Principles of Human Resource

Introduction

The understanding of the principles of human resource (HR) management has become particularly important in contemporary conditions. The dynamic nature of the external environment of the business entity results in the emergence of a wide array of situations that affect its internal processes, and most importantly, they influence the personnel, meaning that they must be managed efficiently. Therefore, it is necessary to review several types of external influences on the organization, assess their impact on the HR of the organization, and propose ways of mitigating their undesirable effects.

The NAFTA Deal

Issue Description

The NAFTA deal presumes the removal of barriers to trade and investment between the U.S., Canada, and Mexico. On the one hand, such an agreement provides numerous business opportunities for all parties. At the same time, the differences in the economic development of the participants can have a wider array of negative effects on the developed states. Moreover, the recent position of the U.S. makes it possible to assume that the deal can be changed or even canceled in the future (McKinney, 2016).

Outcomes

The low labor and environmental standards of Mexico as one of the participants of the NAFTA may result in the shift of business activity in other countries, including Canada. Specifically, large companies may transfer the majority of their branches abroad (McKinney, 2016). On the other hand, the increasing inflow of immigrants may result in the creation of new jobs in the country, accompanied by the growing competition in the labor market and potential wage reduction (McKinney, 2016).

HR Impact

The bilateral effect of NAFTA on the commercial sector, as well as the unclear future of this deal, means that uncertainty is the core factor of its impact on HR. Specifically, the personnel of the company affected by it is likely to search for work in sectors that are not related to international trade due to their higher stability, which will result in an outflow of the workforce from the enterprise (DeCenzo, Robbins, & Verhulst, 2016).

Suggestions

To mitigate the negative effects of the NAFTA deal, it is necessary to ensure the stability of the organization in the long-term perspective, namely — through the optimization of costs (benchmarking and the changes in the information flow). It is also possible to recommend reducing the costs associated with the maintenance of high-status offices, leasing and subleasing of unnecessary premises, and others (DeCenzo et al., 2016). This activity will eliminate the need for attracting a cheaper workforce and the reallocation of the assets abroad.

Proactive HR Benefits

Provided that the organization has implemented the proposed measures in advance, one can expect a lowered level of uncertainty in the company as a whole. In turn, the possibility of rotation and outflow of the staff will be reduced. Additionally, the proactive approach will contribute to the stability of the internal environment of the organization, making it less susceptible to crises of an external nature (DeCenzo et al., 2016).

The Minimum Wage in Ontario

Issue Description

In October 2017, the minimum wage in Ontario increased to $11.6 per hour (the general value). This trend has been observed since 2003, with wages growing on an annual basis (except for the period between 2010 and 2014). Additionally, such categories of the workforce as students and home-workers also receive an increased salary now, which in some cases may exceed the general value (Ministry of Labour, 2017).

Outcomes

The first potential outcome of the described issue is increased competition in the labor market of the country as the workforce may perceive the new work conditions as more attractive. On the other hand, the growth of the minimum wage will increase the expenditures of entrepreneurs on the salary fund, with the main burden falling on the shoulders of small and medium businesses (DeCenzo et al., 2016).

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HR Impact

The primary impact of the minimum wage increase is the growth of the unemployment rate. Small and medium businesses that are incapable of coping with increased expenditures associated with salary funds will cut their costs by firing a share of employees (DeCenzo et al., 2016). Due to this fact, the workers of numerous organizations are likely to become less motivated, knowing that they may be potentially discharged.

Suggestions

To avoid staff reduction, the organization is to optimize its expenditures, specifically the ones associated with the internal processes (administrative costs and others). This goal can be achieved by eliminating the doubling of the efforts (centralization of auxiliary functions) and the formation of new approaches to the allocation of resources (zero-based budgeting and targeted investment policy) (DeCenzo et al., 2016).

Proactive HR Benefits

The proactive measures in the field of cost optimization will allow planning of this process without haste and in a thorough manner, which will contribute to its efficiency. Additionally, the resistance to change will be much lower since the employees of the organization will be informed of the reforms in advance (DeCenzo et al., 2016).

Sears: Pension Regulations

Issue Description

The recent downfall of Sears Canada, a large retail chain, has forced it to close 60 of its stores in the country and has jeopardized the future of almost 16,000 of its retired employees that receive pensions from the company. Moreover, the problem was exacerbated by the absence of legislation that could have provided this social group with legal protection, meaning that pensioners have become one of the most vulnerable categories of the population in the country (Ireton, 2017).

Outcomes

The precedent created by the failure of the described legislation may result in the emergence of numerous incidents associated with the closure of bankrupt companies that are incapable of providing their retired workers with pensions (Ireton, 2017). On the other hand, the possibility of protests from the affected employees can be quite high, making it possible to expect the introduction of the set of protective measures aimed at the pensioners of the country, as well as the companies that are obliged to make the necessary payments (DeCenzo et al., 2016).

HR Impact

The lack of proper legal protection may result in the employees of the company questioning the latter’s credibility, leading to their diminished loyalty. In turn, the valuable human resources may be attracted by the firm’s direct competitors that offer better conditions of work and retirement, lowering the competitiveness of the former considerably (DeCenzo et al., 2016).

Suggestions

The problem of the uncertain future of the employees close to the retirement age is to be addressed by establishing retirement agreements verified by lawyers. Additionally, it is imperative to make the workers understand that their contribution has a direct effect on the well-being of the organization and thus their own. In other words, involvement and inclusion must be made regarding the core principles of the organizational culture (DeCenzo et al., 2016). Thus, the chances of the downfall of the firm will be reduced, with the risk of occurrence of situations similar to the one at Sears Canada being lowered.

Proactive HR Benefits

In the described situation, the proactive actions will help to ensure the high levels of loyalty and commitment of the employees to the goals of the organization. As a result, even in case of scenarios that may indirectly affect them (the inefficient legislation, similar situations in the other companies, and others), they will remain loyal to the enterprise, contributing to its success in the long-term perspective (DeCenzo et al., 2016).

Banks and Offshore Jobs

Issue Description

TD, one of the country’s major banks, has been increasingly relying on offshore practices, outsourcing some of the work overseas. The problem is exacerbated by the fact that the foreign workers hired by the organization have received access to the private data of the bank’s clients. As a result, the local workforce is at disadvantage, and the risk of identity theft is considerable (The National, 2017).

Outcomes

Provided that the bank in question does not violate the country’s legislation, it is likely that it will continue to rely on outsourcing as one of the methods of organization of work. In case this approach is efficient, its example may be followed by the other organization in the financial sector (DeCenzo et al., 2016). At the same time, if the private data of the clientele are mishandled, the possibility of resonance in society can be quite high (The National, 2017). In turn, the bank will either have to abolish the described practices or even cease its activity as a whole.

HR Impact

The outsourcing of work decreases the need for the local workforce, meaning that the employees of the organization resorting to these measures may oppose such policy. In turn, one can expect an increased resistance to change, lowered motivation, and the outflow of workers, with the subsequent reduction of the available human resources of the enterprise (DeCenzo et al., 2016).

Suggestions

Outsourcing is to be presented as an important component that ensures the overall success of the company and the well-being of its personnel. Additionally, it is recommended to outsource the work that has a negligible effect on the professional growth of the company’s employees, thus providing the latter with more opportunities in terms of building careers (DeCenzo et al., 2016).

Proactive HR Benefits

Provided that the employees are accustomed to the idea of outsourcing in advance, they are less likely to perceive it as a threat to their well-being and career growth. Moreover, the optimization of costs as a result of such an approach will increase the overall survivability of the organization during future crises, which will contribute to the overall loyalty of the personnel (DeCenzo et al., 2016).

Conclusion

The reviewed scenarios have demonstrated that almost any change in the external environment of the organization may affect its HR, often not in a favorable way. Thus, all of the potential threats, regardless of how distant they may appear, are to be identified and analyzed with the purpose of assessment of their impact on the firm, as well as for developing a proper response. Moreover, in any of the described situations, the proactive approach is preferable as it contributes to the overall stability of the company, making its internal environment less volatile in the long-term perspective.

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