Organizational Demands and Environmental Influences

Part 1:; Chapter 2

Organizational Demands and Environmental Influences

CHAPTER OUTLINE

Importance of Context

This section emphasizes on the importance of using the right tool for the job and how managing employees strategically is a lot like looking for the right tool for the job. The objectives of this chapter are: provide and in-depth look at the types of organizational demands that exist within companies; examine the environmental influences that exist outside companies that affect employee management.

II.Meeting Organizational Demands

Organizational demands are factors inherent within a company that influence how employees are managed.

Strategy

A company’s strategy is its plan for achieving a competitive advantage over its rivals. There are two broad types of strategies that companies can choose. They are: cost leadership strategy and differentiation strategy.

Low-Cost Strategy and Managing Employees

Companies with a low-cost leadership strategy tend to design jobs in a way that maximizes predictable employee outcomes.

Differentiated Strategy and Managing Employees

A differentiation strategy requires employees to perform jobs geared toward a particular objective, such as creativity or customer service.

B. Company Characteristics

Companies differ in size and stage of development, and these differences directly affect how firms manage employees.

1. Company Size

The types of knowledge, skills, and abilities that employees may need in small versus large companies, even for the same job, differ.

2. Stage of Development

Company’s stage of development affects company goals, the role of employees in meeting those goals, and the most appropriate way to manage employees.

C. Organizational Culture

Differences in how companies operate and how employees act signal what is called organizational culture.

D. Employee Concerns

Taking into consideration the employees’ needs and concerns will help companies be more successful in getting employees to work toward company goals. This is often through pay, benefits, and training as incentives for employees.

Work/Life Balance

Work/Life balance is the balance between the demands of work and the demands of employees’ personal lives.

Justice

The issues of justice focus primarily on the expectations of employees about how they should be treated while at work. Three types of justice are presented: distributive, procedural and interactional.

III. Environmental Influences

Environmental influences are pressures that exist outside a company.

A. Labor Force Trends

Companies will have to consider several notable trends in the labor force, individuals who are available to work, in the future.

1. The Aging Workforce

As the baby boomers approach retirement, companies are facing a situation in which a considerable number of their employees may leave the workforce, and there is a limited supply of workers to replace them.

2. Demographic Diversity

Trends in migration, coupled with differences in birth rates across demographic groups, will continue to shape the racial composition of the workforce.

B. Technology

Technology continues to shape the nature of competition and how companies conduct business. Also, the prominence of the Internet and information technologies has considerable implications for how employees function within companies.

C. Globalization

Many companies are actively competing on an international level through exporting products and services, sending work to foreign companies, setting up production or service facilities in other countries, or establishing international joint ventures and partnerships with foreign firms.

1. International Strategies

A strategy used by companies to expand the markets in which they compete to include multiple countries.

2. Global Factors

The decision regarding the location of a company’s international operation is affected by factors such as proximity to the target market and access to resources; also critical to consider how differences across countries influence the management of human resources and the effectiveness of different HR practices. There are two major factors that are particularly important in an international context: economic considerations and cultural differences.

3. Implications of Global Factors on Managing Employees

Globalization also creates unique challenges for managing employees on international assignments. The importance of effectively managing international assignments cannot be emphasized enough.

D. Ethics and Social Responsibility

Companies need to not only set ethical standards for employees but also take steps to show employees how to carry out ethical actions in their jobs.

DISCUSSION QUESTIONS

List as many different types of differentiation strategies that you can imagine a company pursuing. What implications do these different strategies have for employee management?

Students should identify the seven or so differentiation strategies found in the text. The implications would include acknowledging that employees should have or be provided with skills relevant to addressing these strategies.

What are some of the unique HR challenges associated with managing employees in small companies versus large companies?

Students need to acknowledge that small businesses present more or at least different challenges than larger businesses. For example, there is typically more direct employee impact and difficulty in providing competitive wages, benefits and training.

As a manager, what can you do to help instill new values and beliefs among your employees?

This response should address the importance of communicating and reinforcing organizational culture, and recognize that employees need to be recruited with these values or learn them from their manager.

How much responsibility do companies have to help employees balance their work and personal lives? What options are available to help achieve work/life balance? Which options are the best?

Students should grasp the concept that helping employees with work/life balance retains and attracts good employees, so this becomes an important competitive strategy. The text presents a number of options and students should realize that the best options are those that meet the particular need of each employee.

What are the benefits and challenges of having a diverse workforce? How can you help employees embrace diversity?

Students should understand that different perspectives and talents enhance an organization but theses differences often create conflict and complexity as well. Students should also understand that when employees see that differences lead to greater benefits for everyone, it is easier to embrace them.

What types of managerial challenges would you expect to encounter if your employees were to telecommute to work? How would you address those issues?

Students need to think about the impact of the employee who commutes as well as the impact of that employee’s absence. Communication among all employees will be critical in managing these addresseschallenges.

Companies are increasing their global operations and staffing their international operations. What are some of the challenges that a company would face when going global? What could you do as a manager to help people working internationally deal with these challenges?

The response needs to include differences among culture, language, business practices and management styles. Secondly, students should understand that managers must indentify and deal with the specific differences present in the international work environment.

How have advances in technology affected how companies manage their employees?

Students should essentially discuss how the Internet and other technological advances have or can enhance business communications.

As a manager, what can you do to encourage your employees to act in an ethical and socially responsible manner?

The textbook lists five steps that companies can take to encourage ethical behavior.

LEARNING EXERCISE 1

Given the well-documented scandals in corporate America involving unethical behavior, many companies are increasingly encouraging their employees to act ethically. For this exercise, choose four different companies. Research their approaches to ethics and their codes of ethical conduct by visiting their company Web sites and reading about them in the popular business press. Then answer the following questions.

Which company’s approach to ethics impresses you the most? Why? Which is least impressive? Why?
If you were to write a code of ethical conduct for your employees, what would it say? In your opinion, what are the key components of a good code of ethical conduct?
What are some ways that you would make sure employees comply with your code of ethical conduct?

Tip: Students should select four different types of organizations, including not-for-profit, governmental and business. By reflecting on their own values, they will be able to assess which approach is most impressive. To draft a code of conduct, students could refer to Exhibit 2.11 – the Nike Code of Conduct, as well as the ethics codes that may be found on the company Wweb sites. The response to Question #9 will also be useful in helping students know how compliance to ethics codes can be attained.

LEARNING EXERCISE 2

In light of the trends highlighted in this chapter, there is a good chance that you will work in a small company—or even create one! It is therefore important to think about some of the issues that you might encounter in managing employees in a small or entrepreneurial firm.

What challenges would you expect to encounter as a manager in a small company that are different from those you might encounter in a larger, more established company?
How would these challenges influence how you manage your employees?
If you were to create a new company, or at least be part of the founding team, how you manage employees would set the tone for the culture of the company as it grows. Would this influence your decisions about how to manage your employees? How?

Tip: Students should pick a company or industry with which they are most familiar or interested. The response to Question #2 can provide insight, in addition to their own experience or observation, about which challenges may emerge and how to deal with them. The information the textbook presents shows how decisions to manage employees are directly affected by the desired organizational culture.\

CASE STUDY #1 – SUSTAINING SUCCESS AT ST. STEVENS COMMUNITY COLLEGE

Emma Barnes is a senior administrator at St. Stevens Community College (SSCC), and she has recently been asked to assess the sustainability of SSCC’s strategic mission and to develop a long-term plan for SSCC to overcome any pending challenges and capitalize on any potential opportunities. Established in 1965, SSCC is a midsized community college serving the local population that partners with students to maximize their college experience. SSCC’s competitive advantage is to be a high-quality educational option for diverse students at an affordable price and to serve a valuable role in the community. It provides small classes, cutting-edge classrooms, and great resources to enable students to get the most out of their educational experience. Based on all assessments, SSCC has been successful. In just over 40 years, it has grown to more than 12,000 students and enjoys financial profits with enough funds to reinvest in maintaining the administrative infrastructure of the college, enhancing the technology in the classrooms, and bolstering the quality of the athletic facilities.

Despite the college’s success, Emma is worried that it may be experiencing the calm before the storm. There are several reasons for her concerns. First, many of the faculty are approaching retirement age, and hiring faculty replacements is difficult because newly minted Ph.D.s have many options for employment. Moreover, new hires are demanding salaries that are above what SSCC is typically able to afford. The quality of the faculty is a key attraction for students, and Emma worries that SSCC may not be able to maintain the level of education without planning now for the future. In addition, there has been a growing increase in the number of students who have decided to pursue distance education rather than attend community college, with the goal to attend a four-year university after the completion of an associate’s degree online. Finally, the composition of the student population continues to become increasingly diverse in terms of gender, race, national origin, and age. While everyone at SSCC agrees that it is a great asset, Emma wonders what implications the increased diversity of the student body might have for how SSCC moves forward.

While everything seems to be fine, Emma is determined to develop a plan to ensure that SSCC is able to take advantage of its opportunities and minimize its constraints. The problem is, she doesn’t have a clear answer for how to do so.

DISCUSSION QUESTIONS

What is your assessment of the organizational and environmental challenges facing SSCC?
Which of these HR challenges would you view as most important and least important for Emma to consider as she develops a plan for the future?
Given your assessments of these challenges, what recommendations would you make to move forward in a way that ensures that SSCC is able to sustain its strategy of high-quality education at affordable prices?

Tip: From the information this chapter presents on diversity, technology, and organizational culture, students should be able to identify and assess those most relevant to the SSCC situation. Students should discuss the organizational demands of SSCC including its strategy, characteristics, organizational culture and employee concerns. This knowledge will suggest what actions need to be taken that are consistent and relevant to the identified organizational demands.

CASE STUDY # 2 — GLOBALIZATION AT LEVI STRAUSS

Blue jeans are a legendary component of American culture. They were created in the United States in 1873, when Levi Strauss patented the riveted denim jeans that proved so successful among customers that they launched an entire industry. Yet, the one company that has perhaps been most sSynonymous with blue jeans—Levi Strauss—doesn’t actually make its blue jeans in the United States.

In the late 1990s and early part of this decade, Levi Strauss undertook a substantial shift in the location of its manufacturing operations. In 1997, Levi Strauss closed 11 plants and laid off 7,400 employees to cut excess production. In 1999, Levi’s

announced a large-scale layoff of almost 6,000 jobs and the closing of more factories in Georgia, North Carolina, Virginia, Texas, Tennessee, and Arkansas in an effort to move production to foreign facilities. Over time, the layoffs and the closing continued.

Once a mainstay of U.S. manufacturing, plants in areas such as San Antonio, San Francisco, El Paso, and Brownsville, were closed, and by 2004, Levi Strauss had shut its domestic operations and moved production facilities to foreign countries such as Mexico and China. Costs were a major factor for this decision. What might cost $6.67 to make in the United States costs about $3.00 in Mexico and $1.50 in China. While Levi Strauss was reluctant to move these jobs, it faced a competitive market operating with lower costs and lower prices.

DISCUSSION QUESTIONS

How did the four environmental factors discussed in this chapter influence Levi’s decision to move its manufacturing outside the United States?
How would you evaluate this decision from a business perspective? What about from an ethical perspective?
Assume that you are an employee working for Levi Strauss and are assigned to the management team in one of the manufacturing facilities in Mexico. What differences would you anticipate in terms of how you manage your Mexican employees versus how you manage employees located in the United States?

Tip: In this case study, students should discuss the environmental influences presented in the chapter which include: labor force trends, technology, globalization, ethics and social responsibility. This will enable students to effectively understand the impact of these factors on Levi Strauss and how to manage their employees.

Sources: Kaufman, L. Levi is closing 11 factories; 7,600 jobs cut. New York Times online, February 23, 1999, C103DF930A15751C0A96F958260; Kaufman, L. Levi Strauss to close 6 U.S. plants and lay off 3,300. New York Times online, April 9, 2002, fullpage.html?res=9F06E6DB133DF93AA35757C0A9649C8B63; andThiruvengadam, M. Apparel industry no longer a good fit in El Paso. San Antonio (Texas) Express-News, October 15, 2005, apparelindustryoutofelpaso_ 10152005.pdf.