8.10 Trends in Human Resource Management and Labor Relations

Employee Diversity and Competitive Advantage

American society and its workforce are becoming increasingly more diverse in terms of racial and ethnic status, age, educational background, work experience, and gender. A company with a demographic employee profile that looks like its customers may be in a position to gain a competitive advantage, which is a set of unique features of a company and its product or service that are perceived by the target market as superior to those of the competition. Competitive advantage is the factor that causes customers to patronize a firm and not the competition. Many things can be a source of competitive advantage: for Southwest Airlines it is its operational efficiencies and its hiring practices that focus on finding employees that fit their fun and friendly culture; for Ritz-Carlton hotels it is very high-quality guest services; for Toyota it is manufacturing efficiency and product durability; and for Patagonia it is its narrow market niche and its focus on environmentally sustainable business practices. For these firms, a competitive advantage is also created by their HR practices. Many firms are successful because of employee diversity, which can produce more effective problem-solving, a stronger reputation for hiring women and minorities, quicker adaptation to change, and more robust product solutions because a diverse team can generate more options for improvement.²¹

In order for an organization to use employee diversity for competitive advantage, top management must be fully committed to hiring and developing women and minority individuals. An organization that highly values employee diversity is Johnson & Johnson. The company hosts unconscious bias training for all employees and supports employee resource groups (ERGs) across its global locations to increase employee awareness of diversity both with coworkers and among their customer base. Over 35 percent of Johnson & Johnson's employees are minority persons, including over 16 percent Asian and 10 percent Latino/a. In addition, women make up nearly half of the organization's workforce.²²

Outsourcing HR and Technology

The role of the HR professional has changed noticeably over the past 20 years. One significant change has been the use of technology in handling relatively routine HR tasks, such as payroll processing, initial screening of applicants, and benefits enrollments. Large firms such as FedEx and Procter & Gamble utilize specialized programs (WorkDay and PayCor, for example) to perform the information-processing aspects of many HR tasks. Other firms, such as Unilever, outsource—or contract out—these tasks to HR service providers such as Accenture.

HR outsourcing is done when another firm can perform a task better and more efficiently, thus saving costs. Sometimes HR activities are outsourced because HR requirements involve legal compliance and can be overwhelming to execute in-house in a timely fashion. Frequently, HR activities are outsourced simply because a provider has greater expertise. For example, media conglomerate CBS Corp. uses Fidelity Investments to manage its 401(k) plan, which has more than $4 billion in assets.²³

Today’s HR managers are realizing the value of AI in their job functions. Not only can AI be useful in automating routine administrative tasks, but it can also have a place in more strategic initiatives such as workforce planning and identifying training gaps/needs. According to research conducted by the SHRM (Society for Human Resources Management), AI is being used in generating job descriptions, customizing job postings, initiating communication with candidates, and assisting with onboarding tasks. Looking to the future, HR professionals will have a key role in leading the distribution of AI adoption in the workplace. From hiring professionals with technological experience in AI to training existing employees on how to integrate the technology into their jobs, HR functions will shift from more administrative tasks to more strategic initiatives.²⁴

Organizational Culture and Hiring for Fit

Regardless of general business and economic conditions, many firms are expanding operations and hiring additional employees. For many growing firms, corporate culture can be a key aspect of developing employees into a competitive advantage for the firm. Corporate culture refers to the core values and beliefs that support the mission and business model of the firm and guide employee behavior. Companies such as Trader Joe's, Patagonia, and Warby Parker place an emphasis on fit with the company culture during the recruitment and hiring process. This necessitates recruitment and selection of employees who exhibit the values of the firm. Companies can use carefully crafted applicant screeners early in the recruitment process to determine if the applicant's values and behaviors support the corporate culture. Additional tools such as behavioral-based interviewing questions centered on the company core values can also assist with finding a good fit for the company. Southwest Airlines has non-HR employees such as gate agents and pilots to screen for cultural fit as well as strong customer-service orientation.

In addition to cultural fit, firms are increasingly hiring for technical knowledge and skills fit to the job. Tech companies such as Dell, Alphabet, and Amazon receive thousands of résumés and job applications each year and continue to look for the best and the brightest when it comes to technical knowledge and skills. For example, Alphabet, Inc. focuses on a skills-based approach rather than a candidate's education level. Amazon is customer-centric and looks for employees who are innovative and data driven. Dell Technologies focuses on their "culture code" and actively seeks employees who have high integrity and a team-oriented mindset.²⁵

More Service Workers Joining Labor Unions

Organized labor has faced tumultuous times during the last several decades due to declining union membership, loss of factory jobs, dwindling political clout, and the shifting of jobs outside the United States. With union membership around 10 percent of the U.S. workforce, some wonder if labor unions, who organize as a united front against poor working conditions, still have a place in the country. April Verritt, president of the Service Employees International Union (SEIU) is confident in the work of unions and the impact they can make. The SEIU is one of the fastest-growing unions in the nation, having jumped to 2 million members from 1.1 million a decade or more ago.²⁶

Henry’s goal is to focus on recruiting the country’s millions of low-wage service workers, positions that are primarily filled by the working poor. These workers are disproportionately women, immigrants, and members of minority groups, which have all been traditionally more open to unionization. If these workers are successfully recruited into the SEIU, Henry believes that their wages and benefits would increase in much the same way unions brought factory workers into the middle class in the 1930s.

The SEIU believes that the service industry provides a target of opportunity given the size of the service sector in the United States, with nearly 80 percent of U.S. workers being employed in service-related fields:

Many believe that the future of labor lies primarily in the success of recruitment efforts and in enrolling the massive numbers of employees who are in fast-growing, low-wage service jobs. For example, the SEIU was successful in unionizing hundreds of workers who provide services to people with disabilities in California, with an eye toward raising standards for their work and increasing hourly wages and benefits. Reversing labor’s decline will be challenging, but the SEIU looks positively toward the future under the leadership of Verrett.²⁸