1.3 The Changing Landscape of Human Resource Management

The changing nature of the workforce is a major challenge facing HR managers and other business leaders. The population of the United States has undergone significant changes in the past few decades, and projections indicate these trends will continue in the future. There is no longer a typical worker in organizations, as diversity in terms of gender, ethnicity, and religion abounds within organizations. Demographic trends happen gradually, but over time they create major changes in the workforce. The trends indicate that the future workforce will be multigenerational, older on average, more racially and ethnically diverse, and more female. Let’s briefly examine each of these trends and the impact upon HRM.

When considering the age of the workforce, it can be helpful to look at the generations that comprise the general population. A generation A social grouping of people born within a defined time period who share similar cultural traits, values, and preferences. is a social grouping of people born within a defined time period who share similar cultural traits, values, and preferences. Generations can be divided into cohorts, which provide a method for analyzing changes over time. Cohorts provide a way to understand how different formative experiences (such as world and economic events, technology, and social changes) interact with the life cycle and aging process to shape people’s views of the world. There is no one definitive source for the names and birth years that define generations. For purposes of this textbook, we will use the generational names and years as shown in Figure 1.1.

More than one in three American labor force participants are millennials, making them the largest generation in the U.S. labor force, according to a Pew Research Center analysis of U.S. Census Bureau data. Millennials are the most racially and ethnically diverse adult generation in the nation’s history, and the next generation (post-millennials, born since 1997) is even more so. Many millennials entered the workforce during an economic decline, and their lifestyle choices and attitudes toward work are influenced by coming of age during a recession. They also grew up in a wired world and are used to being always connected. The events that shaped their world view are reflected in their attitudes concerning work-life balance, the desire to be involved in meaningful social causes, and a high degree of autonomy and independence.

Although the millennials comprise the largest cohort in the workforce, employers still must be aware of the needs of older workers. It may be surprising, but the average age of the U.S. worker is still rising. This is partly because of low birth rates and the facts that many people are working longer and millennials themselves are getting older.

The workforce will continue to increase in racial and ethnic diversity. By 2024, less than 60% of the U.S. labor force is likely to define itself as “white non-Hispanic,” while as recently as 1994, over 75% of the workforce fell into that category. Hispanics are expected to comprise 20% of the labor force by 2024, while African Americans will rise to 12.7% (up from 12.1% in 2014), and Asians will rise to 6.6% (from up 5.6% in 2014). As racial and ethnic diversity increases, employers will see a rise in diversity of dress, religious practices, holiday celebrations, and other cultural differences.

Women are expected to continue to become a larger proportion of the U.S. workforce, rising from 46.8% to 47.2% in 2024. The labor force participation rate of women aged 25 to 54 is projected to rise from 73.9% to 75.2%, while the rate for men in the same age cohort is expected to decline from 88.2% to 87.3%. While the percentage of women in the workforce continues to increase, they are still significantly underrepresented in leadership roles. For example, women make up less than 5% of CEOs of Standard and Poor’s 500 (S&P 500) companies.

HR managers play a crucial role in building awareness of diversity and creating a culture of inclusion. As will be discussed further in Chapter 3 “Equal Employment Opportunity”, compliance with Equal Employment Opportunity (EEO) laws by preventing discrimination and harassment is certainly necessary, but companies should be proactive in eliminating barriers to employment and advancement for minorities.

Advances in technology are rapidly changing the way HR professionals do their jobs. Digital technology is impacting virtually every aspect of HR including recruiting, hiring, training and development, and benefits administration. For example, the development of the applicant tracking system has transformed the way in which recruitment is conducted. An applicant tracking system (ATS) A software program that manages the recruitment and hiring process, including job postings and applications. is a software program that manages the recruitment and hiring process, including job postings and applications. As the name implies, an ATS tracks each candidate through the application process and automates much of the process, saving labor time for the HR department and keeping applicants informed of their status. The days of HR staff reading every resume are quickly disappearing, as ATSs are used to electronically screen applications for relevant keywords. In fact, 98% of Fortune 500 companies, along with an increasing number of small and mid-sized businesses, filter resumes through an ATS.

The development of human resource information systems (HRIS) A software or online solution that is used for data entry, data tracking, and the data information requirements of an organization's HR management. has also changed the way in which human resource processes and recordkeeping are handled. An HRIS is a software or online solution that is used for data entry, data tracking, and the data information requirements of an organization's HR management. An HRIS typically integrates with a payroll system and tracks paid time off (PTO), attendance, compensation history, positions and pay grades, disciplinary actions, training, development, and other types of data.

The Forbes Human Resource Council, composed of successful human resource executives, has identified the following ways that technology has streamlined their HR processes:

Recruiting, managing, and retaining human resources at a firm with extensive global operations is especially challenging. For example, German firm Siemens has more than 400,000 employees in 190 countries. Volkswagen, Nestle, IBM, Unilever, Walmart, McDonald’s, and Matsushita each has more than 150,000 employees outside the firm’s home country.

Global business is expanding rapidly, as trade agreements (such as the United States-Canada-Mexico Agreement, or USMCA, and the European Union) are reducing tariffs and other barriers to trade. This is resulting in an increased number of employees who are temporarily assigned to work in another country. Working in another culture poses significant challenges for employees, managers, and the HR department.

Chapter 14 “Global HRM” will cover global HR in much more depth, but as you study the text, begin to consider some of the following challenges that international human resource management (IHRM) poses:

Advances in technology and a better-educated workforce have led to what is often referred to as the knowledge economy A system of production and services based on knowledge-intensive activities that contribute to an accelerated pace of technical and scientific advance, as well as rapid obsolescence. . The knowledge economy is a system of production and services based on knowledge-intensive activities that contribute to an accelerated pace of technical and scientific advance as well as rapid obsolescence. The production of goods and services, and the jobs that this entails, are heavily based upon knowledge and education. Companies strive for competitive advantage by becoming better than their competition either in terms of providing a higher-quality product or service, or doing so at a lower cost, and achieving high levels of productivity. This competitive advantage is increasingly reliant upon a workforce with a high level of knowledge, skills, abilities, and other characteristics, which collectively are referred to as KSAOs Knowledge, skills, abilities, and other characteristics. .

We will examine the role of KSAOs in several chapters of the text, especially Chapter 4 “Job Analysis and Design” on job analysis and design, and Chapter 7 “Talent Development” on talent development. However, since KSAOs are such an important aspect of HRM, let’s define each of these terms now. Knowledge The state of having a correct idea or understanding of something or the possession of information about something. is the state of having a correct idea or understanding of something or the possession of information about something. It refers to theoretical application, or what sometimes might be referred to as head knowledge or book learning. Skill The capability of accomplishing something with precision and certainty. is the capability of accomplishing something with precision and certainty. It refers to practical application of theoretical knowledge. Skills can also be distinguished among three categories: basic, advanced, and expert. An ability The quality in a person or thing that makes an action possible. is a quality in a person or thing which makes an action possible. It refers to an innate capacity that enables a person to develop a skill.

Advances in technology are fundamentally changing the nature of work in many industries and creating an imperative for continual lifelong learning. Basic skill levels were once the prerequisite to finding gainful employment, but advanced levels are becoming the norm. Many companies in developed countries are seeing a shortage of skilled workers for increasingly complex jobs.

The knowledge economy is impacting many areas of HRM including recruitment, training, and development. For example, one area of shortage is industrial maintenance technicians for advanced manufacturing plants. In the past, the KSAOs required for these types of workers (which were referred to as industrial maintenance mechanics) involved knowledge of mechanical functions such as hydraulics, what some have called wrench-turning skills. However, these jobs today require knowledge of computer technology including hardware and software, as advanced manufacturing operations increasingly use electronic and automated processes. Recruitment of knowledge workers has been difficult in these types of industries due to outdated perceptions of the nature of the work.