The world of human resource management Is changing more

rapidly than we can Imagine. Constant environmental changes

mean that human resource managers face constant challenges.
They must respond by taking advantage of gradual yet profound
changes in the nature of the field, current practices, and overall
human resource management policies, mission and vision.

Two stories will illustrate our topic and its importance. The first
one is from Japan. The Japanese Minister of Industry and
Commerce predicted that in the next five years three quarters of
the Gross National Product (GNP) of Japan would come from
products and services that, up to now, had even not been
invented. Think of it - in only 1,825 days, the future of the
Japanese economy will be shaped by new technological
innovations that we are now totally unaware of. Japan's situation
is not unique. What happens there is also happening in the rest
of the world. While the amount and rate of change are
unprecedented, they become more significant when viewed in
the context of education. When today's students finish school,
the job market will have a completely different profile than
today. Will these students and universities be prepared?

The second story comes from Sao Paulo, Brazil. In the first
semester of 1999, the Catho Institute (a professional
outplacement center) worked with about 850 executives who
had, for various reasons, been released by their employers, and
now wanted to reenter the labor market. Half were placed in
other companies, though in many cases with different salaries.
But the other half is still waiting for work. And they may have to
wait a long time, for the characteristics of this group are
troubling. Eighty percent had not read even one book in their
area of specialization in the past 12 months.

Ninety percent had not attended any job-related training

program, seminar or workshop. Seventy-five percent don't
understand computers; 70 percent do not speak another language
(such as English, French or Spanish). The forecast is that it will
be difficult for anyone in this group to get a job at the level that
they had before.

What do these two stories have in common? It's very simple -

we're at the threshold of the new millennium. The world is
changing quickly and relentlessly, and many do not know it.
They're simply being marginalized, left out of the job market,
sitting on the sidelines as opportunities pass them by.

How does this reality affect what contemporary human resource

managers need to learn to be competent professionals
tomorrow? The challenges posed by the new millennium are so
complex as to make simple and objective responses to this
question difficult. But some trends help answer it - or at least
reduce our uncertainty about the future. In fact, the emergent
business environment generates 14 major challenges for HRM
professionals. Let's examine each in turn.

Challenges For Human Resource Management (HRM)

From the Industrial Age to the Information Age. Work
performed in factories by machines is being replaced by work in
offices or at computer terminals. And instead of working with
things, people increasingly work with ideas and concepts.
Information and knowledge have replaced manufacturing as the
source of most new jobs.

From Restricted Markets to Globalization. Our old local

regional vision is giving way to a new global economic order
and business vision. The new demand is think globally and act
locally. We are also used to dealing with restricted or
concentrated markets. We need to become accustomed to
dealing with business from a new global perspective.

From Bureaucracy to Adhocracy. The rigid organizational

hierarchy with its monolithic chain of command is giving way to
integrated team networks based on autonomy and flexibility.
Rigid departmentalization is being replaced by flexible
organizational structure - business units and profit centers that
change rapidly. We are used to working in mechanical,
bureaucratic, vertical and pyramidal organizations. We need to
become accustomed to working in organizations that grow and
change as if they were alive.

From Stability to Change. Static, permanent organizations

designed for a stable and predictable world are giving way to
flexible, adaptive organizations more suited for a new world of
change and transformation. Emphasis on permanence, tradition
and the past is giving way to creativity and innovation in the
search for new solutions, new processes, and new products and
services. Maintaining the status quo is less important than a
vision of the future and the organization's destiny. We are used
to dealing with certainty and predictability. We need to become
accustomed to dealing with uncertainty and ambiguity.

From Command to Orientation. The traditional hierarchical

notion of authority based on vertical imposition of orders and
instructions is giving place to democratic leadership based on
the organization's mission and vision. Blind, reactive obedience
is giving place to spontaneous, proactive collaboration, and
employee commitment. We are used to working under
authoritarian, autocratic command. We need to get used to
working with democratic, inspirational leadership.

From Muscular to Mental Work. Repetitive physical labor that

doesn't add value is increasingly being replaced by mental
creativity. Routine and monotony are giving way to innovation
and a break with tradition. in the past, people were considered to
be merely workers, an old concept that associated people with
things. Now people are considered purveyors of activities and
knowledge whose most important contributions are their
intelligence and individual talents. We are used to dealing with
physical, repetitive manual labor; we need to become
accustomed to dealing with mental, creative, and innovative
work.

From Solitary to Collective Activity. Teamwork is supplanting

individual activity The old emphasis on individual efficiency (on
which the total efficiency of the organization depended) is being
replaced by group synergy. It's a matter of multiplying efforts,
rather than simply adding them. We are used to individualized,
isolated work; we need to change to high-performance
teamwork.

From Specialization to Multitasking. The traditional division of

labor with its consequent fragmentation of activity is evolving
toward more varied and integrated work. Compartmentalization
is changing to a systematic holistic vision, unified rather than
separate. We are used to dealing with division of labor and task
specialization. We need to become accustomed to working in
teams and with holistic organizations. From a Focus on Products
and Services to a Customer Orientation. In the past, the product
or service was the most important element. Now, the customer
to whom this product or service is targeted has become
fundamental. Before, an internally focused vision based on the
product or service prevailed. Now, an externally focused vision
for the customer who is going to use that product or service
predominates. In the past, the product/service was the goal.
We're used to working with the products and services we
produce or offer. We need to shift toward looking after the
customer's needs.

From Full-rime to Part-Irme Work. Work carried out with total

and exclusive dedication to a single company is coming to an
end. It is being replaced by work carried out at any time, and at
any place, to the extent that workers are becoming suppliers for
various activities and various companies at the same time. The
old concept of a job with a single schedule and a formal job
description, dating back to the Industrial Revolution and the
main feature of the Industrial Age, is being supplanted by a new
concept of work that typifies the digital age. Part-time work,
remote work, and virtual work constitute these new forms of
human activity We are used to the old concept of a single job for
life, exclusive and full time. Now, we need to become
accustomed to work as it is defined in the digital age.

From Followers of Orders to Entrepreneurs. The old concept

that people are hired workers who hold certain positions
according to fixed schedules and following internal rules and
regulations is being supplanted by a new concept that rewards
internal entrepreneurship. In the past, performance evaluation
emphasized things like absenteeism, punctuality, and personal
discipline. Now, it focuses on vision, goals and results, and
especially on personal contributions to organizational objectives.
Rather than being conservative bureaucrats, workers are
becoming innovative and creative. And the new generation of
workers (the networked generation) created by digital
technology is leaving the older generation behind. We are used
to working by following rules and regulations, external controls
and standards; now we need to become goaloriented and mission
driven.

From Human Resources to Business Partners. In the past, human

resources were considered passive agents of the company Now,
employees are considered active and proactive agents of the
business they manage together. In the past, workers were
considered an organizational resource. Now, they manage the
company's organizational resources. We are used to talking
about organizational resources. But a resource is a thing. People
are human beings with minds, talent, motivation, and the
proactive capacity for decision-making. They can no longer be
considered only as objects.
From Agents to Leaders. The old autocratic, authoritarian,
people-controlling bosses are becoming democratic leaders and
people promoters. Formal hierarchical authority is being
replaced by such modern concepts as motivation, leadership,
communication, interpersonal relationships, and development of
high-performance cohesive work teams. We have been used to
bosses who give orders to subordinates based on their linear
hierarchical authority. Now we need to become accustomed to
working with leaders who move, motivate and stimulate workers
- leaders who are communicators and visionaries.

From Financial to Intellectual Capital. Emphasis on money as

the most important organizational resource is shifting to
knowledge as the unlimited and fundamental input for business
success. Traditional accounting, centered as it is on physical
assets convertible into financial currency, is being questioned
for not involving such intangible aspects as internal systems,
customers, and intellectual capital. This happened as researchers
began to perceive that investments in people provided such
intangibles as company image, organizational climate, respect,
job satisfaction, customer service, creativity and innovation,
competitiveness, and much more. They also, undoubtedly, cause
other intangible changes that traditional accountants don't
include in their reports, which are essentially numerical and
quantitative, based on the past rather than the future.

Advances in Human Resource Management

These environmental challenges have created the need for
fundamental advances in human resource management:

A New Philosophy of Action. The concept of "human resource

management" must disappear and be changed by a new term that
is gaining greater acceptance, namely "people management." To
be precise, "managing people" is increasingly the responsibility
of middle management. Based on the fundamental change
described previously, people are considered human beings, not
simply organizational resources. Their activities and individual
differences are considered and respected, because they are
endowed with unique personalities and intelligence, and
differentiated aptitudes, knowledge and abilities. And the new
philosophy goes even beyond this. Some more advanced
organizations do not even talk about managing people, because
this concept could imply that people are simply passive agents
who depend on decisions from higher levels. Now, human
resource researchers talk about managing with people, as if
workers were business partners rather than foreign elements
apart from the organization. This concept means that people at
all levels of the organization are considered responsible for, as
well as involved in, the company's business, just as midwives
are responsible for the health of a mother and child. Being
"responsible" means that employees use available information,
apply their abilities and knowledge, and make adequate
decisions that achieve the desired results. Besides the
competitive advantage obtained through more competent
personnel, this is the true difference between the old and new
philosophies. There is an increasing consensus that the main
customers of the company are its workers. This explains the
widespread use of external marketing techniques within the
organization, in that the objective is to keep workers well
informed about the company's philosophy, policies and goals; to
integrate workers through a range of participative programs; to
help them achieve their needs and aspirations; and make them
feel that they are part of the company, and should, therefore,
cooperate through dynamic interrelationships. This change also
explains the concept of holistic management, whereby people
are seen within an organizational context that is totally human,
and not simply as a component of a productive system.
Managing jointly with employees, moving toward a new way of
conceptualizing business - this is the issue.

A Rapid Transformation from Staff Services to Internal

Consultation. The old departmental FIRM structure is being
replaced by more flexible entities responsible for processes
focused on customers and internal users. The functional
organization is disappearing, and a network organized by
process-based teams is emerging in its place. Instead of units or
departments, HRM is now trying to coordinate business
processes or subsystems. This is a change from a function-
oriented to a process-oriented culture, from an organization that
offers services (where the internal customers are always right) to
a concern for the organization's ultimate productivity. This
means a change in the nature of the FIRM department from an
implementing organization to an internal advisory team. Instead
of its usual functions (hiring, training, conducting performance
evaluations, assigning salary raises, etc.), HRM is increasingly
responsible for teaching managers and their teams to perform
these tasks. To put it another way, HRM is teaching people how
to fish instead of giving them fish.
A Gradual Transfer of Functions and Decision-Making to
Middle Managers. There is a notable tendency for certain
activities that were previously centered exclusively on HRM to
devolve to middle management. Selection, training, performance
evaluation and pay are the primary activities affected. Managing
people is a strategic activity. It is important that it be centralized
and entrusted to a single department. Managers from various
areas are becoming managers of people, and they are gaining
full autonomy to make decisions and take action with respect to
their subordinates. Managers are gradually becoming
empowered to act as managers of their human resources. They
are becoming multipliers of the process of preparing and
developing people; therefore, managerial training has become
intensive and continuous. This means a profound commitment
by upper management to trust middle management with
safeguarding new non-technical skills, which are basically
conceptual and interpersonal components of everyday
managerial behavior. Along with this, HRM is concerned with
the productivity of the organization's intellectual capital and
with managerial performance. Managers should be able to
demonstrate efficient leadership and full achievement of
organizational objectives through the personal contributions of
the people directly linked with the final results. Recruitment and
selection processes should validly identify and attract people
with the requisite characteristics and talents. Training and
development processes should generate results for the
organization and the people. Wage systems should be capable of
motivating and channeling efforts to achieve desired goals,
results, and related issues. The essential thing is the search for
efficacy and excellence, starting with people, with emphasis on
goals rather than on means.
A Close Connection with the Company's Mission. HRM is
becoming increasingly involved with strategic planning and the
development of means by which people can work proactively
toward the achievement of organizational objectives. This means
a broader perspective focused on objectives and results. It
implies personal commitment by each worker to the company's
goals. The need for this personal commitment means that
employee education, communication, and involvement now
become fundamental. This being the case, companies develop
and emphasize an HRM philosophy to which top management is
deeply committed, and which is clearly articulated and practiced
by all employees. HR planning is closely linked with strategic
planning, so as to support the company mission and give
incentives to support its achievement. HRM objectives are
indicative of such organizational objectives as profit, growth,
productivity, quality, change, innovation, flexibility - and
especially competitiveness. Besides this, the impact of HRM
processes on people and businesses is continually evaluated to
provide the adjustments necessary for a world of constant
change.

A Clear and Accelerating Tendency toward Downsizing.

Downsizing refers to the gradual and systematic dismantling of
an area - its redefinition and decentralization in the direction of
the other areas of the company. HRM is gradually being
restructured and reduced to its essential or core activities. As
this area is reduced, top-level HR executives are changing their
competencies radically, or are simply disappearing from the
scene. The strong trend toward flattening the organization,
reducing hierarchy, decentralizing decision-making,
debureaucratization, deregulation, separation into strategic
business units, continuous quality improvement programs,
reengineering, and other trends in contemporary administration
are accompanied by parallel changes in people management.
And it could not be otherwise. The search for a flexible, creative
and innovative company that rewards total quality, as well as the
participation and commitment of all its members, has been one
of the major HRM objectives.

Emphasis on a Participative and Democratic Culture within the

Organization. Participative decision-making, continuous
consultation, opportunities for dialogue, direct and open
communication, suggestion programs, use of meetings and
awards ceremonies, more freedom in task selection and the
methods to carry them out, group work and teamwork, work
schedule options, availability of online information, and real
time are gradually leading companies to adopt a primarily
consultative and participative management style through which
workers can coexist within a vibrant and democratic culture.
There is constant, deep concern with organizational climate and
employee satisfaction. Quality of life became an obsession in
successful companies, because they perceived that the quality of
their products and services was a direct function of the quality of
life of the people that made or provided them. What does
"quality of life" mean in this context? It means good salaries and
benefits, adequately defined tasks, a healthy organizational
environment, democratic and efficient leadership, high
motivation and continuous feedback. It means rewards for
productive contributions such as psychological effort, intense
communication and interaction, continued education, and all the
rest. A worker cannot have a good quality of life within a
company, if he or she does not enjoy these conditions. Nor can
the worker enjoy this quality of life outside the company, if it
does not exist within. "Quality of life" creates the psychological
state necessary for the employee to produce quality work for the
company in return. The change is worth the investment. A happy
worker works better and produces much more than an
unsatisfied, rebellious worker. To support this new culture, a
new organizational structure is gradually arising, with few
hierarchical levels that allow it to move the organization's base
to the top. HRM is also being completely deregulated with
respect to sanctions and disciplinary action. This area is losing
its former negative and punitive connotation and is acquiring
new support among workers.

Strong Use of Motivational Tools and Personal Achievement.

Individual objectives and needs are being intensely assessed and
emphasized. Companies are also continually designing ways to
offer opportunities for full development of their employees.
People are developed as persons and not simply as productive
resources; therefore, improvements in education and training
take place among workers and managers on the basis of both the
workers' and the company's needs. Workers become aware of
the importance of self-development as support, and, therefore,
they participate together in MBO-type initiatives through which
both managers and subordinates negotiate company goals and
objectives together. Rewards are not standardized, but are
variable based on contributions to productivity and profit. The
old concept of managing by objectives is revitalized in ways that
make it more liberal, participative, friendly, involving and
motivating than before. The result is less traumatic and
generates less employee anxiety, as it provides effective
conditions for reaching previously established goals. Variable
pay represents the direct material reward for effort. Both the
company and the workers benefit simultaneously through gain
sharing. Variable remuneration is self-financed by its own
results, so that productivity increases are achieved without
added costs. Besides, the systems of recognition and retribution
are abundant and varied, widely used and accepted within
companies.

Flexibility of HR Policies and Practices Based on the Needs of

the People Involved. The previous tendency toward centralized
rules and procedures is being supplanted by alternative practices
designed according to the individual worker's wants and needs.
Instead of complex, generic procedures, companies are using
more and more choices, options and alternatives for adjustment
to individual differences. HRM is constantly creating alternate
selection methods or compensation packages in the area of
benefits or employee services, training, career management,
work schedules, and so on. Instead of a single health plan, for
example, workers can choose the one that best meets their
expectations or personal preferences.

A Complete Change Toward Customer Service, Be it Internal or

External. HRM is becoming totally customer oriented. As a
consequence, managers and employees are being constantly
reoriented toward customer satisfaction. Training in quality and
productivity is intensive, obligatory and cyclical in most
successful companies. Quality is recognized and rewarded.
Quality circles, multifunctional groups, autonomous teams, task
forces, and committees are widely encouraged. Work that must
be performed in restrictive or isolated work sites is being
replaced by teamwork as a means of social interaction, and the
design of functions and tasks uses all aspects of motivation
intensively. Customer satisfaction is being gradually replaced by
an implacable focus on attracting the customer and exceeding
his or her expectations. Looking for excellence has that
standard, and FIRM is being aggressively reoriented in that
direction.

A Strong Concern for Adding Value within the Organization.

There is effort toward creating value for the customer or
taxpayer; and emphasis on making profits that add wealth. This
emergent process of adding value can be called a systemic or
synergic effect, or even profit maximization. The critical
element is that, starting with this concept, each director is
interested in making the organization more valuable; each
manager is interested in training people better; and each person
is interested in increasing the value of products and services
delivered to customers. The goal is to increase stockholder
assets, satisfy customers, and increase the value of human
capital. It is this value chain that provides an increase in equity
and the intellectual capital of a company, and the constant
improvement of a business. HRM is vitally involved with
educating people and increasing their awareness of what it
means to generate value within the company.

A Strong Concern with Knowledge Management and

Generating Intellectual Capital. The information age made
knowledge the most important organizational resource. The
traditional factors of production - nature, capital, and labor -
have already exhausted their contributions. Now the important
activities are the generation, structure, development, spreading,
sharing and application of knowledge. And where is this
knowledge? To whom does it belong? It belongs to people.
Successful companies are becoming learning organizations.
Organizational effectiveness will increasingly depend on
attracting, utilizing and retaining people who can use their
knowledge to solve problems, create services, develop new work
processes and satisfy customer needs.

An Overriding Concern with Preparing the Organization and its

Employees for the Future. HRM is abandoning its passive and
reactive approach in favor of a proactive strategy focused on the
future, so that it can anticipate the company's demands and
needs. It has stopped preserving the past, so that it can begin
creating the future, HRM is more and more interested in
continually preparing the company for the organization of the
future, and preparing personnel for the future that will certainly
arrive, if it has not already done so. In the most advanced
companies, HRM is moving beyond conformity with the present
and predictability in the current situation, by considering that
everything can be improved beyond the standard of excellence it
has already achieved. It holds that other people are not yet
totally prepared and developed, that the quality of life can be
improved, and that the company can achieve even better results,
rather than resting peacefully on its laurels.

Without doubt, these 12 tendencies - as were the 12 labors of

Hercules - are not easy or harmonious organizational transitions.
They reflect the need for competitiveness in a turbulent and
changing world - and the necessity to depend absolutely upon
the support and contributions of internal partners to attract
clients and achieve results. These trends reflect a vision that
takes into account the tremendous capacity people have for
developing and creating value - and the need to place faith on
that capacity for the success of the organization. A company's
competitiveness is based on its employees. This is what HRM is
all about.