GLOBALIZATION & THE CHANGING ROLE OF HUMAN RESOURCE MANAGEMENT
Nov 23 - 29, 2009
The pressures on traditional industrial relations (IR) models are not all due to globalization, as we shall see, but many of the changes taking place can be traced to globalization. It is not always easy to disentangle the causes and effects of globalization. However, it would probably be true to say that globalization is characterized by the opening up of markets due, in large measure, to foreign direct investment; by the liberalization of trade, and by the deregulation of financial markets in consequence of which governments increasingly have little control over the flow of capital across borders.
All these imply the dominance of the market system, facilitated by the collapse of alternative economic (and in many cases political) systems. There is also a direct link between globalization and information technology (IT).
Rapid technological change and reduction in communication costs have facilitated the globalization of production and financial markets. At the same time, globalization stimulates technology through increased competition; it diffuses technology through foreign direct investment. As aptly observed: "Together, globalization and IT crush time and space."
These developments have had further effects such as: democratization and pressures for more labor rights in countries where such rights have been restricted. Liberalization and deregulation for investment increased economic independence of national capital. Information and technology flows are on the increase. Internationalization of enterprises and creation of mergers and alliances engendered customer-driven (and not product-driven) global and local markets, and at the same time segmented markets competitiveness increasingly based (not on low wages or natural resources) on knowledge/innovation, skills and productivity.
The success of global companies is to a large extent dependent on their ability to organize (within and between organizations) across national boundaries information, money, people and other resources.
EMPLOYER RESPONSES AND IMPLICATIONS FOR INDUSTRIAL RELATIONS
Among the responses of employers are the following.
- can move production overseas to reduce costs and to facilitate sensitivity to local and regional market requirements.
- Contracting out and out-sourcing: It is an important rationale of out-sourcing that it, on the one hand, enables an enterprise to concentrate on its core competencies, and on the other hand, it makes service work more productive.
For example, in the USA, outsourcing of functions in hospitals not directly related to the work of doctors and nurses (care of patients) has substantially increased the productivity of the hospitals, and provided new opportunities for service employees. "Outsourcing is needed not just because of the economics involved. It is required equally because it gives opportunities, income and dignity to service work and service workers."
- More part-time and temporary work (especially among women, the elderly and students); introduction of new technology; pushing for a more deregulated and flexible labor market; more emphasis on productivity and quality; greater employee involvement in the design and execution of work; shifting the focus of collective bargaining from the nation/industry level to the enterprise level.
Employers are of the view that issues relevant to the employment relationship such as work re-organization, flexible working hours and contractual arrangements, and pay for performance and skills, are increasingly workplace-related, and should therefore be addressed at the enterprise level.
DOWNSIZING THE WORKFORCE
One important response has been the introduction of flexibility in the employment relationship to increase the capacity of enterprises to adapt rapidly to market changes. This has involved measures such as flexible working hours, part-time work, different types of employment contracts to the standard ones familiar to collective IR flexibility in functions, so that employees who are multi-skilled are not confined to the performance of only one task.
They can cover up for absenteeism, and make some jobs redundant, which involves some component of pay being dependent on performance, whether of the company, a group or the individual.
Globalization has, through technology diffusion, substantially increased the introduction of new technology. This, along with flexible adaptation to market changes, has led to the re-organization of production systems and methods of work.
Reduction of narrow job classifications and demarcation lines between managers and workers, accompanied by skills enhancement needed to perform jobs with a broader range of tasks.
Increasing areas for worker involvement in the conception, execution, and control of work. A greater focus on workplace relations and policies and practices conducive to better motivation and performance such as information-sharing and two-way communication. These responses have increased the necessity for employers to make more investments in skills training, to offer incentives to employees to improve their skills, and for workers to take upon themselves some responsibility for their own development.
The competition generated by globalization and rapid technological changes accompanied by shorter product life have, while destroying countless jobs in industrialized countries, created opportunities for multi-skilled and easily trainable workers, and for the most significant group of emerging employees - the knowledge worker.
Knowledge and skills have become the most important determinants of investment, employment opportunities, productivity and quality and of flexibility.
The impact globalization and information technology have had on each other has made work more mobile, capable of being performed in different parts of the world without the need to actually set up physical facilities in other countries. Other changes in the nature of work and workers are being brought about partly by globalization, but not entirely because of it. The rapid influx into the workforce of women who will, in some countries, occupy more than half the emerging jobs an increasing number of people who will not be working in an organization, though they will be working for an organization. The decreasing number of people working under 'permanent' contracts of employment, and the proliferation of other types of work arrangements such as part-time and temporary work, home work and contract work.
In our country our corporate sector should realize the changing role of the HRM due to the globalization. It produces more duties on the part of the employees as well as the employers. We should update the skills of our employees if we want to survive internationally.