Strategic Human Resource

Management

• Chapter 2: The Changing context for SHRM

Truss et al: Strategic Human Resource Management

 Learning objectives

By the end of this session you will be able to:

• Explain recent global labour market trends
• Understand changes in the nature of the
workforce and critically evaluate the implications
for SHRM
• Understand the changing nature of work and
work relationships and critically evaluate the
implications for SHRM
• Discuss how HR managers might develop
strategies to take account of these changes
Truss et al: Strategic Human Resource Management
 The global labour market

• A major concern of employing organizations

is to be able to recruit and retain the right
number of staff with the appropriate skills and
experience
• The world’s population is growing (6.9 billion
in 2010)
• Knowledge of population trends can inform
decisions for global organizations about
where to locate their production and/or
service delivery facilities

Truss et al: Strategic Human Resource Management

 World populations – top 10 nations 2010
Top 5 list

Source: US Census Bureau, International Data Base

Truss et al: Strategic Human Resource Management

 World populations – top 10 nations 2010
Countries 6-10

Source: US Census Bureau, International Data Base

Truss et al: Strategic Human Resource Management

 The changing character of the workforce

There have been a number of social changes

in recent years, which influence the way in
which people participate in paid work:
– the point at which people join the labour force
(education)
– and the point at which people leave the labour
force (rising retirement ages)

Truss et al: Strategic Human Resource Management

 Average exit from the labour force, 2006

Truss et al: Strategic Human Resource Management

 Life-course structure

Truss et al: Strategic Human Resource Management

 Implications

• Trends suggest that in some countries the

numbers available and willing to work may
decline and this may result in labour
shortages
• Faced with the inability to recruit the right
numbers and quality of staff, employers may
opt to export jobs or to import labour
• Under these circumstances, factors such as
average wage costs and employment rates in
different countries need to be taken into
account

Truss et al: Strategic Human Resource Management

 Average wage costs and levels of
employment

• May inform decisions about whether to export

jobs to a particular country
• Will help employers establish the likelihood
that they will be able to persuade people to
migrate from their home country for work
elsewhere
• Whether or not an organization has the
flexibility to export jobs will depend in part on
the nature of their activity

Truss et al: Strategic Human Resource Management

 Implications

• As labour migrates from a country there will

be an impact on employment rates, and as a
result in the longer term this may reduce the
numbers of people who are willing to move
country in search of employment
• Similarly, as labour becomes scarcer in a
country, average wage rates are likely to
increase and as a result the country may
become a less attractive source of labour

Truss et al: Strategic Human Resource Management

 European Union

• In the EU there has been significant migration

as countries have opened their boundaries to
economic migrants

• 75% of migrants in the EU reside in France,

Germany, Italy, Spain, and the UK

Truss et al: Strategic Human Resource Management

 Changing attitudes

• Generation Y workers (people born between

1978 and 1994) approach work with a
different attitude and a different set of
expectations (Cates and Rahimi, 2003)
• Their attitude and values have been
influenced by the environment in which they
have grown - one of technological
advancement and economic prosperity (and
as children experienced ‘being on the move’
and constant stimulation)

Truss et al: Strategic Human Resource Management

 Generation Y workers

• Observers suggest that they are concerned with

issues such as:
• Corporate social responsibility (CSR)
• work–life balance
• what they will gain from employment, such as marketable
• skills and rewards (which are based on meritocratic
principles)
• They are not seen to be loyal to employers and
do not expect to stay with one employer (Barr,
2004).
• These factors suggest that employers may need
to take a different approach to the management
of Generation Y
Truss et al: Strategic Human Resource Management
 The changing nature of work

• The nature of work has been subject to some

changes in recent years and this has had
implications for the ways in which HR are
managed:
• Growth of the service sector
• Growth in temporary and part-time jobs
• Growth in virtual teams
• Increased importance placed on what has been termed
‘emotional’ and ‘aesthetic’ labour, where employees are paid
to manage their emotions and to appear in a prescribed way

Truss et al: Strategic Human Resource Management

 The growth of service work

• Across the EU services account for 70% of

total employment
• In the US the figure is 78%
• Boxall (2003) argues that the match between
competitive strategy and HR strategy is of
greater importance than in manufacturing

Truss et al: Strategic Human Resource Management

 The characteristics of service work

Korczynski (2002) identifies five attributes of

services that distinguish them from other
sectors:
• Intangibility
• Perishability
• Variability
• Simultaneous production and consumption
• Inseparability

Truss et al: Strategic Human Resource Management

 Implications for HR

• Frenkel (2000) has identified a number of

characteristics of service work that have
implications for the management of HR:
– Service work tends to be labour intensive (higher
labour costs)
– Symbolic behaviours (attitudes, dress) and the social
skills of employees form part of the product and
therefore need to be considered in job design
– Service work may involve others, typically the
customer in work tasks (e.g. internet shopping) and
this may present communication and motivation
challenges
Truss et al: Strategic Human Resource Management
 Implications for HR (contd.)

– Service work is often required ‘on demand’ and

may require complex coordination of different
specialists to deliver the service
– the nature of services may mean that some
degree of customization is needed and therefore
there may be limits to the extent to which work can
be standardized and therefore may require a
different form of work and employment relations.
– Performance management may be problematic
since the experience of the service recipient is
central

Truss et al: Strategic Human Resource Management

 Emotional and aesthetic labour

• Emotional labour (EL) describes circumstances

where employees are expected to manage their
emotions as part of their paid employment
• EL takes place in the context of social interaction in
the conduct of work
• Employees are expected to manage their emotions
in order to engender a state of mind in another
person (normally the customer)
• Aesthetic labour is where employees are required to
look (dress, self presentation) or sound (voice,
language used) in a particular way as part of their
paid employment, normally in order to match the
desired image of the organization
Truss et al: Strategic Human Resource Management
 Workplace flexibility

• Flexibility in organizations can be viewed in two

main ways—flexibility for organizations and
flexibility for individuals
• The first of these is where organizations look for
flexibility in the way in which they utilize labour
so that they can match the supply with their
need for labour more closely
• Individuals, by contrast, look for flexibility in the
way in which they work in order to help them
achieve an acceptable relationship between
work and non-work activities.
Truss et al: Strategic Human Resource Management
 The flexible firm (Atkinson, 1985)

There are the following types of flexibility:

• Numerical flexibility (e.g. part-time jobs and
temporary jobs)
• Temporal flexibility allows the employer to vary
the time at which work is done and might take the
form of compressed working hours or annual
hours contracts
• Functional flexibility occurs where the
employer is able to redeploy employees across a
range of different tasks in line with demand

Truss et al: Strategic Human Resource Management

 Changes to management practices

There has been an increasing trend towards the

individualization of the employment relationship
in some parts of the world (Brown et al, 1998;
Pollert, 2005):
• The decline in trade union membership in a number of
countries
• Employers wishing to take a more individualized approach to
the employment relationship
• This individualized approach is in line with a unitary
perspective

Truss et al: Strategic Human Resource Management

 Changes to management practices
• There has been a growth in the use of and
interest in work systems and practices based on:
• high performance
• high involvement
• high commitment
• Whilst there are some differences in emphasis in
each of these approaches, there is much
similarity and the terms have been used
interchangeably (Lepak et al, 2006)
• In essence they are concerned with approaches
to HRM that deliver superior organizational
performance (Whitener, 2001; Lepak et al, 2006)
Truss et al: Strategic Human Resource Management