Saturday, 28 April 2012

The Impact Of Globalisation On The 'New' Employment Relationship






                                                  


The Impact of Globalisation



This article will be divided into two parts.



Part 1 would examine the impact of globalisation on the 'new' employment relationship and workplace dynamics, as well as its implications for both the organisation and employee.



Part 2 would focus on the effects of globalisation on the world stage, using as case study, the Global Financial Crisis of 2008. It would also contain the conclusion to this piece.

     
             
PART 1                      Article views: 8,310+

                        

The Impact of Globalisation On the 'New' Employment Relationship


It is a well-known fact that that the 'old' employment contract is archaic, and if one were to be blunt - dead. The 'old' employment contract, whereby the traditional promise of a trade-off  between a secure job, a fair day's pay or a career in an organisation, (which employees desire to receive), for the loyalty and hard work, (which they are expected to provide), is no longer plausible, (Guest, 1998).


Echoed in organisational behavioural science literature is the reaffirmation that the 'old' contract - generated in a period of full employment, stability, growth and predictability - was built on steady financial rewards, investment in training and expectations of advancement. These desirables were exchanged for hard work and loyalty, (Spindler, 1994).  In that era, employees in fact exchanged compliance for security. As it is virtually impossible to operate in a predictably unchanging environment, the 'old' contract is regrettably not sustainable in today's fast-paced environment and technological advancements. Consequently, the 'new' employment contract is expressed in terms of what many see as a degradation of the employment relationship and levels of trust.





Globalisation ushering in a new era


Globalisation, generally defined as a conflation of ideas encompassing free flow of international trade, global technology etc. is widely cited as one of the main sources of the shift in the dynamics of the employment relationship: moving away from a state of predictable security, in terms of one's tenure in an organisation, to the ever-changing, ever-competing reality of flexible careers.



Globalisation obliges organisations to seek flexibility in the management of their human resources. This has led to a growing number of organisations opting for the use of contingent workforce, such as short-term, part-time, ad-hoc and contract staff. Other alternative forms of worker representations are also adopted, namely human resources initiatives, employee involvement programs, teams and quality circles, total quality management etc.



Indisputably, globalisation heralds in a new era in the employment relationship by introducing new opportunities and birthing new innovations. It has also been stated that it contributes to economic growth in developed and developing countries, through increased specialisation and via the principle of comparative advantage.







The world seems to be revolving faster with every blink of the eye. Geographical boundaries, hitherto obstacles to business expansions, are being eroded or blurred by the virtual world and new innovations in communications. The Internet with its social media platforms, (Facebook, Twitter, LinkedIn, etc.), is revolutionising the way we communicate and interact with each other on a personal level and via business networking. Platforms utilising Voice Over Internet Protocol (VoIP) systems, as well as devices for video conference calls, Skype etc. (which have either drastically cut, or even eliminated the cost of long-distance calls), have made it easier for businessmen based for example, in the United States, North America, to close deals in Singapore, Far East Asia. Employment opportunities rooted in ‘traditional’ industries, (such as oil, timber, finance, health, construction, manufacturing and engineering), give rise to new positions in 'young' sectors, (such as IT, alternative energy, biotechnology, nanotechnology, R&D, etc.).




According to the Wikipedia website, critics have alleged that the benefits of globalisation are exaggerated and that its costs under-estimated, evident in the wake of decreased inter-cultural contact and increased possibility of international and intra-national conflict. However, I believe that one fact remains incontestable - innovation has become a permanent fixture, not only in our collective psyche, but also in global  economies. Amusing as it may seem, this 'apocalyptic' statement rings true - innovate or perish!



An increase in employment opportunities signals greater flexibility in the workplace. Thus, as globalisation means that lifetime employment or job security can no longer be guaranteed by employers, neither can employees pledge their continued tenures in the organisations if they perceive that their various needs, (such as competitive pay and benefits, healthy  life-work balance, flexible hours, considerate employee welfare programs etc.),  are not consistently fulfilled. The 'new' employment contract thus emerges and is viewed by some as the 'individualisation of the employment relationship'. Various researchers have echoed the following:



-   Changes in in the 'old' contract have implications for the employee's behaviour in  response to organisational attempts to manage careers, rewards and commitment, (Sparrow, 1996).


-   There is no job security and the employee is retained for as long as he adds value to the organisation. In return, he is provided with exciting projects, the freedom and resources to perform satisfactorily and receives a reward package relevant to his position. Training is provided for him to be employed elsewhere if the need arises.  (Coyle-Shapiro, 2000).




In  a  nutshell, the  effects of  the  globalisation  phenomenon shape the employee’s perceptions of his  employment contract and point him towards the 'self-preservation mode', especially during organisational changes like mergers, acquisitions or downsizing. His mantra: "Should I stay or should I go?" is practically and systematically analysed and often devoid of sentiment.  





Globalisation impacting choice at the workplace


Property of the Rethinking Business Communications Blog



Let us assume in this scenario that the employee, Mr. P, is a senior IT Program Manager who works in a multinational company based in the United States (US), with branches in Europe, Asia and Africa.



Given thus the unpredictable, constantly-changing and fast-paced environment in which he works, Mr. P quickly becomes his own advocate and his greatest fan in the 'new' employment relationship.




Nevertheless, the issue of choice only tends to become relevant to him when there is a significant change in the status quo.



Following the change, Mr. P, although now aware of brewing forces which threaten his job satisfaction/security, might still not take definitive, (or retaliatory) actions to remedy the situation, if the following indicators are noted:



1)      The change is temporal or is as a result of a short-term crisis.



2)     The change does not greatly impact Mr. P's compensation package, (e.g. his basic salary remain untouched, even if a small percentage of his quarterly benefits is deducted).



3)      The change respects the 'law' of equity, e.g. its effects are experienced by all employees in his job designation and/or pay grade,  thereby promoting positive perceptions of distributive justice.


Distributive justice indicators, (highlighting the contents or outcomes of a decision), focuses on the fairness of the ends/outcomes achieved. Adam's Equity Theory (1963) - which is concerned with comparing the ratio of an individual's outcome to inputs, with the ratio of outcome to inputs of the comparison other - is often used to understand distributive justice in organisations.


Another researcher, (Mowday, 1996), simplified the literature by stating that it becomes irrelevant if the individual produces high inputs, (i.e. contributions to the organisation), and receives low outcomes, (what he receives from the organisation), as long as his ratio is identical to the comparison other (i.e. employees/colleagues). Where the ratio is different, inequity arises and the individual perceives his outcome to be unfair. This development motivates him to change the inequity through behavioural or cognitive means, which ultimately negatively impact the organisation.



So for example, the 10% forfeit of Mr. P's quarterly profit-sharing allowance would not trigger retaliatory tactics if that measure applies to other colleagues in his pay grade.




4)      Actions to mitigate the effects of the change are clearly communicated and enforced by Management.




The 'playing field' is altered however, when the change is major, such as a transformational change. An example of this would be an organisation-wide upheaval to the status quo, such as the hostile acquisition of the multinational I.T. company in which he works. Mr. P then cognitively analyses the two obvious options available to him:




A) He chooses to stay in the newly-acquired organisation and negotiates new terms and conditions in his contract.



B) He chooses to exit the organisation.







Choosing to stay after a transformational organisational change



Given the nature of the acquisition and considering the fact that it would be virtually impossible to retain all existing talents in the 'acquired' firm, the employee activates the 'self-preservation mode' as a precautionary measure against the predictable practice of  retrenching existing staff following an acquisition. 



He approaches the new Management and seeks to re-negotiate the terms and conditions of his contract. As he possesses  technical skills, operational expertise, significant years of experience, local knowledge and other behavioural traits that make him an invaluable asset to the 'acquired' company, he is likely to be successful in receiving favourable terms, by alluding to his attractiveness to the company's competitors. Here, the choices available to Mr. P prompt his new employer to acquiesce to his demands.  This is because it may be cheaper and less time-consuming for the new Management to retain him, rather than to scout for new talents, who although technically competent, may not possess the in-depth knowledge of the operations specific to the 'acquired' company or local knowledge of some out-stations in other regions where the company functions.



For example, Mr. P may have IT technical and services delivery skills, as well as industry-recognised qualifications and certifications to back up the professional experiences, such as PMP Certification, Cisco Certified Internetworking Expert (CCIE) and Six Sigma - which other professionals outside the organisation may also possess. However, he is fortunate because he had also worked in a developing country in West Africa for several years, serving at different periods as the Subject Matter Expert and Regional IT Project Manager.  During his stint in the region, he experienced the following trends:


-          Political changes, e.g.  shift from military rule to a democratic government etc.


-          Improved power infrastructure.

-          Advances in information technology and telecommunication and subsequent governmental support in those fields.

-          A stable, robust and investor-friendly economy.


His specific experiences thus make it virtually impossible for competition from outside talents, (whose local knowledge is restricted to Silicon Valley in the US), to flourish. This development becomes evident to the new Management, whose new expansion strategy, for its emerging markets' division, includes establishing a hub in Nigeria for its West African operations. In this 'new' employment era whereby opportunities abound for the employee further afield, having the option to choose from other potential employers, (and thus competitors), empowers Mr. P to negotiate, and receive, better terms than were listed in his previous contract before the major change.





Choosing to exit the organisation



Assuming that Mr. P  is  dissatisfied  with  the outcome of negotiations with  the new Management of the 'acquired' firm, he may decide to exit the company.



Again, the invisible yet powerful force of globalisation would ensure that he has two specific options from which to choose:


I) Seeking employment in other respected technology companies.


II) Choosing the entrepreneurial route and launching an IT consultancy firm.





Seeking employment in other respected technology companies


As a seasoned IT Program Manager, with over twenty years of industry experience in the US and abroad, Mr. P represents the total package: technical expertise in overseeing multiple IT projects simultaneously, operational excellence, and experience working in culturally-diverse teams. He also possesses business and communication skills which are essential for management-based roles in applications development, e-commerce projects, Web and portal development etc.


As globalisation brings with it changing technology and innovative trends, the employee has needed to update his skills via continual training and certifications over the years, to guarantee relevance and marketability in such a fast-paced industry. He is thus placed in an advantageous position of choosing the location in which to work and the organisation in which to continue his career. His dilemma might be whether to remain in the US and head a branch in another state, or relocate to Europe to head a start-up.




Choosing the entrepreneurial route and launching an I.T consultancy firm









Mr. P,  currently  in  his  early 40s,  might decide to 'cash in' on  his wealth of  experience and become a business owner.



After pooling together his resources and those of his partners, a choice is made to launch an I.T consultancy firm, 'Mossman Consulting Inc.' with headquarters in the technologically-superior Silicon Valley region of the San Francisco Bay Area, in the United States. It would specialise in developing and deploying, an all-inclusive software which would be used for maximum protection against cyber-attacks. These include: viruses, worms, Trojan horses, phishing, denial of service attacks, as well as control system attacks and unauthorised access, (e.g. stealing intellectual property or confidential information). The ‘hybrid’ software, would combine the strengths of firewalls, anti-virus capabilities, intrusion detection and prevention system, with the weights of encryption and login passwords protection.


The decisions taken about the area of expertise, (developing the all-inclusive anti-cyber crimes software), and region (West Africa), on which to focus, are strategic for two reasons.



Firstly, Mr. P, drawing upon his professional and personal experiences during several years in West Africa, and being knowledgeable about the business environments and technological requirements in the region, becomes convinced that his software would be relevant to both public and private sectors of West African countries. This is especially crucial given the rise in the wave of cyber-crimes and presence of either weak or ineffective cyber-security regulation in the region.



Secondly, he decides that Lagos, the metropolitan business nerve of Nigeria - with its high concentration of local I.T and telecoms firms, banking institutions, manufacturing and oil servicing companies; as well as foreign multinationals operating in diverse sectors - is the ideal location for the marketing of his firm's innovative software. Moreover, his acquired network of contacts during his stint in the region has been strengthened by various social media services. At his disposal are the popular LinkedIn, Facebook, Twitter and Google+ platforms. However, others could become indispensable to his business operations, either by virtue of the resources they provide in terms of information-sharing, or via valuable industry knowledge. These include:



-  Link Expats, (a social networking website for expatriates, helping members to keep abreast of trends and events in their countries of residence);


- Advogato, (an online community and social networking site dedicated to free software development and open source software developers);


- Mixxt website, (whereby one could create and launch a social network for free, and share content with like-minded people).




Mr. P's company then partners with a local, reputable I.T firm in Nigeria in a joint-venture arrangement, whereby the local firm handles all legal, operational and regulatory issues, while Mossman Consulting Inc. acts as the "Technical Partner", handling technical expertise, including training and project management.



A notable advantage of globalisation is this: video conference calls, Internet calls and other innovations in communication and technology enhance effort and reduce time spent in the business decision-making process.



Possibilities become endless and Mr. P can visualise expanding his company's operations not only to neighbouring West African countries, but also to South Africa and beyond. Assuming his company's growth is not threatened by financial constraints and regional security problems, his potential business success may be hindered only by self-imposed limitations, (borne out of the fear of the unknown), or by a personal propensity towards risk aversion.





Globalisation -  negating relationships  in the 'new' employment contract  



This trend  could  be seen  in  the somewhat opportunistic consideration of 'self'. As  the negative effects of globalisation take their toll, organisations and employees selfishly adopt actions prioritising their survival. This development erodes the employment relationship and has consequences for both parties by:



A) Influencing the organisation's strategy,

B) Negatively impacting the employee's way of life.





Influencing the organisation's strategy 



For the organisation, the pressures to remain competitive, technologically astute and relevant in the industry fuel the need for the following:


- Cuts in its "disposable" assets, (often the human resources), in exercises such as retrenchment, 'voluntary retirement' etc., while increasing the hire of contingent labour and ad-hoc consultants;


- Streamlining operations in order to become 'leaner', e.g. outsourcing IT operations or certain activities to India where there is a comparative advantage of lower wages;


- Adopting hi-tech equipment, robots or mechanised devices to replace human expertise, thereby reducing labour costs.


Thus, the organisation is driven into adopting strategic actions which favour its productivity levels and operational performance, often to the detriment of the employment relationship with its staff.



Consequences of the organisation's strategy


If the company is then  perceived to be in the position of habitually laying off its staff to cut costs, (albeit for the purpose of remaining competitive in the uncertain economy), its corporate image will suffer and although it may still attract top talents, in the long run it will fail to retain them. This would be due to low levels of trust/commitment from the employees, which in turn would lead to a high turnover level as a precautionary measure against outright sacks. The employees would simply prefer to leave on their own terms, with the entitled allowances, after the mandatory notice period, rather than risk being retrenched at short notice, with possible cuts to their perks.



Employees who are obliged to stay in the organisation because of financial commitments, lack of other employment options or for  personal reasons,  are likely to feel aggrieved that the company has 'reneged' on its obligations as inherent in  their  psychological contracts*, Their  moral outrage is likely to galvanise them into:



- Taking collective action against the organisation and engaging in expensive lawsuits, which if publicised, may damage an organisation's external reputation. (McLean Parks & Schmedemann, 1994);



- Seeking revenge or retaliation, (in extreme cases of psychological contract violation), by engaging in sabotage or even theft.  The latter constitutes the single most expensive form of non-violent crime against the organisation. They could also display other aggressive behaviours. (Fisher & Baron, 1982; Greenberg, 1990);




- Becoming less loyal to the organisation, neglecting work and presenting the organisation as unfavourable to others. (Turnley and Feldman, 1999).






Negatively impacting the employee's way of life



For the employee, it becomes clear that unless he updates his skills and qualifications, through training and relevant certification, (either privately-financed or paid by the organisation), he is likely to lose his job and often, quite unexpectedly. 



Furthermore, periodic economic slums experienced in other countries emphasise the fact that although opportunities may exist abroad, immigration laws, rising living costs and more professionals often competing for too few contract jobs, make relocating abroad more difficult in practice. For example, it becomes too much of a hassle for an entire family based in the UK, to relocate to Australia for a year's contract, despite the attractive remuneration. Family and social dynamics are altered when the major income-earner accepts the contract overseas and relocates for a short period, leaving his family behind in the UK.



This shift in family life often impedes marital bliss. It is also experienced in many countries and has redefined the traditional perception of a family always remaining together in the work location of the major income-earner.



In Nigeria for example, depending on the organisational structure and culture of the establishment in which he works, it is not uncommon for the breadwinner residing in Lagos, at different points in his career, to be arbitrarily transferred to another state in the country, or to be required to relocate to another West African country such as Ghana. In such a case, he may be forced to leave his family behind in Lagos, given the short term nature of the new role, so as to keep disruption to their lives to the barest minimum.



At the workplace, the employee's activation of the 'self preservation mode' means that his welfare, (and that of his family where applicable), take precedence over his commitment to the organisation.  The effects of globalisation could be felt in terms of a rising cost of living due to inflation, which, coupled with  escalating financial obligations, influence the employee to become overly critical of his employers, leading to reduced performance. This is because he may perceive that he is not receiving adequate organisational support in terms of his compensation package and welfare in view of the economic downturn. Should his disillusionment with the company persist, (often mediated by worry), his performance levels would continue to dwindle. Consequently, he would lose his job satisfaction and may be stripped of certain privileges, thereby making him unhappy in the organisation. He also runs the risk of being replaced by a temp or contract staff. 






Globalisation prods on



Yet neither perturbed by the employee's continuous predicament nor by the organisation’s infinite woes, the world continues to revolve at its dizzying speed...

      










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*Kindly refer to my previous article on Communications Strategy... where this term is explained.




N.B  First image courtesy of www.bized.co.uk (retired). Animation courtesy of Wikimedia Commons. Diagram is author's work. Final image courtesy of freedigitalphotos.net










10 comments:

  1. Great article. Captures the shift in paradigm between the old employee contract and the new one as effect of globalization and new business thinking! Not so much waffle, direct straight to the point using real life day to day situations!



    Supplied On 02/05/2012

    ReplyDelete
  2. This is good. However consider shortening the length of the blog. Keep up the good work.




    Supplied on 04/05/2012

    ReplyDelete
  3. Great article. Using Mr P as an example helps illustrate your points. Diagrams excellent and colourful makes you want to read. I agree with shortening for the next part. You can also give another example of an employer working in a different area/ local organisation. Overall - 'Thumbs up'



    Supplied on 09/05/2012

    ReplyDelete
  4. Thank you all for your comments.

    @ Anonymous of 4th May - I have taken your advice and other posts are considerably shorter. I appreciate all suggestions

    ReplyDelete
  5. The impact of globalization rapidly increases day by day, it affects several sectors from business to public and society. But, we need strong strategies to deal with these issues and from here, we can learn some basic tips on how to deal with globalization. Thanks for such a wonderful presentation.
    Business Coach

    ReplyDelete
    Replies
    1. Indeed Paul. Thanks for reading the article.
      Cheers!



      Delete
  6. Very Informative! This blog is great source of information which is very useful for me. Thank you very much for sharing this!
    Industrial Employees Relations Consultant in Hosur

    ReplyDelete
  7. Really nice thing. And actually this will be included with whatever they have to involve in particular actions and all. Nice and also i am expecting much more posts from you.
    Staffing Companies in Bangalore

    ReplyDelete
  8. Glad you enjoyed the article. Thanks for reading.

    ReplyDelete

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