3 Session 3: New Challenges for HR Executives

Learning Objectives

After completing this session, you will be able to:

  • evaluate the new approaches to organizing HR.
  • discuss the responsibilities of HR to the needs of business.

New Approaches to Organizing HR: Employers are experimenting with offering human resource services in new ways. Some employers organize their HR services around the following four groups:  transactional, corporate, embedded, and centers of expertise.

Human resource responsibilities have become broader and more strategic in response to the needs of business. The HR role has evolved from being merely responsible for hiring, managing careers, payroll, benefits administration to a more strategic role in employee selection, training, promotion and advisory in areas of, employee engagement etc.

Source: Fundamentals of Business: Canadian Edition by Pamplin College of Business and Virgina Tech Libraries is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License, except where otherwise noted.

Globalization and Competition Trends – Globalization  relates to the business of  firms extending  their sales, ownership, and/or manufacturing to new markets abroad. Globalization of the world economy and other trends have triggered changes in how companies organize, manage, and use their HR departments. The rate of globalization continues to be high;  more globalization means more competition, and more competition means more pressure to lower costs, make employees more productive, and do things better at a more optimal cost.

Deregulation – India, among other countries, has  retracted rules that controlled growth, particularly in the financial sector. This led to the emergence of large banking and financial organizations which extended credit to the public without asset banking.  Though the Indian banking system was largely saved from the disaster by the strict rules of RBI, numerous businesses which depended on exports to the Western countries suffered greatly.

Technological Trends – Virtual online businesses and evolving businesses driven by the internet have enabled firms to become more competitive.  HR faces the challenge of quickly applying technology to the task of improving its own operations.

Trends in the nature of work – Jobs are changing due to new technological demands.  Dramatic increases in productivity have allowed manufacturers to produce more with a lower number of employees.  The gig economy has picked up  and non-traditional workers, such as part time workers or people working in alternative work arrangements, enable employers to keep costs down.  HR has to remake some of its internal policies to cope with the new ways of running its function.

Source: Fundamentals of Business: Canadian Edition by Pamplin College of Business and Virgina Tech Libraries is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License, except where otherwise noted.

High-Tech Jobs – More jobs have gone high tech, requiring workers to have more education and skills. Even traditional blue-collar jobs require more math, reading, writing, and computer skills than ever before.

Service Jobs – Most newly created jobs are and will continue to be in the service sector.

Knowledge Work and Human Capital – This refers to the knowledge, education, training, skills, and expertise of a firm’s workers. The HR function must employ more sophisticated and creative means to identify, attract, select, train, and motivate the required workforce.

Workforce Demographic Trends –The aging labor force in the developed countries, presents significant changes in terms of potential labor shortages, and many firms are instituting new policies aimed at encouraging aging employees to stay, or at attracting previously retired employees. Growing numbers of workers with eldercare responsibilities, and high rates of immigration also present challenges and opportunities for HR managers. However, the situation is the reverse in India, which has a younger workforce. Imparting sufficient skills to a younger workforce remains a challenge that Indian HR must face.  In India there is a large workforce available but often organisations find that they are not able to put them on the job readily because their employability skills are not very high.  Hence there is a case for increased training in this area.

Challenging new environment: Globalisation, competition, technology, workforce trends and economic upheaval confront employers with new challenges.  Employees expect and demand that their human resource managers exhibit the competencies required to help the company address these new challenges proactively.

Expectations from Top Management: Top management expects data to be analysed and presented by HR for decision making.  HR is expected to provide measurable, benchmark based evidence for its current efficiency and effectiveness and for the expected efficiency of the new proposed HR programs.  There is an increased focus on  quantified evidence that HR is contributing in a meaningful and positive way to achieving the firm’s strategic aims.

High-Performance Work Systems (HPWS) HR is expected to introduce and implement  HPWS to maximize the competencies and abilities of employees.

Evidence-Based Human Resource Management involves the use of data, facts, analytics, scientific rigor, critical evaluation, and critically evaluated research/case studies to support human resource management proposals, decisions, practices, and conclusions.

Managing Ethics – Due to the various cases of failure of corporate ethics and governance, HR has an increased load of ensuring that there are no lapses in corporate behavior.  Ethics needs to play a bigger role in managers’ decisions and this will happen through increased training and awareness creation.  HR plays a key role in promoting ethical behavior at work.

Staying abreast:  HR professionals need to stay up to date by getting certifications on an ongoing basis so that they are aware of key changes and developments in the way things are done.  In addition, they need to understand the new systems and processes that are being introduced as well as the role of artificial intelligence and machine learning that may radically alter traditional HR practices and processes.


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Human Resource Management by Icfai Business School is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License, except where otherwise noted.

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