Part I. Framing the Challenges

Transcription

1 Part I Framing the Challenges

2 Introduction to Part I "Human resource management": twenty years ago, the term didn't exist. It began to gain currency among those who felt that people were just as important as other corporate resources, such as money and materials - probably even more so.. Unlike "marketing" and other post-war management concepts, human resource management isn't part of the popular vocabulary. Ask the layman what it means, and you'll get a bemused expression. Most managers know the term and its acronym HRM, and they'll tell you that it's a fancy label for the personnel department. Perhaps they'll add that it is something that the wave of management bestsellers (Ouchi's Theory Z, 19Xl; Peters and Waterman's In Search of Excellence, 19X2; Blanchard and Johnson's The One Minute Manager, 19X2) brought into vogue. But then wander through the corridors of power in the multinational enterprises that are beginning to dominate the world economic scene. Stop off to talk with the board members, the chief executive, the general managers, as well as with those in the personnel department. And the tune changes. "Human resource management, it's one of our major challenges", is what you will probably hear. The discussion may start with the difficulties of steering the culture of the firm away from bureaucracy and towards profitability. You hear stories of strategic plans that failed because of the lack of the right people. Their quality program, vital to compete with foreign firms invading the home market, is foundering because employees aren't responding. They tell you about their concern for a growing subsidiary in some far-flung region of the world, where the talented general manager is undercutting his success because he doesn't have a nose for people. And about social resistances to information technology and computer-aided manufacturing. The conversation moves on to new product development, where those research guys aren't talking to the marketing people. More- 2

3 Introduction 3 over, the time it takes to develop a new product from research to its launch in major worldwide markets has to be shortened from twenty years to five years. The obstacles here are that people in different functions and subsidiaries don't know each other, and the firm is gripped by the "notinvented-here" syndrome. They point out that the executive committee spends a quarter of its time discussing key assignments and management development: getting the right people into the right places at the right time. But here they are plagued by difficulties- resistance to mobility, increasing recruitment problems now that the "baby boom" supply of people is drying up, the tendency of local managers to hide their best talent, the problems of reentry into the mother country after expatriation, difficulties in retaining capable people... Then they move on to talk about the problems they arc experiencing in tightening control over hitherto decentralized subsidiaries. This leads in turn to the headaches of integrating the different culture of a major acquisition, and then to their problems in persuading key people to take positions in a joint venture that has recently been negotiated. This book is about such problems. These challenges are so vital for the prosperity and even survival of the international firm that they are increasingly occupying the agendas of top executives. While personnel managers have a critical role to play in the management of human resources, the prime responsibility for this task lies with general management. This is an assumption that runs throughout all the chapters of this book. It is worth pointing out that none of its nine academic contributors is a personnel specialist. They arc professors of management, international business, corporate strategy, business policy, organizational behavior, and technology management. All, from their different perspectives, have come to the conclusion that human resource management is a critical clement of corporate management. We have structured issues such as the above into three themes- Change, Globalization, and Innovation. I. The first, that of major organizational change, is addressed in Part I I. We are currently witnessing a process of cultural transformation in international enterprises. The cultures of these firms were created in the relatively stable, nationally-focused era of post-war growth and prosperity. The 70s changed all that. Competition, internationalization of markets, massive investments requiring a quick payoff through global marketing, the need for careful but rapid decisionmaking: these and other forces mean that most firms arc having to develop more performance-oriented, more international, more responsive cultures. The challenges here are not the "whats" of whatto-do, which arc typically well-known. They are the "hows" of managing a change in the deeper culture of the firm. 2. The second theme is taken up in Part I II, namely managing human

4 4 Framing the Challenges resources in the global firm. Internationalization has brought new problems of managing a worldwide workforce, people with different conceptions of the rights and wrongs of organization. And it has led to new theoretical and practical challenges, like the task of building an organization that is both integrated and locally responsive, escaping from the centralization-decentralization pendulum that has oscillated with increasing frequency in recent decades. The task of developing managers who can provide leadership in the face of ever increasing complexity has itself become a major challenge. Indeed, many scholars go as far as tg suggest that the complexity of international organization and of people management is such that the basis for the competitive advantage of the multinational firm has shifted from its material and financial resources to the capabilities of the organization and its people. 3. Innovation through human resources is the third theme and the focus of Part IV. The widespread concern for innovation reflects the increasing pace of change, and the term covers more complex issues than that of developing entrepreneurial spirit in big firms. These issues range from introducing computerized methods of production to improving the product development process. Innovation means establishing closer links between centralized research and the marketing people spread throughout the world. It means updating the know-how of scientists and technicians, diffusing the insights in one part of the firm rapidly to others. Indeed, innovation implies developing a more responsive, interdependent, and flexible organizational culture. Contrary to the cliche that only small firms are innovative, large firms with multiple competencies and operations throughout the world have a massive potential competitive edge - that is, if they can realize that potential. FRAMING TilE CHALLENGES OF HUMAN RESOURCE MANA<iEMENT Before we turn to these topics, we want to provide a frame for them by discussing the changing business environment from a human resource perspective. This is the purpose of Part I of this book. The two chapters here have complementary perspectives. Bill Ouchi begins with a survey of the past, while Stan Davis takes us from the present into the future. William Ouchi is Professor of Management at the University of California at Los Angeles, and author of the best-selling book Theory Z: How American Management Can Meet the Japanese Challenge ( 19X I). In Chapter I, he reviews the evolution of thought about management, taking us back to Adam Smith and the early days of the industrial revolution. He shows how management attention over the centuries has alternated between a focus on

5 Introduction 5 the "hard", the rational and quantitative aspect of organization, and the "soft", its human and cultural features. The recent concern for corporate culture is one of those pendulum swings back to the "soft", and attention is already moving on to the "hard". Ouchi advocates bringing together the separate logics of "hard" micro-economics and "soft" organization theory in what he calls "organizational economics", where human re~ource management is a key element. He illustrates this with an analysis of firms who achieve super-normal rates of return, arguing that these firms are capable of the unnatural act of combining individualism with the capacity for teamwork. This is supported by the evidence of another recent paradox, partnerships between competitors. The theme of managing tension between opposites is a fitting opening to this book. In subsequent chapters by quite independent contributors, the reader will find these oppositions to be a recurrent concern- that which the concluding chapter in Part V addresses. Stanley Davis takes us into the future in Chapter 2. Formerly a professor of international management at Columbia, Harvard Business School, and Boston University, he is today a business advisor to multinational corporations. His argument is that we are already far into the post-industrial service economy, although our models and ways of thinking about management and organization are still based on the industrial economy. Drawing upon analogies taken from science and physics, he sets out to outline the new model of management for the new economy, one where people are no longer the constraints of the industrial society but the cornerstone resources of the service economy. Our typical way of thinking about time in the shape of strategic and husincss planning is out of tunc with the new reality. The world is now moving in real-time, and just-in-time production processes are an example of the new emerging model. Our assumptions about mass are still Newtonian rather than Einsteinian as we focus on managing tangible products rather than intangible information. We limit ourselves by assumptions about physical and geographic space in a world where consumer needs are already tuned to any-place globalization. Davis views the challenge of human resource management as that of bridging the gap between the emerging nature of the economy and the outdated way we manage our enterprises.