Why Do Organizations Indulge in Sugar-Coated Human Resource Strategies?

Abstract

This study delves into a question as to whether and how workforce composition can shape a HR system. Drawing from the premises of strategic human resource management, we postulate that firms take their own HR-related actions to make their workforce composition effective for their goals. In this vein, when firms develop an HR system in respond to what the dominant group of the workforce demands, the nature of the group attributes plays a crucial role. This indicates that a firm’s HR system designed reflects the attributes of the dominant workforce groups. Given such, particularly we consider how firms’ HR practices respond to aging workforce when the aging group becomes salient in workforce composition. While aging workforce are characterized as being skillful and full of experiences, the group is also understood as being less motivated and having less desire to grow comparing to others. This ambivalence leads firms to likely to exploit the current skills and abilities of the aging workforce, leading to short-sighted HR treatments for the group, called short-termistic HRM. From this standpoint, we argue that a firm with a high proportion of aging workers tends to employ short-temrstic HR practices. To elaborate this relation, we consider two boundary conditions, the role of labor union and the contingency related to competition. As labor unions opt in to firms’ decision making processes, the aging-induced short-termistic HRM can be less likely to unfold. However, when firms face severe competition, which requires cost-effective strategies, the aging-induced short-termistic HRM is likely to be reinforced. With a sample of 662 Korean firms between 2005 and 2013, we examine whether the proportion of aging workers in the given firm can increase the tendency of short-termistic HRM. And given this relation, the two moderation effects of labor union and market rivalry are examined. Our findings suggest how firms develop the HR-related approaches to the heterogeneous workforce composition.