The Human Resource (HR) management function within a business organization not only focuses on the current business environment, but it also must consider changing employment patterns and practices.
In a modern society, there have been a number of observable changes in work practices. Main new trends in Human Resources (HR) include an increase in advanced technology, globalization and shrinking workforce. In addition, there has been an increased emphasis on teamwork and employee participation in the workplace.
In order to remain competitive, businesses offer better training to their employees. The current workforce is better and better educated, so they can offer impeccable service to maintain high customer satisfaction.
Reasons for changing employment patterns
What are new employment patterns in the workforce then? Why are these changes taking place? And, what are the implications for a business and its Human Resource (HR) Management resulting from those changes?
Let’s take a look at reasons for changing employment patterns and practices:
1. Shifts between employment sectors. There are four main sectors of the economy including Primary, Secondary, Tertiary and Quaternary. In developed countries such as the UK, USA or France, only small percentage of population currently works in agriculture. As a country develops economically, the proportion of workers employed in Primary Sector of the economy decreases with shifts to secondary industries and finally into Tertiary and Quaternary Sectors. Traditional heavy industries such as coal-mining, steel production and shipbuilding, which employed most men in manufacturing, no longer play a significant role in developed economies. With this shift comes a significant change in the sectors of the economy in terms of recruiting staff. These days, the area of growth has been Tertiary Sector experiencing large numbers of jobs being created in services. In Tertiary Sector which accounts for the largest proportion of employment many jobs are part-time, temporary or seasonal. Lastly, most of the highly skilled people are employed in Quaternary Sector, known as the knowledge-based sector.
2. Ageing population. People getting older creates the shortage in labor supply which will affect workforce planning, recruitment and training in many business organizations. It is mainly caused by two reasons. Firstly, the net birth rate in many developed economies has been falling which means that the size of the future workforce will also fall. And secondly, as people are living longer, the average age of workers will tend to increase. Ageing population will have the following impact on human resources. Businesses will be more willing to hire, retain and train older employees. Training opportunities will be provided for existing staff to enhance their performance so staff can be retained beyond retirement age. Also, women and part-time employees will be provided more job opportunities and sought after by the employers.
3. Flexible work structures. With a considerable fall in full-time employment in the last couple of years, more and more businesses have started attracting qualified workers and those returning to work by offering them flexible work structures. Some of the companies, especially those which are very cost-sensitive, are reluctant to commit themselves to permanent contracts with employees. Examples of flexible working practices include: teleworking, homeworking, portfolio working, part-time employment and flexitime. In recent years, there has been an increase in the number of people working flexitime. As more and more workers have started realizing, there is no such thing as a ‘job for life’. People have to be prepared to move between jobs or even industries to maintain steady employment. Therefore, highly flexibly and multi-skilled employees will be highly attractive to employers. Flexible working patterns have many implications for employers and employees including:
- Changing recruitment practices. Businesses will tend to gradually use fewer core staff, and more part-time and temporary staff, to improve their flexibility, increasingly outsource projects and using consultants. Shift to hiring more flexible workers is considered in terms of knowledge and skills, working hours as well as location.
- Organizational restructuring. When the traditional organizational structures do not apply anymore due to the existence of full-time, part-time and peripheral workers, there is a new to restructure the firm. These days firms reduce the number of the core staff and employ more part-time workers which helps businesses to reduce their labor costs.
- Retention of core staff. Key employees of the business organization need to be retained for their outstanding knowledge, skills, expertise and experience to make sure that the best qualities are kept within the business. To retain core staff, the business will need to ensure that these workers are offered first-rate financial rewards to prevent them from being poached by competitors.
- Training. Firms are more likely willing to invest in training their core staff. This will result in non-core workers training themselves at their own expense to have the required skills in the workplace as there will be pressure for staff to constantly update their skills.
- Flexitime. Flexitime is becoming popular because more employees wish to work the hours that suit them. Businesses offer flexible working hours to cater for people who have to balance work with other priorities such as childcare or higher education. Typical workers who are more likely to be allowed to work the hours that suit their individual needs include part-time workers, freelancers, contractors and consultants.
4. More women at work. One of the most important economic and social trends that took place in the late 20th century is the dramatic growth of women in the labor market. This has happened while employment rates have remained broadly constant with semi-skilled male workers recording the highest numbers of long-term unemployed. These changes in the demographic make-up of the working population are also visible in the household composition. The growth in female employment has been strong amongst those of child-bearing age with women returning to the labor market while their children are growing up. The challenge for businesses is to providing a wide range of opportunities to fit work around personal and family circumstances to support the increased labor supply of women.
5. Less man working full-time. During the time of economic recession, many companies downsize and reduce levels of middle management. This is one of the typical ways to cut costs and to increase efficiency. The vast majority of these permanent posts had been held by men. Because of this the percentage of men in full-time employment has fallen. At the same time, there has been a significant increase in the number of men working part-time causing changes to how the workforce has been made up. Among both men and women, there has been an increase in temporary-period contract work and temporary agency work.
6. Migration of workers. In a globalized world, more and more people are migrating for work purposes. The number of people who work outside their home country has been on the rise. Migrant workers typically contribute to the economic growth of the host country through their production, consumption and the payment of TAXes. Additionally, many migrant workers send significant proportion of their paycheck back to their home countries to support their families, hence benefiting their country of origin. There are numerous reasons for the modern migration of workers including:
- Higher standard of living. Seeking a better lifestyle as working overseas may provide better career prospects and more educational opportunities.
- Employment opportunities. Trying to escape poverty and unemployment in low-income countries as high-income countries which are experiencing economic growth have an increased need for labor, especially unskilled labor.
- Attractive pay and remuneration. Seeking better pay and remuneration such as relocation allowance, subsidized housing, private medical coverage and education allowance for those with children, preferential TAX rates, etc. Many multinational companies attract migrant expatriate workers in senior posts.
- Seasonal factors. Finding employment in other countries by migrating there during peak seasons to become farm workers picking up fruits and vegetables.
- Domestic instability. Escaping political instability in the home country, lack of social security and limited business opportunities. It is poor socioeconomic conditions in the domestic economy that are the key factor driving workers away to seek employment elsewhere.
7. Technological development. The effects of technological development on the demand for skills around the world along with the increased globalization of the economy are becoming important long-term trends in the job market.
Advantages and disadvantages of changing employment patterns
Non-traditional types of employment have several advantages for a business organization.
A1: When the business organization employs core staff who contribute directly to main corporate activities (those that provide a source of revenue), it can save money on salaries and wages of non-core employees as well as office space.
A2: Costs can be further reduced by not having to pay sickness benefit, holiday pay, make pension contributions or make redundancy payments as it is required when employing full-time employees.
A3: New employment patterns also enable the firm to be flexible and quickly responsive to increasing or decreasing market demands in terms of staffing numbers.
Non-traditional types of employment also have several disadvantages for a business organization.
D1: More time and effort will need to be spent on recruitment and selection of core workers with temporary shortages in certain sectors of the organization. With possible lack of continuity in personnel, some of the customers may feel dissatisfied dealing with the business, if there is constant change.
D2: Non-core employees are most likely not going to be wholly committed to the business organization. And with higher turnover of workers, there might be an increased need for training, hence increasing employment costs.
D3: Additionally, hidden costs may arise from the emergence of new employment patterns and practices mainly as a result of the impact on the flexibility of the labor market and the need of improving rights for employees.
In summary, main challenges related to Human Resources (HR) resulting from changing employment patterns and practices include shortage of highly qualified IT workers, excess of untrained managers as well as complex laws and regulations regarding new types of employment. Other concerns might be related to an increase in older workers, migration of cheap labor from low wage countries in Asia and Africa and low morale due to constant corporate restructuring.
