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Redefining the employment relations in the digital era by Bhuwan Thapaliya The advancement in the information and communication has brought about a clear steerable revolution, in which wise policies and appropriate institutions will be essential towards directing change towards the greatest public good (World Employment Report 2001). The situation of the time demands dynamism in almost every aspect of human life for, there can be no doubt that passivity will lead to marginalisation in such an era of digital globalization. Periods of rapid technological change give rise to innovation and creativity, the outcomes of which cannot be known in advance. Work is becoming independent of location, hence, making current management practices dubious in the new context. Also, the ability to organise production in “real time” anywhere in the world will no doubt induce changing patterns in the global division of labour, management practices, the nature of the employment relations, and the quality of work. The digital era has diffused at an astonishing rate and has the most significant effect in none other than the business world itself. More and more businesses are trying to upgrade their existing technologies and practices just to cope with the new emerging challenge brought about by the information revolution and the numbers are increasing at a rapid rate. However, speed also means disruption and division. Disruption occurs as the inadequacies of existing institutions and regulatory frameworks are exposed to rapid change and new demands. Most of the business sectors especially multinational corporations have already accepted this new development and have shown creativity and innovations to exploit every opportunity brought about by the rapid internationalisation of capital and the information revolution Globalization has already spurred an internal transformation of the enterprise, resulting in changes in the organization of work towards flatter hierarchies and project- based teams. The need for a more rapid response to volatile product markets and declining product life cycles has also been behind the trend toward greater outsourcing. The emerging era of digital globalization is accelerating these organizational changes. Enterprises especially the Multinational Corporations (MNCs) in the most globally competitive industries have experienced both a decline in the time devoted to strategy formulation and a qualitative change in the nature of competitive advantage. “Time-to-market” has arisen as a critical competitive asset. This is turn compels companies to rely on the creativity, knowledge and ability to acquire new knowledge of their core employees (WER 2001). The fast pace of competition means that, for some highly skilled activities, companies are relying on the external labour market for inputs of temporary duration. The technologies, meanwhile, allow companies to source work independently of location. The outsourcing of needed inputs is accelerated both by the enabling technologies, as well as by competitive pressures. Locations (in both industrialized and developing countries) that has the adequate infrastructures and skills in their labour markets can benefit by participation in new global value chains. At the same time, there are lower barriers to entry in a period of rapidly evolving technologies, in which creativity and innovation matter more than physical plant, physical raw materials, and investment capital. These developments have posed a colossal threat and an immense opportunity to the existing employment relation practices especially for the MNCs. The employment relation managers in MNCs are constantly faced with the problem of creating a balance between stability and dynamism, which seem as contradictory to each other, yet mostly desired by all the social actors. Burns and Stalker (1961) and other early contingency theorists urged organizations in volatile environments to assume organic structures and processes so that they could best adapt to ever-changing markets, customers, and competitors. Over the past 40 years, this general perception has been broadened to encompass more and more firms as their environment increasingly are characterized by global markets, advanced technology, and mobile capital. In this line of thinking, stability impedes adaptation for nearly all organizations as their environments become increasingly unpredictable ( Leana and Barry 2000). Moreover, continuous change also can be motivated by cost savings to the firms, particularly in the realm of employment relations. As Pfeffer (1998) and others have observed, in many firms human resources have come to be seen as a cost to be minimized rather than an asset to be managed. Leana and Barry (2000) state that if an organization is able to quickly change its form, employee head count, and work processes in response to changing market demands, this responsiveness alone can become an advantage over competitors. Stemming from this cost- focused or ‘transactional’ approaches, practices such as outsourcing nonessential processes, downsizing personnel, and minimizing the number of core employees may disrupt relations within the firm. Cappelli (1999) and others have argued that the emphasis on change has caused the workplace to become more market driven and, thus, far less stable in terms of employee career. Similarly, if an organization is able to keep fixed employment costs at a minimum, it may enjoy a considerable cost advantage over competitors. This potential for flexibility and short-term cost saving is powerful incentive for changing employment and work practices so that the nature of jobs, and even their existence, are driven by immediate market demands, rather than past practice or social norms. At the same time, such advantages may be short lived, since they are often easily imitated and, thus, difficult to sustain. Despite some strong incentives-as well as considerable rhetoric-promoting change and flexibility in how work is organised and carried out, there are number of forces working against change in organizations. Some of those forces, such as institutionalism, find their basis in routine rather than rationality, whereas others, such as efforts to reduce transaction costs, are rooted in established economic theory. The tendency of organizations to do things as they have done in the past is a well-articulated phenomenon generally described by institutional theorists (Greenwood and Hinnings 1996). Firms pursue stability not just because it is easier but also because organisational actors do not think to do otherwise. New information is less likely to penetrate networks of relationships that are well established and dense (Burt 1992). At the same time, existing power structures tend to be self-perpetuating (Pfeffer 1981), further solidifying relationships and practices in organizations. Thus, organisational actors may have neither a high ability nor a strong desire for change. Williamson (1975), and others view organizations as a solution to the inefficiencies and costs of transactions. Stability in employment, for example, is an efficient solution to the hazards of economic transactions for both employee and employer. If employment is stable, it is rational for firms to invest in employee development. At the same time, employment security gives individuals a rationale for developing firm-specific skills and knowledge. Thus, stability is beneficial to both parties and is an efficient way to avoid or reduce transaction costs. Pfeffer (1998) and others further argue that human resources that work effectively together create such a sustained competitive advantage. These effective working relationships are built over time through stable interactions, and they can be destroyed by uncertainty and abrupt change. Leans and Van Buren (1999) argue that organizations can create a unique asset that provides for long term competitive advantage by encouraging trust among co-workers and between employee and employer, as well as mechanisms that enhance both employees’ motivation and their ability to achieve successful collective action. Trust and associability are most readily created in stable work environments and can be threatened or undermined by change that is too rapid, frequent, or unpredictable. The necessity of continuous decision-making between these two extreme impinges on every employment relationship manager working in today’s digital economy. This implies that employment relation managers, especially working in MNCs have to make decisions based on a very careful analysis of every situation, taking into account all the consequences that may arise, for, a small biasness towards one of the two extreme may have the potential for upheaval of whole employment relation system in the Organization and may lead to company failure. The new role thus, calls for new and effective approaches to managing diversity, the need for employment stability in the face of rapidly changing technology, exploiting the online recruiting facility, promoting life long learning in the organization, accepting the new roles of the Unions and promoting partnership based approaches. These are only but few approaches the situation of the time demands from the employment relation managers in any organization especially the MNCs to continue being competitive in this new digital economy. The emergence of the information economy characterized by the internet technology, global economy and the virtual work environments has taken the business world by storm. The impact of this development is felt the greatest in none other than the employment relation field itself. The move towards teleworking, virtual offices and the growing number of e-lancers has posed an immense challenge to the employment relation system of almost all the business organizations and the countries as well. More and more businesses are trying to upgrade their existing technologies and practices just to cope with the new emerging challenge brought about by the information revolution. The new nature of work and operation in the emerging digital age has practically made the existing practices of employment relations dubious in the new context. Thus, posing a great threat to the survival of the business enterprises along with an immense opportunity for innovations to reap the benefit of the new information revolution. One thing is clear as the crystal, the business organizations that are unable to adapt to the new environment will be extinct like the dinosaurs while others able to reap the benefit of new technologies will no doubt emerge as new business leaders in the information economy. However, lot needs to be done in the area of employment relations if the advancement in the technology is to be exploited to the maximum. The situation of the time demands a lot more research and innovations in the area of employment relation practices, for traditional practices are on the verge of becoming obsolete. References: Anonymous, (2001) ‘Life at work in the information economy,’ World Economic Repor Rajesh Sharma ( 2001) . Individual Essay. University of Technology, Sydney Bell, S. A. and Henry, J. F. (2001) ‘Are employment relations undergoing a fundamental change that threatens the future of capitalism? A critique of Hodgson’s view of the labour contract,’ Journal of Economic Issues, Vol. 35, No. 2, pp 335-343 Birkinshaw, J. (1996) ‘How multinational subsidiary mandates are gained and lost,’ Journal of International Business Studies, Vol 27, pp 467-495 Burns, T. and Stalker, G.M. (1961) ‘The management of Innovation,’ London, Tavistock Burt, R. (1992) ‘Structural holes: The social structure of competition,’ Cambridge, MA, Harvard University Press Cappelli, P. (1999) ‘Career jobs are dead,’ California Management Review, Vol 42, No. 1, pp 146-167 Conhaim, W. (2000) ‘Employment: the internet as an employment resource,’ Business Weekly Cullen, B. (2001) ‘E-Recruiting is driving HR systems integration,’ Strategic Finance Ghoshal, S, and Nohria, N. (1989) ‘Internal differentiation within multinational corporations,’ Strategic Management Journal, Vol. 10, pp 323-337 Greenwood, R., and Hinings, C. (1996) ‘Understanding radical change: Bringing together the old and the new institutionalism,’ Academy of Management Journal, Vol. 21 Leans, C. and Van Buren, H. (1999) ‘Organisational social capital and employment practices,’ Academy of Management Review, Vol. 24, pp 538-555 Pfeffer, J. (1981) ‘Power in organizations,’ Boston, Pitman About the Author(s): See under Our Contributors to find out about the Author(s) of this article. |
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