Discussion 1
Introduction to HRM and the Environment
a. A Brief History of Human Resource Management
The history of HRM can be traced to England, where masons, carpenters,
leather workers, and other craftspeople organized themselves into guilds. They used
their unity to improve their work conditions. 3 The field further developed with the
arrival of the Industrial Revolution in the latter part of the 18 th century, which laid
the basis for a new and complex industrial society. In simple terms, the Industrial
Revolution began with the substitution of steam power and machinery for time-
consuming hand labor. Working conditions, social patterns, and the division of labor
were significantly altered.
In the evolving landscape of the industrial era, a new kind of employee
emerged: the boss. Unlike previous times, when the person at the helm of a business
was typically its owner, the new factory system introduced a distinct separation
between ownership and day-to-day management. This new role of the boss, who was
not necessarily the proprietor, became a pivotal figure within the hierarchical structure
of the workplace. These bosses, often referred to as managers or supervisors, wielded
considerable authority over the operations and workers, acting as intermediaries
between the labor force and the owners.
This shift was profound and marked a significant transformation in the
dynamics of power within the industrial enterprise. The owners, now more distanced
from the everyday activities and individual employees, relied heavily on these bosses
to enforce policies, ensure productivity, and maintain discipline. The bosses, equipped
with managerial authority, became key power brokers, making decisions that directly
impacted the workforce. Their role extended beyond mere supervision; they were
responsible for implementing the strategic vision of the owners, optimizing
production processes, and often making critical operational decisions.
With these structural changes in the factory system came a widening
socioeconomic chasm between the workers and the owners. The introduction of the
boss as a managerial figure not only altered the power dynamics but also intensified
the stratification within the workplace. Workers, who previously might have had a
more direct relationship with the owners, now found themselves dealing with bosses
who prioritized efficiency and productivity, sometimes at the expense of the workers'
well-being.
This growing gap was characterized by differences in economic status,
working conditions, and social standing. Owners, often removed from the daily grind
of the factory floor, enjoyed the profits generated by the labor of their employees.
Meanwhile, workers faced the rigorous demands of the bosses, whose primary focus
was to meet the targets set by the owners. This could lead to longer working hours,
stricter discipline, and a greater emphasis on output over individual worker needs.
Furthermore, the rise of the boss also introduced new forms of workplace
control and surveillance. The bosses had the authority to hire and fire, assess
performance, and impose penalties for perceived inefficiencies or disobedience. This
level of control heightened the power disparity and contributed to a sense of
alienation among the workers. They were increasingly seen as cogs in the industrial
machine, valued primarily for their labor rather than as individuals.
In essence, the emergence of the boss as a distinct and powerful figure within
the new factory system was a critical development in the industrial era. It reshaped the
internal dynamics of workplaces, redefined the relationships between workers and
owners, and contributed to the growing divide between different social and economic
classes. This transformation underscored the broader changes occurring in society as
industrialization progressed, highlighting the complex interplay between
technological advancements, economic practices, and social structures.
Scientific management and welfare work represent two concurrent approaches
that began in the 19th century and, along with industrial psychology, merged during
the era of the world wars. 4 Scientific ma n agement represented an effort to deal with
inefficiencies in labor and management primarily through work methods, time and
motion study, and specialization. Industrial psychology represented the application of
psychological principles toward increasing the ability of workers to perform
efficiently and effectively. The renowned father of scientific management was
Frederick W. Taylor. An engineer at Midvale Steel Works in Philadelphia from 1878
to 1890, he studied worker efficiency and attempted to discover the “one best way”
and the one fastest way to do a job. He summarized scientific management as (1) sc i
ence, not rules of thumb; (2) harmony, not discord; (3) cooperation, not individualism;
and (4) maximum output, not restricted output.
Whereas scientific management focused on the job and efficiencies, industrial
psychology focused on the worker and individual differences. The maximum well-
being of the worker was the focus of industrial psychology. Hugo Munsterberg and
his book Psychology and Industrial Efficiency initiated in 1913 the field of industrial
psychology. 6 The book served as a stimulus and model for the development of the
field in the United States and Europe. The drastic changes in technology, the growth
of organizations, the rise of unions, and government concern and intervention
concerning working people resulted in the development of personnel depar t ments.
There is no specific date assigned to the appearance of the first personnel
department, but around the 1920s more and more organizations seemed to take note of
and do something about the conflict b e tween employees and management. 7 Early
personnel administrators were called welfare secretaries. Their job was to bridge the
gap between management and operator (worker); in other words, they were to speak
to workers in their own language and then recommend to management what had to be
done to get the best results from employees.
Another early contributor to HRM was called the human relations movement.
Two Harvard researc h ers, Elton Mayo and Fritz Roelthisberger , incorporated human
factors into work. This movement began as a result of a series of studies conducted at
the Hawthorne facility of Western Electric in Chicago between 1924 and 1933. The
purpose of the studies was to determine the effects of illumination on workers and
their output. The studies pointed out the importance of the social interaction and work
group on output and satisfaction.
The human relations movement, which emerged in the early 20th century as a
response to the mechanistic approaches of scientific management, gradually evolved
over the decades. By the mid-1960s, this movement had firmly established itself as a
significant and influential branch of study. During this period, it became clear that
understanding the social and psychological needs of workers was crucial for
enhancing productivity and job satisfaction. This realization marked a shift away from
viewing employees merely as cogs in the industrial machine, emphasizing instead the
importance of human interactions, morale, and motivation in the workplace.
As researchers and practitioners delved deeper into the dynamics of workplace
relationships, the human relations movement began to intersect with and contribute
significantly to the burgeoning field of organizational behavior. Organizational
behavior, which encompasses the study of how people interact within groups, was
enriched by the insights and principles derived from the human relations movement.
The focus on human-centric management practices, developed through years of
research and experimentation, provided a robust foundation for exploring more
complex organizational phenomena.
By the mid-1960s, the integration of the human relations movement into
organizational behavior was well underway. This convergence brought about a more
holistic understanding of workplace dynamics. It emphasized the significance of
leadership styles, communication patterns, group dynamics, and organizational
culture. Researchers in organizational behavior began to incorporate theories and
findings from the human relations movement to develop more comprehensive models
of organizational effectiveness.
The human relations movement's contribution to organizational behavior was
multifaceted. It highlighted the importance of employee satisfaction and well-being as
critical factors in organizational success. Concepts such as participative management,
where employees are involved in decision-making processes, and the significance of
social and psychological needs, became central themes in organizational behavior
studies. This movement underscored that organizations are not just technical systems
but also social systems, where human relationships play a pivotal role in achieving
goals.
Moreover, the human relations movement laid the groundwork for various
organizational development interventions aimed at improving workplace harmony and
productivity. Techniques such as team building, conflict resolution, and leadership
training were influenced by the movement's principles. These interventions aimed to
create a more supportive and collaborative work environment, which in turn was
believed to enhance overall organizational performance.
The mid-1960s marked a period of consolidation and expansion for the field of
organizational behavior, with the human relations movement serving as a cornerstone
of this growth. The integration of human relations insights into organizational
behavior not only broadened the scope of the field but also deepened the
understanding of how to manage and lead organizations effectively. This period saw
an increasing emphasis on empirical research, leading to the development of more
sophisticated theories and practices that continue to influence contemporary
organizational management.
In summary, the human relations movement's evolution into a key component
of organizational behavior by the mid-1960s represented a significant advancement in
the study of workplace dynamics. This integration brought a deeper appreciation of
the human element in organizational life, emphasizing the importance of addressing
the social and psychological needs of employees to foster a more productive and
harmonious work environment.
The early history of personnel still obscures the importance of the HRM
function to management. Until the 1960s, the personnel function was considered to be
concerned only with blue-collar or operating e m ployees. It was viewed as a record-
keeping unit that handed out 25-year service pins and coordinated the annual
company picnic. Peter Drucker, a respected management scholar and consultant, made
a statement about personnel management that reflected its blue-collar orientation.
Drucker stated that the job of pe r sonnel was “partly a file clerk’s job, partly a
housekeeping job, partly a social worker’s job, and partly firefighting, heading off
union trouble.”
b. Strategic Importance of HRM
The HRM function today is concerned with much more than simple filing,
housekeeping, and record-keeping. 10 When HRM strategies are integrated within the
organization, HRM plays a major role in clar i fying the firm’s human resource
problems and develops solutions to them. It is oriented toward action, the individual,
worldwide interdependence, and the future. Today it would be difficult to imagine any
organ i zation achieving and sustaining effectiveness without efficient HRM programs
and activities. The strat e gic and competitive advantage importance of HRM to the
survival of an organization will become clearer as we move into the book. 11
Strategic HRM differs significantly from traditional HRM.
In a strategic approach the main responsibility for people management rests
with any individual that is in direct contact with them, such as line managers. Thus,
any individual in an organization who has responsibility for people manages human
resources in addition to his or her regular position. For years the HRM function had
not been linked to the corporate profit margin or what is referred to as the bottom line.
The role of HRM in the firm’s overall strategy was usually couched in fuzzy terms
and abstractions. HRM was merely a tagalong unit with peopleoriented plans, not a
major part of planning or strategic thinking.
Despite the appeal that strategic HRM is important, many organizations have
had a difficult time adopting a strategic perspective. First, many organizations take a
short-run approach and focus only on current and short-term performance. This is not
surprising given the emphasis by Wall Street and many stockholders on achieving
attractive quarterly performance results. Second, many HR managers do not have a
strategic perspective. They are narrowly trained and ed u cated and pay attention
primarily to their area of expertise—compensation, labor law, performance
evaluation, diversity management, training, and other HR areas. They have
insufficient knowledge of international operations, finance, accounting, marketing,
and production.
Finally, while some progress is being made in measuring HRM activities, this
is still a challenging endeavor. Placing values on and tracking HRM pr o grams is
challenging for many HR managers. Using such HR matrix requires quantifying
human behavior and attitudes. Despite this fact, forward-looking companies like
Google, Netflix , and Best Buy rely on data to make informed decisions about how
best to manage their talent. The nearby Your Career Matters discusses how a person
could differentiate himself or herself by using HR metrics.
Today, because of the recognition of the crucial importance of people, HRM in
an increasing number of organizations has become a major player in developing
strategic plans and facilitating changes within the organization. 12 Organizational and
human r e source plans and strategies are inextricably linked. The HRM strategies
must reflect clearly the organiz a tion’s strategy regarding people, profit, and overall
effectiveness. The human resource manager, like all managers, is expected to play a
crucial role in improving the skills of employees and the firm’s profitabi l ity. In
essence, HRM in a growing number of organizations is now viewed as a “profit
center” and not simply a “cost center.”
The increased strategic importance of HRM means that human resource
specialists must show mana g ers that they contribute to the goals and mission of the
firm. The actions, language, and performance of the HRM function must be measured,
precisely communicated, and evaluated. The new strategic pos i tioning of HRM
means that accountability must be taken seriously, and the investment in human assets
is the focal point. The era of accountability for HRM has resulted from concerns
about productivity, from widespread downsizing and redesigning of organizations,
from the need to effectively manage an increasingly diverse workforce, and from the
need to effectively use all the resources of an organization to compete in an i n
creasingly complex and competitive world.
The HRM function today is much more integrated and strategically involved.
The importance of r e cruiting, selecting, training, developing, rewarding,
compensating, and motivating the workforce is reco g nized and practiced by
managers in every unit and functional area of an institution. HRM and every other
function must work together to achieve the level of organizational effectiveness
required to compete l o cally and internationally. If the HRM function is to be
successful, managers in other functions must be knowledgeable and i n volved.
Managers play a major role in setting the direction, tone, and effectiveness of the
relationship between the employees, the firm, and the work performed.
Managers must understand that carrying out HRM activities and programs is
strategically vital. Without managerial participation, there are likely to be major
human resource problems. Since 2008, Howard Schultz, CEO of Starbucks, helped
reinvigorate the health of the company by focusing on its people. First, he closed
more than 7,000 stores for three hours one afternoon to retrain 135,000 baristas in
how to create a perfect expresso shot. Customers gave higher rating scores in the
weeks that followed. Second, Schultz brought 10,000 managers and employees to a
leadership conference to build trust between the company and its people, while
reinforcing the company’s original values.
Choosing New Orleans as the host city for the $30 million event, Starbucks
created an impactful blend of corporate gatherings and community service. This event
was a significant milestone, reflecting the company’s commitment not only to its
business goals but also to social responsibility. Starbucks employees, who gathered
from various locations, were engaged in an intense schedule of meetings and strategic
discussions aimed at shaping the future direction of the company. However, the event
was designed to balance corporate objectives with community engagement.
When not participating in meetings, each Starbucks employee dedicated five
hours to community service projects across the city. This was part of a broader
initiative to give back to the communities that Starbucks serves. The comprehensive
volunteer effort was meticulously planned, ensuring that the employees' contributions
would have a lasting positive impact on New Orleans.
In total, the volunteers amassed an impressive 50,000 hours of community
service. This monumental effort was directed towards a variety of essential projects
aimed at revitalizing and beautifying the local neighborhoods. Employees engaged in
a wide range of activities that included cleaning up urban areas, painting and
renovating houses, restoring and improving public parks, and constructing new
playgrounds for children. Each of these tasks was chosen to address specific needs
within the community, ensuring that the contributions were both meaningful and
beneficial.
The cleaning projects involved not only removing litter and debris from streets
and public spaces but also involved more extensive tasks such as removing graffiti
and overgrown vegetation. This cleanup effort helped to restore the aesthetic appeal
and safety of various neighborhoods, making them more pleasant and welcoming for
residents and visitors alike.
Painting houses was another major focus of the volunteers' efforts. Employees
worked in teams to refresh the exteriors of homes, particularly in areas that had been
neglected or damaged over time. This task required careful coordination and a
significant amount of manual labor, but the end result was a series of vibrant, newly-
painted homes that brought renewed pride to the homeowners and uplifted the spirits
of entire communities.
Restoring parks was equally impactful. Volunteers planted trees, flowers, and
shrubs, creating greener and more inviting spaces for relaxation and recreation. They
repaired and installed benches, fixed broken pathways, and upgraded park facilities to
ensure that these green spaces could be enjoyed by the public for years to come. The
park restoration projects not only enhanced the physical environment but also
promoted a sense of community by providing residents with beautiful, functional
spaces to gather and engage in outdoor activities.
One of the most significant contributions was the construction of new
playgrounds. Recognizing the importance of play in childhood development,
Starbucks employees worked diligently to build safe and modern playgrounds in
several neighborhoods. These playgrounds were designed to be inclusive and
accessible, ensuring that children of all ages and abilities could enjoy them. The
installation of new playground equipment, safety surfaces, and surrounding amenities
created vibrant play areas that quickly became focal points for community interaction
and childhood joy.
The selection of New Orleans as the host city was particularly poignant, given
the city's history of resilience and rebuilding in the aftermath of natural disasters such
as Hurricane Katrina. Starbucks’ decision to hold its event in New Orleans
underscored a commitment to supporting communities that have faced significant
challenges. By investing both financially and through volunteer labor, Starbucks
demonstrated a model of corporate citizenship that goes beyond business interests to
foster real, tangible improvements in the lives of individuals and the broader
community.
In conclusion, the event held by Starbucks in New Orleans was a powerful
testament to the company's dedication to community service and corporate social
responsibility. Through 50,000 hours of volunteer work, Starbucks employees made a
substantial and lasting impact on the city, leaving behind cleaner neighborhoods,
beautifully painted houses, revitalized parks, and newly constructed playgrounds. This
blend of corporate activity and community engagement highlights how businesses can
play a crucial role in fostering positive social change and enhancing the quality of life
in the communities they serve.
c. A Model to Organize HRM
When you’re experiencing pain and must see a physician, you are typically
asked a number of questions. Where do you hurt? When did the pain start? What does
the pain feel like—is it sharp or dull? The doctor examines you and may also run a
number of tests. The doctor is diagnosing the problem by examination and
observation. After making a diagnosis, the physician will prescribe medicine or a
course of action. In most cases the patient will implement the prescription, and the
doctor will evaluate how the prescription is working.
The problem faced by Martha at the National Pancake House is a complex
issue that warrants a thorough and careful diagnosis to understand its root causes and
implications fully. Martha's situation could involve a variety of factors ranging from
operational inefficiencies, staffing challenges, customer service issues, financial
management concerns, to perhaps even broader strategic misalignments within the
organization.
Firstly, it would be essential to examine the operational aspects of the National
Pancake House. This includes evaluating the efficiency of kitchen processes, the
effectiveness of inventory management, and the overall workflow within the
establishment. Any bottlenecks or delays in food preparation and service could
significantly impact customer satisfaction and, subsequently, the restaurant’s
reputation. Martha might need to scrutinize whether the kitchen staff is adequately
trained, if there is a clear division of labor, and if the kitchen layout facilitates a
smooth flow of operations.
Staffing issues could also play a crucial role in the problems Martha is
encountering. A detailed analysis of the staffing levels, employee morale, and
turnover rates could provide insights into underlying human resource challenges. It is
important to assess whether there are enough staff members to handle peak times and
if they are adequately trained to deliver excellent customer service. High turnover
rates might indicate deeper issues such as poor working conditions, lack of career
progression opportunities, or inadequate compensation, all of which need addressing
to ensure a motivated and efficient workforce.
Customer service is another critical area that requires Martha's attention.
Conducting customer surveys and gathering feedback can help identify specific areas
where the National Pancake House might be falling short. Whether it is the speed of
service, the quality of food, or the friendliness of the staff, understanding the
customer’s perspective is essential. Martha could benefit from implementing a
structured feedback mechanism that not only collects customer opinions but also uses
this data to make informed improvements.
Financial management is a fundamental aspect that cannot be overlooked.
Martha needs to conduct a thorough financial analysis to identify any issues related to
cost control, pricing strategy, and overall financial health of the restaurant. This
includes examining profit margins, cost of goods sold, and operating expenses.
Effective financial management is crucial for the sustainability of the business, and
any discrepancies or inefficiencies in this area could have far-reaching consequences.
Furthermore, Martha should consider the strategic alignment of the National
Pancake House. This involves evaluating whether the restaurant’s current operations
and offerings align with its long-term goals and market positioning. It might be
necessary to reassess the restaurant’s value proposition, target market, and
competitive landscape. Understanding where the National Pancake House stands in
relation to its competitors and identifying unique selling points can help Martha
develop strategies to differentiate the restaurant and attract more customers.
Another aspect worth examining is the marketing and promotional strategies
employed by the National Pancake House. Effective marketing can significantly boost
visibility and customer engagement. Martha should evaluate the current marketing
efforts, including social media presence, local advertising, and promotional
campaigns, to determine their effectiveness. Identifying gaps in the marketing strategy
and exploring new avenues for promoting the restaurant could help attract a broader
customer base.
Additionally, Martha could benefit from considering external factors that
might be impacting the National Pancake House. This includes understanding the
local economic conditions, regulatory environment, and any industry trends that could
influence the restaurant’s operations. For instance, changes in consumer preferences,
health regulations, or economic downturns can all have significant effects on the
business.
In conclusion, the problem faced by Martha at the National Pancake House is
multifaceted and requires a comprehensive and careful diagnosis. By thoroughly
examining operational processes, staffing issues, customer service, financial
management, strategic alignment, marketing strategies, and external factors, Martha
can gain a holistic understanding of the challenges and develop effective solutions.
This systematic approach will enable her to address the root causes of the problems
and implement strategies to enhance the overall performance and success of the
National Pancake House.
The ARDM (A 5 acquiring, R 5 rewarding, D 5 developing, and M 5
maintaining and protecting) human resource management model might help her. The
ARDM model with a strategic (overall, broad) focus can help operating managers
focus on a set of relevant factors; it offers a map that aids a person in seeing the whole
picture or parts of the picture. The three factors that Martha was concerned about (pe
o ple, the internal and external environment, and the organization itself) would be
included as parts of an HRM approach.
Diagnosis, prescription, implementation, and evaluation are important in
achieving the nine HRM o b jectives presented. Again, it should be pointed out that a
significant reason for the eventual success of any HRM activity is that the
organization’s employees are the best qualified and are performing jobs that suit their
needs, skills, and abilities. Matching people and activities to accomplish desirable
goals is easier with a diagnostic approach. Of course, the ARDM model can’t include
every important environmental influence, HRM activity, or criterion for effectiveness.
Instead, it provides an orderly and manageable picture of what HRM activities intend
to accomplish.
d. ARDM: A Diagnostic Approach to HRM
The ARDM model includes four specific steps to be taken by managers: (1)
diagnosis, (2)Iprescription, (3) implementation, and (4) evaluation. 1 Managers
typically diagnose a work situation by observing and ide n tifying the key factors. For
example, why is Harry always late for work? Using a diagnostic approach to answer
the question will show how the four steps are applied. Over a period of time, Harry
has acquired a reputation for being late. Being late would, of course, be observed; the
crucial question is why? There may be a personal reason, a job-related reason, or
some other kind of explanation. Various management and HR theories may help the
manager diagnose Harry’s tardiness, as may many observational techniques such as
interviews, surveys, or group meetings. Once a diagnosis is completed, a prescription
is made to translate the diagnosis into action. Suppose that the diagnosis indicated that
Harry is dissatisfied with his job. Therefore, a solution might be to find Harry a more
suitable job. If, however, it was determined that Harry had a substance abuse problem,
then a different resolution would be needed to correct the behavior.
Most human resource pro b lems have no single correct prescription, because
of the complexity of behaviors, emotions, and attitudes. Solutions to a problem may
range from changing the design of a job to altering the performance evalu a tion
system to providing training to changing the compensation system for the job.
Familiarity with a full range of ways to address a problem is a valuable contribution
that HRM experts can make. There are many different HRM programs and techniques
for managers to consider in addressing a problem. Implementing a solution is the next
step in the diagnostic approach. Changing the way Harry is co m pensated may
correct the problem. However, can a compensation system solely for Harry’s use be
impl e mented? Deciding when, how, and whether a solution can be implemented is a
complex set of considera tions that managers face.
Finally, any solution that is implemented to address the issues at the National
Pancake House must be thoroughly evaluated to determine its effectiveness and
sustainability. The evaluation phase is critical as it provides insights into whether the
implemented measures are yielding the desired outcomes and if any adjustments are
necessary.
For instance, if one of the identified problems was Harry’s tardiness, the
evaluation process would involve monitoring his punctuality over a specified period
following the implementation of corrective measures. This could include setting clear
expectations, offering incentives for timely arrivals, or providing additional support or
counseling to address any underlying issues contributing to his tardiness. Evaluation
would involve collecting data on Harry’s attendance, such as tracking his clock-in
times and noting any instances of tardiness or absences.
To ensure a comprehensive evaluation, managers should employ both
quantitative and qualitative methods. Quantitative data, such as attendance records,
sales figures, and customer feedback scores, provide measurable indicators of
performance. Qualitative data, such as employee feedback, customer comments, and
observations, offer deeper insights into the nuances of how the changes are impacting
the workplace environment and overall service quality.
For Harry’s case, quantitative data might show whether his punctuality has
improved by comparing his attendance records before and after the intervention.
However, qualitative data could reveal more about the reasons behind any persistent
issues or the effectiveness of the support provided. For example, feedback from Harry
himself could indicate whether the measures taken were perceived as helpful or if
there were additional factors that the initial diagnosis missed.
Beyond addressing individual issues like Harry’s tardiness, the evaluation
should also encompass broader organizational changes. If new operational processes
were introduced to enhance efficiency, their impact should be assessed by analyzing
key performance indicators such as order fulfillment times, customer wait times, and
error rates in order processing. Surveys and interviews with staff can shed light on
whether the new processes are more manageable and if they have positively affected
their daily routines.
Customer satisfaction is another crucial metric in the evaluation process.
Managers should gather customer feedback through surveys, comment cards, or
online reviews to determine if there has been an improvement in their dining
experience. Metrics such as repeat customer rates, customer complaints, and overall
satisfaction scores will indicate whether the changes have had a positive impact.
Financial performance is also a key area of focus. Analyzing sales data, profit
margins, and cost control measures will help determine if the solutions implemented
have contributed to better financial health for the National Pancake House. For
example, if a new pricing strategy was introduced, managers should evaluate its effect
on sales volumes and revenue. If cost-saving measures were implemented, the
financial reports should reflect reduced operating expenses and improved profit
margins.
Moreover, the evaluation process should be ongoing rather than a one-time
assessment. Continuous monitoring allows for real-time adjustments and ensures that
the solutions remain effective in the long term. Regularly scheduled evaluations, such
as monthly or quarterly reviews, can help managers stay informed about the progress
and make timely interventions when necessary.
Evaluation also serves as a feedback loop for improving the initial diagnosis,
prescription, and implementation steps. By analyzing the outcomes, managers can
identify any gaps or shortcomings in the original problem-solving approach. This
reflective process can lead to refining the diagnostic tools, enhancing the solutions,
and optimizing the implementation strategies for future issues.
For example, if the evaluation reveals that Harry’s tardiness has not improved
despite the interventions, managers might revisit the initial diagnosis to identify any
overlooked factors. Perhaps there are personal issues affecting Harry’s punctuality
that were not addressed, or maybe the incentives provided were not motivating
enough. Similarly, if operational changes did not yield the expected efficiency gains,
it may be necessary to re-examine the processes and gather more input from
employees to understand the barriers to success.
In conclusion, the evaluation phase is an indispensable component of the
problem-solving process at the National Pancake House. By systematically assessing
the effectiveness of implemented solutions, managers can ensure that the interventions
lead to sustained improvements. This process not only helps in resolving current
issues but also enhances the organization’s capability to diagnose, prescribe, and
implement solutions effectively in the future. Through careful and continuous
evaluation, the National Pancake House can achieve better operational efficiency,
employee satisfaction, customer service, and financial performance.
The ARDM model provides the four major anchor points (e.g., acquiring
human resources) to be the centerpiece of effective HRM. If an organization teaches
its members how to focus on each anchor point A, R, D, and M plus the environment,
it is likely to achieve socially responsible, ethical behaviors and competitive, high-
quality products and services. The ARDM model calls for thorough, timely, and sy s
tematic review of each situation. 2 Deloitte Touche Tohmatsu , a large accounting firm
with 45,000 global employees and over $1.5 billion worldwide revenue, used its own
ARDM model to retain more female accountants. By the mid-1980s, 50 percent of
Deloitte’s new hires at the professional level were female. In 2005 Deloitte set a goal
that 25 percent of the partners pr o moted will be women, up from the 22 percent in
2001. This goal was accomplished.
Top Deloitte managers diagnosed the shortage of women problem and
situation and launched the Women’s Initiative. Women were being precluded from
advancement, and many decided to leave Deloitte in the late 1980s. Management
prescribed and implemented an aggressive campaign to address the male-dominated
advancement culture and to provide mentors and role models for female professionals.
In 2009, the Women’s Initiative conducted 400 different programs for female
employees at Deloitte, including business development coaching and mentoring, and
panel discussions about career paths. 3 The prescription also included support
programs to allow women to better balance work and family respons i bilities. Also,
workshops on “Men and Women as Colleagues” became mandatory for all 5,000
Deloitte managers and partners.
Deloitte monitored and evaluated the implemented programs and reported
significant improvements. More highly talented women were staying with the firm.
Female managers, female senior managers, and female partners increased
significantly. Deloitte diagnosed a problem and prescribed, implemented, and
evaluated a solution concerning the hiring, retention, and promotion of more female
professionals. The firm clearly understands the impo r tance of diagnosis. Deloitte
blazed a new trail for its professional women, and now other firms have inst i tuted
similar programs by using their own approaches to diagnosis, prescription,
implementation, and evaluation.
e. External Environmental Influences
They are infl u enced by and influence the external environment (outside the
organization) and internal environment (i n side the organization). On the one hand,
external environmental influences —such as government laws and regulations, union
procedures and requirements, economic conditions, and the labor force—have a
significant impact on HRM processes. On the other hand, the HR planning of a firm
must operate within guidelines, limits of available resources, and competencies
produced by the organization. HRM is one i m portant function among other internal
functions, including finance, accounting, research and development, marketing, and
production. The interaction of these internal programs sets the tone of the entire
organiz a tional system. At the National Pancake House, Martha’s HRM problems are
aggravated by external environmental factors. Remember that Martha is faced with a
tight labor market and government wage legislation. Let’s look at some external
environmental factors.
A powerful external environmental influence is government law and
regulations, which affect organiz a tions directly. Federal regulations influence HRM
activities, policies, and programs. When an organization makes decisions about
hiring, promotion, managing diversity, performance evaluation, downsizing, and
discipline, it must weigh the impact of government regulations.
Government regulation has increased substantially. In 1940 the U.S.
Department of Labor administered 18 regulatory programs; in 2010 it administered
more than 180. 4 And that is just one government agency affecting managers and the
activities of the HR department. As the nearby Your Career Matters suggests, HR and
operating managers alike can enhance their effectiveness and career prospects by
understanding major laws that govern the fair treatment of employees.
To cope with increasing governmental control, management has tried to
influence the passage of rel e vant legislation and the way it is administered.
Organizations have sued to determine the constitutionality of many of the laws. For
example, several states in the United States are challenging the constitutionality of the
Patient Protection and Affordable Care Act (a.k.a., federal health care reform), which
was passed on March 23, 2010. 6 As of the writing of this book, two district courts
have ruled that the law is constitutional, while two other district courts have ruled
against it. If this law survives and is fully implemented in 2014, every employer (and
HRM department) will need to adapt and make major adjustments to be in
compliance.
The presence of a union directly affects most aspects of HRM—recruiting,
selection, performance evalu a tion, promotion, compensation, and benefits, among
others. These effects will be discussed later in the text. A union is an organization that
represents the interests of employees on such issues as working cond i tions, wages
and salaries, fringe benefits, employees’ rights, grievance processes, and work hours.
Unions differ, just as people and other organizations differ. There are cooperative
unions and combative unions, just as there are sensitive organizations and socially
irresponsible organizations. Those familiar with union history are aware of the kind of
toughness a James Hoffa or a John L. Lewis can bring to the employment scene.
Unions can cause significant disruptions by striking; not only in the United
States, but around the globe. In 2009, six unions in France held a one-day nationwide
strike to protest the government’s proposed increase in pension age from 60 to 62
years old. 8 In China, workers at the Honda Motor Company’s auto parts company in
Guangdong went on strike in May 2010 over a monthly pay hike of $118 a month. 9
In London, over 10,000 staff of the Rail Maritime and Transport union organized a
one-day walkout in September of 2010 to protest the cutting of 800 jobs. 10 Back in
the United States, the owners and players (represented by the players’ union) of the
National Football League are currently embroiled in a financial dispute which may
lead to a postponement of the 2011 season.
At one time, unions were concentrated in the private sector of the economy
(e.g., mining and man u facturing), and were influential in only a few of the United
States, primarily the highly industr i alized areas. But union participation has dropped
to 11.9 percent of the workforce, with the majority of union members now in the
public (i.e., government) sector. 12 It is no longer useful to think of the unionized
employee as a blue-collar factory worker. E n gineers, nurses, teachers, secretaries,
salespersons, college professors, professional football players, and even physicians
belong to unions. In sum, unions often play a significant role in HRM programs.
Data, empirical evidence, and general opinion indicate that the productivity of
employees is an important part of a nation’s general economic condition. Managers
are concerned with productivity because they feel it is a representative indicator of the
overall efficiency of an organization. Productivity is defined as output of goods and
services per unit of input of resources used in a production process. 14 Inputs , as
applied in the measurement of productivity, are expressions of the physical or dollar
amount of several elements used in producing a good or a service, including labor,
capital, materials, fuel, and energy. Before productivity can be effectively managed
and improved, it must be measured. This can be done by isolating the outputs—by
division, department, work team, ind i vidual, or product line. Next, the costs that
went into producing the output must be determined, including labor (salaries, bonuses,
benefits), heating, lighting, and capital. 15 Then, u s ing the previous year as a
baseline period, the manager must compare the current year’s figures with those of the
previous year to determine what adjustments are necessary. Managers should lay the
groundwork for measuring and monitoring productivity before they rush into changes.
Productivity measures are crude and subject to short-term error. But over the
long run, productivity measures can capture a trend. Productivity in the United States
slid in the 1970s to an annual rate of i n crease of about 2.0 percent. In 1994–2009,
however, productivity began to increase annually and averaged over 3 percent. Other
countries that consistently maintained high productivity from 1994 to 2009 include
Taiwan, Finland, Singapore, and Sweden. 16 The American worker still is one of the
most productive, but other nations have narrowed the gap. 17 Some suggested
solutions for increasing productivity include reducing government controls, develo p
ing more favorable income tax incentives to invest in new businesses, and
reindustrializing the entire business-industrial complex (such as plants and
equipment). These suggested solutions have both proponents and opponents. 18 For
example, there are many citizens who believe that reducing or eliminating legislative
controls will adversely affect the quality of life and society for decades to come. Toxic
waste, radiation, air pollution, and other forms of destruction must be carefully
controlled.
At the macroeconomic level, the term competitiveness is defined as the degree
to which a nation can, u n der free and fair market conditions, produce goods and
services that meet the test of international markets while simultaneously maintaining
or expanding the real incomes of its citizens. 19 If you substitute the word
organization for nation , and the word employees for citizens , you would have a
definition of organizational competitiveness. At the organizational level,
competitiveness is an important issue. 20 How effectively do the workers produce the
product? How good is the quality of the services or goods provided? Can employees
handle new technology and produce the product at lower costs?
Does the firm have the human resources needed to increase the size of the
manufacturing facility to handle global demand? Will the push to work harder and
faster raise turnover, absenteeism, and the number of defects? An increasing amount
of research suggests that the way organizations implement and modify their HRM
activities can provide them with competitive advantages. A competitive advantage is
defined as having a superior marketplace position relative to competitors. 21
Sustainable competitive advantage r e quires a firm to deal effectively with
employees, customers, suppliers, and all competitors. Pfeffer ident i fied 16 HRM
activities that he recommends to enhance and sustain a firm’s competitive advantages.
The labor force of the United States comprises all people aged 16 years or
older who are not in the mil i tary and who are employed or seeking work. As of 2009
there were over 154 million Americans in the workforce; by 2018, the labor force is
projected to be over 167 million. 25 These data suggest a slowing in the growth rate
of the labor force in the next decade. Other changes projected by the Bureau of Labor
St a tistics (BLS) are reported in the Monthly Labor Review , which carefully tracks
trends in the available l a bor supply.
f. How Did EEO Emerge?
Throughout history, Western society has accepted the principle that people
should be rewarded according to the worth of their contributions. When the United
States became a nation, that principle was embodied in the American dream: the idea
that any individual, through hard work, could advance from the most humble origins
to the highest station, according to the worth of her or his contributions. Such
opportunity was everyone’s birthright. To this day the American dream, with its
emphasis on merit rather than privilege, is widely accepted. Another value that has
encouraged equal opportunity is the profit motive. Nondiscrimination makes good
business sense. If a company gives opportunities only to white males, it cuts itself off
from the vast reservoir of human talent made up of women, minorities, and
individuals with disabilities. Moreover, it adds to such societal problems as poverty,
crime, high taxes, and civic disorder, which also hurt the business community.
Until the early 1960s, it was not unusual for many people, while believing in
the American dream of rewards based on merit, to also believe that African Americans
(and other minorities) had their “place”—a place largely cut off from the rewards that
the majority received. This apparent contradiction in beliefs was a dilemma, observed
as early as in the 1940s by the distinguished Swedish economist Gunnar Myrdal in his
studies of race relations in the United States for the Carnegie Corporation. African
Americans were often excluded from schools, public accommodations, jobs, and
voting; and economic realities for African Americans belied the ideals of the
American dream. 5 The differences between American ideals and American realities
lent special significance to the civil rights conflict of the 1960s. The conflict is often
said to have begun in Montgomery, Alabama, on December 1, 1955, when Rosa
Parks, an African American department store worker in her 50s, was arrested for
refusing to give up her bus seat to a white man. Out of that single act of protest
emerged a previously unthinkable act—a bus boycott by African Americans. At the
center of the boycott was a loosely knit group called the Montgomery Improvement
Association, which chose as its leader a young minister who was in town, Dr. Martin
Luther King, Jr.
hroughout the early 1960s. Reports on television included scenes of civil
rights demonstrators being attacked with cattle prods, dogs, and fire hoses. These
events shocked the public into recognition that infringements of civil rights were a
serious social problem in the United States. Gradually, overt discrimination declined
and recognition of the problems faced by minorities grew. The business community
shared in this attitude change, voluntarily supporting such EEO-related efforts as the
National Alliance of Businessmen. As Congress turned its attention to civil rights,
laws were passed prohibiting discrimination in education, voting, public
accommodations, and the administration of federal programs, as well as
discrimination in employment. The civil rights movement was instrumental in raising
congressional concern and stimulating the passage of this legislation.
Undeniable economic inequality helped focus national attention on
employment as a specific area of discrimination. Unemployment figures for African
Americans were twice as high as for whites, and they were higher still among
nonwhite youth. While African Americans accounted for only 10 percent of the labor
force, they represented 20 percent of total unemployment and nearly 30 percent of
long-term unemployment. Moreover, in 1961, only one-half of African American men
worked steadily at full-time jobs, as opposed to two-thirds of white men. African
Americans were three times as likely as whites to work less than full time. Similar
statistical differences existed for other minorities, such as Hispanics and Native
Americans.
The inequalities are especially striking in the income comparisons between
African Americans and whites. In 1962, the average family income for African
Americans was $3,000, compared with nearly $6,000 for whites. More important, the
relative position of African Americans had been worsening during the preceding 10
years. Family income of African Americans was only 52 percent of family income of
whites in 1962, but it had been 57 percent of whites’ family income in 1952. These
inequalities could not be attributed entirely to differences in education level between
African Americans and whites. The average income of an African American high
school graduate was lower than the average income of a white elementary school
graduate.
Organizations spend billions of dollars to comply with federal regulations and
direct most of the duties associated with compliance to their HR departments. The
growing requirements of equal employment opportunity laws comprise a large portion
of human resource managers’ compliance responsibilities. The growth of equal
employment opportunity has given employees specific rights in their relationship with
their employers. Employees’ rights were not widely publicized or seen as front-page
news prior to the early 1970s. Now it seems that a key story appears daily dealing
with employees’ rights, equal opportunity, or diversity.
g. Equal Employment Opportunity Laws: Content and Court Interpretations
Title VII of the 1964 Civil Rights Act prohibits covered entities from
discriminating against employees on the basis of race, color, religion, sex, or national
origin. The act prohibits discrimination with regard to any employment condition
including hiring, firing, promotion, transfer, compensation, and training programs.
This law also prevents an employer from retaliating against an individual who
complains about discrimination, or who participated in an employment discrimination
lawsuit. Entities that Title VII prohibits from discriminating include private employers
with 15 or more employees; labor organizations with 15 or more members;
employment agencies; and federal, state, and local government employers. Title VII
specifically exempts private membership clubs other than labor unions and Native
American tribes from coverage. Additionally, religious organizations are allowed to
base selection decisions on religion in some cases.
Although the McDonnell Douglas case dealt with employee selection, the
prima facie elements can be modified for application to other employment contexts
such as termination, discipline, and compensation. Upon establishing a prima facie
case, a presumption of employment discrimination is created. The burden of proof
then shifts to the employer (defendant) for rebuttal. The employer may satisfy its
burden of proof at this stage by articulating a legitimate nondiscriminatory reason for
its actions or by proving that a protected category is a bona fide occupational
qualification (BFOQ) . Specifically, Title VII states that organizations may hire
employees based upon “religion, sex, or national origin in those certain instances
where religion, sex, or national origin is a bona fide occupational qualification
reasonably necessary to the normal operation of that particular business or enterprise.”
Courts have applied the BFOQ defense very narrowly. Most of the high-level
court cases concerning BFOQ indicate that overall, the defense is most likely to be
accepted when exclusion of a protected group relates to the ability to safely perform a
job, particularly when the safety of third parties is at risk. For example, in 2007 the
full 9thIU.S. Circuit Court of Appeals reversed an earlier decision that would allow
UPS to apply a BFOQ defense against all job candidates with hearing impairments
who were applying for driver positions. Instead, the 9th Circuit Court shifted the
burden to the applicants to prove that they were qualified and capable of driving
safely.12 Another example of how the courts rejected a company’s BFOQ defense is
International Union, UAW v. Johnson Controls, Inc.13 In this case, the battery
manufacturing company implemented a fetal protection policy that prohibited fertile
female employees from holding positions that exposed them to lead. The court held
that although lead exposure could endanger the health of a fetus, sex or pregnancy in
this situation did not interfere with the employees’ ability to perform the job.
Disparate impact or unintentional discrimination occurs when a racially
neutral employment practice has the effect of disproportionately excluding a group
based upon a protected category. The Supreme Court expanded the definition of
illegal discrimination in 1971 to include disparate impact in the case of Griggs v.
Duke Power Co.15 Willie Griggs was an applicant for a job as a coal handler at the
Duke Power Company. Duke required coal handlers to be high school graduates and
receive a satisfactory score on two aptitude tests. Griggs claimed that these
requirements were unfairly discriminatory in that they resulted in a disproportionate
number of African Americans being disqualified and were not related to the job. In
ruling for Griggs, the Supreme Court held that Duke failed to demonstrate that the
selection criteria were job-related.
To demonstrate disparate impact under condition (1) above, a plaintiff must
identify a specific employment practice when possible to separate the employer’s
practices, and show that it results in a significantly higher percentage of a protected
group in the available population being rejected for employment, placement, or
promotion. One method of evaluating whether such a disparity exists is called the
four-fifths rule. This rule states that discrimination typically occurs if the selection
rate for one group is less than 80 percent of the selection rate for another group.
If a plaintiff proves that a disparate impact exists, an organization may then
defend its employment practices by showing validation or business necessity. The
EEOC’s Uniform Guidelines on Employee Selection Procedures provides a detailed
description of test validation. If the defendant successfully demonstrates business
necessity, the plaintiff may prevail by proving that the defendant refused to adopt an
alternative practice that is equally valid but causes less adverse impact. This condition
was introduced by the Supreme Court in Albermarle Paper Co . v. Moody , 18 stating
that a plaintiff may demonstrate that an employers’ test is a pretext for discrimination
by showing “that other tests or selection devices, without a similarly undesirable
racial effect, would also serve the employer’s legitimate interest in efficient and
trustworthy workmanship.” 19 The Supreme Court noted in Watson v. Fort Worth
Bank and Trust20 that cost, burdens, and effectiveness are factors that may be used to
evaluate alternative practices.
Title VII as well as other federal legislation including the Age Discrimination
in Employment Act (ADEA), the Americans with Disabilities Act (ADA), and the
Equal Pay Act (EPA) prohibit retaliation against employees who oppose
discriminatory practices or participate in a protected investigation, proceeding, or
hearing. Retaliation claims filed with the EEOC have risen significantly over the past
two decades increasing from 7,900 in 1991 to nearly 31,000 in 2010. 21 These claims
can be quite costly since employees may seek compensatory and punitive damages for
organizations’ retaliatory actions. The EEOC recently issued guidance in a
compliance manual which outlines the three essential elements of a retaliation claim:
protected employee activity, adverse action by an organization, and a causal
connection between the protected activity and adverse action. 22 Employee activities
that are considered protected include opposition to discrimination and participation in
a protected proceeding. Opposition is protected if the employee’s manner of
opposition is reasonable and if the employee has a reasonable good faith belief that
the opposed employment practice was discriminatory.
Hostile work environment as a form of sexual harassment was first recognized
by the U.S. Supreme Court in the case of Meritor Savings Bank v. Vinson.33 In this
case, the Supreme Court held that Title VII does not require a tangible job detriment
for sexual harassment to be actionable, stating that unwelcome conduct constituting
hostile work environment harassment must be “sufficiently severe or pervasive to
alter the conditions of the victim’s employment and create an abusive working
environment.” Examples of such conduct may include making sexually oriented jokes
or comments, displaying sexually oriented calendars or posters, and touching of a
sexual nature.
The distinction between hostile work environment and quid pro quo sexual
harassment is important for determining employer liability. Employers can be liable
for hostile work environment harassment caused by a supervisor, other employees, or
by third parties (e.g., customers and vendors) if the employer knew or should have
known of the harassing conduct and failed to take appropriate corrective action. 34
Generally, an employer may fulfill its duty to prevent or remedy hostile work
environment harassment by developing an antiharassment policy, promptly and
thoroughly investigating harassment allegations, and properly disciplining offenders.
35 As the HR Journal discusses, some employers have gone so far as implementing
“love contracts” to protect themselves from the fallout of romances at the office.
A number of U.S. Supreme Court decisions have highlighted the importance
of effective human resource policies prohibiting sexual harassment in the workplace.
Employers must be concerned about and take appropriate action against sexual
harassment. In the cases of Faragher v. City of Boca Raton and Burlington Industries
v. Ellerth , 36 both decided in 1998, the Supreme Court held that employers are
vicariously liable for sexual harassment by a supervisor who has authority over the
harassed employee. Also in 1998, the Supreme Court ruled in the Oncale v.
Sundowner Offshore Services case that same-sex harassment was illegal under the
Civil Rights Act.37 The court also established the following two-part affirmative
defense that employers may assert if the harassment resulted in no tangible loss: (a)
the employer exercised reasonable care to prevent and correct promptly any sexually
harassing behavior and (b) the plaintiff employee unreasonably failed to take
advantage of any preventive or corrective opportunities provided by the employer or
to avoid harm otherwise. This defense is not available to employers if the employee
failed to complain due to a reasonable fear of retaliation.
h. A Global Perspective
The external environment is one of the most important influences on HRM
activities for the international organization. Each country in which the international
organization operates will have its own laws, business customs, and workforce
characteristics. In addition, the international organization must constantly be aware of
the political climate of each country in which it is located. Changes that can affect the
organization occur very rapidly. Although an organization that is expanding into
international markets is faced with many problems when it decides to become global,
the “people challenge” might, in fact, be the most difficult.
For example, one of the main HRM challenges facing many global companies
is an insufficient number of top managers and leaders who have the global skills and
competencies to help their firms compete successfully in world markets. 8 More
specifically, another survey of top international human resource executives indicated
that there are several key challenges related to international HR effectiveness. Global
human resource management (GHRM) refers to the policies and practices related to
managing people in an internationally oriented organization. Although GHRM
includes the same functions as domestic HRM, there are many unique aspects to
human resource management in the international organization.
There are many reasons that an organization might expand its operations
beyond itsIdomestic boundaries, but all are intended to help achieve the end results
outlined in the diagnostic model: satisfied employees and competitive products and
services. The specific reasons include searching for new or broader markets, acquiring
new and moreIefficient manufacturing technology, and taking advantage of large,
inexpensive labor forces located in other countries. One way in which many
corporations located in high-labor-cost countries are utilizing this low-cost labor
supply is through maquiladora factories along the border between the United States
and Mexico. Founded by the Mexican government in 1965 as an economic
development program to add jobs and lower poverty, the maquiladoras are Mexican
assembly plants that are used by international companies for routine production and
assembly processes. 10 They are sometimes called “twin plants” because many of
them are associated with large research and development operations located just
inside the United States.
In recent years, the maquiladora industry in Mexico has been affected by two
major factors: drug-related violence in the U.S.–Mexico border region and
competition from export processing zones in China and other parts of Asia. In terms
of violence, it has been reported that drug cartels were responsible for approximately
22,000 deaths in Mexico between 2008 and 2010. 15 In Ciudad Juarez alone, officials
have attributed over 5,000 deaths over a 28-month time span to violence related to the
drug trade. 16 Despite this violence, many multinational companies are continuing to
operate maquiladoras, including Johnson & Johnson, Delphi Automotive, Lear, and
Siemens. 17 Mexico is not the only area popular with American firms that want to
develop cooperative business relationships; nor is a search for less expensive labor the
only driving force behind such relationships.
China, with its even lower manufacturing costs, has overtaken Mexico in
terms of providing goods for import into the United States. In 2007, U.S. imports
from China reached $323 billion (compared to U.S. imports of $210 billion from
Mexico). 18 While foreign direct investment (FDI) in developed, developing, and
transitional economies decreased in 2008 and 2009, there are signs that FDI flows
should increase to between $1.6 and 2.0 trillion by 2012. 19 The recovery in FDI is
expected to be greater for developing and transitional economies such as China, Hong
Kong (China), Russian Federation, Saudi Arabia, and India, all of which were among
the top 10 most popular countries for FDI inflows in 2008 and 2009. Rounding off the
top 10 list of FDI inflow recipients for those years were the developed economies of
the United States, France, United Kingdom, Germany, and Belgium.
Most HR professionals no longer question that there are important cultural
differences between nations that might influence the effectiveness of HRM policies
and practices. The real issue is understanding these differences and ensuring that
HRM and the cultural orientation of workers are congruent with one another. Several
models of how culture influences work behavior exist. Perhaps the most widely
recognized is Hofstede’s “theory of the cultural relativity of organizational practices.”
21 Hofstede argues that national cultural differences are not changing much at all,
even though more superficial work-related norms and values might be. As a result, he
feels that national culture will continue to have a strong influence on the effectiveness
of various business practices.
When an organization structures its HRM policies for international operations,
it should consider cultural differences through the concept of “fit.” Fit refers to the
degree that HRM policies are congruent with the strategic international plan of the
organization and with the work-related values of a foreign culture. 25 For an
organization to be successful in the international marketplace, it must be concerned
with this fit from both an internal and an external perspective. Internal fit is concerned
with making sure that HRM policies facilitate the work values and motivations of
employees. Policies must be structured in ways that allow headquarters and foreign
subsidiaries to interact without sacrificing efficiency. External fit , on the other hand,
refers to the degree to which HRM matches the context in which the organization is
operating. In this regard, HRM is critical to international operations because of its
effects on cross-cultural interaction. 26 To be effective, theIorganization must
understand the cultural and socioeconomic environments of the foreign subsidiary.
i. The Expatriate Manager in the Multinational Corporation
