The essence of this paper is to explore the changing role and goals of the human resource function in the modern business environment owing to the influential trend of globalisation. In a nutshell, the concept of globalisation refers to the progressive triumph over geographical barriers in the exchange of goods and ideas. The phenomenon of technology warrants special mention because it has contributed significantly in facilitating the interdependence and interconnection that characterise globalisation. The integration that accompanies globalisation is linked to advantages such as access to a greater pool of human resources and at the same time by challenges such as the formation of a generation of workers that may not be responsive to the conventional human resource management techniques. Given the dynamic nature of the contemporary business environment, this paper argues for a reinvention of the human resource function. The paper proposes the shift to the strategic management of the human resource in the organisation highlighted by efficiency in competencies such as response to technological changes, the high demands of the global market, the shift to the knowledge economy as well as changing demographics as a result of globalisation. The key strategies recommended in the paper include the focus on employee engagement, employee retention as the integration of corporate social responsibility into the strategy of human resource management.
- The Impact of Globalisation on Human Capital Management
1a Dynamic global markets
The forces associated with globalisation such as world travel, communication technology, global media and the breakdown of international trade barriers have transformed the structure of the business environment. The result is an extensively demanding market that creates high competition and thus the need for innovation and creativity in maintaining a competitive edge (Maranto-Vargas and Rangel, 2007, p. 96). Globalisation is a challenge to market dominance by individual players because it introduces new players on a consistent basis. The result is an increase in the variety of alternatives available to the consumer (Wiersema, and Bowen, 2008, p. 125). Another important factor introduced by globalisation is the fact that due to a greater awareness of the risks that accompany economic interdependence such as economic recession, consumers are more cautious and less conspicuous in their spending decisions.
The reason for the dynamism in the behaviour of the consumer is the product of exposure to external perceptions and attitudes through communication and interaction platforms introduced by globalisation. Additionally, the changing composition of the market as a result of immigration also influences the tastes of the market. In a nutshell, globalisation has created a profoundly multidimensional consumer. This line of thought points to a consumer who is in a sense more empowered and informed in terms of available product options. (De Mooij, 2010) shows an increased dynamism in the needs of the global consumer. For example, the use of marketing may not be adequate to convince a consumer to make a purchase. A consumer interested in a product or service will rely on consumer reviews and forums to inform their decision. The challenge for firms operating in the global environment is compounded by the fact that the breakdown in barriers to trade as mentioned above results in greater competition for the market share making it critical for organisations to place emphasis on maintained product improvement. Research (Jiménez-Jiménez and Sanz-Valle, 2011, p. 415) links innovation and creativity to greater productivity and customer satisfaction.
1b Changing demographics as a result of globalisation complicate human resource management.
The term employee demography is a reference to the component attributes of a particular social entity. These components include factors such as age, occupation, marital status, gender and ethnicity (Truss, Mankin and Kelliher, 2012, p. 28). It is important to acknowledge the fact that while diversity has always been a reality in the workforce, the level of diversity in workforce demographics has expanded in the past thirty years. For example, the number of women in the labour force has increased sharply. In the same manner, the proportion of ethnic groups in the workplace has also increased. The result of the increased diversity in the workforce is a correspondingly high level of discrepancy in views and attitudes. The differences introduced by demographic diversity are among leading reasons for the need to address labour demographics.
On a similar note, demographic diversity such as that presented by globalisation has contributed to the development and implementation of policies and practices such as the Equal Employment Opportunity Act in the US meant to promote equitable treatment of the workforce. These policies are of essence to the present debate because they influence the perception of the labour market on the employer or firm in question. These policies also alter the workplace dynamics especially because they affect various employee groups differently (Burke and Ng, 2006, p. 92). More specifically, employees may have differing perceptions with regards to the success of the organisation in providing a safe working environment, equal opportunity as well as fair recruitment and selection procedures. It should be noted that attitudes of the human capital towards the response of the organisation to the elements mentioned earlier (safe working environment, equal opportunity and fair recruitment and selection procedures) are a direct product of the strategic human resource approach adopted by an organisation (Guillaume et al. , 2014, 790). A focus on differences arising from demographic diversity is critical to the success of any organisation operating in the modern business environment.
1c Complex employment relations
Employment relations can be described as the mechanisms that secure the interests of the various stakeholders to the employment contract. The range of mechanisms that encompass employment relations includes collective bargaining and unionisation as avenues for conflict resolution. The conventional view is one that pits human resource management and employment relations due to the conflicting nature of their objectives (Truss, Mankin and Kelliher, 2012, p. 201-215). The business environment created by globalisation challenges the conventional conflict between employment relations and the HRM function. This is because the success of the organisation is subject to the capacity for cooperation, and trust in employees, their agents and the management. The thinking behind this argument is based on the fact that the success of the organisation in a highly competitive business environment translates into greater benefits for the employees.
The rationale for the expansion of the HRM and employment relations roles is guided by the need to adopt a people-centred approach to the management of employees that eliminates the need for an adversarial relationship (Truss, Mankin and Kelliher, 2012, p. 201-215). Additionally, the global business environment introduces the need to make considerations for new challenges such as job design, working schedules and organisation as well as workplace diversity. It should be mentioned that these are elements that have not been previously addressed by employment relation processes.
2 The Impact of Technology on Human Resource Management
2a Change in core competencies
The introduction of technology into business process creates the need for specific professional skills and competencies. Based on research (Truss, Mankin and Kelliher, 2012, p. 32; Andreeva & Kianto, 2012) the new roles created by technology challenge the conventional methods used in human resource management.
2b The adoption of ICTs into the human resource process
The development of technology has made it possible for human resource managers to easily access the human capital pool through avenues such as the World Wide Web (Kaur, Sidhu, Sharma and Narang, 2014). The role of digital social media can also be introduced at this point given that it is a popular trend in human resource management at the present. The applications of digital social media in the HR context include communication as a well as in optimising the value of employees to the organisation (Qualman, 2010). It should be noted that competency in the use of digital social media denotes a willingness to pursue alternative methods of doing business.
2c Ability for organisations to outsource services and as such certain jobs in an organisation
The integration of technology into business makes it possible for organisations to outsource non-essential tasks international labour pools. For example, organisations in the US have shifted business to the Asian countries where the cost of labour is comparatively lower. This is especially relevant for companies engaged in international trade where it is possible to engage employees familiar with specific cultural trends (Görg and Hanley, 2011).
2d Emphasis on professional development
The essence of professional development is to communicate the importance of the employee while reaping from the added skills developed by the employee (Hitt, Ireland and Hoskisson, 2012). The objective of the push towards professional development is to create a platform for employees on which to develop and grow their careers. Professional development is in the form of opportunities for education and training (Botha, Kourie and Snyman, 2014). From a practical perspective professional development has value for an organisation operating in a global context where it is used in training employees on the language of the host country. The outcome is greater motivation for the employee which increases productivity.
3 Strategies that can be applied to add Value to the Strategic Apex of Organisations
3a Best-fit approach
The best-fit approach places focus on the value of securing congruence between the human resource strategies adopted and the circumstances specific to the organisation such as the processes of operation, culture and the environment (Truss, Mankin and Kelliher, 2012). This means making considerations for both the organisation and its stakeholders. Finally, the best-fit approach challenges the idea of a universal approach to human resource strategy. The best fit strategy highlights the essence of a strategy approach suited to the specific context and circumstances of the organisation. Following the best-fit approach, elements such as diversity and technology that are a part of the firm’s external environment play a significant role in shaping the HR response to the management of people. In a nutshell, the best-fit approach secures a competitive edge for the organisation by ensuring that human capital absorbed into the organisation is competent in addressing the unique challenges facing the organisation. In the same manner, the policies and procedures adopted by the organisation are directed towards the attainment of predefined strategic goals. However, it should be highlighted that the best fit framework can be criticised for its simplistic view of an organisation’s environment (Wright, 2008, p. 12).
3b Best-practice Approach
The best practice approach identifies what are described as ideal human capital practices that result in improved productivity born from positive developments in the engagement of the employee with the outcome of reduced turnover and absenteeism accompanied by efficiency and productivity (Truss, Mankin and Kelliher, 2012, 90). The argument follows that adopting these best practices will result in gains for the organisation. Proponents of this universal approach put it forward that the implementation of best practices supersedes differences in the circumstances, location, and market of the organisation. It should be admitted that such as assumption is to some extent a stretch. First, it is implausible to expect that a single competitive strategy can be applied to an entire industry. The reason for this is that such a strategy may not align well with practices and resources applied in a different scenario (Budhwar, and Debrah, 2013). Additionally, it is important to state that there is little consensus on the specific high-performance practices that can be applied in a universal sense (Wright, 2008, p. 12). For this reason, the application of this framework in an organisational sense may be challenging.
3c Resource-based approach
The underlying argument, in this case, is that the internal resources of the organisation make the greatest contribution to the success of the organisation as opposed to the external resources. The thinking behind this argument is one that views internal resources as assigning a unique identity to the organisation (Truss, Mankin and Kelliher, 2012). More specifically, the resource-based approach holds it that the resources within the organisation are the best source of competitive advantage because they cannot be easily imitated by the competition (Truss, Mankin and Kelliher, 2012, p. 107). The argument follows that conventional resources such as technology, equipment, and geography can be easily replicated. Conversely, resources such as human capital and organisational structure make it possible for the organisation are characterised by lesser imitability and can, therefore, be used to secure a competitive advantage (Kunc and Morecroft, 2010, p. 1164). Most importantly, these internal resources are within the scope of human resource management. As such, the human resource function can be applied strategically in manipulating these resources to generate a competitive advantage.
The frameworks available in response to the challenges presented by globalisation to human resource management are informed by the view that policies and procedures implemented in the organisation should be designed to reinforce the capacity of human capital in the organisation to meet the objectives of the organisation (April Chang, and Chun Huang, 2005. The generation of a competitive advantage through the human resource function can be achieved by adopting a person oriented approach to the management of human capital in generating job satisfaction.
Employee engagement strategies
The concept of employee engagement refers to the level of passion and commitment that the employee possesses for the organisation and their role. Engagement can be achieved through techniques such as authentic leadership, open communication, and feedback mechanisms, personalising human resource management, opportunities for training and rewarding positive outcomes (Truss, Mankin and Kelliher, 2012, p. 229). It is also important to reiterate that to secure the interests of the organisation, employee engagement should be linked to high performance (Markos and Sridevi, 2010). This should be accompanied by strategic alignment and leadership competence in employee engagement.
Employee retention strategies
This is a reference to the efforts to ensure that high-value employees are retained within the organisation. Employee retention is critical especially with the reality of globalisation and technology and the competition for resources that accompanies these elements (Bedarkar and Pandita, 2014). The strategic role of the HRM function with regards to the retention of employees is to determine how the organisation will support its human capital needs both in the present and in the future. Following the view established in this paper that globalisation alters the dynamics of the employee, it is important to outline the need for strategies beyond financial benefit packages. It is also critical to ensure that the vision of the organisation is communicated precisely to the employee to facilitate a connection between the needs of the organisation and those of the employee (Allen, Bryant and Vardaman, 2010, p. 50). Most importantly, it is essential to offer employees the opportunity for career growth. This can be achieved through employee development as well as internal promotions. Finally, the organisation should seek to provide a precise definition of performance expectations mainly because it helps the employee assess their contribution to the goals of the organisation.
4 Corporate Social Responsibility
The present business environment is characterised by an emphasis on ethical awareness as one of the areas that play a primary role in shaping the decisions of the market. The issue of corporate social responsibility relates to the extent to which an individual organisation goes beyond its fundamental obligation to its stockholders (Voegtlin, Patzer and Scherer, 2012). This argument illustrates the conflict the shareholder and stakeholder theories of corporate governance. Any organisation that hopes to succeed in the global market has to ensure that it is seen to pay attention to the needs of the society beyond the focus on the bottom-line (Segon, 2010). Other frameworks that can inform the implementation of ethics in the organisation include the following:
Ethics of duty (Deontological ethics)
Based on deontological ethics as popularised by Emmanuel Kant, the ends in a particular course of action take precedence over the means. This approach places substantial value on the inherent value of people (Maon, Lindgreen and Swaen, 2010). In application, the organisation would be obligated to treat its employees equitably as a way of respecting the human worth.
The Ethics of Fairness
In this case, the essence of ethical practice is to attain fairness and equality. The ethics of fairness can be described as a reference to a form of social justice approach where the costs, benefits, and responsibilities are shared out equitably (Rupp, Williams and Aguilera, 2010). This means that where two employees the same level of skills and are assigned to a similar task, then the benefits they receive from such an undertaking would be expected to be the same. Actions that undermine the establishment of a just society would, therefore, be deemed unjust.
The Ethics of Utility
The concept of utility ethics is a reference to ethical decision-making informed by an emphasis on gains to the greatest number of players (Hursthouse, 2013, p. 645). For example, the decision to restrict unionisation of employees may be supported by organisational shareholders given that such a move would compromise their financial interests. However, utility ethics is criticised because it disregards the interests of the minority and may, therefore, generate feelings of dissatisfaction.
4a CSR in SHRM
Going forward, it should be acknowledged that the human resource management function can play a major role in the integration of corporate responsibility and ethics into the day to day operations of the organisation (Truss, Mankin and Kelliher, 2012, p. 263). According to research (Kaur, Sidhu, Sharma and Narang, 2014) , the various roles of the HRM function can be exploited to generate strategic outcomes such as the development of an ethically sensitive organisational culture. Most importantly, the HRM function is strategically placed in promoting outcomes that are beneficial to all stakeholders (Maç and Calis, 2012).
There are a number of conclusions that can be drawn after having analysed the impact of globalisation on the business environment. First, the facts presented in the paper capture the extent to which globalisation influences the behaviour of the consumer making it harder to assess their frequently changing needs. Having established these facts, the need for an innovative workforce becomes pronounced. The contemporary human resource function, therefore, has to implement mechanisms to ensure the absorption as well as the retention of a highly creative workforce.
The recurring theme in this paper points to globalisation as a phenomenon that magnifies the demographic diversity in the workforce pool. For example, increased immigration makes it possible for the organization to access a high value human resource pool at a comparatively lower cost. However, this is accompanied by the need to develop competencies in the management of a highly diverse workforce. As such, organizations hoping to succeed in this highly diverse environment have to become equally responsive to the various unique needs of the employee. On a similar note, it is important to reiterate the essence of firms operating in today’s dynamic environment to expand the scope of the human resource function to accommodate elements introduced by globalisation. The reality of globalisation necessitates the establishment of a model where employment relations and human resource management are harmonised for the good of the organisation and employees.
Another important theme in this paper is that of the role of technology in the HR function. Contemporary employees who demand greater autonomy as well as progressive methods of compensation fill the new roles. Technology can be applied strategically in increasing the chances of acquiring a high-value employee. Additionally, the increased possibility of remote employment made possible by technology fits well with the idea of globalisation where the organisation can efficiently target low cost but high-value human resources. These facts make it critical for the human resource function to come up with fresh strategies in the management of this new generation of employees.
Having established the need for a novel approach to HRM management a human oriented approach to the management of people in the organization is critical as the most strategic response to the human resource management problems introduced by globalisation. The basis for this claim is that the views of the workforce regarding the organisation’s management of people determine the level of satisfaction and therefore motivation on the job. The specific strategies that accompany this approach include employee engagement and retention techniques. It is also critical to incorporate moral considerations into the management of people.
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