By Barbara Mitchell

HR expert / co-author
The Essential HR Handbook
“Progress might have been all right once, but it has gone on too long,” said well-known poet Ogden Nash. Indeed, the modern
workplace is evolutionary, with resources—human and otherwise—in a state of constant flux. How organizations adapt and react can
mean the difference between success and failure. Here’s why.
Workforce changes
The workplace has changed significantly in this new century, and the pace of change isn’t slowing down. We have moved into a
global economy in which events and actions in formerly remote parts of the world have a real impact on U.S. business. We’ve
moved into the knowledge economy, too: The service industry has replaced manufacturing as the core U.S. enterprise.
Work that used to be done here is being “outsourced” to countries that pay lower wages. Technology is changing how and where we
work. Employees are seeking a balance between their work and personal lives.
Meanwhile, the makeup of the labor pool in this country continues to experience major shifts. The U.S. Department of Labor
estimates that by 2008, 70 percent of people entering the job market will be women and people of color. Further, we may face a
significant labor shortage—depending on whether Baby Boomers (those born 1946-1964) retire when they are eligible or continue to
work at least part-time.
These forecasts suggest that organizations should review their current policies and practices to be sure they are prepared for a
different workforce.
Business ethics
Recent scandals have raised the bar considerably regarding workplace ethics—that is, moral principles and values that establish
appropriate conduct. More than half of U.S. businesses report having some type of ethics policy—but that isn’t enough.
For example, Enron Corporation, a fast-growing energy firm that was brought down by accounting scandals in the early 21st century,
had a comprehensive ethics policy that appears to have been ignored. In addition to the Enron scandal, firms such as WorldCom,
Tyco International, and Arthur Andersen (auditors to both Enron and WorldCom) were greatly affected by their leaders’ unethical
actions.
What can we do to be sure our organizations follow ethical practices? Many organizations are asking their HR departments to serve
as the “conscience of the organization” and monitor behavior. Policies aren’t enough; employees need to see others, at all levels of
the organization, conduct themselves ethically. Managers need to ensure that their organizational cultures demand ethical behavior.
Organization leaders should participate in determining what their ethics codes cover, then hold each manager accountable for
ensuring that those standards are met. Most important, managers must be models of ethical behavior at all times.
Ethical issues for top management to grapple with include, but are not limited to:
• What information should be shared with employees?
• How much information should the employer share regarding a former employee who was fired or laid off?
• What impact should an employee’s personal life have on his or her potential for advancement?
• Should the organization make accommodations for a valued employee whose job performance is suffering because of a personal
situation?
• Should employees be responsible for reporting actions they think violate the organization’s ethics? If so, to what extent or under
what procedure?
Suggestions for codifying ethical behavior in an organization include having a written statement that is published and posted around
your workplace, then following that code of ethics; discussing your code of ethics in the orientation process and then conducting
mandatory, annual ethics training for everyone; informing employees how to report an ethics violation and ensuring that those who
report them are not subject to retaliation; setting up a confidential hotline for reporting ethics violations; and encouraging continuing
discussion of ethics in staff meetings.
Code of Ethics
Among the elements of workplace issues and behavior that a code of ethics might cover:
• applicable laws
• confidential or proprietary material
• conflicts of interest
• organizational assets or property
• acceptance of gifts, gratuities and entertainment
• privacy issues
• dealing with the media
• reporting ethics violations, including a non-retaliation statement.
Since the recent spate of ethics scandals, Congress passed the Sarbanes-Oxley Act of 2002 (SOX), which is having a large impact on
the policies and procedures for publicly held companies (see below).
Sarbanes-Oxley Act of 2002
The Sarbanes-Oxley Act of 2002, commonly referred to as SOX, is also known as the Public Company Accounting Reform and
Investor Act of 2002, a federal law enacted in response to a spate of major corporate and accounting scandals that diminished public
trust in accounting practices.
SOX established new or enhanced standards for the governing boards of all U.S. public companies and management and public
accounting firms. It also established the Public Company Accounting Oversight Board, charged with overseeing, regulating,
inspecting, and disciplining accounting firms in their roles as auditors of public companies. SOX also covers issues such as auditor
independence, corporate governance, internal control assessment, and enhanced financial disclosure.
The law significantly expanded protection for employees who allege certain types of corporate misconduct. SOX allows the
following employees to bring a lawsuit for reinstatement, back pay, and damages if they have been retaliated against for reporting
corporate fraud or accounting abuses: employees of publicly traded companies and employees of any entity, public or private, that is
a contractor to a publicly traded company such as an accounting firm.
SOX also imposes criminal penalties—including up to 10 years imprisonment—on anyone who retaliates against a person for
providing true information to a law enforcement officer about the commission of a federal crime. For additional information on the
Sarbanes-Oxley Act of 2002, contact your organization’s employment-law counsel and learn more here: www.soxlaw.com.
Main Message for Managers
Managing people in the 21st century seems to entail new challenges at every turn. Managers need to be aware of current events to
stay ahead of new trends and issues. To take their organizations forward to the future, they should:
• prepare for an increasing number of women and people of color in the workforce.
• develop a code of ethics and monitor compliance with it.
• maximize the positive aspects so as to minimize the differences among generations in the workforce.
• create opportunities for employees to have work/life balance and flexibility.
• carefully evaluate whether outsourcing will benefit the organization.
• provide training on cross-cultural issues for both managers and employees

MANAGEMENT CHALLENGES FOR THE 21ST CENTURY

1. Written by Peter F. Drucker. Published by Harper Business
Management Challenges
2. June 10, 2008 2:30 PM +0530
Before his death in 2005, just days before his 96th birthday, management guru Peter F. Drucker had written more than 40 books
about management, economics, politics and society. He had also written an autobiography and a couple of novels. One indication of
the global reach of his words and ideas—and their enormous impact on management around world—is the fact that, today, many of
his books continue to be reprinted in as many as 20 languages.
In Management Challenges for the 21st Century, a book he published in 1999, Drucker addresses the entire field of management in
an effort to destroy many of the myths and assumptions that prevent managers and organizations from realizing their greatest
potential. As a call to action for individuals and organizations to face the future with the best understanding of management possible,
Drucker's book is filled with valuable ideas for improving how organizations work.
Peter Drucker is one of the most respected and influential writers and educators to ever tackle the vast topic of management. His
experiences as a reporter, economist, professor and management expert reverberate throughout his books. In Management
Challenges for the 21st Century, he offers a historical perspective of management and the many mistaken assumptions that have held
organizations back for decades. After he smashes several myths about the discipline and practice of management, he describes a new
set of principles that are far more appropriate for facing the future of management.
For example, one false assumption that once ruled the discipline says, "Management is Business Management." After a quick
reflection on current management realities, which include management that also extends to nonprofit, military and other non-
business organizations, he counters the outdated maxim with this principle: "Management is the specific and distinguishing organ of
any and all organizations."
While reflecting on management's new prevailing theories, Drucker presents smart principles for all individuals and organizations.
One of these principles is that an organization has to be transparent so people know the organization structure they work within.
Another principle he offers is, "Someone in the organization must have the authority to make the final decision." He explains that
even with flatter hierarchies, in a crisis, somebody has to be clearly in command. Drucker also writes, "One person in an
organization should have only one ëmaster.'" This principle, he points out, helps to avoid a conflict of loyalties and distorted
messages from too many layers in an organization.
Another assumption that Drucker dismantles is the idea that there is only one right way to manage people. He not only explains that
different people need to be managed differently, but he replaces the old belief with a new assumption that says: "One does not
ëmanage' people. The task is to lead people. And the goal is to make productive the specific strengths and knowledge of each
individual."
Through research and analysis, Drucker also describes the social and political realities that must be considered when formulating a
management strategy. By helping organizations consider new realities, such as a declining birth rate in the developed world, shifts in
the distribution of disposable income, and increasing global competitiveness, he prepares them to meet the challenges of the future.
He also helps them survive the economic, social, political and technological transformation that is taking place today.
Review by Chris Lauer, senior editor, SEBS

By

Lenin Karthikeyan
Assistant Professor - Senior Scale
Manipal University
Dubai
 Challenges and Issues of Human Resource Management in
the 21st century

Companies that desire to maintain a competitive edge, both now and in the future require human force well equipped to face the ever
increasing pace of technological changes and techniques. This is the accountability of the human force manager to properly train the
work force to accomplish the competitive advantages of business in the 21st century. HRM managers have moved from handling simple
personal issues to making a strategic implementation through supporting the long term strategies with the necessary employee
qualifications and developing the cultural and technical capabilities required for the strategies of the organization. In recent years there
has been considerable debate regarding human resource management (Bal, 2011, p- 2). One has to rise the question here what should be
the priorities for human resource in future? Though we believe that human plays  a vital role in an organization but due to rapidly
transforming business landscape, globalization, changing nature of consumer taste and habits, a new techniques of production, HR
managers are facing a variety of issues and challenges like retention of the employees, multicultural work force, retrenchment of the
employees. Armstrong (2004) defined Human Resource Management (HRM) as the function within an organization that focuses on
recruitment of management of, and providing direction for the people who work in the organization. Human resource manager will
have to build or develop a frame work that allows flexibility to develop a workforce for tomorrow (Andries du plessis, 2008, p-167).
The primary focus of the paper is to explore HR issues and challenges and to provide practical solutions.

Review of Literature:

The world federation of personnel management association (WFPMA, 2009) survey pointed out the most important top ten HR
challenges are leadership development, organizational effectiveness, change management, compensation, health and safety, staff
retention, learning and development, succession planning, staffing: recruitment and skill labour. In the view point of Decenzo and
Robins (2001) the most important challenges of HRM, are technology, E commerce, and work force diversity, and globalization,
ethical consideration of the organization which may directly or indirectly affect the organization competitive advantages, especially
with technological advancement the affect on recruitment, training and development and job performance with great extent can be
study in organization.

Factors affecting the role of HRM

Globalization

Greengard (1995) defined globalization as the system of interaction among the countries of the world in order to develop the global
economy. Globalization refers to the amalgamation of economics and societies around the world which means that world trade and
financial markets are becoming more integrated. Growing internationalization of business has its impact on HRM in terms of problems
of unfamiliar laws, languages, practices, competitions, attitudes, management styles, work ethics etc (Srivastava & Agarwal).
Globalization has an effect on employment patterns worldwide. It has contributed to a great deal of outsourcing which is one of the
greatest organizational and industry structure shifts that change the way business operates (Drucker, 1998). Globalization is also seen as
changing organizational structures where expenses can move up or down as the business climate dictates (Garr, 2001).  As a result HR
managers have to confront with more heterogeneous functions and more involvement in employee's personal life.

Technological advances

Technological advances have a significant impact on HR business practices. Due to the advancements in the technology there has been
a drastic change in the approach to the various projects and the scenarios that guide to the organizational regulations.

Firstly, the need of skilled personals is mentionable. In order to survive in a competitive environment the organization definitely in
need of the skilled personals in substantial number to handle the situations and technical equipments. In an organization there are "hot"
sectors which require a high of technical experts like telecommunications, hospitality, retailing, banking, insurance, bio-technology
etc.  Next head which is worth mentioning is the downsizing. New technologies have decimated many lower-end jobs with frustrating
regularity. The increased automation also has reduced the employee head counts everywhere. The pressure of remaining cost-effective
in every aspect has also compelled many a firm to go lean, and thereby cutting down extra fat at each and every managerial level
(Anurag, 2011).  Managing the expectations of knowledge workers is also going to be a major area of concern for all HR managers in
the years ahead.

Other aspect is telecommuting where the employees started to work remotely from a place other than their primary office.
Telecommuting became a popular alternative to avoid the daily commute where the employees use phones and internet to transmit their
office works.

This has been a powerful cost effective tool in the sense that companies have been successful in increasing their applicant pool through
this mode and staffs also may live far away from cities and gain considerably due to savings in rents, transportation, etc.

The biggest issue due to technological advancement is adaptability, with companies looking at tools which can integrate with the
internet, while other issues of concern include data privacy, security and business continuity/disaster recovery.

Workforce Diversity

Diversity by definition for the business world means having a workforce that represents many different viewpoints, backgrounds and
cultures. Diversity affects all areas of organizations from recruitment to compensation, to the affect it has on the corporate culture,
morale and competitiveness. Diversity in the workplace is an increasingly topical theme in management. Diversity within HRM, termed
as workforce diversity, is a multifaceted phenomenon that can be defined as any visible or invisible difference between organisational
members. Diversity can be labelled into two distinct aspects: observable differences (e.g. nationality, age) and underlying differences
(e.g. values, sexual orientation). Workforce diversity becomes a particular issue in HRM as it has legal, moral and business
implications for an organization.

There are a number of ways in which people respond to diversity. Behavioural and emotional reactions to diversity are explained
largely by three theories: the similarity attraction paradigm, social identity theory and social categorisation theory (Pearson, 1995).
Workplace diversity has its positive effects (e.g. innovation, flexibility) as well as negative effects (e.g. high turnover, decreased job
satisfaction). However, diversity management can help mitigate the adverse effects of diversity and capitalise on the positive effects.

With the fusion of talents of diverse cultural backgrounds, genders, ages and lifestyles, an organization can respond to business
prospects more vividly and creatively, especially in the global arena, which must be one of the main organizational goals to be attained.
The risks of losing talents to competitors occur when an organizational environment does not support diversity. This is especially
factual for a multinational company (MNCs) who have ventures on a global scale and employ people with varies ethical and cultural
backgrounds. Thus, a HR manager needs to be mindful and may employ a Think Global, Act Local approach in most circumstances.

Changes in political and legal environment

If there are Changes in political and legal environment, then almost all aspects of HRM will be affected by the legal and regulatory
environment. The key drivers of a political climate include the extent of external regulations, nature of work contracts, various labour
legislations and case laws etc. Such factors remain ever changing, and as such, the political atmosphere of human resource management
remains in a constant change of flux.  It is the duty of  human resource and industrial relations executives to anticipate the changes and
fully  examine the implication, of these changes and brings about  necessary adjustment within the organization so that they can face
any changes without any  breakdown in its normal functioning (Srivastava & Agarwal, p-47)

Changes in the Economic Environment

In an economic situation companies suffer both internal and external pressures. The external competitive pressure stemming from the
economic crisis produces a drop in demand and an increase in unemployment, which in turn affects the global competition in the
market. On the other hand the internal management of the company focuses on efficiency. This leads to pressure to reduce costs and
fringe expenditure, as well as to the need to justify the need for each and the total amount of all expenditure to be incurred. High
unemployment and layoffs are clearly HRM and managerial issues. Without a doubt, these matters influence the strategic HR function.
In an inflationary economy, the resources tend to become scarce and the costs of machine, materials and labour multiply. These push up
the capital and running costs.

Ethics

While considering the challenges of human resources there is a need to discuss about ethics. The discussion about ethics happened
during mid 2000s when several companies were found to have engaged in gross unethical and illegal conduct, resulting in the loss of
billions of dollars from shareholders. Companies are seeing the value of implementing ethics codes within the business. Many human
resource departments have the responsibility of designing codes of ethics and developing policies for ethical decision making.
According to Steve Miranda, chief human resources officer for the Society for Human Resource Management (SHRM), "[the presence
of an ethics officer] provides a high-level individual with positional authority who can ensure that policies, practices, and guidelines are
effectively communicated across the organization"( McGraw, 2011).  Developing policies, monitoring behaviour, and informing people
of ethics are necessary to ensure a fair and legal business.

In the present era most of the organizations are competing globally for their best reputation, by keeping in view the above issues and
challenges the HR mangers are responsible to train all the young workers, to provide them best rewards as a result they will show their
commitment and loyalty.

- Technology has changed each and everything with great extent, the methods of production, the process of recruitment, the training
techniques, new equipment and technology should be introduced and purchase by the organization and training should be provided to
young and educated workers.

- To cope up with the issue of Globalization HR manager should adopt the concept of Globalize Human Resource Management
(GHRM) where it prepares the skill people or manager worldwide. This way the trend of globalization can be minimized with some
extent.

- Human resource manager should develop such a HR system which consistent with other organization elements such as organization
strategies, goals and organization style, and organization planning.

- Regarding the debate on work force diversity, the HR manager accountable to make such a broad strategies which help to adjust
employees in global organization, HR must increase the ability to compete in the international market.

- Organization culture is also another important element which must be consider by the HR manager, the culture must be like to shape
their behavior and beliefs to observe to what is imperative.

- To provide more and more talent people into the organization the HR manager must re-decide and re-arrange the staffing functions,
for recruitment selection, training and transfer, promotion, dismissals, placement, demotion and layoffs of the employees separate
strategies should be developed and implemented.

Conclusions

As we have discussed the dominant issues and challenges which are facing by HR mangers and organization. The foremost work by the
HR is to develop sound organizational structure with strong interpersonal skill to employees. Training employees by familiarize them
with the concept of globalize human resource management to perform better in the global organization context. All these issues and
challenges like, work force diversity, leadership development. organizational effectiveness, Globalization, E- Commerce, etc, can be
best manage by HR manager where they have to adopt a HR practice which encourages rigid recruitment and selection policy, division
of jobs, empowerment, encouraging diversity in the workplace, training and development of the work force, fostering innovation,
proper assigning of duties and responsibilities, managing knowledge. By enthusiastically following all the above aspects the value of
human resource can be improved, organization efficiency can be enhanced, and the organization will sustain to survive.