manyWrms are increasing their use of both internal and external employment
subsystems among their workforce. The key question is: if people matter so much
for competitive success, how can companies continue to turn to contingent labor,
outsourcing arrangements, as well as selectively invest in subgroups of employees.
Our view on this tension is that it is a natural outgrowth of some signiWcant
changes that companies are dealing with that stem from an increasing need to
distinguish managing jobs and managing knowledge. Adopting an architectural
perspective recognizes that companies must do both. Some employees add value by
eYciently performing well-deWned tasks while others add value for their unique
role or critical contributions toward competitive advantage.
While the ultimate decision as to whether or not companies pursue one or more
of these employment subsystems is inXuenced by numerous factors, we focused on
several factors that are likely to be particularly important. First, while globalization
certainly increases the options that companies have at their disposal for employing
their workforce to pursue lower costs, increased expertise, and workforceXexibil-
ity, countries vary signiWcantly in the quality of their human capital, the relative
supply and demand of diVerent occupational skill sets, labor costs, as well as legal
and logistical considerations that inXuence the potential beneWts of relying on
alternative employment options. Second, we considered the notion that companies
diVerentiate their employees, not based on job titles, but on the value added of
their knowledge and skill sets for internal business processes necessary to realize a
competitive advantage. By focusing on knowledge and skill sets rather than jobs,
Wrms may be in a position to focus their investments on those employees that are
most critical to their competitive success while leveraging the capabilities of
external providers, domestically or internationally, for other tasks or services
wherever they may be located around the globe. Of course, a central challenge
that companies face is to have a clear sense of what knowledge employees presently
hold and need in order to achieve business goals as well as the need to understand
how to promote the exchange of knowledge, innovation, and learning to maintain
competitive distinction; a task that is increasingly diYcult with a globalized
sourcing strategy and further diVerentiated workforce.
Clearly, there are many research questions that remain to be addressed regarding
the implications for the use of various forms of employment by organizations.
Boxall and Purcell ( 2003 ) suggested thatWrms’ choices among employment options
are not based solely on economic rationality. Echoing this sentiment, we encourage
research that explores factors such as the role of the legal, social, and institutional
environments in employment decisions. Relatedly, we still do not have aWrm grasp
on the performance implications of diVerentiating employment systems. In par-
ticular, research is needed that examines individual reactions to working within a
company simultaneously using multiple employment subsystems as well as the role
of social and technical interdependencies between employee groups for knowledge
Xow and competitive success (Purcell et al. 2004 ).
employment subsystems and hr architecture 227