In the previous video, we saw that approaches to managing human resources have evolved over time. But what about today? How are human resources managed in today's organizations? Well, there's certainly been an increase in sophistication in human resource practices, especially coming out of what I call the psychology and human relations movements. But there's still no one best way. There's no universal approach to managing human resources and strains of these three earlier approaches still remain today. Now in looking at different HR practices, it's common to divide things into two broad schools, two broad approaches. What's called the low road approach, and what's called the high road approach. Let's compare and contrast these two approaches. In the low road approach, labor costs are key. In fact, keeping labor costs as low as possible is really the number one goal. So you can easily imagine what that entails. Keeping wages low, offering as few benefits as possible, providing minimal amounts of training, and the like. In comparison, the high road strategy seeks to engage employees, which is typically pursued through above average pay, maybe performance based, providing more generous benefits packages, providing training opportunities, and other types of things which will engage employees. Now let's turn to supervisory authority. In the low road approach, supervisors are key. Recall the drive system in the foreman's empire in the historical evolution. Recall Taylorism and very standardized procedures where managers are assumed to know better than workers. Now that doesn't work very well on a high road approach where employee discretion and autonomy is used to a greater extent to engage employees. In the low road approach, with the emphasis on keeping labor costs low and maintaining supervisory control. If there's the specter of union organizing, then the low road is usually associated with very aggressive anti union, union suppression or union busting approach. Now, the high road approach typically doesn't welcome unions either, but it's usually a softer, gentler union avoidance strategy called union substitution, try to make unions unnecessary. So in the low road approach, it can be summarized by, if you don't like it, quit. In a high road approach, by contrast, we could sum it up by saying if you don't like it, well let's talk about it and figure out a better way to increase your engagement. Now these are just two broad approaches, so of course there are variations within each approach. In the high road approach in particular, there's a lot of variation in the extent to which an organization may provide stable employment or not, may see this as a longer term career development opportunity, organizations vary on the extent and the nature of pay for performance, how standardized their procedures are. The extent to which employees, especially in teams, are able to be self managed. High road organizations also vary in the degree to which they have different consultation mechanisms like works councils or maybe even unions. But nonetheless, these two approaches, distinguishing, thinking between a high road approach and a low road approach, even though there's lots of variation with in them, it's still a very instructive way of thinking about key differences in broad approaches to HR strategies. So, there are really two objectives in this lesson. One is to emphasize that there are two different types of approaches to human resources. What I'm calling a low road or high road approach. The second objective is to really emphasize that you have choices. You don't have to take necessarily the low road path, or the high road path. To illustrate this, let's look at two organizations that compete head to head in the same industry. The two warehouse style retails stores, Sam's Club And Costco. Now Sam's Club has a cost driven approach, so labor is unsurprisingly seen as a cost driver. Where as at Costco, which has more of a service driven approach, labor is seen as a sales driver. So Sam's Club concerned with labor costs try to keep pay low, try to keep benefit cost low. As opposed to a Costco where earnings from employees are 40% higher and they often have a lot more benefits. Now you might think that Sam's Club because labor costs are lower is more profitable, that's not the case. At Costco for example sales per employees are almost double the level At Sam's Club. So to emphasize this, I wanna read a quote from the Harvard Business Review. This is from an article called Why Good Jobs Are Good for Retailers by Zeynep Ton. Highly successful retail chains such as QuikTrip convenience stores, Mercadona, and Trader Joe's supermarkets, and Costco wholesale clubs, not only invest heavily in store employees, but also have the lowest prices in their industries, solid financial performance, and better customer service than their competitors. They have demonstrated that, even in the lowest priced segment of retail, bad jobs are not a cost driven necessity, but a choice. And they have proven that the key to breaking the trade off is a combination of investment in the workforce and operational practices that benefit employees, customers, and the company. So again, wanna emphasize that when managing employees, you have a choice. Organizations and managers often default to very simple ways of managing people, reactive ways of managing people. Tightly controlled ways of managing people, and assume the competitive landscape forces one way or another. But, as the comparison of Costco and Sam's Club illustrates, you have choices. And our HRM specialization will teach you better ways. Follow our courses down the HR high road.
