Human resource policies

In many industrialized nations, as well as in the U.S. the average age of the population is gradually rising, meaning that more people in the current workforce are approaching retirement age. The risk of losing valuable knowledge and skills in public and private organization when employees retire without enough new employees to replenish those skills is alarming. The changing workforce is a global trend having a sweeping effect across the US and global economy. These changes are creating high-levels of age and retirement risks as well as higher costs. These risks will impact not only the number of workers that companies have to attract but also the efficiency, effectiveness and productivity. In many industries, the workforce itself—the way people work and the future supply of skilled and educated employees—are changing dramatically through demographics, culture, technology and new methods of sourcing work.

In the paper it is necessary to consider the changes in human resource policies due to demographic and economic changes. It is necessary to discuss the policy that could help to overcome these challenges.

The impact of demographic changes and economic processes on human resources

The influence of economic growth and demographic change is one of the most complex and controversial, which can’t be assessed by quantitative approach only. In the world in the early XXI century, only a qualitative approach can reveal the correspondence between available human resources and needs in the workforce, and the possible implications of demographic change for economic growth, entrepreneurship and human resources policies. Such demographic processes as decline in the number of young people entering the work force, or the aging of the economically active population, are inevitable and require changes in employment policies pursued by both the authorities and entrepreneurs. Workers, who find themselves in a new situation, must also change their behavior in the labor market. In addition to demographic shifts, the factors that have a profound impact on the economy and society are: the nature and character of technological innovations, changing methods of production management within enterprises, transformation and change in the significance of the concept of “work”. Also the most important are constant changes in demand for labor force, globalization and development of international integration in the labor market.

The relationship between demography, economy and employment can not remain stable over long periods of time. That is why it is necessary to define a new situation that may arise in the 21st century in connection with future changes of various elements of employment, taking into account the existing characteristics of the economically active population, types of economic growth, the state of society and the aspirations of the people. (Chuvala 2002)

Many scientists (for example, Vimont Cl.) believe that the demographic transition will be sustained. Let’s consider the example of France. Annual growth of the economically active population of France in the 1985-1995 period was 200 thousand, in 1995-2000 – 130 thousand, and in 2000-2005 fell to 100 thousand people. In 2005-2010, the number of economically active population is more stable, and then in 2010-2015 it is expected a rapid decline in annual growth of the economically active population. (Vimont 2000)

Such dynamics is stated in the process of aging of the population. In 1995, the ratio between the number of economically active population aged 20-39 years and aged 40-59 years was 1.23. By 2000 it was reduced to 1.10. In 2010 this figure was about 0,95, a in 2015 it is expected to be about 0,92. After 2005, the group aged 40-59 years dominate in the composition of the economically active population. It is this trend of constant annual change, going in one direction for 20 years, testifies to the demographic transition, and leads to a radical change in the demographic situation. (Vimont 2000)

The new demographic situation can be seen not only in France. Several years ago, much earlier than in France, the economically active population of the European Union reached its maximum number. After 2005 (especially since 2010) it is expected that the economically active population of the EU will decline faster than in France. Particularly strong reduction of the economically active population is in Italy (for the period 2000-2015 – 10%) and quite significant is in Germany and Belgium (by 3,1%). The situation in Britain seems to be close to the situation in France, and the reduction in growth of the economically active population in this country only began in 2010. (Chuvala 2002)

Large differences in the dynamics of the economically active population are reported in other industrialized countries. For example, Japan has already entered a phase of reduction of the economically active population several years ago, which in the period 2000-2015 will be about 15%. Japan in terms of reducing the economically active population is ahead of European countries for ten years. On the contrary, in the United States economically active population is expected to grow until 2015.  In the U.S., the reduction of the population will occur a decade later than in the EU, which will create them certain benefits, subject to maintaining current levels of economic growth. (Vimont 2000)

Aging of the economically active population leads to an excess in the enterprises of unskilled labor in the age of 50 years, who are not adapted to their new roles. A large number of these workers can be dismissed, and the number of unemployed (who may not be employed soon) can greatly increase. This will lead to an increase of long-term unemployment and shortages of skilled labor. Therefore, radical innovations in the organization of work and employment issues are especially pressing in Europe and Japan; and in the U.S. after 2010. And yet, with high probability can be predicted that the new labor relations appear first in the USA, as it has the most flexible labor market.

Therefore, organizations in the U.S. and other countries should as soon as possible introduce new industrial relations in which more active role will be given for older workers and, in particular, older manual workers. Organizations, which first succeed in attracting and retaining professionals of traditional pre-retirement age will receive a competitive advantage. Also in all developed countries it is necessary to increase the productivity of workers, including of pre-retirement age, both working full time and part-time, and in particular the performance of knowledge workers. (Luthans 1998)

Unique professional staff is the main competitive advantage of any company seeking to strengthen its position in global markets, as in the twenty-first century to adapt to unpredictable and often chaotic changes in the market environment can only highly mobile enterprises, focused on continuous development of their staff. (Luthans 1998)

These are the possible necessary changes in the human resources policies:

• Change from the autonomous management to a partnership;
• Change from the hierarchical, or centralized structures, to flexible and decentralized structures of HR management;
• Change from the patriarchal model of management to delegate authority;
• change from a closed organizational system to an open system.
• Change from specialization and limited liability for mandated work to a wide professional and official profiles;
• change from a planned career path to the informed and flexible choice of the trajectory of professional development.

That is, numerous changes in the world economy affect  organizations in many ways, and make HR strategy its key competitive element. HR manager must solve such strategic objectives:

1) create a competitive advantage by improving the firm’s level of responsibility of its employees through the management of corporate culture. Strong corporate culture can attract and retain talented workers, creates a high reputation of the company, attracts highly skilled workers.

2) to provide a competitive advantage by increasing the company’s human potential, providing a fully development of its professional competence. Development of human capabilities and professional competence of employees becomes a leitmotif of the activity not only of HR managers, but also of all the managers. Companies must consider the issues of improving the level of staff competence as an opportunity to get competitive advantage in the global markets. (Yasemin 2011)

Thus, a dynamic change in the institutional environment and its diversity necessitates the construction of multifunctional human resources management system within organizations, that would meet modern requirements. (Luthans 1998)