Topics in Human Resources Management of Non-standard Employees November 13, 2011
Recent Media Coverage 'Shock' the system: Add 100,000 more immigrants per year to Canada (Vancouver Sun, May 6, Top News) 100,000 more immigrants per year could help Canada: report (Ottawa Citizen, May 6) Immigrant Women What Does It Take To Succeed In Canada? (Canadian Newcomer April) Radio Canada International (March 11) http://www.rcinet.ca/english/program/the-link/home/ (Part 2) Increasing quota will increase GDP and tax revenue, report shows (April 7, OMNI TV) Canada should welcome 100,000 more immigrants per year: Report (March 31, Vancouver Sun)
Your Thoughts: Reaction Papers • Fang T., and MacPhail F. Transitions from temporary to permanent work in Canada: Who makes the transition and why? SOCIAL INDICATORS RESEARCH 88 (1): 51-74, 2008. (Maria Hadzic): LMX theory and self-efficacy- individual heterogeneity • Lepak DP, Snell SA. The human resource architecture: Toward a theory of human capital allocation and development. ACADEMY OF MANAGEMENT REVIEW 24 (1): 31–48, 1999. (Bianca Souza): transactional cost economies,human capital theory, resource-based view- buy or make? No clear HR strategy at DuPont Canada? • Conlin M, Coy P, Herbst M. The disposable worker. BUSINESS WEEK 4163: 32, 2010. (Mei Ye). Hidden cost of contingent hiring
Your Thoughts: Reaction Papers • Cunningham, CR., Murray, SS. Two executives, one career. HARVARD BUSINESS REVIEW 83 (2), 2005. (Qasim Chaudhry). Rewards and challenges of job sharing. Any loopholes? Corporate culture • Drucker, Peter F. They're not employees, they're people. HARVARD BUSINESS REVIEW 80 (2), 2002 (Donna Levy): lack of employee perspective? Challenges of developing employees and management accountability. More government regulation?
What happened after the tide of suicides at Foxconn? • The CEO apologized to the employees and the public • Announced a pay increase from 900 Yuan per month to the new minimum wage required by the local government, to 1,200, a 30% hike from June 1 • A subsequent announcement of pay increase was made from 1,200 to 2,000 effective Oct. 1 • Workers at Honda’s Chinese supplier went on strike 3 times in 4 weeks and disrupted the entire production chain in China, demanding a 25% pay hike (from 2000 to 2500) and resumed work after the boss offered 20% wage increases to 1,900 yuan (or US$280)
What happened after the tide of suicides at Foxconn? • “Honda’s workers went on strikes as the effective way to negotiate with the company for better treatment. It seems to be their last resort,” said Chang Kai, director of Renmin University’s labor relations institute • “The factory union said about 30 people fought with union officials, leaving some people hospitalized.” • The official unions in China were led by the local government… • Is this the end of cheap labour in China?
- Shenzhen: 10% from RMB1,000 per month to RMB 1100; - Henan: from RMB500 to 600; - Beijing: from RMB800 to 960 “Minimum wage hike becoming the norm,” China Daily, June 10, 2010.
Management of Non-standard Employees: Big Questions • How to get HR interested/involved in the “non-standard business” (legal, financial, and security)? • How to collect information about the current status of your NSWs (number, status, attributes, needs, skills, compensation etc)? • How to ensure strategic alignments (vertical, horizontal, internal)? What’s your value proposition? • How to work with your line managers and procurement? • How to take advantage of the HR strength and competencies (hiring, legal, training etc)? • How to measure success and improve the bottom line?
Headline News… • Most lucrative college majors http://ca.pfinance.yahoo.com/ca_finance_general/733/most-lucrative-college-majors/ • Great six-figure jobs you don't need a degree http://ca.pfinance.yahoo.com/ca_finance_general/403/great-six-figure-jobs-you-dont-need-a-degree-for/ • Educated women still paid less http://yahoo.workopolis.com/yahoo.aspx?action=Transfer&View=Content/Common/ArticlesDetailView&articleId=hrm20080507File1Article1&theme=yahoo&lang=EN • Who's on top?: Canada's 50 Best Employers http://yahoo.workopolis.com/work.aspx?action=Transfer&View=Content/Common/ArticlesDetailView&articleId=brent20080206File1Article1&lang=EN&theme=yahoo&OldUrl=
Management of Non-standard Workers: Is There a Role for the HR? One school of thought: no role Why? Hardly as important as the standard employees Expendable as paper clips: here today, gone tomorrow HR is not in the loop Tough sell to procurement or line managers
Management of Non-standard Workers: Is There a Role for the HR? Another group of thoughts: NSWs are not trivial Contingent staffing is part of corporate strategy (cost leadership, product leadership/differentiation, hybrid) There are significant legal, financial, and security implications Legal: Microsoft paid $97 million to settle a long court battle with its “permatemps” who were hired for years, allegedly in an attempt to avoid paying them for health, pension, and employee stock-purchase benefits (“Now, temp workers are a full-time headache.” BUSINESS WEEK 3631)
Management of Non-standard Workers: Is There a Role for the HR? • Financial: a Minnesota company that makes medical devices estimated its outlay for contingent workers was No. 9 on the list of its 10 largest expenditures: it turned out to be No. 2. What about your company? • Another company issued 1,200 security passes but had only 400 temps in its workforce (security)
The Contingent Mess Just in time labour – the ad hoc approach There is no systematic HR Planning Most certainly do not follow the Lepak and Snell Model of HR Architecture Hiring managers tend to work with large numbers of agencies: no leverage with vendors There are different purchase processes, different HR management rules, no consistent job descriptions across company or business units There is little incentive for the hiring managers to control costs The focus is on a warm body to do the job, not the quality of match
Contingent Staffing: Let HR Do It? This sounds a radical concept, but does it? HR has the expertise in recruitment and selection: how to use the job boards, applicant tracking system etc, or even just source the candidates and send them to the CIO and line managers HR professionals also know the legal stuff (employment and labour laws) If managed properly by, contingent staffing can save money while avoid all kinds of legal and security problems
Setting Up Controls • How many workers were hired? How long did they stay? Who did the hiring? Which vendors were used and on what basis (cost, expertise, track record, etc)? Is there a repeated process? • HR needs to take some leadership and reach out… • Check the account-payable records • Some accounting systems have coding that makes it easy to identify the NSWs (e.g. lots of payment made to same individuals) • Is there co-payment problem? Is there approval procedure for payment over limits?
Setting Up Controls • Technology can make the management of NSWs a lot easier (software providers: PeopleSoft, itiliti, NextSource, eLabor etc): instantaneous requisitions can greatly speed up the hiring process • You need to get the “buy in” of the hiring managers- it’s an educational process • Why is it in their best interest to use it? Does it reduce workload? Lower costs? Remove hassles? What are the deliverables?
Re-making the Employment Contract: Emerging HR Paradigms in the Information Economy • Let’s getting a bit strategic…Knowledge Workers: Examples Motorola: hardware engineer, design engineer, quality assurance, project management, research engineering, human resourcesMacTemps: database design, graphic production, multi-media presentationStatistics Canada: mathematician/statistician, economists, sociologists, information technology
The Evolution of Employment Systems Since 1980 The “old” system based on implicit job security is“dead” (Cappelli, 2000) We are currently in transition Theory predicts that the old system should be replaced by a “new” equilibrium in which job security is replaced by something else.
3 Waves of HRM Paradigms • Wave 1: Mass Production • Taylorism • Repetitive Work • Wave 2: High Commitment Work Systems • Reform movement aimed at restoring flexibility and involvement • Highly influenced by the manufacturing paradigm
Current HRM Paradigms:Neo-Taylorism: Old Bottle, New Wine? Increased emphasis on pay-for-performance Re-engineering of old processes Very limited autonomy for employees Renewed emphasis on managerial leadership styles No change in most HRM functions
Current HRM Paradigms:High Commitment Work Systems Four-way Model Pay-for-performance Flexible work design Employee Involvement Job security Weak Empirical Support Mutations Lean (but not mean) Production (MIT) Topeka: self-directed teams
Market Forces • More consumer choice leading to……… • Higher quality • Lower cost • Higher service standards • Zero-defect • Zero-time • Zero-distance • Product Innovation
Blue Ocean Strategies(Kim and Mauborgne 2005) Creation of new markets & opportunities Many Firms listed in In Search of Excellence and Built to Lastfoundered in years to follow Creation of uncontested market space Capture new demand Achieve both differentiation & low cost
Examples • Cirque du Soleil • Built a business in a declining industry • Avoided head-on competition with established players • Redefined circus by incorporating elements of theatre, opera, ballet…. • Reached out to an adult market willing to pay higher prices
The Strategy Canvas of the U.S. Wine Industry in the Late 1990s High________________________________________________________________________________________ Premium Wines ________________________________________________________________________________________ Budget Wines ________________________________________________________________________________________ Low________________________________________________________________________________________ Wine range Price Above-the-line marketing Vineyard prestige & legacy Aging quality Enological terminology Wine complexity
The Strategy Canvas of Yellow Tail Wines John Casella's goal is to produce a premium, fruit-driven wine with the added complexity of French oak ageing, while maintaining the softness and drinkability of [yellow tail]. [yellow tail] is the most successful launch of any Australian wine brand in the history of the Australian wine industry. Sales have grown worldwide from 500,000 cases in 2001 to almost 11 million cases in 2006/7. This exponential growth and [yellow tail]'s long term concerns for the environment have led to the need to manage resources more sensitively.
The Four Actions Framework Reduce Which factors should be reduced well below the industry’s standard? Eliminate Which of the factors that the industry takes for granted should be eliminated? Create Which factors should be created that the industry has never offered? A New Value Curve Raise Which factors should be raised well above the industry’s standard?
The Strategy Canvas of NetJets High____________________________________________________________________________ Private Jet Corporate travel ____________________________________________________________________________ NetJets’ Value Curve Commercial Airlines First & Business-class travel ___________________________________________________________ Low_____________________________________________________________________________________ Need for customer cost control (aircraft management & administration) Price (fixed purchase + variable price per flight) Speed of total travel time Ease of travel (including check-in, customs, etc.) Flexibility and reliability Deadhead costs In-flight service
Example: UPS Service Expansion Planning & Logistics in Complex Systems
Risk Management Hypotheses Manage risk to enable pursuit of Blue Ocean opportunities Management does not necessarily want to offer lifelong employment to employees Workplaces have shorter half-lives Relations with employees – not continuous but “punctuated equilibrium”
Implications for HR Lifelong Learning NOT lifelong employment Knowledge-base NOT specific skills Creativity over experience Greater attachment to occupation than to employer Entrepreneurship over administration Generic job description as a description of duties made obsolete
Comparison Red Ocean Blue Ocean Organized workers: single employer; single location Take wages out of competition Job control Create new markets Globalize sourcing, production & distribution Plan for shorter half-lives Contingent workforce Be prepared to move out
Third Wave: Knowledge Work Knowledge work inherently different from routine work Greater variety, autonomy Exercising judgment Developing and drawing on a knowledge-base rather than specific skills Problem-solving Stronger attachment to knowledge-base than to employer
Key Dimensions of Knowledge Work • Learning • Continuous learning • Changing knowledge in the field • Personal responsibility for learning • Creativity • Learning to deal with unexpected challenges/problems • Responsibility for own quality, quantity
Employment at the Firm Level • Firms continually adjust to changing market needs • Phase out old skills • Layoffs and voluntary severance plans • Demand for new skills • New hiring in emerging skill sets • “Churning” in the workforce
Response to the Market • Stick to tried-&-true command & control system • Stifles learning & creativity • Marketize • connect all wages to the external market • hire and let-go as the needs ebb and fall • Middle ground between bureaucracy and purely market-driven HRM • Knowledge HRM systems
Proposition:Mismatch between the old and the new Employment system shaped by routinized work must now perform knowledge work. Seniority does not capture skills in emerging fields New equilibrium needed to compensate for loss of employment security.
Knowledge-centred HRM ? Hire employees by competence, not by job Unit of work is not job but project Post all projects (not jobs) and have employees bid (employee participation in work allocation) Selection based on skills & experience Employees taking charge of their own development - skills and careers
Case Studies – Monitor Consulting • Appointment of a “Career-Czar” • Junior consultants shop for assignments with the help of the Czar. • The Czar “shops” projects with consultants • New assignments and businesses are constantly created to accommodate career needs: • Opened new consultancies • Opened an investment bank • New work assignments with clients
Corporate Assignments Program (CAP) at Statistics Canada Any employee (managerial, professional, clerical) can bid to take another job for 6-24 months Home department must keep job open for return Boss may not refuse After the assignment one can return or move on Knowledge organization within a bureaucracy Other examples: secondment, visiting positions, job rotations
Case Studies - Knowledge Firms Consulting; law firms; accounting firms Seniority does not capture knowledge-base Project leaders may be the junior consultants Internal posting and bidding reduces turnover; allows for skill formation
Case Studies - HP Employees discuss short- and long-term plans with manager at performance appraisal time. Employee selects training and bids for jobs. Manager provides work and training opportunities to meet those goals. Manager is evaluated on support for this company-wide system.
The Management of Non-Standard Workers: The HR Issues • Let’s getting into the details… • Workforce Planning • Recruitment and Selection • Compensation and Benefits • Training and Development • Employee Commitment and Retention
Workforce Planning The Internal Labour Market Model Externalization of the Internal Labour Market Hiring in Knowledge-intensive Organizations
The Internal Labour Market Model Career Progress Retirements Job Levels External Hiring Job Families