The Context of HRM

Why HR needs to be aware of its environment

 Understanding the elements
of effective debating

• Tips to being a successful debater:

• Have you identified the main elements to Aristotle’s Rhetorical Triangle?

Can you identify these elements in the following clip:
https://www.theguardian.com/australia-news/video/2016/may/13/bill-shorten-malcolm-turnbull-swap-bars-multinational-tax-election-debate-video
Qantas chief Alan Joyce cuts 5000 jobsFebruary 27, 2014
Jens Meyer, Matt O'Sullivan, Sydney Morning Herald
Qantas will axe 5000 jobs, ditch unprofitable routes and retire ageing gas-guzzling
planes, in the biggest shake up of its operations since it was floated.
Number of reasons to suggest that effective implementation likely to
become more important
• E.g. Richard D’Aveni “hyper-competition”
• markets becoming increasingly competitive and subject to
disruptive change
• SHORTER PRODUCT AND INDUSTRY LIFE CYCLES
• CONDITIONS UNDERMINE VALUE OF CURRENT RESOURCES
AND CAPABILITIES
• Successful firms likely to be those that can respond rapidly to
(short term) opportunities that appear
• I.E. THOSE THAT RAPIDLY DEVELOP AND MORE IMPORTANTLY
IMPLEMENT CHANGES IN STRATEGIC DIRECTION
• SOMETIMES CALLED “DYNAMIC CAPABILITIES”- THE ABILITY TO
RAPIDLY RESPOND TO CHANGE

SOURCE: D’AVENI, R (2010) HYPERCOMPETITION, SIMON AND SCHUSTER,

UK.
Example: The challenges for HR Managers in
the Australian banking sector

http://www.abc.net.au/news/2018-02-21/nab-robots-taking-
over-white-collar-jobs/9465524
Indices of Strategic HRM

Why HR needs to understand its environment:

• Structured governance and business case development

• Developing advanced workforce planning capabilities

• Having the right “HR” philosophy

• Reducing administrative processes

• Implement flexible HR design (standardization vs localisation). See Dowling, Festing and

Engle 2008

• Improve employee facing HR systems (Knowledge portals and engagement. See Paul
Gollan’s work 2010 ff.)

• Having effective metrics to measure impact of HR initiatives

• Developing internal skills (HRD)

• Improve Line Manager capabilities

• Outsource HR strategically (Based on Maturity of business)

However, are HR Managers ready to address these challenges effectively?

How can HRM develop strategic solutions?

http://www.jaygalbraith.com/index.php option=com_content&view=article&id=11&Itemid=123q

Kates, A., & Galbraith, J. R. (2010). Designing your organization: Using the STAR model to solve 5 critical
design challenges. John Wiley & Sons.
The benefits of Strategic HRM? Southwest
Airlines

One of America’s most successful airlines

Lower costs BUT increased revenue?
How?
• Business Strategy drives HRM strategy
• Competitive advantage in labour
• People to have “Fun”
• Culture of ‘family’ collaboration
• Valuing collectivism- institutional actors
• Reflected in reward systems
• ‘Alignment between the values of Southwest, what it stands
for, and the systems and practices it uses to implement its
strategy and values’
• For more information on the Southwest model see chapter 2:

O’Reilley, C & Pfeffer, J (2000), Hidden Value: How Great

Companies Achieve Extraordinary Results With Ordinary
People, Harvard Business Press, Boston
The result of HR design at Southwest?

• https://www.youtube.com/watch?v=Z79p7Ue78Dc
• Creation of a workforce that provides a competitive advantage that others find difficult to replicate
• Increased levels of commitment and innovation
A quick stocktake of external influences on
HRM systems design

• political ideologies can range from supporting an

Political interventionist approach – with extensive government
regulation of HRM– to one of minimal involvement.

• laws and regulations regarding hours of work, holidays,

Legal EEO, sexual harassment, health and safety, privacy,
terminations etc  impact on HRM policy and practice.

• Eg government and community concerns  affect job

Environmental design, health and safety industrial relations and the
image of an organisation as an employer.
External influences (con’t)

• For instance, economic activity, unemployment rates, public v private

Economic ownership, availability of credit, levels of taxes, degrees of economic

planning  influence recruitment, remuneration, labour turnover,
industrial relations etc.

• Factors relating to IR, such as the organisational climate, government

Industrial policies, degree of unionisation, role of industrial tribunals,
employee commitment and quality of work life  shape job design,
Relations absenteeism, labour turnover, industrial disputes and the way pay
and conditions are set in the organisation.

• Characteristics of the external labour market such as numbers,

Demographic geographical distribution, age, sex, literacy, skill and education levels
have a crucial impact on HRM
• eg ageing population; increasing workforce participation of women.
Globalisation

Described as `the increased pace of economic and cultural

interconnectedness between different countries’.
– p. 57 of the textbook

Discussion: Why is globalisation important for HRM

managers?
The global economic context

• The interconnectedness of countries has deepened considerably in the past two

decades
• Australia and free trade agreements
• Investor-state dispute settlements (ISDS) provisions
• Labour migration
• Impact of the Global Financial Crisis on HRM

For more information on migration policies and impact on work see: Wright, C.F.,
2015. Why do states adopt liberal immigration policies? The policymaking dynamics
of skilled visa reform in Australia. Journal of Ethnic and Migration Studies, 41(2),
pp.306-328.
Declining FDI in developing countries
Source: United Nations Trade and Development Report 2016
The challenges of global HR
Management: going global but
remaining local

Sources examining this issue, see for example:

• McGraw, P. & Harley, B. (2003). ‘Industrial Relation and Human Resource Management
Practices in Australian and Overseas-owned Workplaces: Global or Local?’. The Journal
of Industrial Relations, 45-1, 1-22.
Depends on:

• Receptivity of local workforce to adhere to corporate norms of behaviour

• Effectiveness of expatriates as agents of socialization
• Whether localization is timely (not just prompted by cost considerations)
• Appropriateness to the local environment

For more examples: see Chen, S., & Wilson, M. (2003). Standardization and
localization of human resource management in Sino-foreign joint ventures.
Asia Pacific Journal of Management, 20(3), 397-408.

19
More recently…

Chung, C., Sparrow, P. and Bozkurt, Ö., 2014. South Korean MNEs’ international HRM
approach: Hybridization of global standards and local practices. Journal of World
Business, 49(4), pp.549-559.
Understanding the role of culture in HRM
The advantage from managing global
workforces effectively

“We want to create an international class of managers. In our view, the right way to do it is to have people
close to one another, sharing their different approaches and understanding how each different part of the
Company now faces specific business challenges in the same overall scenario. We want to develop a
group of people who understand the challenges of being global on the one hand and are still deeply rooted
in the local countries on the other.

Our target is to develop an international management capability that can leverage our global scale to
maintain our leadership in the industry”

Vodafone spokesperson as quoted in Dowling et al. (2008) at pp.82-83.

The Australian Context

Critical factors include:

• Fluctuations in response to global and domestic factors;
• Changes in industry and occupational structures eg
• Decline in agriculture  rise in importance of manufacturing
• Relative decline in manufacturing  Rise of service sector
• The ‘new economy’
• More flexible organisational forms
• Onshore and off shore providers
• Internet services and virtual organisations
Development of knowledge economy

• Remember context!
• Historical perspective: agrarian=> industrial=> knowledge based
• Deriving value from skill & commitment rather than tangible products produced
• E.g. IBM- 50% revenue from service divisions rather than product divisions

Impact on Australia?
• Primary sector (Agricultural /mining)
• Secondary sector (mfg)
• Tertiary sector (provision of services) e.g. financial, law, hospitality

Current figures? 70.7% GDP & 72.5% of labour force in Tertiary sector- Australia is
a service economy (Australian Bureau of Statistic, ABS).

The impact of technology on jobs? How will this impact HRM strategies and
management of workforces?
Changes in industry and occupational
structures
Sectoral changes: Projected employment growth
to 2019. Source: Department of Employment 2015
Australian unemployment
New ways of working: the challenge for HRM

Design of jobs has significantly changed:

• The self seeking worker- no longer aligned to the organisation

• Increase in casualisation of workers (8.3 million workers in 2007 (27%))
• Current proportion of workforce which is casualised (2017): 22.6% of the workforce (2.32 million
workers) (ABS 6306.0)
• Outsourcing- (contracting out non-core functions of organisation)
Ensuring control on quality?
Impact on organisational culture? Issues of Trust
• Telecommuting: work disseminated back to workers home
Problems?
Monitoring?
Maintaining social/work divide
• Developments in other jurisdictions: http://fortune.com/2017/01/01/french-right-to-disconnect-law/
The new wave of ‘gig’ work

https://www.smh.com.au/business/careers/airtasker-
increases-recommended-hourly-rates-to-above-national-
minimum-20161017-gs3uwh.html
The “uberfication” of work: where does this
leave HRM?

http://www.smh.com.au/business/workplace-relations/fears-gigeconomy-threatens-loss-of-100-years-of-
workplace-rights-20160516-gowag1.html

• What are the consequences of this new type of work for HRM?

• Do you think this type of work creates the type of “social contracts” that HRM are premised on? Why?
Changing demographic characteristics

• Ageing population (see next slide)

• Intergenerational conflict – four generations coexisting in the
workplace.
• Declining fertility rates
• Declining mortality rates
• Increasing working hours
• Increased female participation rates in the workforce.
• For more information on the need to enhance female participation see:
Charlesworth, Sara. "Women, work and industrial relations in Australia in 2012."
Journal of Industrial Relations 55.3 (2013): 371-385.
• On changing demographics generally - Mark McCrindle
http://www.youtube.com/watch?v=AzPzxheGnws
Age Changes in the Workforce
Australian Labour Force, 1994-2014 , ABS 3101.0
Women and work (cont.)
Adapting to change: Women in senior
management and on boards

Women in management:
• the percentages: 27.4 per cent of key management
positions and just 16.4 per cent of board positions are
filled by women
• legislation
• pay inequity?
• See: https://www.wgea.gov.au/sites/default/files/2016-
17-gender-equality-scorecard.pdf
Changing nature of work and employment - 1

• Numerical - workforce divided into:

• CORE workforce
• PERIPHERY or contingent workforce
Flexibility • Functional
• Working time
• Considerable debate over who benefits from the new
flexibility
• Longer and harder
Working • Non-standard working week
• 12-hour shifts
hours • Evidence of work intensification and increased stress
on homes and families

• Via casual employment, agency hire, sub-contracting

etc
Casualisation • Short term and long term employment
• Limited access to benefits and leave
• Deteriorating skill base
Changing nature of work and employment
– slide 2

The new • Individualised agreements and fixed-term contracts

• Effects on job security
employment • Negotiable entitlements
contract • Scaling down of employee entitlements over time
• NB. Fair Work Act 2009 national employment standards
and other provisions (to be discussed in week 4)
The emergence of “flexible” work:

For more critical analysis see: Pollert, Anna. "The Flexible Firm': Fixation
or Fact?." Work, Employment & Society 2.3 (1988): 281-316.
The value of labour: Informing HR strategy

See: Lepak, D.P. and Snell, S.A., 2002. Examining the human resource architecture: The relationships among
human capital, employment, and human resource configurations. Journal of management, 28(4), pp.517-
543, Lepak, D. and Snell, S.A., 2007. Employment subsystems and the'HR architecture'. Oxford Handbook of
Human Resource Management, The, p.210.
Conclusions

• This session has examined key features of the internal

and external environment which influence HRM.
• The changing context in which HRM operates – globally
and domestically, economically , politically and socially -
has contributed to HRM’s rapidly changing role and its
emergence as a key strategic partner in management.
• HR practitioners need to continue to be responsive to
changes in the organisation’s environment.
• HR needs to become a more integral part of Org strategy
design.
REMEMBER!

• Tutorial guide is available for download from ilearn

• Keep reading about contemporary HRM issues in the news
• Keep up with your readings so things don’t get out of control during the
semester !
• See you next week to examine employment relations frameworks