HRM and Unemployment

Paper Summary:

The way workplaces are organized in the United States has changed in the last 20 years. Job stability has declined for long-term workers, there has been a large increase in the use of contract workers and there has been widespread adoption of new forms of workplace organization. This paper discusses the recent changes in how firms hire, train, fire, compensate, and manage workers. It uses these components to suggest how the major changes in human resource management (HRM) practices could have led to the drop in the unemployment rate.

From the Paper:

"Starting in the 1980s, competition and technical change resulted in greater pressures for customer specialization, cost reductions and quality (7). In response many companies began experimenting with a wide range of practices known as high performance work organization (HPWO). Examples of these practices include: job rotation, pay for knowledge, autonomous teams, and total quality management (TQM). HPWO has made workers become more interchangeable between tasks (otherwise known as job rotation). This saves the company time and money it would take to hire someone new. This increasing ability to move workers within firms between jobs may be part of the explanation for improved labor market efficiency. At the same time, a more flexible production process means that many of skills workers use must be relearned frequently."

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