Ulrich (1998) suggests that environmental and contextual changes present a number of competitive challenges to organizations that mean that HR has to be involved in helping to build new capabilities. These comprise:
● Globalization, which requires organizations to move people, ideas, products and information around the world to meet local needs. New and important ingredients must be added to the mix when making strategy: volatile political situations, contentious global trade issues, fluctuating exchange rates and unfamiliar cultures.
● Profitability through growth – the drive for revenue growth means that companies must be creative and innovative and this means encouraging the free flow of information and shared learning among employees.
● Technology – the challenge is to make technology a viable, productive part of the work setting.
● Intellectual capital – this is the source of competitive advantage for organizations. The challenge is to ensure that firms have the capability to find, assimilate,
compensate and retain human capital in the shape of the talented individuals they need who can drive a global organization that is both responsive to its customers and ‘the burgeoning opportunities of technology’. They have also to consider how the social capital of the organization – the ways in which people interact – can be developed. Importantly, organizations have to focus on organizational capital – the knowledge they own and how it should be managed.
● Change, change and more change – the greatest challenge companies face is adjusting to – indeed, embracing – non-stop change. They must be able to ‘learn rapidly and continuously, and take on new strategic imperatives faster and more comfortably’.
● Globalization, which requires organizations to move people, ideas, products and information around the world to meet local needs. New and important ingredients must be added to the mix when making strategy: volatile political situations, contentious global trade issues, fluctuating exchange rates and unfamiliar cultures.
● Profitability through growth – the drive for revenue growth means that companies must be creative and innovative and this means encouraging the free flow of information and shared learning among employees.
● Technology – the challenge is to make technology a viable, productive part of the work setting.
● Intellectual capital – this is the source of competitive advantage for organizations. The challenge is to ensure that firms have the capability to find, assimilate,
compensate and retain human capital in the shape of the talented individuals they need who can drive a global organization that is both responsive to its customers and ‘the burgeoning opportunities of technology’. They have also to consider how the social capital of the organization – the ways in which people interact – can be developed. Importantly, organizations have to focus on organizational capital – the knowledge they own and how it should be managed.
● Change, change and more change – the greatest challenge companies face is adjusting to – indeed, embracing – non-stop change. They must be able to ‘learn rapidly and continuously, and take on new strategic imperatives faster and more comfortably’.
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