As noted, organizations go through evolutionary life cycles, and the stage in which an organization finds itself in an industry affects the human resource strategies it should use. For example, the HR needs of a small, three-year-old hightechnology software firm will be different from those of Netscape or America Online.
EMBRYONIC At the embryonic stage a high-risk, entrepreneurial spirit pervades the organization. Because the founders often operate with limited financial resources, base pay often is modest. When skills are needed, the organization recruits and hires individuals who already have the necessary capabilities. Training and development are done on an as-needed basis.
GROWTH During the growth stage, the organization needs investments to expand facilities, marketing, and human resources to take advantage of the demand for its products and services. Often, backlog and scheduling problems indicate that the organization has grown faster than its ability to handle the demand. Extensive efforts are made to recruit employees to handle the expanded workload. It is also important to have HR plans, and planning processes, rather than just reacting to immediate pressures. Compensation practices have to become more market-competitive in order to attract sufficient employees with the necessary capabilities. Communicating with those employees about career opportunities affects their retention, so career planning efforts and HR development efforts to support them are expanded.
SHAKEOUTS In the shakeout stage the industry reacts to rapid growth, and not all firms will continue to exist. Some will be bought out by other larger competitors; others will fade from the industry. The explosive growth in Internet businesses and the consolidations of Internet providers by such firms as America Online, Microsoft, and Yahoo illustrate how shakeouts occur. Regarding HR management in a shakeout industry, competition to retain human resources is important, especially while restructuring and reducing the number of jobs to control costs.
Compensation costs must be monitored, but a balance is required in order to retain key employees using short- and longer-term incentives. HR development is focused on high-potential, scarce-skilled employees who are seen as ones who will ensure that the organization is a major player following the shakeout.
MATURITY In the maturity stage, the organization and its culture are stabilized. Size and success enable the organization to develop even more formalized plans, policies, and procedures. Often, organizational politics flourish and HR activities expand. Compensation programs become a major focus for HR efforts, and they are expanded to reward executives as well. Extensive HR development occurs, coordinated by an internal training staff.
DECLINE The organization in the decline stage faces resistance to change. Numerous examples can be cited in the manufacturing sectors of the
economy. Manufacturing firms have had to reduce their workforces, close plants, and use their accumulated profits from the past to diversify into other industries. During the decline stage, employers try certain HR practices such as productivityenhancement and cost-reduction programs. Unionized workers resist the decline by demanding no pay cuts and greater job-security provisions in their contracts. U.S.
Nevertheless, employers are compelled to reduce their workforces through attrition, early retirement incentives, and major facility closings.