The new millennium has brought rapid changes in the environment, posing a number of challenges in the practice of human resource management. Chiavenato (2001) enumerated several of these challenges in his article. The arrival of the information age, globalization of markets, “adhocratization” of organizational structure (i. e., changing the organization structure into integrated network of teams characterized by autonomy and flexibility), democratic leadership that instigates employee collaboration and commitment, multitasking of responsibilities, doing part-time over full-time work, and the shift to intellectual capital as the most important organizational resource are some of the current trends that have caused the practice of human resource management to evolve (Chiavenato, 2001).
To combat these challenges, Chiavenato (2001) describes several fundamental advances that have changed the practice of human resource management (HRM), one of which includes incorporating a new philosophy of action which emphasizes on “managing people” not as a company’s assets, but as human beings. A networked HRM is also starting to emerge and replace the functional organization by conducting internal consultation with managers in performing human resource-related tasks. Organizations are also beginning to incorporate HRM in strategic planning and development of objectives by highlighting the need for employee education and commitment.
HRM of organizations are undergoing a process of restructuring to downsize it to its core activities. This may involve flattening the organizational structure and decentralizing of decision making. HRM is also influences the organization to nurture a participative and democratic organizational culture characterized by direct and open communication and teamwork. Company policies are also being changed to make it more flexible to serve the needs of the employees and adjust to their individual differences. Offshoring, brought about by globalization, is one of the major trends which receive much attention from human resource managers.
The term “generally refers to an organization’s purchase of goods or services from abroad that were previously produced domestically” (GAO, 2006). Offshoring was made possible by specific features of globalization such as the opening of China to the global market, the drastic fall of telecommunication costs, and the emergence of low-wage educated workers in Asia and Eastern Europe. Huge corporations such as Nike and Mattel started to offshore their manufacturing operations decades ago which influenced other companies to follow suit. This is not surprising as offshoring offers global optimization of organizational resources.
The cheaper cost of labor enabled organizations to save up to more than 50 percent of the services offshored (Tyagi et al. , 2003). Consequently, offshoring allows organizations to achieve profit maximization (Pagach et al. , 2004). To cite an example, large companies such as American Express and AOL Time-Warner migrated their customer service operations in India and the Philippines, causing them to save millions of dollars annually (Tyagi et al. , 2003). While offshoring enables companies to cut down costs and maximize their profits, it puts their reputation at risk.
This recent trend has caught the attention of Americans who perceive them negatively. It has caused employees to generate fear of losing their jobs. It also gave rise to protests and demonstrations all over the U. S. which attack the image of companies that offshore all or parts of their operations. These companies may become targets of negative advertisements, boycotts, and other forms of protest when the general opinion shifts to severe opposition to offshoring. If this becomes a reality, other organizations may discontinue their business relationship with companies that outsource their operations and/or jobs to foreign lands.
As a consequence, their reputations may be negatively affected and their strategic position may be threatened (Beasley et al. , 2004). In summary, the evolving environment has brought about trends that pose several challenges that the whole organization need to face, especially the human resource managers who are required to deal with them. Some of these challenges include the emergence of the information age, globalization of markets, and “adhocratization” of organizational structure. Fundamental advances in human resource management are being adopted by organizations to combat these challenges.
Examples of these include “managing people” not as a company’s assets, but as human beings, establishing a networked HRM that allows internal consultation with managers in performing human resource-related tasks, and nurturing a participative and democratic organizational culture characterized by direct and open communication and teamwork. Globalization brought about offshoring, a trend which has recently become the focus of human resource managers. Offshoring enables companies to globally optimize resources of organizations by reducing costs and maximizing their profit.
However, it may become a threat to the organization’s reputation. Some of the citizens are starting to perceive offshoring in a negative way as they nurture fear of losing their jobs. If the public opinion becomes extremely opposed to offshoring, it may become detrimental to the strategic position of companies that engage in outsourcing jobs and/ operations in low-wage countries.
Beasley, M. et al. (2004). Outsourcing? At your own risk. Strategic Finance, 86 (1), 23-29. Chiavenato, I. (2001). Advances and challenges in human resource management in the new millennium. Public Personnel Management, 30(1),17-25. GAO. (January 1, 2006). Offshoring of services: an overview of the issues. General Accounting Office Reports and Testimony. Retrieved November 26, 2007 from http://www. allbusiness. com/human-resources/workforce-management-hiring-consulting/862188-1. html Tyagi, S. et al. (2003). Leaping into offshore services: what directors must know. Directorship. Retrieved November 26, 2007 from http://www. inductis. com/who_we_are/articleandwhitepaper/Directorship_article_2. html
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