Understanding the Political Changes to Human Resource Management

Understanding the Political Changes to Human Resource Management
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The political changes to human resource management are complex and difficult to analyze. They determine the nature of working relationships and have an impact on both economic and social contexts.

The political environment of an enterprise has a direct bearing on the political context or the political climate under which the human resource management of an organization functions. The key drivers of a political climate include the extent of external regulations, nature of work contracts, various labor legislations and case laws, to name a few. Such factors remain ever changing, and as such, the political atmosphere of human resource management remains in a constant change of flux.

The Shift Toward New Paradigms in HR

Since the 1980s most governments have adopted a “supply side economics” as the means to ensure growth and creation of wealth. The underlying principle of supply side economics is a free run for market forces. The justification for such a move are the challenges poised by globalization and a free-market economy along with the realization that protectionism created bloated companies that are unable to compete at a global level.

In the human resource management context, such political change suggests the market or economic conditions replacing the hitherto prevalent regulated welfare-oriented approach as the major factor governing employer-employee relationships.

The changes brought about by the shift in political climate include:

  1. Greater human resource mobility among firms, rendering concepts such as organizational commitment and loyalty irrelevant, and enhancing the role of HR functions such as recruitment as core strategic functions.
  2. Shift from performance management to talent management to tap the employees core skills for the betterment of the organization.
  3. Importance of individualism over collectivism resulting in individual contracts and negotiations opposed to collective bargaining and roles for trade unions.
  4. Shift from performance related-pay to result-oriented pay as a reaction to both the changed economic circumstances and new work methods such as telecommuting and outsourcing.

Elevation of HR Management as a Strategic Management Partner

The increased human resource mobility owing to greater opportunities has raised fresh challenges for human resource management. The high cost of turnover and the loss of intellectual capital due to the lack of skilled employees has made Human Resource Management (HRM) a core strategic management function. The competitiveness of the firm now depends on how effectively HR managers devise interventions to retain existing talent and attract new talent.

In its new strategic role, HR becomes the enabler of talent management processes aimed at empowering managers and developing leaders to create business value rather than trying to implement processes, forms, and compliance. The success of the enterprise now depends on the skill of the human resource manager to master the political factors.

The Shift From Collectivism to Individualism

The advent of outsourcing and the work-from-home concept, and the increased reliance on profitability more than any other factor when making decisions, has heralded a shift from treating the workforce on a collective basis to considering each employee individually. This change has had far-reaching impacts such as:

  1. A shift from collective bargaining to individual negotiations.
  2. A lesser role for trade unions.
  3. Increased reliance on a temporary and contract workforce instead of full-time, permanent employees.
  4. Personalized pay packages based on employee contribution to the bottom line instead of standard pay scales and productivity linked pay.
  5. HR devising personalized development plans for each employee as a part of the talent management plan rather than organizing training programs to make employees competent in organizational processes and methods.

Fresh Challenges

The major fallouts of political changes to human resource management include:

  1. Concerns of low wages and the withdrawal of hard fought benefits.
  2. Companies relocating to cheaper third world countries, or outsourcing to cut costs.

Demands from employees and trade unions include retaining of protections guaranteed by various legislations and by convention over the years, maintaining equitable employment standards, and pay equity. The major challenge for human resource is reconciling these employee demands with the economic imperatives of the business.

Paradoxically, while the trend is toward lesser regulatory interference in the employee-employer relationship, the growing diversity in the workforce has resulted in a greater awareness about the need to respect cross-cultural sensitivities, and providing reasonable accommodation for people with disabilities; and much of the case laws in recent years has focused on such aspects.