Describing all the challenges HR managers will face in the upcoming century might be a rather complicated task. Therefore, this paper will focus on the main trends which will be reshaping HR management in the decades to come. Effective human resource management is critical for organizational performance, and the importance of investing in people should not be underestimated. Taking into account the ongoing increase in the number of companies and organizations, there is a strong need for the development of successful strategies for managing people within them.
A recent and significant development in HR management theory is transformational human resource management, or strategic human resource management. Conventionally, HRM is entrusted with performing a traditional set of transactional tasks, such as recruitment, benefits, and job classification. However, this approach perceives HRM as a cost instead of viewing it as a strategic opportunity. Therefore, the need has arisen to transform HRM into a value-added service. HR managers should become strategic business partners and change agents within their organizations, playing a consultative role rather than being strictly confined to their traditional tasks. HRM is a practice that affects all the functions of an organization and should be attached paramount importance. As Ivancevich (2007) notes, “[w]hen an organization is concerned about people, its total philosophy, culture, and orientation reflect it” (sl. 1-4).
It is also true that for decades HRM was overlooked and barely linked to organizational effectiveness. Current performance was more important than long-term perspective, and the role of HR professionals was traditional and limited. Nowadays, such approach is widely recognized as counterproductive, and HR specialists should take an active part in determining the strategic direction of an organization: the “HR department must be a proactive, integral part of management and strategic planning” (Ivancevich, 2007, sl. 1-44).
For businesses, competition and globalization made strategic, or transformational, HRM a priority. The shift from transactional to transformational HRM should start with a comprehensive needs assessment in the form of an internal survey of employees and line managers. The survey should indicate possible areas for improvement; these areas usually concern the “development of more consistent processes, communication and collaboration between HR areas, strategic business partnership with line management, employee and management training and career development, and best practice knowledge” (Mothersell et al., 2008, “Overview of Drivers for Transforming HR”, para. 4).
In the 21st century, HR specialists should develop a sense of strategic direction, organizational alignment, and focus on effectiveness. Company’s vision, according to the principles of strategic HRM, should necessarily include five elements, which are as follows:
- highly competent diverse workforce (attracting highly qualified specialists, offering career development opportunities, and acknowledging and rewarding their contribution);
- value-added technology (implementing adaptable, user-friendly and accessible information systems);
- customer driven HR services (understanding customer needs and responding to them in a timely and adequate manner);
- involving HR consultants (hiring them for providing expert help, accelerating change, and being strategic business partners within organizations);
- following the philosophy of collaborative HRM (implementing consistent HR orientation across the organization).
Strategic HRM has numerous advantages as compared with traditional HRM, as presented by Ivancevich (2007). Under the new paradigm, HR managers lead, inspire, and understand their subordinates and colleagues; it stimulates them to transform the culture of their organizations into open, participative, and empowering one; and it orients them towards an improved understanding and use of human assets.
Moving towards the new vision would demand enhanced skills and reinvented attitude from state HR specialists. Therefore, a series of trainings to equip HR managers with skills they need to cope with pressing issues in the turbulent times of change might be necessary. Training could be focused on boosting the effectiveness of HRM; increasing technical and subject matter expertise in HR managers; orienting HR employees towards a more consultative role in their organizations; helping them become strategic business partners and change agents; and introducing best HR practices into the HR system. One example of training in strategic HRM included Analytical Skills, Building Partnerships, Business System Thinking, Dispute Resolution Skills, Customer Service Orientation, Continuous Learning, Effective Communication, Facilitation Skills, Flexibility and Adaptability, Innovation and Creativity, Integrity and Ethical Behavior, Negotiating and Marketing Skills, and Subject Matter Expertise (Ivancevich, 2007).
Given that market globalization reinforces the importance of intercultural communication, and that a vast majority of big corporations employ people from a variety of backgrounds, the point about highly competent diverse workforce merits further attention. For the reasons outlined above, management of diversity becomes one of the most important human resources tasks in the 21st century. Visionary and effective diversity management reduces the probability of conflict in organizations; furthermore, it increases efficiency, productivity, and employee satisfaction.
“Managing diversity” is a concept that refers to “a planned, systematic and comprehensive managerial process for developing an organizational environment in which all employees, with their similarities and differences, can contribute to the strategic and competitive advantage of the organization, and where no-one is excluded on the basis of factors unrelated to production” (Performance Associates, 2004, “Managing Diversity: A Definition”, para. 1).
Many scholars acknowledge the impact of diverse workforce on market and underline the fact that successful companies should go to great length to avoid clashes among employees from different ethnic, cultural and religious backgrounds. Not only does everyday life differ across the globe, but also leadership style and workplace ethics vary from country to country. In the contemporary workplace, failure of an organization can be in many cases attribute to ineffective management of diversity. Development of healthy, tolerant and productive organizational culture is only possible under the conditions of visionary intercultural management.
It is projected that very soon people of Western European descent will become a minority in the U.S. As Dougherty (2008) reports, whites will make up less than half of the U.S. population by 2042, sooner than expected. Therefore, organizations will have to adjust to the new situation. While it will touch upon all areas of organizational performance, from marketing to procurement, HR management will be affected the most. Therefore, “[b]usinesses must learn to embrace and manage diversity if they want to continue to be successful. A diverse work force will increase organizational effectiveness. It will lift morale, bring greater access to new segments of the marketplace, and enhance productivity. In short, business needs diversity to succeed” (Saint Mary’s, 2006, “Why should companies concern themselves with Diversity?”).
A successful HR manager in the 21st century will be characterized by tolerance and cultural sensitivity. The importance of multicultural competency is hard to overestimate: it is widely believed that technical competency and multicultural competency constitute a prerequisite for each other in HR management. Every HR manager should strive to become a culturally skilled practitioner if he or she wants to remain of value to their company forced to compete in the global marketplace and adapt to challenges poses by changing demographics. A culturally skilled practitioner pays attention to values shared by people from different backgrounds and cultivates openness as his or her key characteristic.
As concerns practical measures aimed at utilizing the potential of a diverse workforce, there is a number of ways to manage diversity in the workplace. First of all, the process starts with recruitment. Underutilized minorities, women, and disabled citizens often possess unique skills crucial to a company’s success. It is important to make the job look attractive to the abovementioned groups and encourage them to come to an interview. It is also necessary to ensure that interviewees are not stereotyped on the basis of sex, race, ethnicity, skin color, age, disability, or sexual orientation.
Secondly, developing intercultural skills among managers and employees is of paramount importance. In a multinational environment, employees are likely to have different experiences and sums of knowledge. Problems might include misunderstanding of basic terms of cooperation and prejudices against other team members. To avoid them, management should establish a clear framework for cooperation and enforce ethical standards.
It is possible to draw an overall conclusion that there are numerous challenges which can be encountered by HR managers in the 21st century. However, the two main challenges will be an increase in competition due to globalization and more diverse workforce due to the same phenomenon. Therefore, one of the main tasks for HR managers will be implementing the paradigm of strategic HRM in their companies in order to transform HR function from a liability into competitive advantage. Also, diversity should be regarded as a strategic resource for successful organizations. Managing diversity is the second most important human resources tasks in the contemporary workplace.
Dougherty, C. “Nonwhites to be Majority in US by 2042.” The Wall Street Journal. August 14, 2008: A3. November 26, 2009. <http://online.wsj.com/article/SB121867492705539109.html>
Ivancevich, J.M. “Human Resource Management and the Environment.” Human Resource Management, 10th ed. Boston: McGraw-Hill/Irwin, 2007. November 26, 2009. <nixhome.com/keuka/hr/yn/ppt/Chapter01-abb.ppt>
Mothersell, W., Moore, M., Ford, J., & Farrell, J. “Revitalizing human resources management in state government: Moving from transaction to transformational HR professionals in the state of Michigan.” Public Personnel Management 37.1(2008): 77-97. November 26, 2009. <http://www.entrepreneur.com/tradejournals/article/178616830.html>
Performance Associates. “Managing Diversity.” 2004. November 26, 2009. <http://www.performanceassociates.co.nz/diversity.html>
Saint Mary’s Health Care. “Diversity in the Workplace: Frequently Asked Questions about Diversity.” 2006. November 26, 2009. <http://www.smmmc.org/career/diversity/faqs.shtml>
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