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Friday, April 13, 2012

Globalization-driven Changes at Workplaces & the New Role of HRM

May the inmost aspirations of you all
Be perfectly harmonious;
May your hearts beat in unison;
May absolute concord reign in your minds,
May you all be welded
Into strong fellowship and unity.

– Rig Veda 10.191.4.

It’s not the flow of goods across the sovereign boundaries that define globalized economy, for it has existed for centuries, but it is the migration of capital, people and information across the borders that defines ‘globalization’ which is posing newer challenges. Today, time and space do not matter in striking a deal from anywhere in the world, with anyone located at any place in the world.

Consolidation of financial services, along with the convergence in computation and communication technologies and the ease afforded by many countries for FDI, has reduced the number of financial intermediaries worldwide. International mergers and acquisitions have almost become a common phenomenon. Tangible assets are no longer as important as the intangibles. Knowledge-centered assets, such as technologies, brands, workforce skills, strategic relationships, etc., have become mission-critical. In this new phase of ‘business doing’, information is criss-crossing the globe much faster than even capital or people.

As the world is getting increasingly connected, competition is becoming more ferocious. Today, the customer enjoys more choices. This new-found realization demands a better understanding of customers – whether they are large corporates using electronic-procurement systems to obtain raw material from the world-pool of suppliers or individual consumers buying a custom-designed car or a computer. The net result of these tectonic shifts in ‘business-doing’ is the all round change in the employee-employer relations across the businesses.

1.     Globalization-driven Changes at Workplaces

In this era of economic integration, new workplace practices such as team-based work, cross-functional integration, supplier partnerships, and collaborations with competitors are fast becoming the hallmarks of world-class companies. The evolving style of functioning indeed differs from that of even the recent past in many ways. Let us take a peep at them.

1.1  Flexibility of Labor

This could be observed under two heads: one, qualitative flexibility that affords multitasking which is achieved through training of the most talented employees for ‘newer-jobs’ and two, quantitative flexibility that is achieved by engaging temporary employees, mostly for performing relatively simple tasks that can be done with little training by even unskilled workers, or to retain the ‘core’ of the business which differentiates a firm from its competitors and outsource the ancillary jobs. This kind of arrangement is, of course, causing work overload to the regular employees. Nevertheless, it has almost become the norm.

1.2  Lean and Mean Organizations

In order to fight out the global competition, companies are resorting to reduction of hierarchical levels besides total number of employees. With the result, more and more responsibility is being pushed down to the floor level. This has resulted in employees working in autonomous task-teams. Workforce at every level is made more accountable today – both for decisions and performance.

The working paper of Raghuram G Rajan of Chicago’s Graduate School of Business and Julie Wulf of Wharton School for Business, commends that “the perception of flattening is justified. The managerial levels between the CEO and the lowest level managers with profit-center responsibility have decreased by more than 25%. At the same time, the average number of division heads reporting directly to the CEO has tripled.” According to them, “Technology has put information at everyone’s finger tips,” enabling lower-level profit-center managers to handle decisions more effectively.

1.3  Outsourcing

To stay focused on the core business, companies are hiving-off the routine business-processing activities into independent businesses. Thus ‘outsourcing’ has become the order of the global market. Business process outsourcing is reported to improve performance and profitability of companies, besides helping to achieve operational excellence; leverage proven methods and innovative technologies; beat competitors in the market; respond quickly to market demands; tap experienced pool of global resources to achieve cost savings without compromising superior service; and ultimately, realign core talent to sustain market-differentiation strategies. Outsourcing has simply moved from being a niche technology management tool to a mainstream, strategic weapon for many global businesses.

1.4  Fading-out of Fixed Business Hours and Places

With the setting-up of plants/business processing units in different countries to maximize their production at the least cost, and gain market reach, the multinationals have resorted to multiple shifts. As a result, the number of people working in each shift has also gone up. Similarly, the trading hours have undergone a sea change. With the result, the stress on full-time employees has gone up in terms of unsocial hours of work, too much travel, frequent changes in tasks, ambiguous and unclear goals and ultimately adverse impact on the private, social and public lives of individual employees.

1.5  Emergence of ‘Knowledge’ as a Key Factor of Production

Pope John Paul II once said: “Whereas at one time the decisive factor of production was the land, and later capital, today the decisive factor is increasingly man himself, that is, his knowledge”. Today, knowledge-based resources have acquired highest criticality in a firm’s competitiveness vis-à-vis other resources such as capital or natural resources. Capabilities and competencies have today become the most important strategic assets (Prahalad and Hamel, 1990[1]; Stalk, Evans et al., 1992[2]). Again, within this, creation and sharing of knowledge is identified as the major contributor towards organizational advantage (Nahapiet and Ghoshal, 1998[3]).

The growing importance of knowledge is “challenging the hitherto widely held beliefs about how organizations should be structured and managed” and, in the process, a “new model of people management is emerging in the knowledge-intensive firms”. According to researchers, this management consists of three critical elements: one, developing individual knowledge; two, sharing knowledge across the organization and three, sharing and developing knowledge across client’s partners and suppliers (Swart, Kinnieet al., 2001[4]).

Many researchers are today arguing that the so called fact of some firms’ worth being much more than their book value, is more due to the intellectual capital (that is intangible) owned by them. As the knowledge resides primarily in the minds of employees, it is perceived as tacit and thus found difficult to codify and transfer. That is where organizations are moving towards a culture where ‘organizational learning’ has become a way of existence, so that they can stay competitive dynamically. With the increased stress on ‘knowledge’ for market competence, the power is shifting towards ‘employees’, while, according to a survey of 2003, around 34% of employees are neither committed to nor planning to stay in a given position for long.

1.6  IQ Plus EQ

Businesses are shaking off their blinkered mindsets and are increasingly becoming conscious that in today’s competitive market, what matters most is ‘enterprise’ and ‘risk taking capabilities’. Many business leaders, particularly those from knowledge industries, are advocating that Intelligence Quotient alone cannot deliver the goods: Emotional Quotient too is essential. It is the ‘attitude’ that ultimately determines the success of an individual in any organization. More knowledge-driven students, particularly coming from high ranking institutions, are often found not being able to tackle businesses competently. The employers are today harboring a feeling that it is the students with exposure to tougher living standards who are found faring better at decision-making and risk taking in a globalized market than students from a financially well-off and comfortable background. The need for employees with enabling emotional intelligence has thus become the demand of the current market.

1.7  Gen X

The Generation X is looking for a work-life balance. For them, the moral and ethical behavior of their executives is very important. They, unlike their parents, are no longer interested in going anywhere and doing anything for money alone. Secondly, they want to spend equal time with family and work. Indeed, they are known to integrate their professional and personal life, for they seek a balance in life. It is often seen that this cadre is taking their family along, with them in their business trips. Thirdly, they are looking for places to work where they can grow and follow people of high integrity.

1.8  Shortage of Human Talent

Amidst these changes, human talent is reported to be falling short of demand. Although capital is freely available for investment, the matching technical and managerial talent to manage such investments is found wanting. No wonder, this phenomenon has driven many multinationals such as IBM, Microsoft, Intel, etc., to not only move out themselves to wherever such talent is available, but also commit investment for primary and secondary education all over the world to sustain the quality labor supply. As per HBR survey, education has today become the number one social priority everywhere. Depending on the complexity of the market, in-house education has become the critical input for sustaining growth.

1.9  Emergence of Collaboration as the Key Factor of Production

In the knowledge-based economy, it has become imperative for a manager to share information and talent and work across business units and divisions to enable the organization to grow with a portfolio of products and services. The days of the ‘lone-ranger-manager’ are over. It does not mean that individual performance is not important, but what is essential is to collaborate with and get help from lots of other people who are in the same line of business. This puts ‘team work’ among managers and business units at the center place. The leadership has, therefore, to build diverse and collaborative relationships among the workforce. Ultimately, it is the mix of people and knowledge that is emerging as the powerful tool for business success.

2.     HRM to Cultivate New Roles

Due to the changes in carrying out a business and the paradigm shift in the functional demands made on employees today for delivering the intended ‘objectives’, HR professionals are forced to cultivate new roles.

2.1  Commitment Reflector

As employees tend to be loyal so long as their knowledge is appreciated and required by the employer, HR professionals must act as generators and reflectors of organizational commitment. This can be accomplished when knowledge workers are motivated enough to design their work and priorities by themselves rather than being instructed from top. The organization must present them with a set of relevant values to live for (John Storey) [5].

2.2  Change-seller

As change is becoming the constant phenomenon, the HR professional should assume the role of selling the ‘change’ to workforce. They should sell the concept of “embracing and accepting change” as an opportunity to better their own status.

2.3  Cross-seller and Image Builder

In a cut-throat competition, it becomes essential for each functional group to hard-sell the company’s image so that it can forge ahead. In such a context, HR professionals must play a lead role at seminars, conferences, competitions, etc., to further the corporate goals.

2.4  Strategic Business Partner

It is the dire need of the hour for every functional group to align itself with the corporate goals. To better realize this objective, HR professionals should reciprocate by acquiring substantial and focused knowledge about the organization’s core business, its competitors, etc.

2.5  Relationship Manager

With customers becoming very choosy, it is incumbent upon every employee in the organization to stay focused on satisfying and retaining key customers and HR professionals is no exception to this. They must also ensure that the new workforce that is expected to work for long hours is welded together and with the organization via good relationship management.

Studies have shown that it is the actions of front line managers, which are crucial to maintain excellent relations, for it is their way of implementing the policies that ultimately matters in maintaining healthy employee-employer relations.

2.6  Human Capital Steward

Human capital is understood to be the collective knowledge, skills and abilities of an organization’s employees. They usually consist of four types of knowledge, of course, with varying degrees: generic, industry, occupational and firm-specific. It is for the staffing policy of the organization to exploit these different profiles of the employees optimally. And that is where the role of ‘steward’ emerges as a new job. Human capital, unlike raw materials or equipment, cannot simply be bought and used, for it must be contributed by the employees voluntarily. So, the human capital steward has to create an atmosphere in which employees can contribute their skills, ideas and energy. Most importantly, this must be achieved by “facilitating employees without controlling them”.

2.7  Knowledge Facilitator

HR professionals should help the organization acquire and disseminate knowledge for creating competitive advantage for the organization. It has to decide what knowledge needs to be developed, how to arrange for its sharing and its maintenance, besides constantly working for its development. Besides the traditional methods such as senior management seminars, joint workshops, secondments and collaborative working on special problem-solving task forces, it must also explore learning through ‘constructive controversy’. It should ensure that teaching becomes a part of everyone’s job in the organization.

2.8  Creativity and Innovativeness

The need for nurturing and sustaining continuous innovation hardly needs any stress in an environment where customers are looking for newer benefits. Hence, HR professionals must create and diffuse an atmosphere that breeds innovation. They must own responsibility to drive away the ‘fear of failure’ from the workplace besides creating strategies for adequately rewarding innovation. A study that compared the organizations which were more innovative with those of the less innovative companies revealed that senior managers’ orientations to and perception of organizations were the critical differentiators (Storey & Salaman, 2005[6]).

2.9  Agility Nurturer

In the dynamical network-centric environments, organizations need to be quite agile in their reaction to the swift changes occurring all around the organization. In such a scenario, an ‘agile’ HR function that constantly re-energizes its human resources in response to changing market opportunities alone can contribute to the bottom line by not letting opportunities go for want of resources.

Indeed, HR function should not wait for the events to occur; instead, it should proactively innovate and tailor the processes and people to align with the changing situations. In order to achieve this objective, it should integrate employees to share knowledge and skills, so as to equip the system to face any change.

Ironically, it is often found that, in many organizations, the existing HR systems are themselves major impediments to create agile workforces, for HR systems are often found to be designed to reduce variability and to standardize behavior, but not to promote flexibility and adaptive/innovative behavior.

It is to overcome these obstacles that HR has to redesign its “hiring criteria and processes”, so that agile attributes get reflected in the fresh selection itself. Job descriptions may have to be eliminated and compensation systems redesigned to pay relatively more for enterprise-wide results and less for individual outcomes. It should constantly upgrade its ‘readiness’ to face unpredictable changes by honing the capacity of its employees.

The rewards are immense for those HR managers who build agile workforces and work environments. Such acts directly impact the organization’s bottom line. That is the change that HR is undergoing worldwide today.

- GRK Murty

[1] Prahalad, C K and G Hamel (1990), “The Core Competence of the Corporation”, Harvard Business Review, 68: 79-88.
[2] Stalk, G, Evans et al. (1992), “Competing on Capabilities: The New Rules of Corporate Strategy,” Harvard Business Review, March-April: 57-69.
[3] Nahapiet, J and Ghoshal (1998), “Social Capital, Intellectual Capital and the Organizational Advantage,” Academy of Management Review, 23(2): 242-266.
[4] Swart, J; N Kinnie, et al. (2001), People and Performance in Knowledge-intensive Firms: A Comparison of Six Research & Technology Organizations, London, CIPD.
[5] John Storey, Human Resource Policies for Knowledge Work, EBK Working Paper 2005/05.
[6] Storey, J and G Salaman (2005), Managers of Innovation: Insights into Making Innovation Happen, Oxford, Blackwell.


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