Current research deals with analysis of HR practices and procedures that are the most appropriate for the retention of labor force. Changing market relations which can be described as a result of globalization process and flexible labor regulation and market impose new challenges to HR specialists which are to elaborate effective policies and procedures in the view of creating favorable conditions for employees and thus avoiding significant losses in human capital. To provide a proper analysis of this issues current research paper first provides the contours of modern labor market and discusses the reasons for qualified employees rather than seeking stable employment often change their job. Finally some useful transformations in HR policies are proposed in the view of achieving the goal of labor retention.
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In the conditions of modern flexible labor market existing models of career development are no longer adequate in modern companies.
Changes in the world economy, decline of manufacturing and growth of IT and services sectors disrupted a long tradition of life-time employment. That also resulted in the changing relationships between company and its employees (Pellegin, 1994).Thus to ensure the implementation of best HRM practices and procedures which are relevant to securing employees’ retention requires elaboration of new approach to career development. The life-long employment required a framework of permanent rewards for the workers that were based on seniority, loyalty and performance.
In contrast, as Rubin and Rubin suggest, ‘modern global market pose new challenges on companies’; hence, modern companies should produce flexible capital and provide the best conditions to achieve employees’ retention (Rubin & Rubin, 2006, p. 289). The risk of developing human capital while securing retention is inevitable but all depends on the successful HR policies.
In the changed environment more emphasis is placed on employee’s flexibility than on the employment security. The worker must be competitive which can be ensured by enhancing his competence and creating attractive portfolio (Brewster C., Hilary H., Paul S., 2004). Thus continuous education and training becomes prerequisite of worker’s success.
Existing labor market depends on the constantly changing demand and proposal as well as flexible wage prices. Hence, for companies to be effective in the retention of their employees it is necessary to secure that they do not change the place of their work for a new one. If another company would propose for worker better conditions of employment, he/she having appropriate training, skills and abilities wouldn’t have any qualms to change the job. As Rita and Shay argue, ‘The redistribution of labor and opportunities within and across organization and labor markets occurs primary through employees changing jobs. (Rita & Shay, 2004). Furthermore there is no denying the importance of the fact that actual moves are likely to occur when employees’ market skills match available opportunities (Mano-Negrin, 1999).
Besides this one of the most important peculiarities of modern labor market and labor relations is the absence of the significant social guarantees for the layoffs. This means that to be effective in the labor market employees should have a good capacities for learning, training and adapting in new situations. If such conditions are provided by the firm it becomes a good precondition for retention. As Schevish argues a good local labor market conditions improve organizational stability (Schevish ,1983) Besides this Hom and Kinicki (2001) argue that labor market variables interpret employee turnover ‘
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The new career development pattern should be in the midst of management and customer needs. More emphasis must be placed not on the job development but on promotion of learning for knowledge is the most important comparative advantage in the changing and flexible business environment. The learning process must be based on the available resource and be substantiated and not formalized. This is a main task of HRM. The HRM must create sound career development program which must include:
- Developing potential through learning and fostering creation of new skills.
- Strategic implementation which means make workers perform well and tie their development with the overall company’s goals.
- Employability – attention to continuous education and training.
- Diversity – creating positive effect of the specialization of employees’ skills.
- Nurturing culture – creating robust culture of workers’ communication, team spirit and ability of adapting to difficult contingencies.
This approach fosters freedom for employees, which is considered to be a condition for high performance of the company. A one example of this model can be found in HRM practices of Brazilian company Semco. Its CEO drawing on this assumption gives employees possibility to decide on what work they will do and how they will are going to do it. This approach helped this company to occupy a solid place on the IT and service market in Brazil (Budhwar & Debrah, 2001, p. 45) The workers tying their career development with performance of their company utilized all their creativeness, skills and potential that resulted in great progress of the company.
- Pellegin, J. (1994). The Hidden Sources of Employment. OECD Observer, a(185), 37-40.
- Budhwar, P. S. & Debrah, Y. A. (Eds.). (2001). Human Resource Management in Developing Countries. London: Routledge.
- Rubin, B., & Rubin, R. (2006). Labor-Management Relations: Conditions for Collaboration. Public Personnel Management, 35(4), 283-305.