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The New HRM System:
Challenges to Labor and Management

Yonatan Reshef
University of Alberta
School of Business
University of Alberta

The following discussion is based on Peter Cappelli (Ed.). Change at Work. New York: Oxford University Press. 1997. (Chapter 7)

According to Cappelli, the following are the major HRM changes experienced by American workers/managers during the 1990s. They also apply to the Canadian workforce:

  1. Sharp moves toward downsizing;
  2. growth of a contingent workforce;
  3. redesign of tasks and work systems that both make greater demands on employees and allow them opportunities for more meaningful work;
  4. Polarization of opportunities between those with access to education, training, and jobs with innovative practices and those without;
  5. A sharp decline in labor market opportunities for men, especially for those with little education.

The new model makes individual employment relationships more sensitive to market forces. Pressures from the product market are brought to bear on employees by making compensation and job security contingent on organizational performance. Pressures from the labor market manifest themselves through more hiring from outside, career development increasingly across (rather than within) organizations, and greater use of contingent and contract labor (P. 209).

As I have mentioned previously, many of the new model's challenges are a result of pushing authority down in the organization and demand more from employees. For example, employees are expected to use their experience and creativity to identify quality problems, design solutions and, sometime, implement them. It seems that in order to make the new work arrangements pay off, employment has to be reasonably stable. Yet, downsizing and other restrcutrings that move employees around inside organizations disrupt these work systems and seem incompatible with them (e.g., nurses during the Klein Revolution). It would seem that some kind of employment stability and perhaps even explicit job security would be a necessary condition for these new work systems to succeed.

Labor mobility creates a challenge to management. Their problem is how to create skills that are largely specific to an individual employer, skills that cannot be purchased in the outside market, when the employer's ability to recoup an investment in those skills may well have eroded because of declining employee-employer attachment (p. 212).

An advantage of scientific management-based work systems is that they created simple entry-level positions where unskilled workers could make a contribution while learning something about work. Moreover, these unskilled jobs were insensitive to turnover. The notion of broadly skilled, cross-functional teams basically eliminates lower-skilled, entry-level positions and makes it difficult to see how new workers could develop those skills. Additionally, the new work systems not only make it more difficult for unskilled, untrained workers to contribute but are also quite vulnerable to turnover. This, in turn, makes management less and less willing to invest in in employee training.

Interestingly, a decrease in attachment to a single employer may reduce employees' interest in unions as a means of addressing workplace problems rather than simply moving on to a job elsewhere. The risks associated with business are increasingly being pushed onto employees with no apparent compensation advantages. Once on the jobs, employees have much greater responsibility for managing their own careers than they have been accustomed to.

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