The HR department’s responsibilities have gradually become broader and more strategic since the days when business people began including “personal departments” in their organization charts. In the earliest firms, “personnel” first took over hiring and firing from supervisors ran the payroll department, and administered benefit plans. As technology in areas like testing and interviewing began to emerge, the personnel department began to play an expanded role in employee selection, training, and promotion. The emergence of union legislation in the 1930s added ‘protecting the firm in its interaction with unions’ to the personnel department’s responsibilities. Then, as new equal employment created legislation created the potential for discrimination related lawsuits and penalties, personnel advice and oversight became even more indispensable.
Today, the globalization of the world economy and several other trends are again triggering changes in how companies organize, manage, and use their personnel /HR departments. In this article we plan to discuss these trends and changes next.
Globalization refers to the tendency of firms to extend their sales, ownership, and/or manufacturing to new markets abroad. Examples are all around us. Toyota produces the Camry in Kentucky, while Dell produces and sells PCs in China. Free trade areas – agreements that reduce tariffs and barriers among trading partners – further encourage international trade. NAFTA (the North American Free trade Area) and the EU (European Union) are examples. Doing business internationally is big business today. For example, the total value of US imports rose from $799 million in 1994 to $135 billion in 2003; exports rose from $702 million to $88 billion in the same period.
Globalization means more competition, and more competition means more pressure to be “world class” – to lower costs, to make employees more productive, and to do things better and less expensively. As one expert puts it, “the bottom line is that the growing integration of the world economy into a single, huge marketplace is increasing the intensity of competition in a wide range of manufacturing and service industries.. From helping firm like Dell cut global HR communication costs, to formulating selection, training, and compensation policies for expatriate employees, managing globalization in the world class firms is a major HR challenge.
Many of the improvements that make firms world class involve technology. For example, Carrier Corporation is the world’s largest manufacturer of the air conditioners, and saves an estimated $100 million per year by using the Internet. In Brazil, Carrier handles all its transactions with its channel partners (its 550 dealers, retailers, and installers) over the Web. The time required to get an order entered and confirmed by the channel partners has gone from six days to six minutes. Today, HR faces the challenge of quickly applying technology to the task of improving its own operations.
Competitive pressures and the search for greater efficiencies are also prompting more employers to export jobs abroad. For example, Merrill Lynch said it was planning on having some of its security analysis work done in India; IBM shifted several hundred systems analysis jobs abroad; and one hospital in Boston even began a program in which radiologists abroad read digital x-rays for the hospital’s Patients. Between 2005 and 2015 about three million US jobs, ranging from office support and computer jobs to management, sales, and even legal jobs, will likely move offshore. Technology facilitates this shift, as companies like Dell find it easier to set up call centers abroad, for instance.Technology is also changing the nature of work. Even factory jobs are more technologically demanding. For example, “Knowledge intensive high tech manufacturing in such industries as aerospace, computers, telecommunications, home electronics, pharmaceuticals, and medical instruments” are replacing factory jobs in steel, rubber and textiles.