Understanding the business environmentAssignment 1 Due Dat.docx

Understanding the business environment:
Assignment 1:
Due Date: 25 Jul 2015
1, Work through each of the first four Study Guide topics and
write a 150-word ( approx. – no marks will be deducted if the
posts exceed 150 words) response on the discussion board to
each of the topical questions found at the end of Study Guide
topics 1-4 ( note: there are questions at the end of each
chapters, but you are only expected to answer topics 1-4 for
assignment 1)
2, Write a 1000-word reflection hat summaries your personal
understanding, practical implication and possible criticisms
raised by the discussion and questions. Viewpoints and
interpretations should be supported and appropriate examples
provided, as applicable. Even as a reflective piece of work
students need to follow the essay structure of introduction, body
and conclusion, as well as appropriate referencing.
CRICOS Provider: 01241G
MNG10713
Understanding the Business
Environment
Written by: Dr Brian Morris
Study Guide
Third edition

Third edition 2015
© 2015 Southern Cross University
Southern Cross University
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East Lismore NSW 2480
No part of this publication may be reproduced, stored in a
retrieval system or transmitted in
any form or by means electronic, mechanical, photocopying,
recording or otherwise without
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Copyright material indicated in this work has been copied under
Part VB of the Copyright Act
1968.
i
Contents
Topic 1 The history of work: Classical, behavioural, and
modern approaches to management ................... 1
Introduction
...............................................................................................
....................................................1
Management: An amalgam of ‘art’ and ‘science’
.......................................................................................2
The classical approach to management
...............................................................................................
.......2
The behavioural approach to management
...............................................................................................

4
The modern approach to management
...............................................................................................
.......5
Advantages and disadvantages
...............................................................................................
.....................6
Summary
...............................................................................................
.........................................................7
References
...............................................................................................
.......................................................8
Topic 2 Introduction to fundamentals of the contemporary
workforce ................................................................9
Introduction
...............................................................................................
....................................................9
Features of the contemporary workforce
...............................................................................................
. 10
Basic structures and functions of contemporary organisations
........................................................... 14
Summary
...............................................................................................
...................................................... 15
References
...............................................................................................
.................................................... 15
Topic 3 An overview of HRM
...............................................................................................
.................................................17
Fundamentals of human resource management, attracting,
developing and maintaining a quality

workforce
...............................................................................................
...................................................... 17
Introduction
...............................................................................................
................................................. 17
The importance of people to organisational performance
................................................................... 18
A basic understanding of HRM
...............................................................................................
................ 19
Engaging a quality workforce
...............................................................................................
.................... 21
Developing a quality workforce
...............................................................................................
................ 22
Maintaining a quality workforce
...............................................................................................
............... 22
Summary
...............................................................................................
...................................................... 23
References
...............................................................................................
.................................................... 24
Topic 4 International management and globalisation and its
effect upon labour and capital .................. 25
Introduction
...............................................................................................
................................................. 25
International management in the globalised business
environment .................................................. 26
Summary
...............................................................................................

...................................................... 30
References
...............................................................................................
.................................................... 31
Topic 5 Motivation and rewards theories – The meaning of work
for individuals, job design
and stress, generational cohorts and the aging population
....................................................................................33
Introduction
...............................................................................................
................................................. 33
Human need and workplace motivation
...............................................................................................
.. 34
Processes of job design
...............................................................................................
............................... 36
Generational cohorts and the implications of an aging
population .................................................... 38
MNG10713 Understanding the Business Environmentii
Summary
...............................................................................................
...................................................... 39
References
...............................................................................................
.................................................... 40
Topic 6 Skill shortages and global competition for highly
skilled labour ............................................................41
Introduction

...............................................................................................
................................................. 41
Skill shortages in the contemporary global context
.............................................................................. 42
The ‘war for talent’ and global competition
............................................................................................
43
Sourcing highly skilled labour in the global business
environment ................................................... 44
Summary
...............................................................................................
...................................................... 45
References
...............................................................................................
.................................................... 45
Topic 7 Communicating effectively and resolving conflict
.......................................................................................47
Introduction
...............................................................................................
................................................. 47
Communication and conceptualisation
...............................................................................................
... 48
Communication and considerations
...............................................................................................
........ 50
Communication and conflict
...............................................................................................
.................... 53
Summary
...............................................................................................
...................................................... 54
References
...............................................................................................
.................................................... 54

Topic 8 Managing change at the organisational and individual
level. Changing nature of work ...............55
Introduction
...............................................................................................
................................................. 55
Challenges of change
...............................................................................................
.................................. 56
Managing change
...............................................................................................
........................................ 58
Changing nature of work
...............................................................................................
........................... 60
Summary
...............................................................................................
...................................................... 62
References
...............................................................................................
.................................................... 62
Topic 9 Leading a multi-generational workforce. The
implication of emotional intelligence
and gender leadership
...............................................................................................
............................................................63
Introduction
...............................................................................................
................................................. 63
Leadership in the business environment
...............................................................................................
. 64
The multi-generational workforce
...............................................................................................

............ 66
Emotional intelligence and multi-generational workforces
................................................................. 67
Gender leadership in the multi-generational workforce
...................................................................... 68
Summary
...............................................................................................
...................................................... 69
References
...............................................................................................
.................................................... 70
Topic 10 Sustainable operations and service management. The
role of HR practices in supporting
managers effectively
...............................................................................................
................................................................71
Introduction
...............................................................................................
................................................. 71
Operations management and efficiencies
...............................................................................................
72
Operations management and value creation
.......................................................................................... 73
Operations management and quality
...............................................................................................
....... 74
Strategic management
...............................................................................................
................................ 74
Summary
...............................................................................................
...................................................... 75
References

............................................................................................. ..
.................................................... 75
1
Topic 1
The history of work: Classical,
behavioural, and modern
approaches to management
How to use this Study Guide
This Study Guide is intended to provide to you a sound
overview of the topics considered in this unit. Each
topic contains:
• an outline of the learning objectives for the topic
• the list of readings you should undertake to improve your
understanding of each topic
• activities that you can do to enhance your learning
• and the mandatory (only mandatory from Topics 1–4) Weekly
online discussion activity that
comprises Assignment 1.
To succeed in this unit you are advised to read the Study Guide
carefully and do the exercises provided in it.
You would also benefit tremendously from reading the material
provided in the topic, which will be located
in MySCU under ‘eReadings’.
Seeking to understand the contemporary business environment
is an important endeavour that will reward
diligent consideration. This unit provides the opportunity to

study this important topic. Study the material
in this unit carefully and diligently and you will complete it
successfully and with a sound understanding
of the nature and challenges of business today.
Learning objectives
After completing this topic, the student will be able to:
1. recognise the major approaches to management and describe
their historical development
2. list and explain the characteristics of classical, behavioural
and modern approaches to management.
3. compare the advantages and disadvantages of each
managerial approach.
These objectives relate to Unit Learning Outcomes 1 and 5.
Introduction
This topic examines three fundamental approaches to
management in the history of work: classical,
behavioural, and modern. After completing this topic, you will
be able to identify, describe and compare
these approaches, and describe their historical context and
significance.
The classical approach incorporates scientific management,
administrative principles and bureaucratic
organisation.
MNG10713 Understanding the Business Environment2
The behavioural approach examines the Hawthorne studies,
Maslow’s theory of human needs and
McGregor’s Theory X and Theory Y.

Modern approaches to management includes systems thinking
and contingency thinking.
To complete this topic, you will need to read through the
material and complete the activities and readings
that address the topic.
r Textbook
• Read Chapter 2 of the textbook to get a more detailed
overview of this topic.
• Schermerhorn, JR, Davidson, P, Poole, A, Woods, D, Simon,
A & McBarron, E 2011,
‘Historical foundations of management’, in Management, 5th
Asia-Pacific edn, Wiley,
Milton, Qld, pp. 33–56.
Management: An amalgam of ‘art’ and ‘science’
Successful management is an amalgam of art and science. It is
an art in that good management is not
accomplished simply by following a set of rules. The
management of people is intrinsically many-faceted,
fluid and enigmatic because it is susceptible to all the vagaries
of the human psyche and emotion. As such,
the ‘art’ of management involves factors such as perception,
intuition, empathy, subtlety, insight, support,
innovation and leadership, all the less tangible aspects of
quality management. This is the ‘art’ side to
management. It refers to the ‘soft’ skills a manager must
possess to be effective in recruiting and maintaining
people who will become productive for an organisation.
However, the counter-balance to the ‘art’ of management is the
‘science’ of management. The ‘soft’ skills
work in conjunction with the ‘hard’ skills of management.
These are the skills that encompass factors such

as Frederick Taylor’s methods of ‘measurement and
management’, which employed scientific rationale and
measurement to increase productivity. Max Weber’s ideas on
the significance and utility of ‘bureaucracy’
to manage organisations also reflect the ‘hard’ skills of
management. As such, these skills rely on ‘objective
measurement and proven experiments’ (Schermerhorn et al.,
p. 36). Effective management does not easily or
exclusively fall into the domain of either ‘art’ or ‘science’ but,
instead, involves the amalgamation of both ‘soft’
and ‘hard’ skills. It is important to know this because
emphasising one dimension of management, without
regard for the other, will not provide a complete picture of the
business and management environment. And,
of course, incomplete information can produce errors of
judgement.
Accordingly, the first step to understanding the business
environment is to become familiar with the
historical development of management. Three fundamental
approaches will be considered: classical,
behavioural and modern approaches. These approaches are
comprised of a variety of perspectives, discourses
and methods. Your task at the beginning of this unit is to
familiarise yourself with these perspectives. In so
doing, you will internalise a rich historical context that better
informs and guides your understanding and
response to the contemporary business environment.
The classical approach to management
The classical approach to management focuses on developing
universal approaches for use in various
management situations. These approaches share the common
assumption that people are rational and that
appealing to this rationality, and the formation of management
strategy based upon it, will be facilitate

productive work and effective management. The classical
approach is informed by the ideas of Taylor, Weber
and Fayol, amongst others. It is comprised of three distinct
management methods that reflect the ideas of
these important contributors to management thinking: scientific
management, administrative principles
and bureaucratic organisation (Schermerhorn et al. 2014, p. 36).
modern approaches to management 3
Scientific management
The first element within the classical approach to management
emphasises scientific management. Frederick
Taylor is the father of scientific management (Locke 1982).
Taylor applied a scientific approach to managing
worker productivity. He measured productivity by reducing it to
a fixed set of motions by the worker and
measuring the time taken to accomplish the task under
observation. In this way, he applied ‘scientific’
principles that increased output and productivity. This was
particularly effective in line management and
where output was associated with, or attached to, a production
line. However, the principle he employed
became popular and soon gained widespread acceptance and
use.
However, there were some flaws in Taylor’s approach. For
instance, it tended to alienate workers by reducing
their experience of work to a routine of drudgery. It also created
resentment because workers began to
perceive it as a management system that simply sought to wring
more labour from them and reduce the
amount of employees required. So, while the scientific

principles of ‘Taylorism’ did generate efficiencies, it
tended to ignore the significance and management of worker
satisfaction.
The principles Taylor applied were the origin of scientific
management. Four principles guide and inform
this aspect of the classical approach to management: science,
selection, support and smoothing. The first
principle, science, refers to the standardisation of work
procedures. Selection concerns the principle of careful
selection of suitable workers. Support focuses on the training
and incentivising of workers. Smoothing
concerns ensuring the ease of the work of employees through
careful planning.
You can expand your understanding of Taylor’s ideas by
reading the following article:
r Reading 1.1
Locke, E 1982, ‘The ideas of Frederick W. Taylor: An
evaluation’, Academy of Management
Review, vol. 7, no. 1, pp. 14–24. In this article, Edwin Locke
examines the ideas of Frederick
Taylor. He explains the techniques Taylor developed, asserts
they still have validity and refutes
some criticisms against them.
Administrative principles
The second element within the classical approach to
management focuses on administrative principles. This
is the perspective that emphasises administrative principles
rather than scientific principles. It is informed
by the ideas of Henri Fayol (Wren et al. 2002) and Mary Parker
Follett (McLarney & Rhyno 1999). Fayol
proposed that effective management involved five ‘duties’:
foresight, organisation, command, coordination

and control. These five duties closely resemble the four
functions of management commonly held today:
planning, organising, leading and controlling. Foresight refers
to planning, organisation to the clear
implementing of the plan, command to leadership that draws
productivity from workers, coordination to
the management of effort and problems, and control to the
ensuring the effective implementation of the plan.
Fayol’s contribution to the management also included the belief
that it could be developed as the result
of training. His ideas form the basis of approaching
management from a perspective that emphasises
administration. Moreover, he introduced concepts and terms that
are still in use. These include the scalar
chain, unity of command and unity of direction principles.
The scalar chain principle is the notion that communication
should be unbroken within an organisation’s
hierarchy.
The unity of command principle refers to the need for each
employee to have only one person to whom they
are directly accountable.
The unity of direction principle refers to the need to have only
one person in charge of those activities that
fall into the same category of performance objectives.
Fayol’s ideas elevated the significance of administrative
principles in management. However, Mary Parker
Follet also contributed to this approach. Her understanding and
insight developed from her work with
groups, which inculcated in her the certainty that cooperation
amongst people produced better outcomes in

organisations. Follett’s ideas promoted the notion that harmony
and collaboration between managers and
workers enhanced productivity. Her ideas form the basis of
current concepts and practices such as ‘employee
ownership’ and ‘profit-sharing’.
Both Fayol and Follet are important contributors to the classical
approach of management. Their contribution
developed and highlighted the significant role that correct
administration had in effective management.
Bureaucratic organisation
The third element within the classical approach to management
emphasised the importance of bureaucratic
organisation. Max Weber is the primary contributor to this
school of thought (Harro, 2006). Essentially,
Weber confronted the problem of nepotism and concluded that
the bureaucratic organisation was the means
to correct this problem. Nepotism is the promoting or granting
of valuable positions/contracts to close
confidantes or associates. Weber thought that this problem
could be removed by organisations becoming
more bureaucratic in their structure. This meant the organisation
adhering to strict rules and regulations
concerning appointments, decisions and processes.
Appointments were to be based on merit, decisions on
a set of pre-established rules, and processes on a system of
continual checking and accountability. Weber
saw the ‘bureaucratic’ structure as the most efficient and
effective way for organisations to function. The
bureaucratic organisation was intended to function on principles
of ‘logic, order and legitimate authority’

(Schermerhorn et al. 2014, p. 40).
Accordingly, the bureaucratic organisation is characterised by
features that enable rationality, efficiency and
legitimacy. Five features characterise the bureaucratic
organisation: distinct separation of tasks, hierarchal
authority, formalised set of rules and procedures, impartiality
and merit-based advancement.
Unfortunately, bureaucracy contained flaws that, today, are
commonly recognised and acknowledged.
Prominent amongst these flaws is the tendency of bureaucracy
to become bogged down in ‘red tape’. This
refers to the excessive paperwork that is often associated with
bureaucratic organisations. In addition,
problems are managed slowly, response time to change is slow,
intractability is common and employees
are prone to apathy. These problems are especially troublesome
in the contemporary environment of fast
changing customer desires and client needs. In an era when
organisational nimbleness is almost mandatory,
bureaucratic organisations can struggle to compete.
Now, undertake the following activity.
a Activity 1.1
Consider the following and share your understanding on the
MySCU Discussion Forum.
• Summarise Frederick Taylor’s major ideas and techniques.
• List and briefly explain five major criticisms applied against
Taylor’s work.
• Why, and in what circumstances, would Taylor’s ideas still be
valid today?
The behavioural approach to management
The behavioural approach to management is the second major

approach we are considering. As with the
classical approach, three major branches constitute the
behavioural approach: the Hawthorne studies of
human relations, Maslow’s theory of human needs and
McGregor’s Theory X and Theory Y. The behavioural
approach to management contrasts with the classical approach
to management in that it represents a shift of
focus away from the worker as automaton to the worker as a
person. You will recall that the latter approach
focused on worker productivity and involved de-personalisation
of workers via time-motions studies,
chains of command and bureaucratic organisation. The
behavioural approach developed during the 1920s
and placed emphasis on the human dimension of the workplace.
Hawthorne studies of human relations
The Hawthorne studies ignited the interest in behavioural
approaches to management. The studies are so
named because they were conducted at the Hawthorne Works
factory of the Western Electric Company
in 1924 (Greenwood et al. 1983). The research was initially
premised on classical, scientific approaches
to management. The study hope to make a link between
illumination (lighting) levels and productivity.
However, the assumptions of the classical approach failed to
explain the results, which was that illumination
made no difference. Consequently, the researchers concluded
that factors other than physical working
conditions were in play when it came to productivity. The
significance of the Hawthorne studies is that it
directed attention to these other, behavioural, factors.

This initial recognition was followed up in 1927 by Elton Mayo,
who commenced a study to investigate the
relation of fatigue to productivity. This study sought to
investigate the effects of varying work schedules on
productivity. Again, the study failed to show a link between
physical conditions and productivity, leading
Mayo to conclude that social factors were the reason for this
failure. The point here, of course, is that
researchers were beginning to understand in these studies that
factors other than physical conditions
affected productivity.
Maslow’s theory of human needs
The Hawthorne studies showed that the human or social
dimension effected worker productivity and was
instrumental the development of the behavioural approach to
management. Abraham Maslow contributed
to this approach in his work by focussing on human need as an
important driver in workplace productivity
(Dye et al. 2005). His premise was that there were five
important levels of human need that people sought
to satisfy in sequence: ‘physiological, safety, social, esteem and
self-actualisation’ (Schermerhorn et al. 2014,
p. 43). His conclusion was that managers who could enable
workers to satisfy these important needs would
gain more productivity from them.
McGregor’s Theory X and Theory Y
The behavioural approach to management was further advanced
through the work of Douglas McGregor
(Carson 2005), who proposed that notions of workers as
resistant to productivity, which he collated under
the label ‘Theory X’, were incorrect and should be replaced by
the positive assumptions of ‘Theory Y’,
which held that workers were quite willing and able. His

proposal was the managers made the difference
by recognising and utilising the human and social dimensions of
worker productivity. In short, managers
needed to substitute the negative and disempowering
assumptions of Theory X with the positive and
empowering assumptions of Theory Y.
r Reading 1.2
Greenwood, R, Bolton, A & Greenwood, RA 1983, ‘Hawthorne
a half century later: Relay
assembly participants remember’, Journal of Management, vol.
9, no. 2, pp. 217–231. This paper
revisits and outlines the Hawthorne experiments. Read it to
better understand the context and
development of the Hawthorne experiments.
The modern approach to management
Modern approaches to management is the last perspective we
consider in our overview. They represent
the culmination of a linear progression in the development of
management approaches. That is, they have
developed directly from preceding approaches. In essence,
modern approaches to management apply and
merge principles from the preceding perspectives to the
strategies it employs to gain productivity. Modern
approaches to management concur with behavioural approaches
in recognising the importance of the
human and social aspects of workplace productivity and also
recognise the ongoing utility and value of the
classical notions discussed above. Two flavours of the modern
approach to management are considered here.

Systems thinking
Systems thinking is so named because it is based on the notion
that well-coordinated organisations would
be more productive. In this perspective, organisations are
depicted as systems comprised of various parts
with a common goal. If these parts all work well together, the
organisation will be effective, if not, it will
decline. The point is that managers are considered the critical
agents to enabling effective coordination of
the organisation, which they do by fostering cooperation
amongst the individuals, teams and departments.
Contingency thinking
Contingency thinking is as is sounds; an approach to
management based on selecting an appropriate
response to a particular situation. It assumes the demands of
various situations are unique and, therefore,
require a best fit solution. A solution that is contingent to the
situation, not the rigid and forced application
of inappropriate methods. As such, the emphasis of contingency
thinking is deciphering and understanding
the unique factors to each circumstance before applying
solutions. The management approach here is one
that is concerned with the best fit and recognises that this may
differ over time and within organisations.
a Activity 1.2
Go to the Discussion Forum on MySCU and give an example of
when you have encountered
either systems thinking or contingency thinking as a
management approach.
Advantages and disadvantages
The linear progression in the development of the approach to
management explained above may suggest
progression in terms of improvement. That is, as new ideas have

developed and additional knowledge
uncovered, the older approaches became obsolete. However, as
contingency thinking shows, the principles
of earlier models of management still retain applicability in
some situations. For instance, McDonald’s
applies both the efficiencies of scientific management and the
motivational aspects of human relations to
enhance the productivity of its workers. As such, the advantages
and disadvantages of each approach depend
on the particular make-up and circumstance of the organisation
or situation in question. Nonetheless, the
approaches can be compared and contrasted.
The impersonal tone of classical approaches to management is
useful when undertaking tasks that
require clear rules and boundaries. It is also useful for
maintaining focus on the task and for blocking
the overflow of personal issues into the workplace. However, its
advantage is also its disadvantage in that
its impersonality ignores the significance of human relations to
worker productivity, which could lead to
worker dissatisfaction, turnover and apathy.
The advantage of behavioural approaches to management is that
it does take into account human relations.
As such, it addresses issues of worker satisfaction and
motivation and provides a model for managing worker
productivity according to these principles. The effects can be
productivity increases that are attributable to
workers being more creative, industrious, satisfied and loyal.
However, it can also generate an organisational
culture that is overly social or lacks the objectiveness required
to make hard decisions, such as making
significant changes or dismissing invested workers.
The advantages of the modern approaches to management are

their comprehensiveness and flexibility.
Systems thinking approaches management by focusing on the
overall context. This has the advantage of
identifying problem areas and enabling clarity concerning the
state of an organisation. However, it can
also lead to unexpected outcomes. For instance, using the
systems thinking approach might result in the
identification of a worker that is less productive than others and
the subsequent dismissal of that worker.
It might be expected that productivity would then increase but
the opposite may be the case if the worker
fulfilled other, unnoticed, functions that enhanced teamwork.
Contingency thinking allows for flexibility
when undertaking management challenges. Its advantage is that
it enables choice and a broad range of
options when resolving management problems or designing new
solutions.
The following reading provides a useful overview of trends in
Australian human resource management
(HRM) policies over the last fifty years. Read it to get a sense
of how management approaches have evolved
in Australia.
r Reading 1.3
Kramar, R, 2012, ‘Trends in Australian human resource
management: What next?’, Asia Pacific
Journal of Human Resources, vol. 50, pp. 133–150. This paper
examines the trends in Australian
human resource management (HRM) policies in the last fifty
years. Read it to get an overview

of HRM policy development in Australia.
Summary
• The scientific management, administrative principles and
bureaucratic organisations constitute the
core of the classical approach to management. Scientific
management refers to the application of
rationality and ‘science’ to the task of management and involves
the observation and measurement of
time and motion to increase task efficiency. Frederick Taylor is
a major contributor to this school of
thought. Charges of exploitation have been directed at this
system of management.
• Administrative principles refer to the application of
management principles in contrast to the
emulation of scientific methodology. It emphasises planning,
leading, controlling and supporting.
It also emphasises harmony and collaboration and limited
hierarchal authority. Henri Fayol and
Mary Parker Follett are the key figures in the historical
development of this system. Bureaucratic
organisations are the idea of Max Weber and are characterised
by an emphasis on appointments
by merit rather than privilege, a fixed set of rules and
procedures to guide the organisation
and impartiality in the exercise of these rules. Cumbersomeness
tends to mark these types of
organisations.
• The behavioural approach to management developed out of the
Hawthorne studies when it could not
explain why physical workplace conditions did not affect
productivity. Further studies uncovered
the role of human and social aspects in productivity and led to

managerial approaches emphasising
the satisfaction of needs and the adjusting of negative
assumptions about workers as strategies for
enhancing productivity. These approaches embraced a
behavioural perspective.
• Modern approaches to management select from the range of
notions, strategies, tools and
assumptions available within the managerial toolbox. It seeks
solutions that are the best fit to
particular situations and applies the principles of the classical
and behavioural approaches if, and
when, necessary. It does not assume one correct solution or that
a solution will always be correct in all
circumstances, rather, it identifies the unique issues to a
situation and applies solutions selected from
the range of options available.
a Weekly online discussion activity: Topic 1
Post a 150-word response on the Discussion Board in MySCU to
the following question: ‘What
were some of Henry Fayol’s main contributions to the field of
management?’
References
Carson, C 2005, ‘A historical view of Douglas McGregor’s
Theory Y’, Management Decision, vol. 43, no. 3,
pp. 450–460.
Dye, K, Mills, A & Weatherbee, T 2005, ‘Maslow: Man
interrupted: Reading management theory in context’,

Management Decision, vol. 43, no. 10, pp. 1375–1395.
Greenwood, R, Bolton, A & Greenwood, RA 1983, ‘Hawthorne
a half century later: Relay assembly
participants remember’, Journal of Management, vol. 9, no. 2,
pp. 217–231.
Harro, M 2006, ‘Post-bureaucracy and Weber’s “modern”
bureaucrat’, Journal of Organizational Change
Management, vol. 19, no. 1, pp. 8–21.
Locke, E 1982, ‘The ideas of Frederick W. Taylor: An
evaluation’, Academy of Management Review, vol. 7,
no. 1, pp. 14–24.
McLarney, C & Rhyno, S 1999, ‘Mary Parker Follett: Visionary
leadership and strategic management’,
Women In Management Review, vol. 14, no. 7, pp. 292–304.
Schermerhorn, JR, Davidson, P, Poole, D, Simon, A, Woods, P
& McBarron, E 2011, ‘Historical foundations
of management’, In: Management, 4th Asia-Pacific edn, Wiley,
Wren, D, Bedeian, A & Breeze J 2002, ‘The foundations of
Henri Fayol’s administrative theory’, Management
Decision, vol. 40, no. 9, pp. 906–918.
9
Topic 2
Introduction to fundamentals of
the contemporary workforce

Learning objectives
1. outline the major features of the contemporary workforce,
namely, that it is knowledge-based,
technology dependent, globalised, networked, diverse, team-
focused and flexibly employed
2. describe the basic structures and functions of contemporary
organisations
3. summarise the significance of knowledge, globalisation,
technology and diversity to contemporary
work practices.
Introduction
The contemporary workforce has to work smarter, faster and
better to be productive in today’s globalised,
knowledge-based and technologically savvy business
environment. As the global financial crisis revealed,
tectonic changes in the global economy can occur unexpectedly
with catastrophic effects. Organisations
must be flexible, innovative and learning focussed to maintain
competitiveness and to manage the challenges
of the globalised economy. To do this, their workforces need to
be well trained, properly supported and
suitably rewarded.
In the contemporary knowledge-based business environment,
creating value is even more connected to
the productivity of an organisation’s people. Today’s workforce
has to innovatively and effectively manage
knowledge and technology, it must function creatively in a
social context of diversity and collaboration and

it must operate in a globalised, networked and flexibly
employed environment.
This topic will introduce you to the fundamentals of the
contemporary workforce. It will outline the major
features of today’s workforce, explain the basic structures and
functions of contemporary organisations and
highlight the significance of globalisation, technology and
diversity.
r Textbook
• Read Chapter 1 and 3 of the textbook to get a more detailed
• Schermerhorn, JR, Davidson, P, Poole, D, Simon, A, Woods, P
& McBarron, E 2014, ‘The
contemporary workplace’, In: Management, 5th Asia-Pacific
edn, Milton, Wiley, Qld,
pp. 1–30.
• Schermerhorn, J et al. 2014 ‘Environment and diversity’, In:
Management, 5th Asia-Pacific
edn, Wiley, Milton, Qld, pp. 57–84.
Features of the contemporary workforce
Knowledge workers
The foundation of successful organisations is people and the
knowledge they possess and continually
acquire. The people working within an organisation are the
repositories of its intellectual and social capital
and it is this capital that enables organisations to be

competitive. As such, the contemporary workforce is
characterised by knowledge workers. A knowledge worker is
‘someone whose mind is an important asset
to employers and who adds to the intellectual capital of the
organisation’ (Schermerhorn et al. 2014, p. 15).
Research investigating the links between knowledge, social
capital and innovation has shown that
organisational knowledge is a ‘strong determinant of … radical
innovation’ (Pérez-Luño et al. 2011,
p. 1373). The knowledge worker’s ability to continually
acquire, analyse and apply knowledge is a critical
component of innovation, which is a key factor to
organisational success in the contemporary environment.
The contemporary workforce is able to gain, manage and use
knowledge effectively to add value to their
employing organisations (Drucker 1997, p. 22).
r Reading 2.1
Drucker, P, Dyson, E, Handy, C, Saffo, P, & Senge, PM, 1997,
‘Looking ahead: Implications of
the present’, Harvard Business Review, September-October,
pp. 18–32. This article presents the
reflections of five major thinkers regarding the problems and
challenges of the future. Read it to
better understand the nature of the contemporary business
environment and workforce.
r Online reading
Xerri, M & Brunetto, Y 2011, ‘Fostering the innovative
behaviour of SME employees: A social
capital perspective’, Research and Practice in Human Resource
Management, vol. 19, no. 2, pp. 43–
59. http://rphrm.curtin.edu.au/2011/issue2/innovative.html. This
paper investigates antecedents
for innovative behaviour in SME employees. Read it for insight

into how the innovative process
occurs and can be developed.
Technology dependent
The contemporary workforce is characterised by dependence on
technology. Information technology is the
backbone of the global economy and it is unthinkable that
modern organisations could function without
it. Computers, mobile phones and iPads are ubiquitous in the
contemporary business environment and are
used incessantly to communicate, calculate, navigate and
accelerate the transactions, inventory checking,
decision making and stream lining of business activity.
Technology makes possible the virtual office, an aspect of the
contemporary workforce in which workers
can overcome the constraints of geographical and chronological
boundaries. It enables organisations to
use new ways to manage the challenges faced by expatriate
workers. It also enables massive connectivity at
virtually instantaneous speeds, which enables the sharing of
information on a scale not previously known.
This dependence on technology is a key feature of the
contemporary workforce. It means that part of the
knowledge workers purview is to be technologically savvy and
that ‘computer literacy must be mastered and
continuously developed as foundation for career success’
(Schermerhorn et al. 2014, p. 7).
http://rphrm.curtin.edu.au/2011/issue2/innovative.html
workforce 11

Globalised
International trade, via imports and exports, has always been an
important element of national economies
in that products were manufactured in one country and imported
or exported to another. This economic
activity was globalised in the sense that it involved
international trade and transactions. However, in the
twentieth century, national boundaries became increasingly
irrelevant to the manufacturing of goods,
particularly in the latter half, with the rapid and ubiquitous
diffusion of information technologies.
Today the products we consume may be made of parts that have
several different origins. Your running
shoes may have been designed in the USA and its leather upper
sourced from Texas. However, the tanning
of that leather may have taken place in South Korea and the
actual shoe assembled in Indonesia. The rubber
soles might have been made from petroleum and benzene from
Saudi Arabia and then assembled in Taiwan.
The box it came in might have been made in a New Mexico
paper mill (Victoria International Development
Education Association, VIDEA 2000, p. 1). The business aspect
of globalisation refers this transcendence of
national boundaries in the manufacturing and managing of
production.
What this means for the contemporary workforce is that it must
be increasingly interconnected, mobile
and culturally competent (Grosse 2011). Working in the
contemporary globalised environment requires
expertise in the technology and process of communication. It
involves a greater degree of mobility as
employees are increasingly required to cross international
boundaries to undertake their duties or seek
new employment.

Inevitably, this increased interconnectedness and mobility
involves negotiating cultural differences. As
such, the contemporary workforce must be culturally competent,
one of the graduate attributes that
Southern Cross University seeks to inculcate in students. It is
the ability to engage with diverse cultural
and Indigenous perspectives in both global and local settings.
Globalisation is a significant factor in the
contemporary workforce.
Diverse
Perhaps the most self-evident characteristic of the contemporary
workforce is its diversity. Age, gender, race,
religion, ethnicity, sexual orientation and disability are major
sources of difference amongst workers today.
These differences are often discussed in terms of the potential
for conflict but the benefits of diversity are that
it enables access to wide range of views and the cross-
pollination of ideas, and thus, can effect innovation
(Østergaarda, Timmermans, & Kristinsson 2011).
As noted above, people are the repositories of the intellectual
capital of an organisation because of the
knowledge they gain, retain and apply. Diversity extends the
value of the contemporary workforce in the way
it harnesses human capital and the application of a wide range
of perspectives (Yang & Konrad 2011). The
contemporary workforce is diverse and when it is valued it is a
potential source of value for an organisation.
However, workforce diversity can also be problematic. While
discrimination on the basis of demographic
attributes is prohibited in Australia, the contemporary
workforce is still subject to forms of discrimination
that are not easily visible or explicitly addressed. Female

workers and those from minority groups can still
be excluded from advancing past a certain point. This limitation
is referred to as the glass ceiling effect, a
hidden and discriminatory obstruction to promotion for these
groups.
Older workers also are subjected to discrimination. Despite a
large proportion of the Australian workforce
being comprised of people over 45, research involving 7500
Australian companies uncovered that less than
a third of these companies sought to recruit older workers
(Schermerhorn et al. 2014, p. 7). Ironically, the
outlook for the future is one in which the contemporary
workforce is going to be increasingly older. Factors
such as the low birth rates of western nations (Drucker et al.
1997, p. 20), increased longevity and the impact
of the global financial crisis on retirement savings has meant
more workers being older and deferring
retirement.
Diversity is key feature of the contemporary workforce.
However, difference can be either a source of value or
of conflict and the manner in which an organisation or
individual approaches diversity will either empower
or obstruct productivity.
r Reading 2.3
Eikhof, D, 2012, ‘A double-edged sword: Twenty-first century
workplace trends and gender
equality’, Gender in Management: An International Journal, vol.
27, no. 1, pp. 7–22. This
paper addresses the hidden gender consequences related to the

increase in knowledge work,
information and communication technology and work-life
balance policies. Read it to better
understand the nature, diversity and gender issues of the
r Reading 2.4
The Treasury 2015, 2015 Intergenerational Report, Government
of Australia. Available from:
http://d3v4mnyz9ontea.cloudfront.net/2015_IGR.pdf. [24 April
2015].
Intergenerational Reports detail demographic and economic
changes in Australia, and are
compiled every five years. Read it to better understand some of
the challenges that Australia
will face over the next 40 years and the decisions that need to
be made now.
r Reading 2.5
Australian Human Rights Commission, National prevalence
survey of age discrimination in
the workplace, Government of Australia. Available from:
https://www.humanrights.gov.au/our-
work/age-discrimination/publications/national-prevalence-
survey-age-discrimination-workplace.
[24 April 2015]. The report details Australia’s first nation-wide
survey of age discrimination
at work. Read it to better understand some of the challenges that
Australia will face over age
discrimination in the workplace. The results show that over a
quarter of Australians aged 50
years and over report that they had experienced some form of
age discrimination in the last two
years, and 80 per cent of those spoke of negative impacts.

Team-focused
A team is a group of people pooling their talents, knowledge
and resources to attain a common goal. Teams
and teamwork are prominent features of the contemporary
workforce and come in a variety of forms,
such as committees, project teams, cross-functional teams,
employee involvement teams and virtual teams.
Organisations today are confronted with complex challenges
that cannot be resolved without the combined
knowledge and input of teams. Many of the tasks in
organisations are far too complex for individuals to
manage.
To be competitive organisations must harness the synergistic
effects of teams to enhance the speed,
innovativeness and efficiency with which they respond to
challenges. Teams contain the potential to
unlock individual talents, which can then combine and generate
synergistic effects that outstrip what
can be accomplished by the individuals themselves. These
effects include greater productivity, better
communication and more efficient processes.
As such, the 21st century employee is expected to work well in
teams. Emotional intelligence, communication
and interpersonal skills are at a premium and work performance
is often evaluated on these abilities (Chien
Farh & Seo 2012). Employees that cannot function effectively
in teams can find themselves blocked from
advancement or vulnerable to dismissal. The contemporary
workforce is team-focused.
http://d3v4mnyz9ontea.cloudfront.net/2015_IGR.pdf
https://www.humanrights.gov.au/our-work/age-
discrimination/publications/national-prevalence-survey-age-
discrimination-workplace

discrimination-workplace
workforce 13
r Reading 2.6
Yeager, K & Nafukho, F 2012, ‘Developing diverse teams to
improve performance in the
organizational setting’, European Journal of Training and
Development, vol. 36, no. 4, pp. 388–
408. This paper examines teamwork in the context of
globalisation, population changes, diversity
and an ageing workforce. Read it to better understand the issue
of teamwork and diversity in the
Flexibly employed
Non-standard employment is a feature of the contemporary
workforce and is considered by many
organisations to be a key element of organisational efficiency
(Benjamin & Goclaw 2005, p. 739). Many
employees work on a casual basis or on short-term contracts and
many others sell their services as
consultants or outsourcers. Flexible employment in Australia
began in the 1970s and within twenty years
the proportion of the workforce undertaking part-time
employment doubled (Cameron 1998, p. 188). The
reasons for this shift include the mass entrance of women into
the workforce, a rapidly developing services
sector, larger numbers of youth participating in the workforce
and the vagaries of the economic cycle.
However, employers were quick to recognise that flexible

employment delivered cost-efficiencies and
responsiveness, enabling them to be more competitive in a
rapidly globalising business environment.
Benefits included increased productivity from flexible workers
when they were working, lowered
absenteeism, reduced fringe benefits, limited pay increases and,
of course, the flexibility to use targeted
labour as required. Unsurprisingly, these benefits became
increasingly attractive and flexible employment
is now deeply entrenched in the contemporary workforce.
However, there are also disadvantages to flexible employment,
not to mention numerous criticisms
levelled at these work practices. While this trend toward
flexible employment can enable organisations to
respond quickly to changing market conditions, it can also lead
to precarious and inequitable employment.
Employees that are fully employed enjoy better pay, more
opportunities for development and greater security
than those that are flexibly employed.
Moreover, flexible employment tends to add administrative
costs because organisations must contend with
managing and administering the recording, paying, training and
supervising of more staff. Staff turnover
is also higher and workers less likely to invest in the
organisation. The lack of commitment innate to flexible
employment is a two-way process and may incur problems of
motivation in workers. Moreover, the reduced
training and investment in workers can impact the quality of the
organisation’s products and services.
Flexible employment is very much a feature of the
contemporary workforce and many organisations
consider its advantages to be greater than its disadvantages.
Charles Handy coined the term ‘Shamrock’ to

illustrate how organisations that employ flexible workers are
structured (Schermerhorn et al. 2014, p. 10).
The shamrock is an Irish plant that has three leaves and Handy
used this to illustrate how ‘Shamrock’
organisations had three types of workers. The first leaf
represented ‘a core of full time professional and
managerial staff’, the second, ‘a cluster of specialist contract
workers’ and the third, ‘a group of part-time
workers used in peak demand periods’ (Cameron 1998, p. 189).
The contemporary workforce must navigate
and negotiate this shamrock structure, taking opportunities
when they arise, changing jobs as required,
developing portable skills and upgrading their knowledge
continually (Schermerhorn et al. 2014, p. 8).
Basic structures and functions of
contemporary organisations
An ‘organisation is a collection of people working together for
a common purpose’ (Schermerhorn et al. 2014,
p. 12). Organisations today can be usefully described as open
systems because the term holds two important
connotations for outlining their basic structure. An organisation
is a system because it is comprised of many
parts that work together for a common goal and it is an open
system because it must also interact with an
external and internal environment that impacts its operation.
As an open system, an organisation manages an external and
internal environment while accomplishing
its goal of producing goods and services. The external
environment an organisations interacts with is
particularly important because it is the source of both suppliers

and customers. The importance of its
internal environment is also significant because its condition
and operation affect overall performance.
Environmental factors also include the general environment and
the specific environment. The former
refers to the natural, economic, political, legal, social, cultural
and technological influences that affect an
organisation. The latter refers to the stakeholders with whom
the organisation interacts.
a Activity 2.1
Complete the diagram below illustrating organisations as open
systems using Figure 1.1 from
Chapter 1 of your text. Add all headings, labels and arrows.
Resource Inputs
Transformation process
Product Outputs
The above consideration of the major features of the
contemporary workforce are paralleled in the structures
and function of today’s organisations. Just as employees must
operate in a globalised and networked
business environment that is technology dependent, so do the
organisations in which they are employed.
Similarly, just as individuals are required to respond to a
business environment emphasising knowledge
work, diversity, teams and flexible employment, so must the

companies for which they work. What this
means is that contemporary organisations reflect in their
functions and structures the major trends that
characterise the current economic environment.
For instance, globalisation has meant companies must
increasingly function as entities without boundaries
and operate with structures that enable speediness and
networking. This means that contemporary
organisations must have a strong focus on using and being
competent with information technologies to
communicate and coordinate in real-time with its external and
internal environment. It also means that
organisations are subjected to global competitiveness and that
knowledge work is a key factor for high
performance in the global economy (Drucker et al. 1997, p. 22).
As such, the contemporary organisation must have structures in
place that facilitate the development of
its employees, who are the repositories of intellectual capital. It
requires leadership and HR policies that
ensure diversity, enhance teamwork and attract, recruit, support
and retain skilled workers. It must also be
structured to manage flexible employment effectively. While the
‘shamrock’ structure is an effective and
pervasive organisational structure, the non-standard
employment that it facilitates has hidden costs that
need to be properly managed.
workforce 15
r Reading 2.7
Ulrich, D, Younger, J & Brockbank, W 2008, ‘The twenty-first-

century HR organization’, Human
Resource Management, vol. 47, no. 4, pp. 829–850. This paper
examines HR in the contemporary
organisation, particularly in terms of the value it can add. Read
it to better understand the nature
of contemporary HR.
Summary
• This topic has introduced the fundamentals of the
contemporary workforce. It has considered the
major features of the contemporary workforce and the basic
functions and structures of organisations
today.
• The features characterising the workforce are reflected in the
functions of organisations. Globalisation
affects both employees and organisations in the changed
external environment it brings and in the
significance it attaches to knowledge work and intellectual
capital.
• Technology is central to how people work and organisations’
function by providing new opportunities
of communication and coordination, externally and internally.
To prosper, individuals must master
technology and organisations must use it effectively.
• Teams that produce synergistic effects form the core of
workplace solutions to complex tasks.
Employees must be able work well in teams and organisations
must provide the leadership and
support required to make them effective.
• This means that individuals and organisations must navigate
and manage the diversity characterising

the contemporary workforce, which includes issues of age,
gender, religion, disability, race, religion,
ethnicity and sexual orientation.
• It also means that both individuals and organisations now
operate in an environment of flexible
employment. Individuals must develop skills that are portable
and upgradeable to navigate and
progress through the ‘shamrock’ structure that contemporary
organisations utilise. Organisations
must ensure the disadvantages of flexible employment do not
result in hidden costs and the loss of
valuable workers.
Post a 150-word response on the Discussion Board in MySCU to
the following question: ‘What
is competitive advantage and why is it important for
contemporary organisations?’
References
Australian Human Rights Commission, National prevalence
survey of age discrimination in the
workplace, Government of Australia. Available from:
discrimination-workplace. [24 April 2015].
Benjamin, O & Goclaw R 2005, ‘Narrating the power of non-
standard employment: The case of the Israeli
public sector’, Journal of Management Studies, vol. 42, no. 4,
pp. 737–759.
Cameron, A 1998, ‘The hidden organisational costs of using
non-standard employment’, Personnel Review,

vol. 29, no. 2, pp. 188–202.
Chien Farh, C & Seo, MTP 2012, ‘Emotional intelligence,
teamwork effectiveness, and job performance’,
Journal of Applied Psychology, vol. 97, no. 4, pp. 890–900.
Drucker, P 1997, ‘The global economy and the nation-state’,
Foreign Affairs, vol. 76, no. 5, pp. 159–171.
https://www.humanrights.gov.au/our-work/age-discrimination/
https://www.humanrights.gov.au/our-work/age-discrimination/
Drucker, P, Dyson, E, Handy, C, Saffo, P & Senge, PM 1997,
‘Looking ahead: Implications of the present’,
Harvard Business Review, September–October, pp. 18–32.
Grosse, C 2011, ‘Global managers’ perceptions of cultural
competence’, Business Horizons, vol. 54, no. 4,
pp. 307–314.
Østergaarda, C, Timmermans, B & Kristinsson, K 2011, ‘Does a
different view create something new? The
effect of employee diversity on innovation’, Research Policy,
vol. 40, no. 3, pp. 503–509.
Pérez-Luño, A, Medina, C, Lavado, A & Rodríguez, G 2011,
‘How social capital and knowledge affect
innovation’, Journal of Business Research, vol. 64, pp. 1369–
1376.
& McBarron, E 2014, ‘The contemporary
workplace’, In: Management, 5th Asia-Pacific edn, Wiley,

& McBarron, E 2014, ‘Environment and
diversity’, In: Management, 5th Asia-Pacific edn, Wiley,
The Treasury 2015, 2015 Intergenerational Report, Government
of Australia. Available from:
http://d3v4mnyz9ontea.cloudfront.net/2015_IGR.pdf. [24 April
2015].
Victoria International Development Education Association,
VIDEA 2000, ‘Foul play: Working conditions
in overseas shoe factories’, Global Citizens for a Global Era,
vol. 1, no. 3, pp. 1–7.
Yang, Y & Konrad, A 2011, ‘Diversity and organizational
innovation: The role of employee involvement’,
Journal of Organizational Behavior, vol. 32, no. 8, pp. 1062–
1083.
http://d3v4mnyz9ontea.cloudfront.net/2015_IGR.pdf
17
Topic 3
An overview of HRM
Fundamentals of human resource
management, attracting, developing and
maintaining a quality workforce
Learning objectives

1. explain the importance of people in terms of organisational
productivity and profit
2. explain and justify the value and utility of diversity within
the workforce
3. outline the basic scope, processes and strategies of HRM
4. summarise the issues and processes involved in recruiting,
refining and retaining a quality workforce.
Introduction
Human Resource Management (HRM) has never been more
important. In Topic 2, we saw that employment
in the contemporary workforce has undergone radical changes
since the 1970s. Globalisation and technology
has been central to this change and an important outcome has
been a more competitive market in which
knowledge and innovation are critical.
There has also been a shift from secure, full-time and permanent
jobs to a casualised workforce and an
increasing diversity within the workforce due to the en-masse
influx of women and greater awareness
regarding discrimination. These changes have made HRM a
critical element to the performance of an
organisation.
This topic will provide an overview of HRM. It will present the
fundamentals of HRM and focuses particularly
on the role it plays in attracting, developing and maintaining a
quality workforce. After completing this topic
you will be able to explain the importance of people to the
performance of the contemporary organisation,
the value of diversity, the basics of HRM and the processes of
attaining a quality workforce.

r Textbook
& McBarron, E 2014,
‘Human resource management’, In: Management, 5th Asia-
Pacific edn, Wiley, Milton, Qld,
pp. 317–358.
The importance of people to
organisational performance
Knowledge and innovativeness
Knowledge and innovativeness are critical to competitiveness in
the contemporary global economy and
technology is a powerful facilitator of information management.
However, people remain an organisation’s
key resource for turning information into value-adding ideas.
Numerous studies show that organisations
that manage their people better also perform better and that
effective HRM is a key factor to this improved
performance. These studies show that organisations that perform
well will use HRM practices that engender
security, teamwork, reward, training and collaboration. They
will also tend to embed good HRM practices
from the onset and regularly use performance management
systems to evaluate, appraise and align employee
performance for training needs, remuneration levels and
organisational objectives. Moreover, they show
that organisations achieve significant share price and

productivity gains when they use empowering HRM
practices (Schermerhorn et al. 2014, pp. 320–321).
Diversity
Diversity is an important aspect of this competitive advantage.
The value of diversity is the synergism it
creates through the application of multiple perspectives, talents,
world-views and experiences to workplace
tasks. Numerous researchers, organisations and individuals have
recognised this value. However, Hamdani
and Buckley point out that while diversity has the potential to
tap hidden talent and release synergies, it
is not clear that it has a direct causal link to performance (2011,
pp. 36–37). Their study recognises the
importance of diversity but also clarifies the complexity of the
relation between it and organisational
performance. Notwithstanding, diversity, along with knowledge,
creativity and teamwork, has a clear
potential to generate economic benefits for organisations, in
addition to the legitimacy and goodwill it
generates. It is an important aspect of why people are important
to organisations.
Companies that exemplify good HRM are characterised by
people-oriented leaders, good employment
conditions, opportunity for professional development, and a
culture balancing performance and play
(Schermerhorn et al. 2014, p. 319). In other words, these are
companies that recognise the importance of
people and, subsequently, prioritise HR practices that will
foster the productivity of their employees. A
fundamental tenet of HRM is that people are the key resource of
an organisation.
r Reading 3.1
Brunetto, Y, Farr-Wharton, R & Shacklock, K 2011,

‘Supervisor–subordinate communication
relationships, role ambiguity, autonomy and affective
commitment for nurses’, Contemporary
Nurse, vol. 39, no. 2, pp. 227–239. This paper investigates
nurse satisfaction with supervisor
communications relationships and the impact of this on their
sense of autonomy and job
commitment. Read it to consider the importance and processes
of managing people.
r Reading 3.2
Farr-Wharton, R, Brunetto, Y & Shacklock, K 2011,
‘Professionals’ supervisor–subordinate
relationships, autonomy and commitment in Australia: A
leader–member exchange theory
perspective’, The International Journal of Human Resource
Management, vol. 22, no. 17, pp. 3496–
3512. This paper applies leader-membership theory to compare
the impact of supervisor-
subordinate to professional perceptions of autonomy and
commitment. Read it for insight into
the managing and retention of professionals.
Topic 3 An overview of HRM 19
A basic understanding of HRM
Personnel Management (PM) was the forerunner to HRM, the
former a product of the 1960s and the
latter emerging in the 1980s (Boselie et al. 2009; Kramar 2012).
HRM recognises the value of people to an
organisation’s performance. Its fundamental purpose is to
unlock the potential of human talent, empower
employees and ensure skilled workers are available to the
organisation they represent. Your textbook defines

HRM as ‘the process of attracting, developing and maintaining a
quality workforce’ (Schermerhorn et
al. 2011, p. 306). The essential issues that occupy HRM,
include discrimination, industrial relations,
occupational health and safety, international HRM, the HRM
process and strategic HRM.
Discrimination
Discrimination is the advantaging or disadvantaging of
individuals or groups on the basis of factors
unrelated to task capability. These factors encompass gender,
disability, religion, ethnicity, socio-economic
and marital status, sexual orientation and family
responsibilities. Employers are legally bound to provide
equal employment opportunity and to refrain from both direct
and indirect discrimination. Moreover,
organisations with over 100 employees are subject to
affirmative action legislation, such as The Equal
Opportunity for Women in the Workplace Act 1999, which
stipulates that an organisation must put into place
policies that remove historical and structural discriminations
against women. A raft of Federal legislation
is in place to combat discrimination in the workplace
(Schermerhorn et al. 2014, pp. 323–333). Ensuring
discrimination is not permitted within an organisation is a
fundamental HRM responsibility. Sound HRM
policies and practices are required to simultaneously foster
diversity and combat discrimination.
Occupational health and safety (OHS)
Occupational health and safety (OHS) is another fundamental
HRM issue. In 2009–2010, a total of 216
Australian workers died because of injuries they sustained at
their workplace and over 133 000 serious claims
for compensation were made in 2008–2009. Serious claims
‘involve a death, a permanent incapacity or a

temporary incapacity requiring an absence from work of one
working week or more’ (Safe Work Australia,
2012). Moreover, the injuries from 2008–2009 cost the
Australian economy over $60 billion dollars, which
was 4.8% of GDP. OHS has legal, ethical and economic
implications for businesses and a high performance
in this area is an essential of good HRM. Legally and ethically,
employers are responsible for the safety of
their workplaces employees, economically, it makes good sense
to have robust OHS practices because it
reduces compensation, absenteeism and improves productivity.
Industrial relations (IR)
Industrial relations (IR) is a process that encompasses a range
of stakeholders, including unions, business
associations, employees, employers and government. IR refers
to the negotiation between employees and
employers over pay and conditions. Significant changes in
Australian IR law have taken place recently,
namely, the Workplace Relations Act (1996) implemented under
the Howard government and the Fair Work
Act, 2009, which repealed many of the reforms under the former
legislation. The relation of IR to HRM is
neatly encapsulated in the term now widely used in place of it,
that is, employee relations (Kramar 2012,
p. 134). The term communicates the essential role of HRM in
ensuring mutually beneficial and productive
relations between workforce and organisation.
International HRM
International HRM deals with the issues and factors that impact
an organisation, and its workforce, as it
operates in the global environment. Expatriates, inpatriates and
international employees encounter issues
with cultural re-orientation, resettlement and work satisfaction,
for which HRM is responsible. Mishandled,

these issues can result in poor productivity, difficulty filling the
international role with the right people
and unwillingness of international workers to continue with the
organisation post-assignment. HRM is
responsible for ensuring the pay and conditions of employees
are not worsened by the international posting.
This means providing appropriate psychological and financial
support for travel, accommodation, lifestyle,
family, relocation and culture shock. Language barriers must
also be taken into consideration, particularly
as they affect communication and hence, productivity.
Moreover, familiarity with foreign government
structures must be addressed, as must responses to potential
threats to employees.
Developing and maintaining a quality workforce
A fundamental task of HRM concerns attracting, developing and
maintaining a quality workforce. As
such, the first responsibility of HRM in this process is to attract
suitable staff by implementing appropriate
planning, recruiting and selecting practices. To develop quality
staff, HRM must provide sound orientation
services, opportunities for training and development, and clear
and accessible career planning. To
maintain a quality workforce, HRM takes responsibility for
employee retention and turnover, performance
evaluations and appropriate remuneration. This is a task that has
become increasingly complex due to the
wide and diverse range of issues that the contemporary
organisation must now manage. This complexity
encompasses managing issues such as legal matters, economic

changes, organisational transformations,
shifting labour force values and new technologies. In this
complex business environment, HRM is tasked
(metaphorically) with enabling ship and crew to sail smoothly
through the turbulent waters of business. To
do this, it requires a strategic focus.
Strategic HRM
Strategic HRM emphasises the role of planning in the HRM
process to enable and sustain competitiveness.
‘Strategic HRM involves attracting, developing and maintaining
a quality workforce to implement
organisational strategies’ (Schermerhorn et al. 2011, p. 313).
This process requires the commitment of top-
level management, analysing of staffing needs and planning the
management of these needs so that the
organisation’s goals are served. The steps to this process
involve reviewing organisational and HR objectives,
assessing current human resources, forecasting future
requirements and developing/implementing
appropriate HR plans to accommodate these requirements.
r Reading 3.3
Dickie, C & Dwyer, J 2011, ‘A 2009 perspective of HR
practices in Australian mining’, Journal
of Management Development, vol. 30, no. 4, pp. 329–343. This
paper investigates the human
resource (HR) challenges facing the West Australian mining
industry in terms of replacing
retirees, retaining key talent, growing the talent pool, training
and development, and keeping
staff motivated. Read it to better understand the challenges and
contemporary issues confronting
HR.
r Reading 3.4

Boon, C, Paauwe, J, Boselie, P & Den Hartog, D 2009,
‘Institutional pressures and HRM:
Developing institutional fit’, Personnel Review, vol. 38, no. 5,
pp. 492–508. This paper addresses
how institutional pressures help shape HRM. Read it to gain an
oversight into how institutional
fit can contribute to strategic HRM by providing insight in this
more balanced goal setting of
organisations.
Engaging a quality workforce
Attracting a quality workforce
Typically, recruitment involves three basic steps: advertising
the vacancy, preliminary contact and initial
screening. Recruitment can occur either internally or externally.
The former targets candidates from within
an organisation while the latter searches outside it. Both
avenues have advantages and disadvantages.
Internal recruitment offers employees clear career paths within
the organisation and represent a known
factor to organisations. Moreover, the recruitment process is not
as expensive and company culture and
knowledge is retained. The advantages of external recruitment
are that new perspectives and specialised
skills and experience can be brought into the organisation.
Clarity regarding qualifications
Attracting a quality work force starts with a clear knowledge of
the qualifications that are being sought in
a potential recruit. If an organisation is unclear on this, its
recruiting process will be compromised and

candidates will be placed in jobs unsuitable to their skills and
qualifications and to the organisation’s needs.
Clearly, this is a negative and unproductive outcome for both
employee and organisation, which is why the
screening of candidates begins with a sound knowledge of the
requirements for a position.
Targeting the right candidates
An effective recruitment process also involves targeting the
right candidates. A clear knowledge of the
skills and qualifications required for a position is mandatory but
if the recruitment process does not get the
attention of the right candidates it is under-utilised, at best.
‘Effective recruiting should bring employment
opportunities to the attention of people whose abilities and
skills meet job specifications’ (Schermerhorn
et al. 2014).
Transparency
Transparency regarding the advertised role is also a significant
factor to effective recruitment. Candidates
that are not given adequate and appropriate information about
the role they are undertaking may have
unrealistic expectations that can result in a poor fit or quick
turnover. In contrast, when candidates have
realistic expectations the result is greater job satisfaction, less
likelihood to resign and a better employment
relationship.
Selection procedure
A valid and reliable selection procedure is another vital
component in the process of effective recruiting. The
selection process usually includes at least, a formal application,
an interview, reference checking, and analysis
and decision. It can also include testing and a physical exam.
The formal application contains the applicant’s

resume and intent to apply for the position. An effective
recruitment process ensures this document clearly
targets the requirements of the job so that applicants, and those
screening them, can accurately address and
assess the selection criteria. Interviews are another crucial point
in effective recruiting because they are an
information-rich form of communication that enables both
applicant and employer to better gather and
understand the information they need. Interviews must be
managed properly if recruitment is to be effective.
An interviewer that is inexperienced, unsuited or biased can
jeopardise the selection process.
The selection decision is the culmination of the recruitment
process. If it is mishandled, an incorrect decision
is made that has negative ramifications for both employees and
organisation. As such, it is important that
appropriate consultation take place between stakeholders
between managers, team leaders, HR staff and
potential co-workers. Moreover, the candidates need to be
assessed carefully and comprehensively to ensure
a right fit. The old saying ‘Marry in haste, repent at leisure’ can
be applied to the selecting procedure because,
if mishandled, it can create myriad future problems.
The importance of effective recruiting is heightened by the war
for talent accompanying an ageing workforce
and concomitant skills shortage in some sectors. The global
demographic trend of an ageing workforce
means that the acquisition of skilled labour will be more
competitive as workers reach retirement age
(Hughes & Rog 2008, p. 747). A key role of HRM in this
business environment of skills shortage is to attract
a quality workforce. However, HRM is also responsible for
developing the talent it attracts.

Developing a quality workforce
New employees must be socialised into the culture, norms,
expectations and methods of an organisation.
HRM undertakes this process to enable the best fit between
employee, role and organisation and it usually
involves an number or stages.
Orientation
Orientation is the first stage of socialisation for new employees.
It is concerned with clarifying and explaining
the organisation’s purpose, policies, procedures and people and
the employee’s position, performance,
prospects and place. It is an important stage in the development
of a quality workforce because of its potential
to direct work practices and attitudes from the onset. Without a
sound orientation phase, organisations run
the risk of new employees not clearly understanding and
embracing the expectations upon them.
Training
Opportunities for training are also an important developmental
factor. Organisations that enable their
employees to upgrade their skills or train for new ones are
ensuring their workforce is not only capable for
optimum performance but also experiencing higher levels of job
satisfaction. Training can be on-the-job or
off-the-job. The former is training that occurs on the job floor
and can be accomplished through processes
such as job rotation or coaching. The latter occurs outside the
workplace and usually involves participation
in training programs run by outside consultants. However it
occurs, training is a key element to developing

a quality workforce.
Assessing
Assessing an employee’s performance is yet another important
stage in developing a quality work force.
Performance management is crucial for ensuring objectives are
attained, standards are met and productivity
is improved. A quality workforce is developed through
evaluation and development; evaluation identifies
the needs and development implements actions to resolve them.
It is not enough to attract quality personnel. An organisation
must also develop the people it has and
orientation, training and performance management are essential
to this process. There is also the matter of
maintaining a quality workforce.
r Reading 3.5
Nankervis, A & Compton, R 2006, ‘Performance management:
Theory in practice?’, Asia
Pacific Journal of Human Resources, vol. 44, no. 1, pp. 83–101.
This paper investigates whether
performance management has become a more effective strategic
tool in the human resource
management repertoire. Read it to consider the nature and value
of performance management.
Maintaining a quality workforce
Once a quality workforce has been attracted and developed, the
HRM challenge becomes to retain,
consolidate and manage the workforce. It is both counter-
intuitive and counter-productive to spend the
expense and energy to attract high quality staff and develop
them without ensuring they are retained.
Career development

One way this occurs is by organisations providing opportunity
and scope for the career development of
their staff. While employees are ultimately responsible for their
career path, good organisations provide
opportunity for career development via processes such as
mentoring and development programs.
Work-life balance
Work-life balance is another factor in retaining staff. The influx
of women into the workforce, the changing
nature of the family, the ageing workforce, the intensification of
work and the increasing prevalence of single
and dual-career parents has created difficulties in maintaining a
healthy work-life balance. Organisations
have responded with flexible working hours and family-friendly
policies.
Remuneration
A good remuneration framework is also essential to retaining
staff. Base remuneration must be competitive
but other benefits such as salary-sacrificed superannuation, a
company car, bonuses and provision of
computing and communication technology are also important.
Retaining a quality workforce involves
providing a competitive remuneration and benefits package.
r Reading 3.6
Hughes, J & Rog, R 2008, ‘Talent management: A strategy for
improving employee recruitment,
retention and engagement within hospitality organizations’,
International Journal of
Contemporary Hospitality Management, vol. 20, no. 7, pp. 743–

757. This paper seeks to clarify
the understanding and importance of talent management in
terms of employee recruitment,
retention and engagement and implementation. Read it for
insight into talent management.
r Reading 3.7
Baptiste, N 2008, ‘Tightening the link between employee
wellbeing at work and performance:
A new dimension for HRM’, Management Decision, vol. 46, no.
2, pp. 284–309. This paper
examines the effects of HRM practices on employee wellbeing
and performance. Read it to
understand the link between HRM practices, employee
wellbeing at work and performance.
Summary
• This topic has considered the importance of people to
organisational productivity and profit. It has
discussed diversity within the workforce and outlined the basic
scope, processes and strategies of
HRM. Moreover, it has explained some of the issues and
processes involved in recruiting, refining and
retaining a quality workforce.
• No organisation can ignore the importance of people to its
success, especially in a newly globally
competitive and information-rich business environment. As the
suppositories of critical knowledge
and information, a skilled workforce is a critical key to
productivity and profit. Not surprisingly, an
organisation’s HRM is also critical to its success.
• HRM has responsibility for managing discrimination,
industrial relations, occupational health and

safety, international HRM, the HRM process and strategic
HRM. The HRM process, in particular, is
vital because it is the process of engaging a quality workforce,
which involves attracting, developing
and maintaining quality staff. This topic has provided an
overview of HRM and explained its
importance for both organisations and employees.
Present a 150-word response to the following question: ‘Why do
people make the difference in
organisations?’
References
Boselie, P, Brewster, C & Paauwe, J 2009, ‘In search of balance
– managing the dualities of HRM: an overview
of the issues’, Personnel Review, vol. 38, no. 5, pp. 461–471.
Hamdani, M & Buckley, M 2011, ‘Diversity goals: Reframing
the debate and enabling a fair evaluation’,
Business Horizons, vol. 54, no. 1, pp. 33–40.
Hughes, J & Rog, R 2008, ‘Talent management: A strategy for
improving employee recruitment, retention
and engagement within hospitality organizations’, International
Journal of Contemporary Hospitality
Management, vol. 20, no. 7, pp. 743–757.
Kramar, R 2012, ‘Trends in Australian human resource
management: What next?’, Asia Pacific Journal of
Human Resources, vol. 50, pp. 133–150.

Martin-Alcazar, F, Romero-Fernandez, P & Sanchez-Gardey, G
2012, ‘Transforming human resource
management systems to cope with diversity’, Journal of
Business Ethics, vol. 107, pp. 511–531.
Safe Work Australia 2012, Safe Work Australia. [Online]
Available at:
http://www.safeworkaustralia.gov.au/sites/SWA/AboutSafeWor
kAustralia/WhatWeDo/Publications/
Pages/Key-WHS_stats-2012.aspx [Accessed 15 October 2012].
& McBarron, E 2011, ‘Human resource
management’, In: Management, 5th Asia-Pacific edn, Wiley,
kAustralia/WhatWeDo/Publications/Pages/Key-WHS_stats-
2012.aspx
kAustralia/WhatWeDo/Publications/Pages/Key-WHS_stats-
2012.aspx
25
Topic 4
International management
and globalisation and its effect
upon labour and capital
Learning objectives

1. demonstrate understanding of the issues and problems
associated with a globalised management
environment
2. identify and explain the significance and roles of expatriates,
flexipatriates and inpatriates for
managing in a globalised environment
3. recognise and evaluate the role of multinationals in the
struggle between economic nationalism and
internationalism
4. recognise and evaluate the role of culture within an
increasingly diverse and globalised setting.
Introduction
This topic will examine how globalisation affects the manner in
which organisations operate, invest
and manage personnel in a culturally diverse environment.
Globalisation has created opportunities
and challenges for investment and workforce management. The
opportunities are significant, with new
customers, markets and partners providing scope for expansion
and profit.
However, the challenges can also be foreboding, with cultural
misunderstandings and political risks that
can result in problems and losses. Some of these problems
involve the complexities of managing staff that
relocate to the foreign field, either permanently or temporarily,
or foreign staff relocated to the organisation’s
country of origin.
Other problems involve clashes between nationalist interests

and those of the multi-national corporation
(MNC). Both of these issues will be examined in this topic and
both reflect how the globalised environment
contains cultural pitfalls. As such, this topic will also examine
the role of culture on doing business in the
globalised economy.
R Textbook
& McBarron, E 2014,
‘International dimensions of management’, In: Management, 5th
Asia-Pacific edn, Wiley,
International management in the
globalised business environment
The world has become smaller. Communication over vast
distances is now virtually instantaneous and where
travel between countries once took months it is now
accomplished in hours. Inevitably, these advances have
lessened the barriers to international travel and trade. Today,
the business environment is international
and borderless, with companies competing, operating,
partnering and investing within a global market.
International management is concerned with overseeing these
globalised operations.
International management takes place when organisations
operate in multiple countries. With the

contemporary business environment decidedly and inseparably
bound to the global economy, the need for
capable international management is acute. The effects and
influence of globalisation impinge regularly and
directly on the activities, operations, structures and culture of
organisations.
Managing organisations in this context requires a sound and
current knowledge of developments in the
international space. It requires the capability to recognise and
comprehend the transnational nature of an
organisation. It also requires the ability to understand,
empathise and work with people of different cultures
and, moreover, to be well informed of specific regional
developments that can affect the organisation. These
challenges represent some of the complexities of international
management.
R Reading 4.1
Caligiuri, P, Tarique, I & Jacobs, R 2009, ‘Selection for
international assignments’, Human
Resource Management Review, vol. 19, p. 251–262. This
article examines the predictors of
success for international assignees, such as; personality
characteristics, language fluency and
international experience. Read it to better understand the issues
involved in selecting employees
for international assignments.
International management and globalisation
International management requires understanding globalisation
and the socio-economic and historical
context of the regions in which business is conducted. This
means understanding the effect of globalisation
on business operation and opportunity and on labour and
capital. It also means understanding how

globalisation developed and manifests in different regions. We
know from our text that globalisation
in a business sense ‘is the worldwide interdependence of
resource flows, product markets and business
competition’ (Schermerhorn et al. 2014, p. 89).
However, globalisation also involves exposure to and
appropriation of alternative cultures and has a
specific historical development within those cultures. So
globalisation is the ubiquitous diffusion of
economic activity and cultural influences worldwide but is also
framed in particular historical contexts.
As such, effective international management involves a
transnational, or globalised, perspective. That is, an
understanding of the economies of the world in terms of their
economic interdependence, cultural norms
and historical antecedents.
For instance, Asia and the Pacific Rim economies are growing
at such a pace that they are expected to
soon surpass European Union economies. These are countries
like China, Japan, South Korea, Taiwan,
Singapore and Malaysia, amongst others. These are important
markets that are primed for rapid growth
and as organisations increasingly locate to or conduct business
with these nations, they will need to manage
expatriate and local staff, provincial customs and foreign
government expectations.
In some of these countries, the economic and cultural
investment of western companies may be viewed
with reservation or as a threat, while in others they are
embraced. There are differences to conducting
business between China and Japan or Singapore and Malaysia or
Australia and New Zealand. A globalised
perspective is aware of these opportunities, issues, challenges

and differences and is, therefore, more able to
manage the nuances of conducting business in these regions.
Effective international management requires
a globalised perspective.
Topic 4 International management and globalisation and its
effect upon labour and capital 27
Conducting business with the European Union (EU) has
different implications to doing so in the Asia
and Pacific Rim economies. It is a union of 27 countries with
shared institutions and policies in which the
members agree to trade and customs laws that exclusively
benefit each other and to enable the unhampered
exchange of capital, labour and products. Moreover, the
historical context of the EU involves the collapse
of communism and the subsequent opportunities, and risks, to
do business with the nations of the former
Soviet Union. Effective international management in this
context requires an outlook that has a clear
understanding of the economic, cultural and historical issues
pertinent to Europe, that is, a globalised
perspective.
This requirement is extended to the Africa and the Americas
where the former is rich in natural resources
and the latter has a larger consumer base then the EU. In Africa,
opportunities abound but there are
also problems of poverty and disease which present risks to
investment. In the Americas, the North
American Free Trade Agreement (NAFTA) provides a
prodigious consumer base that presents tremendous
opportunity. NAFTA is an agreement between the United States,
Canada and Mexico that operates similarly

to EU model in that it also enables the free flow of investments,
workers, and goods and services between
the three countries.
However, there are some economic and cultural issues between
the countries when coming to this agreement.
They include the concern of Canadian companies that they
would be dominated by US firms, the concern of
the US that Mexico would take its jobs and the concern of
Mexico that it would be subsumed further into
American culture. Sound international management recognises
these issues and differences and takes them
into consideration when involved with these countries. A proper
understanding of globalisation enables a
globalised perspective, which is a vital aspect of effective
international management.
R Reading 4.2
Caligiuri, P & Colakoglu, S 2007, ‘A strategic contingency
approach to expatriate assignment
management’, Human Resource Management Journal, vol. 17,
no. 4, pp. 393–410. This study
examines the categories of expatriate assignments, the strategic
integration of expatriate
assignments into leadership development and the types of
human resource practices that firms
utilise to manage expatriates. Read it for a better understanding
of expatriate management
practices.
A Activity 4.1
Consider the following questions and share your understanding
on the MySCU Discussion
Forum.
• What is globalisation? Why do companies engage in
international business?

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