Multitasking has become
a way of life for many
employees who need to
make the most of every
minute. This is a new,
but prevalent, trend that
is affecting human
resource management
and the employees it
supports.
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32 PART 1 The Human Resource Environment

distracted multitaskers lose an amazing amount of the fruits of their busyness: "You
should see the `road kill'--a dropped wallet, a case with over $135 in CDs."3
These are the kinds of people and situations that shape the nature of human re-
source management today. This chapter describes major trends that are affecting
human resource management. It begins with an examination of the modern labor
force, including trends that are determining who will participate in the workforce of
the future. Next, we explore ways HRM can support a number of trends in organiza-
tional strategy, from efforts to maintain high-performance work systems to changes in
the organization's size and structure. Often, growth includes the use of human re-
sources on a global scale, as more and more organizations hire immigrants or open op-
erations overseas. The chapter then turns to major changes in technology, especially
the role of the Internet. As we will explain, the Internet is changing organizations
themselves, as well as providing new ways to carry out human resource management.
Finally, we explore the changing nature of the employment relationship, in which ca-
reers and jobs are becoming more flexible.



LO1 Change in the Labor Force
The labor force is a general way to refer to all the people willing and able to work. For
internal labor force an organization, the internal labor force consists of the organization's workers--its
An organization's employees and the people who have contracts to work at the organization. This in-
workers (its ternal labor force is drawn from the organization's external labor market, that is, in-
employees and the
dividuals who are actively seeking employment. The number and kinds of people in
people who have
contracts to work at
the external labor market determine the kinds of human resources available to an or-
the organization). ganization (and their cost). Human resource professionals need to be aware of trends
in the composition of the external labor market, because these trends affect the or-
external labor ganization's options for creating a well-skilled, motivated internal labor force.
market
Individuals who are
actively seeking
An Aging Workforce
employment. In the United States, the Bureau of Labor Statistics (BLS), an agency of the Depart-
ment of Labor, tracks changes in the composition of the U.S. labor force and forecasts
employment trends. The BLS has projected that from 1996 to 2006, the total U.S.
labor force will grow from 134 million to 149 million workers.4 This 11 percent in-
crease represents somewhat slower growth than during the preceding decade. As that
growth occurs, the composition of the labor force will change because of shifts in the
U.S. population.
Some of the expected change involves the distribution of workers by age. During
the 1996­2006 period, the youth labor force (workers between the ages of 16 and 24)
is expected to grow faster than the overall labor force for the first time in 25 years.
However, the fastest-growing age segment will be workers aged 45 to 64, as the baby
boom generation (born from 1946 to 1964) continues to age. Therefore, in spite of
the growing numbers of young workers, the overall work force will be aging. Figure
2.1 shows the change in age distribution, as forecast by the Bureau of Labor Statistics,
between 1990 and 2010. The BLS forecasts that by 2015, the number of workers at
least 40 years old will exceed the number under 40 for the first time ever.5 Human re-
source professionals will therefore spend much of their time on concerns related to re-
tirement planning, retraining older workers, and motivating workers whose careers
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Resource Management




CHAPTER 2 Trends in Human Resource Management 33

FIGURE 2.1
16­24 16­24 Age Distribution of U.S.
(17.9%) (16.5%) Labor Force, 1990 and
55+ 2010
55+
(11.9%) (16.9%)


25­54 25­54
(70.2%) (66.6%)




1990 2010
SOURCE: H. N. Fullerton Jr. and M. Toossi, "Labor Force Projections to 2010: Steady Growth and Changing
Composition," Monthly Labor Review 124, no. 11 (November 2001), downloaded at www.bls.gov.




have plateaued. Organizations will struggle with ways to control the rising costs of
health care and other benefits. At the same time, organizations will have to find ways
to attract, retain, and prepare the youth labor force.
In doing so, organizations will be reminded that values tend to change from one
generation to the next, as well as when people reach different life stages.6 For exam-
ple, members of Generation Y (born between 1976 and 1995) begin their career with
the assumption they will frequently change jobs. They are likely to place a high value
on money as well as on helping others. Most employees, however, value several as-
pects of work, regardless of their age. Employees view work as a means to self-fulfill-
ment--that is, a means to more fully use their skills and abilities, meet their interests,
and live a desirable lifestyle.7 One report indicates that if employees receive opportu-
nities to fully use and develop their skills, have greater job responsibilities, believe the
promotion system is fair, and have a trustworthy manager who represents the em-
ployee's best interests, they are more committed to their companies.8 Fostering these
values requires organizations to develop HRM practices that provide more opportu-
nity for individual contribution and entrepreneurship (in this context, taking re-
sponsibility for starting up something new).9 Because many employees place more
value on the quality of nonwork activities and family life than on pay and production,
employees will demand more flexible work policies that allow them to choose work
hours and the places where they work.
Employers will likely find that many talented older workers want to continue con-
tributing through their work, though not necessarily in a traditional nine-to-five job.
For organizations to attract and keep talented older workers, many will have to re-
think the ways they design jobs. Phyllis Ostrowsky, in her mid-fifties, enjoyed her po-
sition as a store manager for 13 years, and she went out of her way to provide good
customer service. But her job responsibilities and hours expanded to the point they
became excessive. She eventually was working 12-hour days and was too busy to give
customers the personal touch she liked to deliver. Ostrowsky therefore left her store
job for a position as an office manager with another company.10
Noe-Hollenbeck-Gerhert-Wright: I. The Human Resource 2. Trends in Human © The McGraw-Hill
Fundamentals of Human Environment Resource Management Companies, 2003
Resource Management




34 PART 1 The Human Resource Environment

A Diverse Workforce
Another kind of change affecting the U.S. labor force is that it is growing more di-
verse in racial and ethnic terms. As Figure 2.2 shows, the 2006 workforce will be 72
percent white (and non-Hispanic), 11 percent black, 12 percent Hispanic, and 5 per-
cent Asian and other minorities. The fastest-growing of these categories are "Asian
and other" and Hispanics because these groups are experiencing immigration and
birthrates above the national average. Along with the greater racial and ethnic di-
versity, more women are in the paid labor force than in the past. Since 1994, women
have been 46 percent of the U.S. labor force. Three-quarters of them work full-time.11
The greater diversity of the U.S. labor force challenges employers to create HRM
practices that ensure they fully utilize the talents, skills, and values of all employees.
The growth in the labor market of female and minority populations will exceed the
growth of white non-Hispanic persons. As a result, organizations cannot afford to ig-
nore or discount the potential contributions of women and minorities. Employers will
have to ensure that employees and HRM systems are free of bias and value the per-
spectives and experience that women and minorities can contribute to organizational
goals such as product quality and customer service. As we will discuss further in the
next chapter, managing cultural diversity involves many different activities. These in-
clude creating an organizational culture that values diversity, ensuring that HRM sys-
tems are bias-free, encouraging career development for women and minorities, pro-
moting knowledge and acceptance of cultural differences, ensuring involvement in
education both within and outside the organization, and dealing with employees' re-
sistance to diversity.12 Figure 2.3 summarizes ways in which HRM can support the
management of diversity for organizational success.
Many U.S. companies have already committed themselves to ensuring that they rec-
ognize the diversity of their internal labor force and use it to gain a competitive advan-
tage. According to a recent survey of HR professionals, the most common approaches
include recruiting efforts with the goal of increasing diversity and training programs re-
lated to diversity.13 The majority of respondents believed that these efforts were benefi-
cial; 91 percent said they helped the company maintain a competitive advantage.
Texaco developed a state-of-the-art diversity program after the company had to


FIGURE 2.2
Projected Racial/Ethnic
Makeup of the U.S. Black,
Workforce, 2006
non-Hispanic (11%)
White,
non-Hispanic
Hispanic (12%) (72%)

Asian and
Other Minorities (5%)




SOURCE: Bureau of Labor Statistics, "BLS Releases New 1996­2006 Employment Projections,"
www.bls.gov/new.release/ecopro.nws.htm.
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Fundamentals of Human Environment Resource Management Companies, 2003
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CHAPTER 2 Trends in Human Resource Management 35

FIGURE 2.3
HRM Practices That Support Diversity Management

Communication:
yees from a varie
it h e m p lo ty of b
a te w ack
n ic gro
m mu Development: un
ds
Co mployees with differe .
f or e nt b
m ent ack
lop ce
gr
ou
ve forman Apprai
r d e Per based on ob sal: nd
s
k jecti
ee ed b ac ve a
e ou
r




nd
ef tco
ca




id p loyee Relation m




ab
Em vironment tha s:
e




ov e
vid




ilit
en fosters t is
Pr




k




s.
Pro




or l and crea co




ies
w al tiv m




.
ity
or
a




fo
ate




rta
f




.
Cre




ble
SOURCE: Based on M. Loden and J. B. Rosener, Workforce America! (Homewood, IL: Business One Irwin, 1991).




pay more than $175 million to settle a racial discrimination lawsuit.14 The lawsuit
publicly accused company executives of using racial slurs. Before the lawsuit, Texaco's
diversity program consisted of a workshop presented to top executives on practical
tips for managing a diverse workforce. Today all Texaco employees are required to at-
tend a two-day diversity "learning experience" that emphasizes awareness of what it
feels like to be excluded, develops employee sensitivity to others, and improves com-
munication skills needed for interacting with diverse peers. However, managing di-
versity at Texaco goes far beyond attending workshops; it is part of a culture change.
As you will see in Chapter 7, Texaco's diversity effort includes programs designed to
stop discrimination in hiring, retention, and promotion.
The practices required for successfully managing diversity do more than meet em-
ployee needs; they reduce turnover costs and ensure that customers receive the best
service possible. For instance, Molina Healthcare operates clinics whose clients are
mostly African American, Hispanic, and Southeast Asian. The company tries to hire
staffers who live in the clinics' neighborhoods and speak their patients' languages.
This commitment to diversity helps improve communications and the quality of
health care provided by the company.15
Throughout this book, we will show how diversity affects HRM practices. For ex-
ample, from a staffing perspective, it is important to ensure that tests used to select
employees are not unfairly biased against minority groups. From the perspective of
work design, employees need flexible schedules that allow them to meet nonwork
needs. In terms of training, it is clear that employees must be made aware of the dam-
age that stereotypes can do. With regard to compensation, organizations are provid-
ing benefits such as elder care and day care as a way to accommodate the needs of a
diverse workforce. As we will see later in the chapter, successfully managing diversity
is also critical for companies that compete in international markets.
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36 PART 1 The Human Resource Environment

Skill Deficiencies of the Workforce
The increasing use of computers to do routine tasks has shifted the kinds of skills
needed for employees in the U.S. economy. Such qualities as physical strength and
mastery of a particular piece of machinery are no longer important for many jobs.
More employers are looking for mathematical, verbal, and interpersonal skills, such
as the ability to solve math problems or reach decisions as part of a team. Often, when
organizations are looking for technical skills, they are looking for skills related to
computers and using the Internet. Today's employees must be able to handle a vari-
ety of responsibilities, interact with customers, and think creatively.
To find such employees, most organizations are looking for educational achieve-
ments. A college degree is a basic requirement for many jobs today. Competition for
qualified college graduates in many fields is intense. At the other extreme, workers
with less education often have to settle for low-paying jobs. Some companies are un-
able to find qualified employees and instead rely on training to correct skill deficien-
cies.16 Other companies team up with universities, community colleges, and high
schools to design and teach courses ranging from basic reading to design blueprint
reading.
Not all the skills employers want require a college education. Employers surveyed
by the National Association of Manufacturers report a deficiency in employees with
such basic skills as getting to work on time and working hard. The school district in
Kent, Washington, surveyed local businesses and learned that its graduates were not
well prepared to handle such challenges as working well with others. According to
Tony Proscio, a researcher who prepared a report on the subject for a Philadelphia
think tank, there have always been many people lacking these soft skills, but a lower-
than-usual employment rate has forced employers to consider hiring these unqualified
workers: "In the late 1990s, employers weren't able to pass them over anymore, be-
cause there simply wasn't anyone [else] left." Proscio expects that when the recent
economic slowdown reverses, the problem will again become severe.17 The gap be-
tween skills needed and skills available has decreased U.S. companies' ability to com-
pete because they sometimes lack the skills to upgrade technology, reorganize work,
and empower employees.


LO2 High-Performance Work Systems
Human resource management is playing an important role in helping organizations
gain and keep an advantage over competitors by becoming high-performance work
high-performance systems. These are organizations that have the best possible fit between their social
work systems system (people and how they interact) and technical system (equipment and
Organizations that processes).18 As the nature of the workforce and the technology available to organi-
have the best zations have changed, so have the requirements for creating a high-performance work
possible fit between
system. Customers are demanding high quality and customized products, employees
their social system
are seeking flexible work arrangements, and employers are looking for ways to tap
(people and how
they interact) and people's creativity and interpersonal skills. Such demands require that organizations
technical system make full use of their people's knowledge and skill, and skilled human resource man-
(equipment and agement can help organizations do this.
processes). Among the trends that are occurring in today's high-performance work systems are
reliance on knowledge workers; the empowerment of employees to make decisions;
and the use of teamwork. The following sections describe those three trends, and
Chapter 16 will explore the ways HRM can support the creation and maintenance of
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Fundamentals of Human Environment Resource Management Companies, 2003
Resource Management




HR
HOW TO
Keeping Up with Change
Many of the changes in today's Know Your Business. To support organization's performance,
business environment have a your organization's strategy, you listen for the HR implications.
direct impact on human have to know the company's line Does the organization have the
resource management. of work. Read industry and right amounts and kinds of
Changes in the population, in general business publications, knowledge, skills, and
technology, in employees' with an eye on news about motivation to carry out its
expectations, and other what's happening in your goals? Can some of the new
aspects of the business company's industry. You can ideas in your field help your
environment place heavy customize Web portals and news organization?
demands on modern HR websites to deliver headlines
professionals--and anyone else related to your industry. Keep Your Résumé Up-to-Date.
involved in management. The If new job or career
career advantage goes to Follow Trends. Government opportunities become available
those who keep an eye on agencies publish news releases with your current employer (or
what's happening in the and data related to their area of another organization), you will
business environment. Here are responsibility. Pay regular visits be ready to take advantage of
some ways to keep up with to relevant agency websites, them.
change: such as those for the Bureau of
Labor Statistics (www.bls.gov), Take Time Out to Relax.
Know Your Specialty. Join and the Equal Employment Change creates long work
participate in trade and Opportunity Commission hours and stress. Work can
professional groups. In human (www.eeoc.gov), and the become all-consuming. If you
resource management, the Occupational Safety and Health are stressed out, you are not a
largest group is the Society for Administration (www.osha.gov) valuable employee or a happy
Human Resource Management. to find the latest information. person to be around. Make
Attendance at meetings and sure you take time for leisure
visits to the SHRM home page Listen at Work. When activities you enjoy. Dance,
will help you stay abreast of employees and management are read, exercise--have fun!
the latest ideas in the field. talking about their work and the




a high-performance work system. HR professionals who keep up with change are well
positioned to help create high-performance work systems. The nearby "HR How To"
box suggests ways HR professionals can make a commitment to adapt to change in
order to keep up with a fast-changing work environment.


Knowledge Workers
The growth in e-commerce, plus the shift from a manufacturing to a service and in-
formation economy, has changed the nature of employees that are most in demand.
Figure 2.4 shows the number of job openings forecast by the Bureau of Labor Statis-
tics for a variety of job classes. The numbers include new positions created by exist-
ing and start-up organizations, as well as openings that result from employees leaving
jobs for retirement, disability, or other reasons.
37
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38 PART 1 The Human Resource Environment

FIGURE 2.4
Types of Job Openings Agriculture, forestry,
Forecast by the Bureau fishing, and related Growth
of Labor Statistics
Technicians and related Replacement Needs
support

Precision production,
craft, and repair

Executive, administrative,
and managerial

Operators, fabricators,
and laborers


Marketing and sales


Administrative support,
including clerical


Professional specialty


Service


0 2 4 6 8 10 12
Millions
SOURCE: "Tomorrow's Jobs" in the 2000­01 Occupational Outlook Handbook, chart 11. From website
http://stats.bls.gov/oco/oco2003.htm.




In terms of numbers, the greatest job growth will be in service occupations. The
number of service jobs has important implications for human resource management.
Research shows that if employees have a favorable view of HRM practices--say, their
career opportunities, training, pay, and feedback on performance--they are more
likely to provide good service to customers. Therefore, quality HRM for service em-
ployees can translate into customer satisfaction. The second-largest category of new
jobs is professional specialties. Most of the new jobs in this category will be for teach-
ers, librarians, and counselors; computer, mathematical, and operations research po-
sitions; and health assessment and treatment occupations.
According to the Bureau of Labor Statistics, the fastest growth rate for jobs over
the next few years will include computer-related positions such as computer engi-
neers, computer support specialists, system analysts, and computer database adminis-
trators.19 The largest number of job openings will be in occupations requiring a bach-
elor's degree and on-the-job training. Most of the opportunities for unskilled workers
will be in retailing.
What most of these high-growth jobs have in common is specialized knowledge.
Noe-Hollenbeck-Gerhert-Wright: I. The Human Resource 2. Trends in Human © The McGraw-Hill
Fundamentals of Human Environment Resource Management Companies, 2003
Resource Management




CHAPTER 2 Trends in Human Resource Management 39

Knowledge workers are
employees whose value
to their employers stems
primarily from what they
know. Engineers such as
the ones pictured here
have in-depth knowledge
of their field and are
hard to replace because
of their special
knowledge.




To meet their human capital needs, companies are increasingly trying to attract, de-
velop, and retain knowledge workers. Knowledge workers are employees whose main knowledge
contribution to the organization is specialized knowledge, such as knowledge of cus- workers
tomers, a process, or a profession. Knowledge workers are especially needed for jobs in Employees whose
health services, business services, social services, engineering, and management. main contribution to
Knowledge workers are in a position of power, because they own the knowledge the organization is
specialized
that the company needs in order to produce its products and services, and they must
knowledge, such as
share their knowledge and collaborate with others in order for their employer to suc- knowledge of
ceed. An employer cannot simply order these employees to perform tasks. Managers customers, a
depend on the employees' willingness to share information. Furthermore, skilled process, or a
knowledge workers have many job opportunities, even in a slow economy. If they profession.
choose, they can leave a company and take their knowledge to another employer. Re-
placing them may be difficult and time-consuming.
As more organizations become knowledge-based, they must promote and capture
learning at the level of employees, teams, and the overall organization. Buckman Lab-
oratories, for example, is known for its knowledge management practices.20 Buckman
Laboratories develops and markets specialty chemicals. Buckman's CEO, Robert
Buckman, has developed an organizational culture, technology, and work processes
that encourage the sharing of knowledge. Employees have laptop computers so they
can share information anywhere and anytime via the Internet. The company set up
rewards for innovation and for creating and exchanging knowledge. The rewards are
based on performance measures related to the percentage of sales of new products.
Buckman also changed the focus of the company's information systems department,
Noe-Hollenbeck-Gerhert-Wright: I. The Human Resource 2. Trends in Human © The McGraw-Hill
Fundamentals of Human Environment Resource Management Companies, 2003
Resource Management




40 PART 1 The Human Resource Environment

renaming it the "knowledge transfer department" to better match the service it is sup-
posed to provide.
The reliance on knowledge workers also affects organizations' decisions about the
kinds of people they are recruiting and selecting.21 They are shifting away from fo-
cusing on specific skills, such as how to operate a particular kind of machinery, and
toward a greater emphasis on general cognitive skills (thinking and problem solving)
and interpersonal skills. Employers are more interested in evidence that job candi-
dates will excel at working in teams or interacting with customers. These skills also
support an employee's ability to gather and share knowledge, helping the organization
to innovate and meet customer needs. To the extent that technical skills are impor-
tant, employers often are most interested in the ability to use information technology,
including the Internet and statistical software.


LO3 Employee Empowerment
To completely benefit from employees' knowledge, organizations need a management
employee style that focuses on developing and empowering employees. Employee empower-
empowerment ment means giving employees responsibility and authority to make decisions regard-
Giving employees ing all aspects of product development or customer service.22 Employees are then held
responsibility and accountable for products and services. In return, they share the resulting losses and
authority to make rewards.
decisions regarding HRM practices such as performance management, training, work design, and com-
all aspects of
pensation are important for ensuring the success of employee empowerment. Jobs
product
development or
must be designed to give employees the necessary latitude for making a variety of de-
customer service. cisions. Employees must be properly trained to exert their wider authority and use in-
formation resources such as the Internet, as well as tools for communicating informa-
tion. Employees also need feedback to help them evaluate their success. Pay and other
rewards should reflect employees' authority and be related to successful handling of
their responsibility. In addition, for empowerment to succeed, managers must be
trained to link employees to resources within and outside the organization, such as
cust