Future Trends in Human Resource Management: A Literature Review

Introduction and Definition of Terms

Taking advantage of effective human resource development opportunities will require human resource managers to combine lessons learned from the past and present with anticipated changes and trends of the future. The changing nature of HR management — in regard to pertinent issues such as strategic planning, hiring, training, motivation, benefits, communication, and program development — will all need to be addressed in terms of both theoretical and practical applications in order to truly capture the essence of advanced management thought.

Definition of Terms

Effective Leadership: "The ability to use resources and mobilize the efforts of others toward goal accomplishment" (Northouse, 2006, p. 6).

Human Resource Management (HRM): "Administrative activities associated with human resources planning, recruitment, selection, orientation, training, appraisal, motivation, remuneration, etc. HRM aims at developing people through work" (BusinessDictionary.com).

Quality of Hire: "The output of the new hires coming onboard" (Lermusi, 2010, p. 1).

Talent Management: "The systematic attraction, identification, development, engagement/retention, and deployment of those individuals with high potential who are of particular value to an organization" (Garrow and Hirsh, 2008, p. 390).

The Changing Perceptions of HR Management Theory

Throughout history, management theory has primarily focused on profit and production (Tanz, 2003). The changing nature of the workforce — in terms of demographics, structure, and theoretical applications — is also changing the way in which HR departments are operated and perceived. Two of the most significant issues discussed in the literature regarding these changes involve the dual concepts of growth and visibility. According to Lengnick-Hall et al. (2009), as the discipline of human resource management grows, it becomes more visible; and the more visible it becomes, the more it is either blamed for failure or lauded for success. As such, an increasing amount of accountability is shifting the perception of HR management from that of an ancillary department to one that is critical to the success or failure of the organization as a whole.

The problem arises when companies are led by people who lack the proper communicative and decision-making skills, along with the ability to adequately navigate the power struggles that arise. According to Boella and Goss-Turner (2005), the 21st-century human resource model is one that "reflects a people-oriented focus throughout the organization, including respect for the individual, full utilization of individual abilities and sophisticated policies for employee involvement" (p. 32). This approach can generate the necessary actions and communication strategies to facilitate smooth operations. The future of HR management will clearly emphasize a more person-centered approach to employee relations (Lengnick-Hall et al., 2009).

The issues of employee-management relations have changed significantly over time. In the old workplace, productivity was far more closely managed than relationships. The new workplace, however, is one where relationships between employees and management are considered paramount (Kearns, 2003). In the modern workplace, employees and employers recognize their interdependence and work together to create a superior product or service. This environment also allows people of diverse backgrounds and circumstances to coexist, and for the needs of individual employees and their families to be taken into account during the planning process (Avery & McKay, 2006).

Recruiting and Retaining Quality Employees

Improving an organization's recruiting and retention strategies will remain a complicated but essential task in the future of HR management. Without a productive and satisfied workforce of talented, motivated individuals, a company is bound to fall behind its competitors and may eventually lose its competitive standing altogether. In order to compete in the modern business environment, a company must critically examine its functions and practices, and subsequently develop more effective ways to not only obtain the best employees but to maintain their loyalty and commitment to the organization's success. Human resource managers need to facilitate the development of a positive work environment in which teamwork and achievement can flourish. For this to happen, however, recruitment and retention strategies must be clearly defined.

Within this modern working environment, human resource functions have become increasingly significant. Recognizing, recruiting, and effectively managing talented employees are essential ingredients in the formula for success for virtually any organization (Frank & Taylor, 2004). Whereas HR departments of the past were primarily concerned with hiring, firing, and compensation issues, the HR manager of the present and future deals with a much broader spectrum of activities — from recruitment to relationship management to assessment and evaluation. While the actual processes and strategies may vary, one principle will remain constant in the future of HR management: that happy, productive employees are the most valuable assets of an organization.

Recruiting and retention today, and in the future, will continue to focus on attracting not only the most talented employees, but also those whose ideals, values, personalities, and goals align with those of the organization (Garrow & Hirsh, 2008). In an interview with Recruiting Trends.com, Yves Lermusi, CEO of Checkster, explained: "Good companies would rather hire new employees that are a good fit and stay for the long-term, rather than someone who has to be fired six months after being hired. So, quality of hire is a strategic measure" (Lermusi, 2010, p. 1). The term "quality of hire" has become a buzzword in the talent management industry, but as Lermusi points out, it is not just a catchphrase — it is a strategy. The quality-of-hire approach focuses on recruitment as an effective process more than an efficient one. Simply put, hiring quickly will cost more in the long run than hiring effectively.

Once an organization has hired talented employees, it needs to retain them. This means keeping them satisfied. High turnover rates and lack of loyalty to an organization generally indicate that employees are dissatisfied with their working conditions. This dissatisfaction could stem from a variety of factors: lack of incentive and motivation, dissatisfaction with pay and benefits, the unpleasant nature of the work, lack of rapport with management, or a feeling of being unappreciated or disrespected.

The employee benefits provided by an organization can be both tangible and intangible. Tangible benefits such as health insurance, sick leave, and profit sharing serve as concrete reminders to employees that their service is valued and worthy of reward. Intangible benefits such as verbal or written praise also reinforce these feelings of value. The more an employee experiences both tangible and intangible benefits of working for a company, the less likely he or she is to leave, underperform, or become disengaged. Therefore, the importance of employee benefits as a strategic component of fulfilling human resource goals has always been significant. In the future, however, trends are likely to move beyond standard health insurance and vacation days toward more creative and innovative offerings. Companies such as Zappos are demonstrating to their employees that they are attuned to what they want and need, and that they are willing to go the extra mile to maintain employee satisfaction.

Zappos is especially creative with its pajama parties, nap rooms, and happy hours — all of which align with the company's quirky, fun atmosphere. It is clear that a certain type of employee would be attracted to this kind of environment, and by providing these unique benefits, Zappos is not only encouraging valued employees to remain, but is also likely attracting new employees who will fit naturally within the organization's culture (Chafkin, 2010).

According to Kearns (2003), "An HR strategy is a conscious and explicit attempt to manage the organization's human resource to gain a competitive advantage" (p. 10). This means that the goal of an HR strategy is to put the corporation ahead of its competition by ensuring that employees are engaged enough in their work to perform at their best. Companies such as Zappos seem to have achieved this goal very successfully, making it a trend likely to continue well into the 21st century.

Unique and innovative incentive benefits such as those offered at Zappos could be successful in other organizations — but not necessarily in all of them. Frank and Taylor (2004) caution that motivating employees is highly dependent on their specific wants and needs. An accounting firm that primarily hires conservative, efficiency-focused employees is not likely to be motivated by the offer of a life coach or a concierge service; such employees would probably be far more motivated by a competitive 401(k) plan. However, this does not mean that all types of organizations cannot be creative with their benefits.

The key to creating an effective and creative employee benefits strategy is to talk to employees and find out what they genuinely want. According to Gajewski (2005), it is critically important to modify "the corporate culture to balance employee needs and desires with organizational objectives" (p. 4). If companies can shift the corporate culture in ways that satisfy both management and employees, they would be remiss not to do so.

Managing Human Resources Through Effective Leadership

A leadership strategy is not based merely on principles; it requires a carefully constructed plan of action. Strategy design is an essential part of effectively managing an organization's talent. There are numerous technical aspects to HR strategizing that go beyond standard hiring, paying, and firing protocols. Unfortunately, many HR leaders are not planning their strategies as thoroughly as necessary to attract and retain the most capable workforce, because they are not fully aware of the technical factors that strategy planning entails. There is therefore a strong need for organizational leaders to learn how to create a more effective process for designing HR strategies, grounded in the principles of successful management thought. According to Wren (2004), "Management thought is both a process in and a product of its changing environment" (p. 473).

In order to improve the process of designing an effective talent management strategy, HR managers must first understand exactly what the term "talent management" entails. The U.S. Office of Personnel Management defines it as "A system that addresses competency gaps, particularly in mission-critical occupations, by implementing and maintaining programs to attract, acquire, develop, promote, and retain quality talent" (p. 1). According to this definition, talent management is essentially a problem-solving approach to HR management.

According to Garrow and Hirsh (2008), the Chartered Institute of Personnel and Development (CIPD) "defines talent management as 'the systematic attraction, identification, development, engagement/retention, and deployment of those individuals with high potential who are of particular value to an organization'" (p. 390). From this perspective, talent management is not only about recruiting and managing talented employees, but also about cultivating those with potential. While definitions of talent management may vary, the overall theme is that organizations need to make the most of the people who work for them (Birdi et al., 2008).

Human resource strategies are not merely a collection of ideas or policies strung together — they are specific plans that account for all major stakeholders and contribute to continuous improvement. Continuous improvement, according to Kearns (2003), is not only a strategy but a philosophy; a mindset. Companies that understand there is always room for improvement, and that resist the trap of complacency, are the most successful. Understanding where improvements are necessary requires good communication. As Kearns (2003) points out, "It is very easy to communicate badly, but you can never have too much good communication" (p. 152).

An HR strategy, no matter how well conceived, must be communicated effectively if it is to have any legitimate value. If people do not understand the strategy, it is not possible for them to carry it out. The only successful organizations in the future will be those able to increase productivity through improving the performance of their human resources (Robbins & Judge, 2007). Effective communication is an especially critical part of achieving this goal. Creating a vision and communicating its components clearly can establish a shared understanding of what the company hopes to achieve. Moreover, making employees feel that they are part of the decision-making process encourages them to work as members of a cohesive team, which in turn motivates them to help new initiatives succeed rather than resist them.