IPM Kurunegala 1 02.07.09

Copyright The Training Partnership 1

IPM Professional Qualification IPM Professional Qualification in Human Resource in Human Resource

Management Management Stage IStage I

Employee ResourcingChanging World of Work and

Organization


Lakshmi de ZoysaLakshmi de ZoysaHRM & D Consultant – TrainerHRM & D Consultant – Trainer

Post-Grad Dip. In Personnel Management (LSE, U.K.)Post-Grad Dip. In Personnel Management (LSE, U.K.)B.Sc. Business Administration (Georgetown University, U.S.A.)B.Sc. Business Administration (Georgetown University, U.S.A.)

Copyright The Training PartnersCopyright The Training Partnershiphip

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MACRO PICTUREMACRO PICTURE

• Emerging themes pertaining to Employee Resourcing– Evolution of economic development

and sources of competitive advantage– Open Economies– Devolution– Globalization– Competing markets– Changing expectations


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Evolution of economic development Evolution of economic development and sources of competitive and sources of competitive

advantageadvantage

• As economies evolved, the source of competitive advantage changed, both at national level and organizational levels. We now produce more.– Agricultural economies– Industrial economies– Service economies– Knowledge economies


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• Imports and exports can flow freely in and out of the country

• Increase Business opportunities

Features of an Open Features of an Open EconomyEconomy


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Features of an Open EconomyFeatures of an Open Economy

• The internet opens economies up even further. Any seller can access any buyer, anywhere on the web. This will put tremendous pressure on organizations, to manage overhead costs, including labour costs.

• Money can flow freely in and out of the country, forcing exchange rates to reflect the real value of the economy and currency in relation to other countries.When the Rs./- drops, it costs us more to import but it is easier to export.

• Unemployment drops.


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Features of a Closed EconomyFeatures of a Closed Economy

• Prices are not market driven. They are fixed or are determined by other factors such as the cost of production or desire for profit.

• Therefore, resources are not distributed efficiently (not at equilibrium)

• Aggregate cost of labour can go up and is hidden within set prices for products and services.

• Closed economies lead to a drop in economic activities and a drop in demand for labour.


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Emerging Themes Pertaining to Employee Emerging Themes Pertaining to Employee Resourcing: DevolutionResourcing: Devolution

• Ideally, in the long run, devolution decentralizes decision making throughout the country, thereby developing leadership in many parts of the country.

• Some local areas, with proper leadership, will experience increased economic development and growth.

• This will lead to an increase in jobs, outside urban centres

• Devolution may create a competitive spirit between provinces, leading to more efficient use of resources within and between local areas.


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Emerging Themes Pertaining to Employee Emerging Themes Pertaining to Employee Resourcing: Foreign Employment & Foreign LabourResourcing: Foreign Employment & Foreign Labour

• A large demand for skilled and unskilled labour from Sri Lanka, from the Middle East, Cyprus, Malaysia, Thailand, and Singapore, push up the price of labour, here

• The biggest labour markets are India and China, totaling nearly 35% of the entire world’s population. Also other countries in the far east have large populations. Their labour prices are very low. This puts pressure on us to keep our labour prices down.


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ORGANIZATIONAL CONTEXT: What Your ORGANIZATIONAL CONTEXT: What Your Organization Looks LikeOrganization Looks Like

External & Internal Environment

Functions

Employee LevelsChairman & Board of Directors

Unskilled worker

Organization


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ORGANIZATIONAL CONTEXT: Types of ORGANIZATIONAL CONTEXT: Types of labourlabour

• Unskilled, semi-skilled, and skilled labourCharacteristics of skilled employees are: – ability to cope with non-routine, technical problems– Speed and reliability at the job

• Supervisors, Front line managers– The lowest level at which individuals are responsible for the work of

others. They direct the work of non-management employees, not other managers

• Middle managers– They form a link between lower and upper level managers– They direct implementation of policy


Unskilled worker


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ORGANIZATIONAL CONTEXT: Types of ORGANIZATIONAL CONTEXT: Types of labourlabour

• Top managers– They establish operating policy– They guide the organization’s interaction with its’

environment– They are responsible for overall management of the

organization

• Functional managers– They are responsible for just ONE organizational activity.

E.g. Production, Sales & Marketing, Finance, HRM&D, IT.

• General manager– A GM oversees a complex unit, such as a company, a

subsidiary, a SBU, and are responsible for all the activities of that unit, such as production, marketing,, finance.


Unskilled worker


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Types of Labour by FunctionTypes of Labour by Function

• Accounting: finance, auditing• Engineering: production, maintenance, R&D• Marketing: marketing, sales, advertising• Human resource management: HRM, HRD,

Training• Purchasing and supplies, including inventory

and stock control• MIS, IT


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ProfessionalismProfessionalism

• Profession: This is a calling , a vocation, especially one that involves some branch of advanced learning

• Professional: Someone who belongs to a profession. They may have a common code of ethics.

• Professionalism– Professionalism involves a skill based on

theoretical knowledge– It requires education and training– It must demonstrate competency by passing a test– Maintains integrity by adhering to a code of

conduct– Service is for the public good– The profession is organized


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ORGANIZATIONAL CONTEXT: Worker Of The ORGANIZATIONAL CONTEXT: Worker Of The FutureFuture

– Knowledge worker– Multi-skilled worker– Flexible worker– Committed worker– Individualistic worker


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• Knowledge worker: Increasingly, knowledge gives organizations a competitive advantage. Skill shifts are:– From unskilled, manual blue collar workers to

highly skilled computer programmers, operators of computer driven equipment, and professional, technically qualified managers.

– Knowledge provides new business opportunities in the service sector, such as software development, Business Process Outsourcing (BPOs), maintaining and repairing bio-medical equipment, financial services


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– Multi-skilled workerA multi-skilled employee is

someone who has multiple skills and competencies.


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Discussion Topic: What are the advantages and disadvantages of multi-skilling, from the: -

– Employer’s point of view– Employees’ point of view


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Worker Of The Future: Flexible Worker Of The Future: Flexible workerworker

• Forms of labour flexibility: -– Numerical flexibility, by altering the number of

workers employed and by altering the working hours (flexi-time)

– Functional flexibility: A firm’s ability to adjust and deploy the skills of its employees to match the tasks required by its changing workload, production methods and/or technology. This is achieved by training people to perform a wider variety of tasks, breaking down barriers to deploy workers across tasks.

– Distancing: Replacing employees with sub-contractors. Employment contracts are replaced with contracts for service (i.e. commercial contracts)


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• Forms of labour flexibility: -– Pay flexibility: The organization’s pay and

reward structure supports the numerical and functional flexibility

Note: The first three forms of flexibility amount to a re-organization of the internal labour market


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Segmentation of the workforce: -• Core workers: They deliver functional

flexibility by being trained, re-trained and re-deployed across tasks.– They provide organization-specific skills– Since training is costly, organizations give

core workers long-term employment security.– Long-term employment helps build skills and

expertise– Organizations try to motivate and retain,

through soft HRM techniques.


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Segmentation of the workforce: -• Peripheral workers:

– They deliver numerical flexibility (flexi-hours, lay-offs)– Skills can be easily obtained in the open market– Their cooperation is not critical to organizational

performance

• They are: -– Full-time employees with little prospect of secure,

continuous employment– Workers who are on non-standard contracts of

employment (temporary, part-time, casual)– Distance workers (work contracted out) who supply

their labour under contracts for service rather than ‘contract of service’.


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Benefits to organizations:1. Reduced labour costs2. The ability to tailor the size of the work-force

to changing demand levels. This reduces the risk of additional labour costs due to overstaffing and labour shortages.

3. Increased productivity from core workforce4. Increases managerial control.


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Committed worker: High commitment is being concerned with both behavioural commitment to pursue agreed goals and attitudinal commitment in which a worker identifies strongly with the enterprise.


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What is CommitmentWhat is Commitment

Committed worker

1. Internalized belief of organization’s values and goals

2. Is constructively proactive

3. Employee goes above and beyond the call of duty

4. Has a strong desire to remain a member of the organization

Compliant worker

1. Maintained by externally imposed bureaucratic control

2. Generates reactive rather than proactive behaviour

3. Employee works to contract or even to rule

4. The employee sees the organization as a source of employment and not a re-affirmation of his/her values, identity, goals.


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Reasons for Developing Reasons for Developing Commitment Commitment

1. Management assumes that committed employees will be more satisfied

2. Assumption that they will be more productive3. Assumption that they will be more adaptable (less

resistant to change)4. Commitment is often associated with the ‘soft’ HRM

policies of participation, team working and team briefing, multi-skilling, developmentally oriented appraisals, reward and training policies, which are considered by management to generate and be reflective of an organization that is individualistic, (rather than pluralistic/collectivist), has a culture of high trust rather than a low trust culture of stereo-typed ‘contracts manager’.

5. To achieve employee commitment to those values that senior management thinks will facilitate or enable organizations to perform better.


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Values That Organizations Values That Organizations Seek, When They RecruitSeek, When They Recruit

Employees who value: • Quality • Customers• Cost effectiveness• Productivity• Flexibility• Innovativeness and creativity


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Worker Commitment VS Worker Commitment VS FlexibilityFlexibility

1. Increased labour flexibility may, sometimes, only be achieved at the expense of other aspects of the employment relations, which are valued by employers. E.g.

1. Temporary workers are seen to be less committed and less reliable than permanent workers

2. Part-time employees on a permanent basis are reliable, but more difficult to manage than full-time people, because they spend less time at work.

2. Increased savings generated through flexibility may be outweighed by additional costs that arise from lower commitment.


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Worker Commitment VS Worker Commitment VS FlexibilityFlexibility

3. Widespread use of temporary workers is seen to reduce the commitment of permanent staff.

4. Employers have a fear that being seen to operate different standards of treatment for temporary and permanent staff (e.g. pensions, health care) might undermine management’s claim to be following more enlightened HRM policies. This can threaten the trust and cooperation between managers and permanent staff.


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Worker Of The Future: Individualistic Worker Of The Future: Individualistic WorkerWorker

The traditional, pluralistic relations with employees, based on Trade Union recognition and collective agreements, is being replaced with individualistic relations and individual contracts of employment.


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What Are The Pressures Causing The Shift From What Are The Pressures Causing The Shift From Collective To Individualistic Relations and Collective To Individualistic Relations and

Individual Contracts of Employment?Individual Contracts of Employment?

1. Higher levels of education2. Greater sense of independence and individualism

amongst workers, decreasing need to ‘run with the pack’.

3. Workers’ questioning attitude towards authority.4. Employees’ expectations of being given increased

levels of responsibility5. Increase management focus on recruiting the ‘right

individual’, because hiring the wrong person is seen as an expensive, long-term organizational cost.(Right person in the right place at the right time for the right price.)


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What Are The Pressures Causing The Shift From What Are The Pressures Causing The Shift From Collective To Individualistic Relations and Individual Collective To Individualistic Relations and Individual

Contracts of Employment?Contracts of Employment?

6. Pressures from employers and prospective foreign investors to review and revise Sri Lanka’s labour legislation (which is based on a climate of union representation, collective agreements) because it is presently seen to hinder economic development and creating job opportunities.

7. Open economy and the need to create work rather than jobs

8. Increased global competition, which is weakening various sectors of our economy (e.g. tea to Kenya, India, rubber to Malaysia and synthetic alternatives, Paddy, Garments – we are not competitive in the non-quota system)

9. Growth of bureaucracy, making larger organizations less competitive.


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What Are The Pressures Causing The Shift From What Are The Pressures Causing The Shift From Collective To Individualistic Relations and Individual Collective To Individualistic Relations and Individual

Contracts of Employment?Contracts of Employment?

10. Anti-union values amongst some management11. Increased welfare benefits given to employees,

which undermines the need for collectivism or unions

12. A focus on developing individual workers’ commitment to organizations

13. Economic shift towards knowledge-based work. Knowledge is individualistic and used individually.

14. Focus towards innovative and entrepreneurial workers, using talent fully.


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ORGANIZATIONAL & EMPLOYEE ORGANIZATIONAL & EMPLOYEE CONTEXTCONTEXT

Psychological ContractThis is the total set of expectations held by

the employer and the employee of each other and which determines their relationship and work behaviour

Why is it important?Because relationships may continue or fail,

depending on whether expectations are met or not.


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Psychological contract: Psychological contract:

Individual’s Contribution

•Effort•Ability•Skills•Knowledge•Time•Loyalty

Organization’s Inducements

•Pay•Benefits•Job-security•Professional development & growth•Promotion opportunities•Status•Sense of belonging


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Both parties may try to change the Both parties may try to change the psychological contract, if it is perceived psychological contract, if it is perceived

as unfair.as unfair.• The individual

– Requests pay raises

– Reduces output– Asks for

promotions– resigns

• The organization– E valuates and

requests better performance

– Provides training– Transfers– Demotes– Promotes (yes, they

do) and sends to Siberia

– Terminates


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Techniques for Managing the Techniques for Managing the Psychological ContractPsychological Contract

• Goal congruence• Know and meet your employer’s

expectations• Self learning• Be dynamic and flexible


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• Adding economic value:– What is economic value?– Making a contribution that counts


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New forms of work contracts

There are two dimensions to an employment relationship.

– Economic exchange.– Sociological; power relationship

Ways in which a contract of employment can be created: -

– Verbally– In writing. The Shop and Office Act requires

that it be in writing and provide the details of the terms and conditions of employment.


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Forms of ‘work’ contractsForms of ‘work’ contracts

Commercial contract: -– To be a commercial contract, there must

be the following: -– Offer– Acceptance– Consideration– Intent to create legal relations– Reasonable– Legal– Genuine consent between parties– Parties must have the capacity to consent


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Forms of ‘work’ contractsForms of ‘work’ contracts

Employment contract: -

– It is a contract of personal service– It is to be an open ended relationship– This is different from a commercial contract in that

the ‘employers’ can determine both– their own self-interest, and– have part say in determining the employees’ interests

(concept of contract of subordination)– Many Government laws have been introduced to

provide employment protection legislation, designed to reduce the power imbalance between the two parties.


Thank YouThank You

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IPM Kurunegala 1 02.07.09