THE FUTURE OF

HRM
ELENA CHITOIU & KETING ZHOU

CONTENTS
The objectives of the chapter
The labour market
Tighter labour markets
Managing a diverse team
Competitive pressures
Flexibility
Cost Control
Evaluating the HR contribution
Regulation
Skills
Welfare to work
Carbon emissions
Waste
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THE OBJECTIVES OF THIS CHAPTER

1. Reach a judgement about which issues are likely to move to the top of
the HRM agenda during the coming twenty years;
2. Explain the significance of demographic trends for future labour market
conditions and the extent of diversity among the working population;
3. Discuss the sources of increased competitive intensity in industries and
the organisational consequences from an HRM perspective;
4. Explore likely shifts in the emphasis of employment regulation away
from labour markets and towards the achievement of a range of wider
government objectives;
5. Debate the merits of the argument that traditional employment
practices will change radically in the future in response to environmental
trends.
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THE LABOUR MARKET

The number of people who are employed:
there were relatively short periods in the past
during times of recession when the increase has
temporarily slowed or even reversed,
but over the long term the total number of people
who are employed has grown significantly.

THE LABOUR MARKET

During 1945-1964 there was a generation called
baby boomers:
high birth rates that occurred at that time;
because of the size of this generation and the
increased propensity of women to work for longer
periods of their lifetimes the supply of labour has
been able to keep pace with the growing demand
for labour in the economy over recent decades.
However, this situation has already started to change
as the big baby boomers has started to retire.
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ACTIVITY
Why do you think that people, on average,
choose to have fewer children than they did
a generation ago? Can anything be done to
reverse the trend? To what extent should
governments see it as their role to
encourage more births?

THE LABOUR MARKET

Immigration is also an important factor:
current levels of net migration are estimated to at
around 200 000 a year.
Example:
UK in recent years the number of overseas migrants
coming to the UK to work has greatly exceeded the
number of existing UK residents leaving to emigrate
overseas.
If current patterns of immigration and emigration
continue in the future the UKs population will increase
dramatically, meaning that many concerns about an
inadequate supply of labour can cease.
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THERE MUST BE REMINDED THAT:

Over 20% of the working age population (almost 8
million people) who are of working age are not working
or seeking work at any time
The size of the working population will increase
somewhat between 2010 and 2020 as a result of the
raising of the female state pension age from 60 to 65,
and thereafter as the state pension age is raised for
men and women to:

66 in 2024,
67 in 2034
and 68 in 2044.

THE LABOUR MARKET

In conclusion, it is difficult to reach definitive
judgements about how much changing
demographic patterns will influence labour
market conditions in future decades.
Population ageing suggests that labour
markets will tighten considerably, while
immigration statistics suggest they need not.

TIGHTER LABOUR MARKETS

The most majority of employers experience a
difficulty for recruiting the people they need. The key
reasons for this recruitment difficulty are:
A lack of specialist skills in the labour market;
A tendency for qualified job applicants to ask for
more money than can be afforded;
A lack of sufficient experience on the part of people
applying for jobs.
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TIGHTER LABOUR MARKETS

Where skills are already in short supply, the
problem is likely to worsen considerably.
From a human resource management point of view
the likely outcome over the coming decades is one
in which the art of recruiting and retaining people in
a tight labour market stays right at the top of the
agenda.
Competence in this area, more than any other, will
make the difference between an HRM function
which is successful and one that is not.
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MANAGING A DIVERSE TEAM

Many organisations already operate with a
workforce which is highly diverse in terms of its
national origins.
Organisations that are serious about diversity
need to eliminate unfairness or
discrimination.
These organisations also need to be seen to be
doing so and perceived by their employees as
acting entirely equitably.
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MANAGING A DIVERSE TEAM

Example:
In the UK when the people are selected for jobs, firstly
the employers focus on skills and experience that are
necessary to do the particular job well. The better
matched the skills and the more relevant the
experience, the better the chances that a candidate will
be offered the job. For candidates from elsewhere in the
world, particularly for people from Southern Asia and the
Middle East, such an approach is alien. They are used to
a business culture where educational qualifications are
far more significant, the most successful job applicants
being those with highest degrees from the most
prestigious institutions.
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COMPETITIVE PRESSURES
The most likely future scenario is one in which
most organisations in countries will continue to
face greater levels of competition than is
currently the case.
The trend towards greater levels of competition
has three principal causes:
Flexibility
Cost control
Evaluating the HR contribution
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FLEXIBILITY
Competition leads to increased volatility and unpredictability in
an organizations trading environment (the greater the
competition the more fleet of foot the organisation must be).
Changes have to be made more quickly and more regularly;
Organisation should be in a position to deploy people
opportunistically so that there are sufficient people with the right
qualifications in a position to:
provide a new service,
develop a new product
or meet increased demand for new lines.
Flexibility is more likely to move forward in the HRM agenda in
the decades ahead.

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COST CONTROL
The need to reduce expenditure and to keep a lid
on costs is another cause for increased competitive
intensity; which means:
Less money is available for pay rises or enhanced
benefit packages.
An organisations ability to buy its way out of a
skills shortage is severely limited.

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COST CONTROL
Greater focus being placed on relational rewards,
creating jobs which are as rewarding as possible in
the widest sense of the word, but which are less costly.

Methods will have to be found and introduced - which

make people feel more:
valued,
positively motivated
and highly satisfied with their work
but which do not involve paying them more
money.
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EVALUATING H.R. CONTRIBUTION

Increased pressure for the function of HRM itself to
demonstrate its own worth in terms of valued added and
cost controlled.
We thus can expect:
More examples of HR accounting measures being developed
and used;
More quantitative targets being set for HR specialists to
meet;
More benchmarking of HR performance against that of
competitors;
Pressure to organise the HR function in such a way as to
secure a greater value for money.
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REGULATION
The very substantial increase in the extent of
employment legislation.
It is reasonable to characterise this increase as
comprising a regulatory revolution:
great transformation in the amount of regulation
the employment relationship has become subject
and its day-to-day impact on management
practice
However, there is no question that the existing body
of employment law will be further adjusted.
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SKILLS
The government in the UK has set itself a demanding set of targets for the
coming decades years as far as raising skills levels is concerned, and
include the following:
95% of adults to be functionally literate and numerate (currently 85% and
79% respectively);
Over 90% of adults to have gained a level 2 qualification (currently 69%);
2 million more people with level 3 qualification;
500,000 people to be in apprenticeships;
40% of adults to have degree-level qualifications (now 29%);
Much of the policy is focused on schools and colleges. E.g. it includes the
aim to make full-time education until the age of 18 universal.
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WELFARE TO WORK
Another recent government White Paper sets objectives
for reducing the proportion of people of working age who
live off state benefits of one kind or another and
encouraging them into employment.
Primarily concerned with welfare reform and with ways of
reducing the number of economically inactive people:
There are over 3 million people in the UK of working
age who have been on benefit for over a year;
There are 3 million households, with 1.7 million
children, in which no one is working;
In total, a quarter of adults of working age are not
currently working.
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WELFARE TO WORK
More specific aims include:
use a combination of incentives and disincentives aimed
at increasing the participation rate to 70%.
a reduction of million in the number of people claiming
incapacity benefit.
a reduction of a 300,000 in the number of single parents
who are working.
an increase of a million in the number of over-fifties who
are working.
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CARBON EMISSIONS
The need to reduce carbon emissions in order to
stem global warming is now firmly established as a
government priority.
Using economic models, Sir Nicholas Stern argues
that the GDP will decline by 5% a year as a result of
damage done to the economy by climate change,
but that temperature rises can be limited and many
of the costs of dealing with climate-induced
disruption avoided if just 1% of current annual world
GDP each year was to be invested in reducing
greenhouse gas emissions.
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CARBON EMISSIONS
Stern suggests there are three areas where it has to be taken
action:
Carbon pricing tax, fines for those who do not comply with
stricter regulations;
Public funding of research aimed at the development and
deployment of low carbon technologies;
Public investment in measures which educate the public
about ways of greening their lifestyles and which remove
barriers that prevent people from living in a more energyefficient way.
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WASTE
We are a very wasteful society, mans treatment
of the planet being likened by some
commentators to a bird which fouls its own nest.
In the industrialised countries we throw away into
our dustbins around 500 kg of waste per person
per year.
The industrial processes are hugely wasteful as
well. For every car that is manufactured, 15
tonnes of solid waste are produced.
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WASTE
There are three ways in which waste is disposed of:
Landfill;
Incineration;
Recycling small minority of the total.
The government has set targets to achieve in switching to
incineration and recycling:
Encouraging households to sort items for recycling before
throwing rubbish away
Reducing the amount of waste produced in the first place
Efficiency savings in the methods/processes used to
collect and dispose of waste.
These measures try to change individuals and organisations
behaviour.
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THANK YOU FOR YOUR

ATTENTION!