LECTURE 1 3 : What is HRM?

Let us understand it by dividing the term into its subparts. Human people, us Resource assets/costs for organizations Management co ordination and control to achieve set goals !ut humans, unli"e other resources in the conte#t of $or" and management, cause problems. %he ob&ective is to see" ' ma#imize commitment of people by organising $or" and creating attitudes and behaviour, $hich generate best outcomes. %hus, HRM is basically a search for best practices to generate high levels of employee commitment and performance. !ut organisational practices may cause difficulties do$n/right sizing or less secure employment seems to sit uneasily against this rhetoric of HRM. (torey has identified t$o broadly contrasting pictures of HRM )mphasis on people as costs and resources to be $or"ed to secure ma#imum efficiency. *t is called the Rational or economic view of em lo!ment" $here the basic approach is Control and compliance )mphasis on people as resources to be invested in to generate high commitment and involvement. %his is the #ocial or s!cholo$ical view of em lo!ment" and it emphasises on commitment of the people $or"ing together as an organisation both % Hard and Soft. &ratton an' (ol' define HRM as+ ,- a strategic approach to managing employment relations which emphasises that leveraging peoples capabilities is critical to achieving sustained competitive advantage, this being achieved through a distinctive set of integrated employment policies, programmes and practices. .rom this definition, $e can easily deduce certain "ey $ords $hich can give us an idea of $hat the features of HRM are. %hey are+ Strategic i.e. planned, deliberate, see"ing to achieve set ob&ectives Capabilities i.e. people or resources $ith potential /"no$ledge, s"ills, attitudes0 $hich can be developed to contribute to organisational success. Competitive advantage by tapping into and developing these capabilities organisations give themselves an edge over their rivals

Integrated that the range of things under HRM /recruitment, selection of employees, their training and development, ho$ they are re$arded0 is loo"ed at together not as separate things. .or e#ample, if you recruit and select people you should have a clear idea of ho$ you see them developing and contributing to the performance of the organization. *sn1t it 22 %his Employment Relationship has several dimensions to it+ 3. Economic pay in e#change for effort 4e sell ourselves to survive and prosper 4e enter the ,labour mar"et5 to be bought 4e try to improve our price in various $ays. !ut there is a supply and demand aspect 4e bring potential effort $hich needs control 6. Legal employment la$s, rights and responsibilities on both sides contractual relationship although formality of the contract can be very freely entered into. !ut is it that free and e7ual2 )mployment rights may help redress the balance bet$een individual and organizations /as does collective association or unions0 8. Social 4or" is social because it involves various degrees of integration $ith others+ (ome of this is formally re7uired (ome is &ust ,natural5 *nfluence of social on individual *n $or", social relations are structured 9. Psychological mutual e#pectations and obligations beyond the formal contract 4hat do you e#pect your employer to provide beyond the $age effort bargain2 4hat is reasonable in terms of this bargain2 %o understand $hat human resource management more clearly, $e should first revie$ $hat managers do. :essler has defined the concept by relating the HRM field $ith five basic functions all managers perform+ planning, organizing, staffing, leading, and controlling. *n total, these functions represent the management process. (ome of the specific activities involved in each function include+ Planning )stablishing goals and standards; developing rules and procedures; developing plans and forecasting predicting or pro&ecting some future occurrence.

!rgani"ing <iving each subordinate a specific tas"; establishing departments; delegating authority to subordinates; establishing channels of authority and communication; coordinating the $or" of subordinates. Staffing :eciding $hat type of people should be hired; recruiting prospective employees; selecting employees; setting performance standards; compensating employees; evaluating performance; counseling employees; training and developing employees. Leading <etting others to get the &ob done; maintaining morale; motivating subordinates. Controlling (etting standards such as sales 7uotas, 7uality standards, or production levels; chec"ing to see ho$ actual performance compares $ith these standards; ta"ing corrective action as needed. %hus, H)man reso)rce mana$ement refers to the practices and policies you need to carry out the people or personnel aspects of your management &ob. =ther thin"ers li"e, *avi'+ ,+ *ecen-o . #te hen /+Ro00ins have defined it as , > process consisting four functions ac7uisition, development, motivation, and maintenance of human resources.5 1nstit)te of /ersonnel Mana$ement2 Lon'on2 U3+ , ?ersonnel Management is that part of management concerned $ith the people at $or" and $ith their relationship into an effective organisation; the men and $omen $ho ma"e up an enterprise and having regard for the $ell being of the individual and of $or"ing groups, to enable them to ma"e their best contribution to its success.5 E'war' 4li o refers to it as, ,?ersonnel management is the planning, organising, directing and controlling of the procurement, development, compensation, integration, maintenance and separation of human resources to the ob&ectives are accomplished5 %he meaning and prevalence of HRM are topics that continue to attract debate and disagreement. >s a conse7uence, practitioners and te#tboo" authors use a diverse and sometimes contradictory range of interpretations. 4e find that HRM has a variety of definitions but there is general agreement that it has a closer fit $ith business strategy than previous models, specifically personnel management. ?arado#ically, attempts to define HRM too precisely seemed to have resulted in confusion and contradiction rather than clarity. Ho$ever, and perhaps only for the moment, HRM has the advantage of appearing to be contemporary and innovative.

%his is particularly the case in comparison $ith personnel management. @evertheless, personnel departments have refused to go a$ay. > casual e#amination of &ob advertisements in the press $ill reveal that applications are still to be sent to A?ersonnel ManagersA, A?ersonnel :epartmentsA, and even A(taffing =fficersA. >t the same time, advertisements for Ahuman resourceA &obs are common particularly at a senior level even if applications are to be sent to the ?ersonnel =fficeB #chools of tho)$ht: *t is evident, therefore, that defining and accepting HRM comes do$n to a matter of opinion or vested interest. *ndeed, some interpretations have a strong constituency. *t can be seen that each of these vie$s has a natural audience able to identify their o$n interests $ith a particular interpretation. *f you yourself read a fe$ boo"s and $ill find accounts stressing one of the follo$ing+ HRM is reall! ersonnel mana$ement Human resource management is a modernized form of ApersonnelA, repac"aged to enhance the status of personnel managers. *t has a hard edge, entitling HR managers to the same respect as finance professionals. HRM is based on integrated and coherent recruitment, assessment and development programmes. *t is sophisticated, re7uiring rigorous training under the auspices of a professional body or university. HRM is a strate$ic mo'el *t employs the techni7ues of strategic management for the utilization of human resources. *t focuses on senior managersA concern $ith achieving ob&ectives and containing costs. HRM aims for a seamless lin" bet$een business policy and recruitment, performance assessment, re$ard management, development and dismissal. HRM is a mechanism for control and the e#ercise of po$er by top management. *t encourages employee attitudes and behaviour $hich are consistent $ith business goals. HRM is &ust one aspect of a senior managerAs strategic repertoire. *t re7uires a $ide appreciation of the industry and the organization and fits resource based theories $hich are familiar from business strategy literature. HRM is eo le mana$ement *t covers all aspects of managing employees in its $idest sense and emphasises the role of line managers in overseeing their o$n staff. .rom this perspective, HRM is a ne$ generic label for all the techni7ues and tactics available to manage people. *t concentrates on translating organizational ob&ectives into operational achievement by $inning

employee commitment and gaining high 7uality performance. HRM is practical and pragmatic. Ho$ever, there is a considerable ris" that this approach can result in a loss of focus. *n fact, the value and popularity of HRM may derive from its openness to varied interpretations. *t is possible to argue that the term is a useful, Acatch all phrase, reflecting general intentions but devoid of specific meaningA /<uest, 3CDCb0. %his allo$s it to be applied in a variety of circumstances. *ndividual authors and practitioners interpret HRM according to their o$n bac"ground, interests and intended audiences. *ndeed, Eeenoy and >nthony /3CC6+ 68D0 consider that $e should not loo" too closely+ A...once $e see" to e#plain HRM, to sub&ect it to any analysis or criticism, it ceases to function as intended. *ts purpose is to transform, to inspire, to motivate and, above all, to create a ne$ ArealityA $hich is freely available to those $ho choose or are persuaded to believe. %o e#plain it is to destroy it.A

LECTURE 5 6 : Evol)tion of H)man Reso)rce Mana$ement

4e all are a$are ho$ the development of Human Resource Management too" place, through our sub&ects in .irst (emester. %he development of HRM has been slo$ but a steady process. >rguably, HRM has become the dominant approach to people management in most of the countries. Ho$ever, it is important to stress that human resource management has not Acome out of no$hereA. HRM has absorbed ideas and techni7ues from a number of areas. *n effect, it is a synthesis of themes and concepts dra$n from over a century of management theory and social science research. %here is a long history of attempts to achieve an understanding of human behaviour in the $or"place. %hroughout the t$entieth century, practitioners and academics have searched for theories and tools to e#plain and influence human behaviour at $or". Managers in different industries encounter similar e#periences+ businesses e#pand or fail; they innovate or stagnate; they may be e#citing or unhappy organizations in $hich to $or"; finance has to be obtained and $or"ers have to be recruited; ne$ e7uipment is purchased, eliminating old procedures and introducing ne$ methods; staff must be re organized, retrained or dismissed. =ver and over again, managers must deal $ith events that are clearly similar but also different enough to re7uire fresh thin"ing. 4e can imagine that, one day, there $ill be a science of management in $hich these problems and their solutions are catalogued, classified, standardized and made predictable. (ociologists, psychologists and management theorists have attempted to build such a science, producing a

constant stream of ne$ and re$or"ed ideas. %hey offer theoretical insights and practical assistance in areas of people management such as recruitment and selection, performance measurement, team composition and organizational design. Many of their concepts have been integrated into broader approaches $hich have contributed to management thin"ing in various periods and ultimately the development of HRM. Let )s 'o a 0it of recollection now+ The $reat 1n')strial Revol)tion+ >s you all "no$ brought in an era of (pecialization in techni7ues. %he rest is history. Fobs fragmentation, more stress on $or" specialization ear mar"ed the significance of this era. :evelopment $as fast, the rays of management started rising on the horizon of the economy. ..4.%aylor introduced the (cientific Management. More emphasis $as laid on the increase in efficiency and right person for the right &ob. %raining, tas" performance $ith economic re$ards $as given much importance. %aylor believed in a combination of detailed tas" specifications and selection of the Abest manA for the &ob. *t $as the function of managers to thin" $or"ers $ere e#pected to do e#actly as they $ere told. %his, he felt, $ould result in the most efficient method of performing physical $or". >dditionally, he advocated premium payments as a means of re$arding the most effective /compliant0 $or"ers. %aylorAs ideas led on to+ 4or'ism a philosophy of production based on the continuous assembly line techni7ues devised by Henry .ord. %his methodology dominated $orld$ide manufacturing until the 3CDGs. Time an' motion stop$atch methods of measuring $or", used to increase efficiency and fundamental to Fapanese production methods+ using employee minimize $asted time and effort. Contin)o)s im rovement "no$ledge and ingenuity to continually refine product manufacture and development. %hese practices re7uire management control over the precise detail of $or" in order to ma#imise efficiency and gain competitive advantage. *nevitably, this is achieved at the e#pense of employees $ho sacrifice the freedom to control their o$n $or". A(cientific managementA, under any name, creates an inevitable tension bet$een the rights and e#pectations of $or"ers and managementAs need to gain ever greater 7uality and cost effectiveness. %hus, HRM is identified $ith attempts to deal constructively $ith this tension through assertive, but non

autocratic, people management. *t is also lin"ed to the use of performance related pay and other $ays of re$arding appropriate behaviour. La0o)r : %rends started changing rapidly. 4or"ers started coming together to as" for their rights. %rade unions slo$ly emerged. 4or"ers started their Hnion activities for getting good benefits; good pay, per"s and improved $elfare conditions. =ne of the ma&or ill effects of *ndustrial Revolution $as the e#ploitation of labour. %his led to unionization of labour movements. H)man 4actor+ (lo$ly the importance of human aspect began to da$n in the minds of the people. %he fact that apart from economic incentives, human beings need satisfaction of social and psychological needs $as realized and stressed upon. . *n >ustralia, @e$ Iealand and particularly the HE, government sponsored research by $or" psychologists during and after the first $orld $ar produced significant information on the relationship bet$een boredom, fatigue and $or"ing conditions. %hey established that fatigue arose from psychological as $ell as physical causes. %hey demonstrated also that $or"ing longer hours did not necessarily increase productivity. Human factors psychologists established a tradition of performance measurement, &ob analysis and clarification of s"ill re7uirements. %hese underlie "ey HRM techni7ues such as competence assessment and selection methods. H)man relations+ *n the 3C6Gs and 8Gs researchers demonstrated that $or" performance and motivation did not depend simply on pay and discipline. ?eople $or"ed for many other reasons. %hey $anted to be involved in determining their o$n $or" conditions. %hey responded to encouragement and the interest sho$n by management. %he Ha$thorne e#periments paved $ay for this thought. 4or"ers formed informal groups $hich established their o$n norms of behaviour, including acceptable levels of performance. 4or"ing groups e#ercised social pressure on their members to conform to these unconsciously determined rules. %he human relations movement had considerable influence $ithin H( business schools such as Harvard $hich later developed a AsoftA, humanistic interpretation of HRM. &ehavio)ral science+ %he human relations and human factors approaches $ere absorbed into a broad behavioural science movement in the 3CJGAs and 3CKGAs. %his period produced some influential theories on the motivation of human performance. .or e#ample, Maslo$As hierarchy of needs gave an individual focus to the reasons $hy people $or", satisfying an ascending series of needs from survival, through security to eventual Aself actualisationA.

*n the same period, concepts of &ob design such as &ob enrichment and &ob enlargement $ere investigated. *t $as felt that people $ould give more to an organization if they gained satisfaction from their &obs. Fobs should be designed to be interesting and challenging to gain the commitment of $or"ers a central theme of HRM. Mana$ement 0! 708ectives+ !ased on $or" by :ruc"er in the 3CJGs, and further developed by Mc<regor, management by ob&ectives /M!=0 lin"ed achievement to competence and &ob performance. M!= primarily focused on the individual, tying re$ards and promotion opportunities to specific agreed ob&ectives, measured by feedbac" from performance assessment. *ndividual managers $ere given the opportunity to clarify the purposes of their &obs and set their o$n targets. M!= developed into modern performance management schemes and performance related pay. Contin$enc!+ Many researchers found difficulty in applying academic theories to real organizations. %he socio technical school developed models of behaviour and performance $hich too" into account the contingent variables, or Ait dependsA circumstances, attached to particular $or" situations /!urns and (tal"er, 3CK3; 4ood$ard, 3CDG0. %hey argued that employees $ere part of a system $hich also included the e7uipment and other resources utilized by an organization. %he system could not function optimally unless all its components human and non human had been considered. %he HRM concepts of coherence and integration derive, in part, from this line of thought. 7r$ani-ational 'evelo ment+ >lso dra$n from the long tradition of organizational theory, organizational development /=:0 too" a pragmatic approach to change. %heory and practice $ere mi#ed in a tentative process called Aaction researchA. =: familiarized managers $ith the idea that changes in processes, attitudes and behaviour $ere possible and that organizations should be thought of as $hole entities. #trate$ic mana$ement+ :irecting people to achieve strategic ob&ectives so that individual goals are tied to the business needs of the $hole organization. (trategic management has become a dominant frame$or" for organizational thin"ing since the second $orld $ar. *t is based on concepts first used for large scale military and space programmes in the H(>. .re7uently, it employs pro&ect and team based methods for planning and implementation. Lately, internal /including human0 resources and "ey competencies have been identified as crucial elements of long term competitive success. (trategic management has become the ma&or unifying theme of functioning of departments of all organizations

The concern with strategy distinguishes human resource management from personnel management!! Lea'ershi + Many $riters have concluded that a visionary leader is essential, particularly in developing and inspiring teams. Mc<regorAs #he H$man Side of Enterprise /3CKG0 lin"ed leadership and management style to motivation. Mc<regor e#pressed the contrast bet$een authoritarian people management /A%heory LA0 and a modern form based on human relations ideas /A%heory MA0. His ideas parallel AhardA and AsoftA HRM. )ffective managers do not need to give orders and discipline staff; they dra$ the best from their people through encouragement, support and personal charisma. Cor orate c)lt)re+ :eal and Eennedy /3CD60 popularized the belief that organizational effectiveness depends on a strong, positive corporate culture. %hey combined ideas from leadership theory and strategic management thin"ers $ith prevailing beliefs about Fapanese business success. %he e#cellence movement inspired by ?eters and 4aterman /%n Search of E&cellence, 3CD6, and others0 has been particularly influential $ith practising managers. %hus, the development in the management field after the human relations movement led to the ne$ term called the human resources approach, $hich has gained momentum ever since. 4hat does this approach state2 *t states that human beings are very valuable assets to the organization. Hni7ueness amongst individuals $as recognized . Peoples involvement' commitment' potential development' good organisational c$lt$re (ere considered as important factors in HRM)) 1m ortance of H)man Reso)rce Mana$ement HRM is very important to us for the follo$ing reasons+ 1+*evelo ment an' (rowth of the or$ani-ation: HRM paves $ay for development and gro$th in the organization. !y improving the individual capabilities, ac7uiring necessary cooperation and developing team$or" HRM ma"es sure that the organization develops and gro$s $ell. <oals of the organization are met by HRM by effective motivation and e#cellent utilization of employees.

9+Creation of health! c)lt)re in the 7r$ani-ation: HRM creates and maintains e#cellent culture in the organization and it ma"es people develop and gro$. 3+Maintenance of H)man Reso)rces: %he development, care of Human Resources is done by the HRM. Human beings are a very crucial and vital factor of production , and thus HRM is gaining more and more importance day by day. *t also has important implication in societal development also. *% *( %H) H)>R% >@: (=HL =. M=:)R@ M>@><)M)@%. Core val$es of HRM #he core val$es of HRM states that 3.Human beings are the crucial aspects of every organization. %he greater is the commitment of the human resources the more successful is the organization. 6. >n individual is a $hole person. He brings all aspects of his personality, attitudes, traits and behavior to the $or" place. 8. >ll people represents the organization. %he building, e7uipment and other resources productive only because they are being handled by the hyper energic force of humans. 9.?eople are different from each other. %hey vary in abilities, nature, personality, religion etc. people are also influenced by social economic and environmental factors. J. Human resources have to be ac7uired, developed and motivated to give higher performances and also must be retained. K. %he success of an organization depends upon the satisfaction of organizational needs and employees needs. %here are various levels of hierarchical levels in an organisation. %he people $ho manage /i.e., the managers0, and people $ho are at $or" /subordinates0. %he effective coordination and commitment bet$een managers and subordinates is essential for organizational success. >part from that healthy relation ships are to be maintained $ith consumers, shareholders, entrepreneurs, governments and suppliers. N. Human relations enable people to $or" effectively in an organization $ith other people in organization.

LECTURE 6 11 : HR:s ;EW R7LE 7R1E;T,T17;2 C7M/ET1T1<E E*(E

1ntro')ction %he human resources function is at a crossroads, as ne$ technologies create opportunities for more strategic leadership in the management of human capital and corporate culture, $hile commoditizing some of HR1s traditional administrative functions. 4hat1s the strategic vision for HR in today1s large organizations2 Ho$ can HR proactively help drive business results and business transformation2 4hat are best practices in global talent management, self service HR systems, and outsourcing2 4ho is the customer for HR2 Ho$ can HR and *% $or" together to further the corporation1s business goals2

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 The h)man reso)rces >HR? f)nction is at an inflection oint: 1t m)st resha e itself to 'eliver the strate$ic val)e that to'a!:s 0)siness environment 'eman's an' refoc)s its ener$ies to 0ecome a chan$e catal!st an' lea'er+ HR is in a position to shape corporate culture, spread best practices, and drive enterprise $ide consistency of important shared values and messages. HR an' 1T m)st 8ointl! levera$e technolo$! an' their )ni@)e cross%enter rise views to ena0le com anies to 0ecome increasin$l! fleAi0le an' a'a ta0le2 'rive enter rise%wi'e trans arenc!2 an' rovi'e Bhi$h%to)ch: eA eriences where an' when the! are reall! nee'e'+ *nformation technology is enabling ,digitization5 of routine transactional processes and event management, at the same time providing all levels of the enterprise more data about its human capital than ever before. Talent mana$ement an' 'evelo ment is a hi$h levera$e o ort)nit! for HR+ HR can play a ma&or role in creating a performance and accountability culture via compensation systems, opt out programs, recruiting, and continuous learning processes. %echnology offers tools to do this more effectively and efficiently. &oth HR an' 1T can 0enefit from sharin$ Bem0e''e': talent with each others: or$ani-ations an' with other 0)siness f)nctions+ Oross pollination of managerial talent and perspectives can help increase understanding, cooperation and goal alignment. #elf%service HR s!stems2 when well 'esi$ne'2 can 'eliver 0enefits 0e!on' increase' ca acit! an' efficienc!+ *n addition to empo$ering employees and managers, *% enabled systems can also deliver ne$ managerial insight by aggregating and leveraging data that $ere previously inaccessible. (elf service HR systems should be event triggered, $or"flo$ driven and role based $henever possible. 1n maCin$ o)tso)rcin$ an' a)tomation 'ecisions2 HR m)st consi'er 0oth cor orate efficienc! $oals an' the strate$ic 0enefit of Bhi$h%to)ch: c)stomer an' em lo!ee eA eriences+ )#ecutives must understand $hat1s strategic and value added to the business and $hat1s not, and let those distinctions drive the design of ne$ processes and programs. %he $orld of $or" is rapidly changing. >s a part of organization, HRM must be prepared to deal $ith effects of changing $orld of $or". .or the HR people it means understanding the implications of globalization, $or" force diversity, changing s"ill re7uirements, corporate

do$nsizing, continuous improvement initiatives, reengineering, the contingent $or" force, decentralized $or" sites and employee involvement. Let us consider each of them one by one.

1+ (lo0ali-ation an' its im lications !usiness today doesn1t have national boundaries it reaches around the $orld. %he rise of multinational corporations places ne$ re7uirements on human resource managers. %he HR department needs to ensure that the appropriate mi# of employees in terms of "no$ledge, s"ills and cultural adaptability is available to handle global assignments. *n order to meet this goal, the organizations must train individuals to meet the challenges of globalization. %he employees must have $or"ing "no$ledge of the language and culture / in terms of values, morals, customs and la$s0 of the host country. HRM must also develop mechanisms that $ill help multicultural individuals $or" together. >s bac"ground, language, custom or age differences become more prevalent, there are indications that employee conflict $ill increase. HRM $ould be re7uired to train management to be more fle#ible in its practices. !ecause tomorro$1s $or"ers $ill come in different colors, nationalities and so on, managers $ill be re7uired to change their $ays. %his $ill necessitate managers being trained to recognize differences in $or"ers and to appreciate and even celebrate these differences. 9+ WorC%force *iversit! *n the past HRM $as considerably simpler because our $or" force $as stri"ingly homogeneous. %oday1s $or" force comprises of people of different gender, age, social class se#ual orientation, values, personality characteristics, ethnicity, religion, education, language, physical appearance, martial status, lifestyle, beliefs, ideologies and bac"ground characteristics such as geographic origin, tenure $ith the organization, and economic status and the list could go on. :iversity is critically lin"ed to the organization1s strategic direction. 4here diversity flourishes, the potential benefits from better creativity and decision ma"ing and greater innovation can be accrued to help increase organization1s competitiveness. =ne means of achieving that is through the organization1s benefits pac"age. %his includes HRM offerings that fall under the heading of the family friendly organization. > famil! frien'l! or$ani-ation is one that has fle#ible $or" schedules and provides such employee benefits such as child care. *n addition to the diversity brought by gender and nationality, HRM must be a$are of the age

differences that e#ist in today1s $or" force. HRM must train people of different age groups to effectively mange and to deal $ith each other and to respect the diversity of vie$s that each offers. *n situations li"e these a participative approach seems to $or" better. 3+ Chan$in$ sCill re@)irements Recruiting and developing s"illed labour is important for any company concerned about competitiveness, productivity, 7uality and managing a diverse $or" force effectively. ("ill deficiencies translate into significant losses for the organization in terms of poor 7uality $or" and lo$er productivity, increase in employee accidents and customer complaints. (ince a gro$ing number of &obs $ill re7uire more education and higher levels of language than current ones , HRM practitioners and specialists $ill have to communicate this to educators and community leaders etc. (trategic human resource planning $ill have to carefully $eigh the s"ill deficiencies and shortages. HRM department $ill have to devise suitable training and short term programmes to bridge the s"ill gaps ' deficiencies. 5+ Cor orate 'ownsi-in$ 4henever an organization attempts to delayer, it is attempting to create greater efficiency. %he premise of do$nsizing is to reduce the number of $or"ers employed by the organization. HRM department has a very important role to play in do$nsizing. HRM people must ensure that proper communication must ta"e place during this time. %hey must minimize the negative effects of rumors and ensure that individuals are "ept informed $ith factual data. HRM must also deal $ith actual layoff. HRM dept is "ey to the do$nsizing discussions that have to ta"e place. D+ Contin)o)s im rovement ro$rams Oontinuous improvement programs focus on the long term $ell being of the organization. *t is a process $hereby an organization focuses on 7uality and builds a better foundation to serve its customers. %his often involves a company $ide initiative to improve 7uality and productivity. %he company changes its operations to focus on the customer and to involve $or"ers in matters affecting them. Oompanies strive to improve everything that they do, from hiring 7uality people, to administrative paper processing, to meeting customer needs. Hnfortunately, such initiatives are not something that can be easily implemented, nor dictated do$n through the many levels in an organization. Rather, they are li"e an organization $ide development process and the process must be accepted and supported by top management and driven by collaborative efforts, throughout each segment in the organization. HRM plays an

important role in the implementation of O*?1s. 4henever an organization embar"s on any improvement effort, it is introducing change into the organization. >t this point =rganization development initiatives dominate. (pecifically, HRM must prepare individuals for the change. %his re7uires clear and e#tensive communications of $hy the change $ill occur, $hat is to be e#pected and $hat effect it $ill have on employees.

E+ Reen$ineerin$ worC rocesses for im rove' ro')ctivit! >lthough continuous improvement initiatives are positive starts in many of our organizations, they typically focus on ongoing incremental change. (uch action is intuitively appealing the constant and permanent search to ma"e things better. Met many companies function in an environment that is dynamic facing rapid and constant change. >s a result O*?1s may not be in the best interest of the organization. %he problem $ith them is that they may provide a false sense of security. =ngoing incremental change avoids facing up to the possibility that $hat the organization may really need is radical or 7uantum change. (uch drastic change results in the reengineering of the organization. Reengineering occurs $hen more than NGP of the $or" processes in an organization are evaluated and altered. *t re7uires organizational members to rethin" $hat $or" should be done, ho$ it is to be done and ho$ to best implement these decisions. Reengineering changes ho$ organizations do their business and directly affects the employees. Reengineering may leave certain employees frustrated and angry and unsure of $hat to e#pect. >ccordingly HRM must have mechanisms in place for employees to get appropriate direction of $hat to do and $hat to e#pect as $ell as assistance in dealing $ith the conflict that may permeate the organization. .or reengineering to generate its benefits HRM needs to offer s"ill training to its employees. 4hether it1s a ne$ process, a technology enhancement, $or"ing in teams, having more decision ma"ing authority, or the li"e , employees $ould need ne$ s"ills as a result of the reengineering process. F+ Contin$ent worCforce

> very substantial part of the modern day $or"force are the contingent $or"ers. Oontingent $or"ers are individuals $ho are typically hired for shorter periods of time. %hey perform specific tas"s that often re7uire special &ob s"ills and are employed $hen an organization is e#periencing significant deviations in its $or"flo$. 4hen an organization ma"es its strategic decision to employ a sizable portion of its $or"force from the contingency ran"s, several HRM issues come to the forefront. %hese include being able to have these virtual employees available $hen needed, providing scheduling options that meet their needs and ma"ing decisions about $hether or not benefits $ill be offered to the contingent $or" force. @o organization can ma"e the transition to a contingent $or"force $ithout sufficient planning. >s such, $hen these strategic decisions are being made, HRM must be an active partner in these discussions. >fter all its HRM department1s responsibility to locate and bring into the organization these temporary $or"ers. >s temporary $or"ers are brought in, HRM $ill also have the responsibility of 7uic"ly adapting them to the organization. HRM $ill also have to give some thought to ho$ it $ill attract 7uality temporaries. G+ *ecentrali-e' worC sites 4or" sites are getting more and more decentralized. %elecommuting capabilities that e#ist today have made it possible for the employees to be located any$here on the globe. 4ith this potential, the employers no longer have to consider locating a business near its $or" force. %elecommuting also offers an opportunity for a business tin a high cost area to have its $or" done in an area $here lo$er $ages prevail. :ecentralized $or" sites also offer opportunities that may meet the needs of the diversified $or"force. %hose $ho have family responsibilities li"e child care, or those $ho have disabilities may prefer to $or" in their homes rather than travel to the organization1s facility. .or HRM, decentralized $or" sites present a challenge. Much of that challenge revolves around training managers in ho$ to establish and ensure appropriate $or" 7uality and on time completion. 4or" at home may also re7uire HRM to rethin" its compensation policy. 4ill it pay by the hour, on a salary basis, or by the &ob performed. >lso, because employees in decentralized $or" sites are full time employees of the organization as opposed to contingent $or"ers, it $ill be organization1s responsibility to ensure health and safety of the decentralized $or" force.

1H+ Em lo!ee involvement !y and large for today1s organization1s to be successful, there are a number of employee involvement concepts that appear to be accepted. %hese are delegation, participative management, $or" teams, goal setting, employee training and empo$ering of employees. HRM has a significant role to play in employee involvement. 4hat is needed is demonstrated leadership as $ell as supportive management. )mployees need to be trained and that1s $here human resource management has a significant role to play. )mployees e#pected to delegate, to have decisions participatively handled, to $or" in teams, or to set goals cannot do so unless they "no$ and understand $hat it is that they are to do. )mpo$ering employees re7uires e#tensive training in all aspects of the &ob. 4or"ers may need to understand ho$ ne$ &ob design processes. %hey may need training in interpersonal s"ills to ma"e participative and $or" teams function properly. LECTURE 19 1D : 1;<E#TME;T /ER#/ECT1<E 74 HR : WHI #H7UL* 7R(,;1=,T17;# 1;<E#T 1; HR ? %he ans$er lies in the contribution of high performance $or" practices. Many studies have sho$n the substantial economic benefits of adopting high commitment or high performance $or" practices in contrast to conventional Qscientific1 management typical of Qmodernist1 organizations. =ften described as QFapanese5 management practices, the case for implementing such approaches is strong. %he ,assembly plants $hich had adopted fle#ible or lean manufacturing methods and associated employment relation practices far outperformed others using mass production methods. %hese high commitment $or" practices are characterized by (uggestion schemes, Ruality Oircles, ?roblem solving groups or other forms of employee participation in idea generation )mployee participation in decision ma"ing .reedom of e#pression )#tensive team$or" including self managing teams Reformulation of $or" to ma"e best use of upgraded s"ills.

?articipation and involvement means that po$er shifts from middle managers to further do$n the organizational hierarchy those closest to the customer or the production process. Oompanies operating such approaches include Levi (trauss, Motorola and Honey$ell. 4hat is common about high performing companies in their agenda to create relationships $ith employees $hich support their business ob&ectives. )mployee relations are therefore a priority and Qto push the e#ecution of employee relations policies do$n to the lo$est level possible, compatible $ith t he organization1s overall values.1 Oorporate values are most clearly visible in re$ard policies $hich are sometimes used to instill specific values. ?rofit related pay and share o$nership are obvious manifestations of value statements about the $orth of the people to the organization. (imilarly, formal communication transmit values, through usually more is understood by behavior of the people conveying the message then by the $ords used. :espite the evidence from the organizations $hich practice %otal Ruality that these practices $or", diffusion seems to be slo$. %he main barrier appears to be that traditionally the focus of management has been on the financial and strategic aspects of the business, rather than on employee relations. (ince high commitment $or" practices re7uire ma&or up front investments, such as in training and higher rates of pay, a $illingness to ta"e ris" that these measures $ill pay off is re7uired; and many management teams are ris" averse. ?olitical and po$er barriers can get in the $ay of implementing high commitment $or" practices. How can HR hel to im lement hi$h erformance worC ractices? * !y creating a culture $hich is supportive of high performance High performances does not occur in vacuum. %he organization1s culture must be conductive to productivity and the 7uality improvement. ** !y influencing attitudes HR professionals can be effective in bringing about change through their cross organizational influence, ability to design structures and processes $hich support the business strategy and helping to create the culture changes through values and communication $hich supports ne$

$ays of $or"ing. HR can help set up benchmar"ing visits to organizations $hich are achieving outstanding results through people. ("illful use of data can stimulate the need for change among *** !y designing and implementing HR processes $hich support the business strategy >t a practical level to create the conditions for high performance, HR processes such as re$ard systems need to be aligned to the ne$ $ays of $or"ing. %he follo$ing HR processes are typical of Qvanguard1 companies described by =1toole+ Highly selective recruitment )#tensive training and s"ill development Oontingent or performance related pay , at high rates )mployee share o$nership !enefits tailored to individual needs ?roviding some degree of employment security (haring information about a firm1 goals and results.

?erformance management Managing performances is perhaps the "ey responsibility of the line managers and an area $here a partnership bet$een line and HR can be most beneficial. Hr can help managers to understand ho$ to define roles in the light of business drivers and ho$ to identify the capabilities re7uired to do the &ob. %he "ey performance indicators for each role should derive from business drivers and are then built into role processes. %his ma"es each &ob role responsive to the changing business environment. %he four "ey elements of performance management are+ > common understanding of the organizations goals (hared e#pectations of ho$ individuals can contribute )mployee $ith the s"ill and ability to meet e#pectations

*ndividuals $ho are fully committed to the aims of the organization *n managing performances mangers should ensure that the employees are appropriately focused into roles, developed and managed. Fob fit and &ob design $hat role can HR play2 HR can develop assessment processes to ensure that the Qright1 people are selected for roles. HR can $or" $ith the line to develop self assessment process. %he pace of change is so fast that &ob description, $hich create boundaries, are inappropriate. *mportant responsibilities fall bet$een the gaps and the most &ob descriptions are not current for more than fe$ months. 4hat is needed is a broad role description, $ith some Qfuzzy1 boundaries to allo$ for gro$th. :ealing $ith poor performance *n some organizations, poor performance is handled by simply passing on the underperformer to another department. HR needs to be able to support managers in understanding ho$ they can achieve high standards $ith slim resources. HR can provide valuable training and other resources to ensure that managers have the s"ills to coach and develop other people, as $ell as appraise performance. :esigning effective appraisal and development processes >ppraisal re7uires e#cellent intervie$ and counseling s"ills if the process is to be motivating for those involved. *t relies on managers and employees having a relationship in $hich discussing performance is not seen as a burden or a threat. Hsually appraisal are ta"en only as an administrative tool, thus there is no lin" bet$een personal development and business strategy. HR can help by designing processes $hich are user friendly and effective li"e, 8KGS feedbac". Helping line managers to set appropriate measures

(uccess criteria should be such that ma"es a positive difference to the organization. 4hile measure undoubtedly send strong symbolic messages about $hat is valued, the 7uestion of $hat is being measured and therefore considered important is increasingly be called into 7uestion. %argets need to be set for the deliverables $hich are re7uired but not at the e#pense of ho$ the deliverables are to be achieved. *f measures are set around Qsoft1 targets such as behavior, care must be ta"en that they are ta"en seriously and also understood $ell. Rewar' #trate$ies (ince 3CCG1s the dynamic lin" bet$een performance and re$ard has been a topic of debate. %he need of fle#ibility and cost effectiveness has lead to organizational restructuring of various "inds; including flatter structures $ith their focus on team$or", broader roles and non traditional $or" arrangements. *mplementing a flatter structure is meaningless unless there is a degree of consistency bet$een $hat is e#pected of employees in terms of $or"ing practices and systems, processes and the resources needed to do the &ob. >ll human resource systems especially pay; need to reinforce the forms of s"illed performance re7uired of individuals. Ho$ever most of the companies believe in follo$ing the preferred model of paying mar"et rates alongside schemes that recognize individual short term performance but not long term development. %his is among the most challenging responsibility of human resource specialist, as there are many factors to be ta"en into account before revising a compensation system to ma"e it reflect the diverse aspects of behavior, s"ills and e#perience $hich lead to the sort of performance organization re7uires. Many organizations are e#perimenting $ith more fle#ible pac"ages $hich include elements of variable pay, lin"ed to &ob performance, competence s"ill development and desired team and leadership behavior. %he symbolic po$er of re$ard systems Re$ard schemes are re7uired to meet both the organizational need of managing its salary bill, along side ensuring that it is getting good performance from its employees as $ell as the employee is been appropriately recompensed for their efforts. Re$ard schemes carry enormous

symbolic significance for employees, as they are the po$erful means of teaching employees $hat is actually valued in the organization, as $ell as $hat is not. >s such they have a greater impact on employee attitudes and behavior than rhetoric or values statements $hich encourage, team $or". *n theory, re$ard schemes are designed to be motivating, offering appropriate incentives for, and recognition of, desired performance. 4hether schemes $hich focus e#clusively on the financial aspects of re$ard achieves this aim is open to debate. %he need to revise re$ard strategies *n an attempt to move to$ards the performance culture, many organizations have introduced pay schemes $hich have intended to reflected performance in the &ob more than the &ob grade itself. *n these changing times, re$ard schemes 7uic"ly becomes sources of discontent. *n flatter structures in particular, there is often considerable pressure for re$ard system to be revised. Ho$ever, in traditional hierarchical structure, being promoted $as the only $ay of gaining status as $ell as earning more money or brea"ing through the ceiling for a grade. *n some organizations, eligibility for promotion $as based on age and e#perience rather than performance. *n flatter structure $here promotion is most unli"ely, thus pay is obviously performance based. %here1s no perfect pay system, thus a good system should be customized and tailored as per the need and the ob&ective, rather than adopting any off the shelf solution. ?erformance related pay *ncentive schemes and performance related pay continues to provo"e debate. Ho$ever some researches propagate the ineffectiveness of performance based re$ard, recognition and incentive systems on the follo$ing grounds+ %here is no data to sho$ long term benefits %hey setup internal competition Re$ard systems undermine team$or" and cooperation %hey often re$ard those $ho are luc"y and pass by those $ho are unluc"y

%hey create cynic and losers 4hile devising such schemes care should be ta"en about their responsiveness to the business drivers, the changing technology, the ne$ s"ills needed and the fact in a ne$ environment, people need to perform on different parameters. *n response to these business drivers some basic 7uestions need to be ans$ered+ 4hat, for instance, are t he critical roles, tas", s"ills, $hich should be re$arded2 4hat are the ne$ $or"ing practices that t he organization $ishes to encourage2 4ill team $or"ing be more critical to achieving business goals than individual performances2 *s having one system the only $ay of thin"ing about the revised system2 Many organizations $ant people to be "een and $illing to ta"e on broader responsibilities, learn ne$ s"ills and develop $ider competencies. *n addition, technology is bringing about a more fundamental change, s$itching the nature of the $ay $or" is carried out from directive tas"s to process driven activities. *n some organizations only outputs are assessed for bonus purposes $hile in others inputs are also ta"en into account. %ypically, the ne$ areas of providing incentives include Qsoft1 areas such as ma"ing creative suggestions, receiving positive feedbac" from customers, team $or"ing and demonstrating leadership. %o support this approach there is usually an emphasis on competencies and various feedbac" mechanisms are used. 7ther tren'sJJ * Oompetence based pay /O!?0 Many organizations are e#perimenting $ith the competence based pay /O!?0, also "no$n as "no$ledge or s"illGbased pay $hich ta"es the notion of performance related pay in a particular direction. O!? $or"s on the basis of re$arding the s"ills an individual possesses and actually uses. %he do$nside of such schemes of such schemes

%hat they tend to be very comple#. %he emphasis on individual competence can lead to a failure to reflect sought after organizational business goals such as team $or"ing and 7uality.

** %eam based pay *t provides financial re$ards to individual employees $or"ing $ithin a formally established team. ?ayments are lin"ed to team performances or the achievement of agreed team ob&ectives. =ne of the dra$bac" is that every scheme is uni7ue, it1s not possible to adopt some broad recommendations from other organizations, nor are such schemes easy to design or manage. .or effective success of such a scheme it necessary that team stands alone $ith the agreed targets and standards, have autonomy, are composed of people $hose $or" is interdependent, are stable, are $ell established and ma"e good use of complimentary s"ills. %he three basic elements of a team based re$ard pac"age /assuming that the basic pay is right0 are+ 3. %he individual element, the basic salary but varied in relation to performance or s"ills/competence. 6. > team element related to the achievement of team targets. 8. >n organization element related to the business performance measured as a profit, or added value. >ccording to :anny Ohestennan, corporate development advisor at Eent Oounty Oouncil, Qindividuals should be re$arded for their contribution to teams, and the teams for the $ay they develop individuals1.

*** .le#ible benefits <iven the $ay the $or" environment is changing, continuing to offer benefits that are based on the Q&ob for life1 assumption is unrealistic. %he important thing is to find out ho$ people perceive their benefits and $hether these are valued appropriate to both the company and the employee needs. *tems in this scheme include pensions, healthcare, childcare vouchers, annual

leave, life cover and dental insurance for employees and their partners. .urther emphasize should be there to ensure proper communication of these schemes by HR team.

Ho$ do people $ant to be re$arded2 %he latest re$ards techni7ues follo$ed are as follo$s+ ?rofit /gain0 sharing .le#ible benefit !onuses payable !onuses payable in terms of e#tra leaves rather than pay !onuses payable to$ards prestigious 7ualification Long term incentives :eferred incentives )#tending private health schemes to all employees and their families Longer holidays (ponsored holidays Q.ree5 family holiday in company o$ned cottages )nhanced early retirement

Research suggests that intrinsic motivators such as the chance to do something $orth$hile, to have a development stretch, to increase &ob satisfaction are all as important as the financial pac"age and represent Qpsychological1 re$ards. *T Recognition *n many organizations the scope for modifying the re$ard system may appear limited. Recognition schemes ta"e on a special significance since they are a symbolic $ay of reinforcing the Qne$1 behaviors and the performance needed in the organization.

LECTURE 1E 1F : 1;<E#TME;T 1; TR,1;1;( ,;* *E<EL7/ME;T #trate$ies for Trainin$ . *evelo in$ /eo le
%he $or"place is being radically reshaped in a number of $ays. ?eople are no$ e#pected to have a $ide range of s"ills in areas such as customer relations, business a$areness and leadership. %he impact of technology on people1s &obs is becoming ever more apparent, leading to a gro$ing importance attached to the soft s"ills as $ell as the Qhard1. ?eter Oochrane, head of Research for !% and a $ell "no$n futurologist, suggests that Qthe future belongs to highly s"illed professionals $or"ing long hours on short contracts $ho $on1t have time for the daily life, $hich $ill create opportunities for others.1 *n this period of rapid change, the need for employees to continuously update their s"ills, and develop ne$ ones, has never been greater. ?arado#ically, the pace of change and the demanding $or"loads of most employees act as a deterrent to conscious development. :evelopment strategies need to ta"e into account the reality of most people1s $or"ing lives and the fact that conventional training is only one $ay in $hich people can develop. :evelopment solutions can ta"e many forms and strategies should ideally be as innovative as employees are no$ re7uired to be. *n creating a :evelopment strategies, it is important as ever to start $ith $here the business is going and $hat that suggests in terms of the s"ills $hich $ill be needed. %he :evelopment strategies should be guided by a vision and set of values. 4hat is the philosophy $hich $ill underpin development do $ant people to be self sufficient or do u see development as a partnership bet$een the individual and th9e organization. >broad philosophy can be communicated to employees as it provides the rationale for the choice of elements in the strategy %he 7uestion $hich :evelopment strategies need to ans$er is ho( do (e ens$re that people are developed to their f$ll potential and ma&im$m effectiveness*

:evelopment needs to be focused on areas $hich are relevant to the individual and the organization. =ne employee for instance might need a rapid in&ection of &ob related s"ills due to a change in technology. >nother may have reached the stage in his or her career $hen a :evelopment stretch, such as ma&or ne$ responsibility or an M!> programme might provide, is re7uired. 4hile a :evelopment strategy should be sufficiently fle#ible that it can adapt to individual needs, organizational priorities may ta"e precedence. %his is $here having a guiding frame$or" and criteria for decision ma"ing can be helpful. *n any :evelopment strategy there are li"ely to be three areas of focus+ =rganizational level $here corporate re7uirements such as induction, 7uality improvements, leadership, customer care and culture change programmes are addressed :epartmental business unit level $here &ob related training and development is li"ely to ta"e place *ndividual level $here people are usually motivated to close the gap bet$een there current and desired capabilities *t follo$s then that to ensure an optimum return on the time and other resources in development that those activities are $ell targeted. Ma"ing a difference can be measured at a number of levels. :onald Eir"patric"1s evaluations frame$or" suggests four levels 3. Reactions $hat do participants thin" about the activity at the time2 6. Learning ho$ have s"ills, "no$ledge or attitudes improved as a result of the activity2 8. !ehavior ho$ does participants changed behaviors affect their constituents e#ample their $or" group2 9. Results ho$ do these improved behaviors, s"ills and "no$ledge translate into bottom line impact2

;EE* ,;,LI#1#
=ne $ay of finding out $hat is needed to carryout some form of development needs analysis based on the e#isting $or" force there are many $ays of doing this. 4hich includes surveys, using e#isting data such as appraisal information, sampling of specific groups, bench mar"ing

$ith ,$orld class5 organization to identify obvious gaps. %he analysis should provide ans$ers to the 7uestions+ 4hat is needed and $hy2 4here is this needed2 !y $hom2 Ho$ $ill this best be provided2 Ho$ m much $ill this cost2 4hat $ill the e#pected return loo" li"e2

E<,LU,T17;
*ncreasingly hard measures of the impact of development activities are re7uired. Eir"patric" suggests the follo$ing guidelines to implementation $hen trying to assess the impact of the training on business results+ Hse a control group >llo$ enough time for results to be achieved Measure both before and after training Repeat the ,measurement at appropriate time Oonsider the cost of evaluation versus the potential benefit !e satisfied $ith the evidence if absolute proof isn1t possible to attain

Marilyn Mc :ougall and >ngela Mulvie carried out a study of ho$ companies measure the impact of HRM to bottom line. %hey found that many organizations ma"e access to management "no$ledge and s"ills available on a general basis to employees as a part of a philosophy of continuous learning participants are therefore not e#pected to produce improved bottom line results

/R17R1T1#1;( *E<EL7/ME;T ;EE*# U#1;( C7M/ETE;C1E#

%he need to ensure that training and other forms of development are tailored to the business re7uirements as $ell as to those of individuals evident in the $ide spread use of competency based development process. %hese should ensure that :evelopment opportunities are targeted

to meet specific ob&ectives for the relevant individuals. (ome organizations are offering managers 8KG degree feedbac" based on a range of competencies. Oompetencies can be used to develop self assessment 7uestionnaires and other feedbac" processes to ensure that individual needs are understood. )nsuring that development opportunities are appropriately targeted may prove more difficult. *t is useful to identify short list of priority areas of management :evelopment for the short, medium and long term. *n the medium term there may be significant merits in standardizing role description using competencies to define the s"illed component of each role. *n the short term, management :evelopment effort may perhaps produce best effect $hen applied to specific business ob&ectives and particular groups or individuals according to relevant criteria such as+ &)siness nee's %he current short to medium term business strategy. *f the current main business priority is maintaining 7uality standard it may seem inappropriate to put effort into change management and leadership. %he biggest obstacle in terms of management s"ills or behavior to achieving the overall business goals, i.e. does the lac" of certain competencies prevent the organization from ma#imizing opportunities or actually cause operating problems2 %he specific priorities of different business groups 4hat managers $ould li"e to develop Oultural priorities

&)il'in$ to stren$ths .ocusing :evelopment on areas $hich people consider strengths may seem contradictory. Ho$ever there is reasonable amount of research evidence to suggest that people are motivated to even higher levels of performance $hen they are $or"ing on areas in $hich they feel they are effective.

/rioriti-in$ reso)rce allocation accor'in$ to 'ifferent 'evelo ment nee's

Ho$ do the strengths and development needs of managers, high fliers and directors differ2 Roffey ?ar" has carried out research into the effects of the changing $or"place or employees for a number of years. %$o surveys carried out in 3CCD highlight the needs employees perceive $ith regard to the s"ills re7uired to do their &obs. =ne survey, the

Management >genda $as completed by a cross sector population of managers mainly based in HE. %he sample $as a good mi# of &uniors, middle and senior managers as $ell as people $ho $ere running their o$n companies. %he other survey $as a focused loo" at the needs of high flyers in 9GG organizations. %he survey as"ed both groups about their current s"ills and strengths. *n both surveys, the information supplied $as a self assessment and may be vie$ed differently by people reporting to the individuals surveyed. %he top s"ills of the Q>genda1 group reflected the broadly Qpeople management1 aspects of their role and $ere as follo$s+ *nterpersonal Oommunication .le#ibility ?eople management =rganization/planning >nalytical Motivational Leadership Ooaching

%he high flyers had a similar range of s"ills and strengths but there $ere some different priorities in terms of &ob focus. .or nearly half of this group, developing strategy is their "ey priority $ith other responsibilities for managing a team, building and maintaining relationships $ith clients and managing the financial side of the business. %hese priorities reflect the business focus and direction setting so often associated $ith high flyers. (imilarly, the emphasis given to managing a team and managing relationships $ith clients suggests that people related activities are important. Ho$ever, the high flyer group as a $hole placed little priority on issues relating to customer satisfaction and 7uality management or training and development. @ot surprisingly, the current s"ills and strengths of the high flyers reflected their priorities to a large e#tent as follo$s+ Oommunication Managing people (trategic thin"ing

*nterpersonal !usiness .inancial ?olitical *nfluencing

%he survey as"ed both groups $hat they believed $ere the s"ills they needed to develop to e7uip them for their current role /i.e. short term0. %he agenda group1s needs $ere as follo$s+ ?olitical/influencing s"ills (trategic thin"ing s"ills *% s"ills .inancial )ntrepreneurial Leadership !usiness Ohange management

%his group appears to be mainly in implementation roles, $ith an emphasis on raising or maintaining 7uality. *deally, these managers should have opportunities to improve processes across their organization. 4ithout ma"ing this overly comple#, senior managers can improve the efficiency of services $hile developing themselves at the same time. %hey may need help in pro&ect management s"ills, including dealing $ith third parties s $or" is increasingly put out to tender. %he art of managing a fle#ible $or"force is some$hat more challenging than managing a directly managed staff.

*evelo ment nee's of hi$h fl!ers

%he s"ills people felt $ould e7uip them for future success $ere diverse. %he main areas $ere as follo$s+ !usiness ?olitical/influencing Managing people Oommunication Leadership

*nterpersonal

*nterestingly rather at odds $ith current management trends, this group does not see the ability to coach and develop others as crucial to future success. %his may reflect the pragmatic reality that in many organizations promotion to senior positions has not depended on a manager being an effective Qpeople person1. Ho$ever as many organizations are attempting to integrate culture change ob&ectives $ith succession planning, this may change. > number of the organizations are no$ screening candidates for senior roles on the basis of ho$ they demonstrate leadership behaviors. #) ortin$ mana$er:s 'evelo ment 3. Oreating a self development culture :evelopment should be seen as primarily the individual1s responsibility but encouraged and supported by the organization. > ne$sletter $hich regularly focuses on development achievements $ill convey the message that development is ta"en seriously, especially $hen directors contribute. (imilarly, $here people set themselves development targets they should be encouraged to identify the organizational benefits /including bottom line0 of $hat they are planning to do. %hat $ay, people1s development can be more clearly understood and celebrated in terms of its contribution to organizational effectiveness. *n the medium term, re$ard systems should be enhanced and reflect people development. Managers should be re$arded on the achievement of people development targets and individuals should ideally be offered a small bonus or a slightly higher salary if their improved s"ills enhance their contribution. %he appraisal scheme can be supplemented, if this has not yet happened, $ith a development planning process. %his again calls upon line managers to be $illing and able to hold development discussions $ith individuals. 6. )nabling development through competencies ?eople should be encouraged to move &obs around the organization, ac7uiring different forms of e#perience. Oompetencies can be helpful in facilitating this process in that &ob re7uirements can be defined in $ays $hich enable people to underta"e a realistic self assessment. Fob profiles can be updated and specific technical competencies defined. %his $ay, a data ban" of people re7uiring specific forms of development can be matched against available options. %here may also be opportunities for &ob s$aps and secondments if resourcing is a problem. %he increased mobility of staff can also be supported by greater a$areness of the roles of different

business groups. %his can be encouraged by briefings hosted by different business groups at their $or"place.

Metho's of learnin$ on the 8o0

3. =n the &ob *t seems that most senior managers learn best by e#perience. =n the &ob learning is therefore li"ely to be the primary source of development. <iven the importance of this form of learning, it is essential that managers are able to support people $ith their development as $ell as their current performance. 6. %raining %raining can be helpful for both a$areness raising and s"ills development. %here are clear benefits, for instance, in raising senior managers1 a$areness of the strategic issues for their organization through briefings and net$or"s. %he ma&ority of managers, ho$ever, consider that most of their development too" place on the &ob, or outside $or". 8. Mentoring and coaching *n many organizations, tools are no$ provided to encourage self development, including the use of development centers and resource learning centers. Many organizations such as !ritish >merican tobacco, have trained managers in coaching s"ills and the trend to$ards the Qline manager as developer1 is $ell established. *n some companies, managers1 ability to help others to develop is no$ ta"en into account $hen bonuses are being allocated. Learning groups are increasingly being used in a number of organizations such as *OL and the former <la#o 4ellcome. %hese can enable individual needs to be met in $or" conte#t. (ome organizations are introducing peer mentoring to address both organizational needs for team$or" and greater collaboration and individual needs for support. ?eer mentoring involves t$o, three or more individuals agreeing to have development relationship $ith one another. %his is primarily a development relationship $ith the clear purpose of supporting individuals to achieve their &ob ob&ectives. HR can help such relationships to be established through creating a mechanism $hereby peers can identify li"ely peer Qresources1. =ften this is through the use of a database on $hich information is stored about people $ho have specific e#pertise and are $illing to act as peer mentors. %hese can be matched against people $ho e#press specific needs.

9. Learning opportunities using computers Many pundits predict a huge gro$th in on line learning in ne#t fe$ years. %his is driven by shortage of time to attend training and the increasingly global spread of organizations $hich ma"e training solutions costly. Research by the Ohartered *nstitute of ?ersonnel and :evelopment /3CCC0 found that only one 7uarter of organizations used the internet or
intranet for training and development, but forecast that there would be a 70 percent increase in the early years of the millennium. Similarly, CD- !" usage is e#pected to grow by $0% as per the respondents in the C&'D survey.

*evelo ment
:evelopment is a process of enhancing an individual1s present and future effectiveness. *n the present case, $e are vie$ing effectiveness in the conte#t of the employee1s career. >nd by career $e mean, the individually perceived se7uence of attitudes and behaviors associated $ith $or" related e#periences over the space of person1s life. %hus development in the career entails changing both perceptions and behavior /or s"ills0. More specifically, the targets of development are the four outcomes that measure career effectiveness+ performance, attitudes, identity and adaptability. %hese outcomes can be bro"en do$n by time frame and locus of concern, as sho$n in the follo$ing figure+ ?erformance and attitudes focus on the short term+ attainment of present $or" goals and present feelings about the career, such as involvement commitment and conflict. >daptability is the e#tent to $hich the person is preparing to meet future career demands. *dentity is a measure of the congruence of integration of the person1s self perceptions overtime /i.e., a measure of ho$ the person sees the parts of the career fitting together or ,ma"ing sense50. >ny activity that enhances one or more of these four career outcomes constitutes development. %raining, coaching, increased effort and self improvement to increase &ob performance are development. (ocialization, &ob e#periences, counseling, peer interactions and other activities that alter or clarify career attitudes are development. Fob assignments, education and other learning that broadens the person1s s"ills and abilities enhances adaptability and thus also development. >nd finally self e#amination, self assessment, feedbac", counseling and other activities that clarify and focus self identity are also development. %oo often, ho$ever, organizations define development as $or"ing only on the top left hand corner on short term, tas" related s"ills. %oo seldom are attitudes, adaptability and identity the focus of plans for development.

*n addition to considering the four career outcomes as goals of developmental activities, $e can also e#amine various strategies for attaining these goals. *n their revie$ of organizational training and development processes, 4e#ley and Latham propose certain basic developmental strategies that organizations use. %he first strategy is cognitive and is conceived $ith altering thoughts and ideas. %he second is behavioral, entailing the attempt to change behavior directly. >nd the third is environmental and consists of interventions aimed at immediate $or" environment of the individual. *f $e combine the career goals and these three basic strategies, $e obtain a matri# of possible combinations of development strategies aimed at particular career outcomes, as sho$n in the table. /(ince the performance category is so important, it has been subdivided into technical, interpersonal and conceptual s"ills.0 %he specific activities listed are not meant to be e#haustive and some cells may represent some$hat incompatible combinations /e.g. cognitive approaches to developing interpersonal s"ills0. .urthermore, several activities are found in more than one cell, as a given activity can produce multiple outcomes.

Concl)sion
%he need for employee at all levels to be involved in ongoing development of ne$ s"ills, e#posure to ne$ e#periences and learning to learn is apparent. HR can $or" to$ards creating a culture in $hich learning is valued and supported, and $here the enhanced s"ills of the individual are put to good use. *n such a development culture the pressure to measure a return on every development activity maybe less strong than in a culture $hich believes that any offline activity is a cost. *ndividuals can ta"e responsibility for managing their development. >fter all, it is in their interest to do so, but the organization can help Q"ic" start1 the process by providing people $ith the opportunity to understand $hat to develop and ho$. *ronically, pressure of $or" in some cases is so strong on the company ethos so Qmacho1 that people are al$ays prepared to learn, especially through training. Tarious innovative approaches such as Q&ust in time1 training, using on line resources, can help, but sometimes the best form of development is $hen individual ta"e themselves to a residential training programme and ma"e time to reflect. (enior managers in particular are important role models in both leaning and valuing learning. %hey set the tone and need to be $illing to e#ercise some old fashioned command and control $ith regard to development.

)ncouraging people to prioritize development, $hose returns to the business may not be immediate, over short term business demands, at least occasionally, may $ell produce larger returns in the long run.

LECTURE 1G 99 : ;7; TR,*1T17;,L 1;<E#TME;T ,//R7,CHE# : 1;<E#TME;T 1; *1#,&LE* EM/L7IEE# !efore $e move on to the core of the issue, $e must define $hat disability or being disabled means ,(omeone $ho is disabled has an illness, in&ury or condition that tends to restrict the $ay they live their life, especially by ma"ing it difficult for them to move about.5 %hus, the employee, $ho is $or"ing for the organization, $ill be termed disabled if he/she is suffering from an in&ury or illness $hich affects or restricts them from performing their &ob effectively. %here can be t$o types of disabled employees *. :isabled $hile employed + i.e. the person $as fit and sound during the start of

employment relationship, ho$ever, during the tenure of his/her service he turned disable, $hich can be either+ a0 =n the &ob+ %his is during the $or" hours $hile $or"ing at premises. b0 =ff the &ob+ %his is not at $or" premises, but surely after the start of employment relationship. **. :isabled prior to employment+ Here the employer is $ell a$are of the disability yet

employ the person for the &ob.

:isabled $hile employed+ %here can be short and long term disability /(%: and

L%:0.4hile dealing $ith such a case the employer must follo$ the follo$ing procedure.

%he *nteractive ?rocess, $hereby through an informal open discussion $ith the disabled employee, the precise &ob related limitation imposed by the employeeAs disability are being realized and ho$ those limitations could be overcome $ith a reasonable accommodation. )ven if the departmentAs ability to accommodate the employeeAs disability seems doubtful, the department must still conduct a good faith interactive process. %here are four levels of possible accommodation+ 3. Fob >ccommodation+ Modification of &ob duties, &ob environment and/or $or" schedule. 6. Modified 4or"+ Lateral transfer into an e#isting position for $hich employee is 7ualified. 8. %ransferable ("ills+ %ransfer to UdemotedU position or position of lesser terms/conditions /Ulast resort accommodation.U0. 9. >lternate 4or"+ Ho$ever, consideration should be given to his present salary and the distance of the ne$ $or" place from his residence. Oonsider the preference of the individual to be accommodated and select and implement the accommodation that is most appropriate for both the employee and the employer. %he employer should not accommodate the employee in case+ 3. %he disabled employee cannot perform the essential functions of the &ob; and that no reasonable accommodation e#ists. 6. %he person $ould create an imminent and substantial danger to him/her self or to others by performing the &ob; and there is no $ay to remove or reduce the danger. *n such a scenario employer may use medical separation and also appoint a rehabilitation counselor for the disabled employee. ** :isabled prior to employment+ %here could be any form of disability namely i0 ii0 iii0 Mental health ?hysical :isability Learning :isability

$hich the employer is a$are of prior to employment. !ut still considers their employment as a part of social responsibility, alongside trusting their capability to perform the tas" fit for them. %he trend of employing disabled as $ell as "eeping provisions for employees disabled after employment is gaining momentum $hich can be due to+ i0 ii0 iii0 Realization of social responsibility by employers. <overnment intervention %rade benefit schemes, ta# benefits etc.

Reasons for this chan$e :isability Oonfident employers $ill have access to a $ider talent pool. %echnological developments and increasing use of fle#ible $or"ing mean that organisations are able to create enabling environments $here more disabled people can contribute to business success. En$a$in$ with otential em lo!ees >'isa0le'?

>ttracting talented disabled candidates can be problematic. )#perience of leading employers suggests that multiple /pro&ect based0 recruitment tends to attract more disabled candidates than single post advertising.

)mployer needs to build a brand $hich symbolize $elcome and fair treatment. Oonsider offering $or" e#perience and internship opportunities to disabled people. (ector based initiatives can help to change peopleAs vie$s of $or"ing in a particular industry.

%a"e for e#ample, in *%)( sector companies li"e Hero *tes, a part of Mun&al group, openly mentions the special invitation to disabled in it1s employment advertisement. (imilarly there1s a lot of potential to hire these people in the sunrise sectors li"e ban"ing, soft$are,etc though companies li"e (atyam, *nfosys- have ta"en initiative yet lot has to be done. Oonsidering high staff turnover and an acute shortage of s"illed $or"force, 7ualified technical people $ho are disabled can be good alternative. Hnfortunately $hen it comes to recruitment, employers tend to loo" the other $ay if the &ob candidate is a person $ith disability. %op of the charts in the *% &ob mar"et include vacancies for soft$are developers,

programmers, $eb designers, database and system administrators, graphic artists and system analysts. !ut still the percentage of disabled employees is very lo$. Most employers are reluctant to employ the disabled because of concerns regarding safety regulations, the need to modify premises such as installing ramps, disabled friendly toilets and e#tra medical costs. )ven if they are employed, the system that is being follo$ed in the organization does not $or" in their favour. %here is, ho$ever, concern that some management practices, even those imposed $ithout pre&udice on all employees, might have a disparate effect on the health and performance of some disabled employees. 4ith the advancement in technology, the potential of these employees can be enhanced to a higher level. .or e#ample, speech device can be used as a tool to support the person $ho is verbally impaired. (imilarly, visually disabled can convey through special computers. %hus $e need such things along $ith training for the disabled employees as $ell as the normal employees to help them ad&ust to the changes, and their differently abled employees. %hough, this may seem as an investment but the benefits are far reached and re$arding. Return on investment is far greater considering people $ith disabilities tend to be appreciative and loyal employees, because they have difficulties finding &obs. %heir commitment to $or" has to do $ith their self esteem. %his notion of $or", as a prideful activity, is something they definitely feel. Cost to Cee 'isa0le' em lo!ee >em lo!e'? )mployers e#perience multiple direct and indirect benefits such as retaining 7ualified employees, considering i0 ii0 iii0 iv0 the cost of training the ne$ employee productivity of retained employee is higher cost of accommodation is lo$er than inducting ne$ employee )mployers $ant to retain valued and 7ualified employees.

%here are lot many industries $hich have a scope of employing disabled employee. its &ust the initiative $hich is re7uired, considering %itan, %ata group $hich is one of the $orldAs largest timepiece manufacturers started introducing disabled employees to it1s facility since DG1s . U%itan $as clear that these people are an intrinsic part of our society and need understanding, support and opportunities, not charity or misplaced compassion,U says Mamatha !hat. %hus, the capable candidates of 3D 69 yrs $ere adopted and proper measures $ere ta"en to get them into main stream, li"e i0 ii0 iii0 ergonomically designed $or"spaces training to enhance technical competence non discriminating policies, effective grievance handling, counseling etc.

4ith time, %itan has realized that the disabled members of its family are more loyal and far more focused on the &ob. :espite the physical shortcomings of these employees, productivity and are 7uality no had longer never been an issue. as %itanAs disabled, children merely of a lesser god classified Adifferently abledA.

%hus, such an investment is $orth not only for it1s return in terms of loyalty earned. !ut, employers should consider their responsibility to$ards the society and help in ma"ing these people self dependent and getting them into the main stream. EM/L7IEE ,##1#T,;CE /R7(R,MME# >E,/s? )>?( are used to ma"e professional help available to the employees. %ypical )>?( offer assistance to employees in such areas as alcoholism, drug abuse, emotional stress, family problems and financial indebtedness. >lthough research findings tend to vary, it is believed that )>?s are valuable contributors to both employees and employers. .irst of all, giving employee assistance is simply the right thing to do from the standpoint of humanity, and there are some cost benefit arguments in favor of )>?(. Oertainly, the resolution of personal problems tends to ma"e the employee a more effective contributor to

employer ob&ectives. %hat is, money spent on abating alcoholism among the $or"force is perceived to be cheaper than money spent on ineffective performance, lost time, illness and death on the part of employees suffering from the disease of alcoholism.

Characteristics of an effective E,/ %he )>? should be staffed $ith competent professionals $ho respond to employee problems $ith empathy and $ho "no$ $hat services are available in the local community. %he )>? should be accessible to all employees 69 hours a day, seven days a $ee". %he )>? should be advertised to all employees so that all are a$are of the program. %he )>? should be available to all employees and their dependents. %he )>? must guarantee complete confidentiality. %he )>? staff members should be $illing to meet at any location $here the employee or dependent feels comfortable.

LECTURE 93 95 #TR,TE(I

: 1M/7RT,;CE 74 HUM,; RE#7URCE# T7

%he field of Human Resource Management /HRM0 has recently seen the human resources that it selects, trains, and retains move from a supportive to a strategic role in organizations. %his occurred because in (trategic Management sources of competitive advantage $ere no longer sought in the e#ternal, but in the internal environment of a firm, namely in its resources, particularly its human ones. >ccordingly the field of HRM reconsidered its o$n role, resulting in the emergence of a ne$ distinct discipline termed (trategic Human Resource Management /(HRM0. *t intended to lin" HRM $ith the strategic management process of the organization

> shift in thin"ing in (trategic Management about the location of sources of competitive advantage has put the spot light on human resources as the strategic resource in a firm. *nitially, sources of competitive advantage $ere sought outside of the firm, i.e. in a superior positioning of a firm in attractive mar"ets and "eeping contenders out. *n this vie$, the role of the human resources $as one of implementation and support. More recently a ne$ school of thought, called the resource based vie$ of the firm argued instead that the source of competitive advantage lies $ithin the firm, in uni7ue resources that cannot be imitated by competitors. !ecause these resources, capabilities, and competencies are dependent on people and in the case of capabilities and competencies located in the minds of people human resources are deemed valuable if not the Uthe "ey strategic resourceU. %his shift in (trategic Management has elevated the role of human resources from a supportive to a strategic one *n light of this elevated status for human resources in the (trategic Management field, many have reasoned that the HRM function had ac7uired a ne$ strategic role as $ell. !artlett and <hoshal /6GG60 e#plain that rather than being supportive by focusing on recruiting, training, and ta"ing care of benefits HRMAs role became strategic+ building and using human capital to ensure competitive advantage. %he notion of the HRM function being strategic is embodied in the distinct field /:yer, 3CDJ; :yer and Holder, 3CDD; .isher, 3CDC; (chuler and Fac"son, 3CDN0 of (trategic Human Resource Management /(HRM0. Rather than being supportive it consists of /30 Ulin"ing VHRMW $ith the strategic management process of the organization,U and /60 Uemphasizes the coordination or congruence among the various human resource management practices /4right and McMahan, 6CD0.U *n other $ords, rather than e#ecuting strategy formulated by others, it attempts to be involved in the formulation of the strategy. %hese attempts consist amongst others of /30 use of the label Astrategic,A /60 lin"ing role behaviors to strategy types, /80 lin"ing competency profiles to core competencies, /90 using HR measures to &ustify performance contribution, /J0 adapting strategy tools to encompass the HRM function. Human capital has long been held to be a critical resource in most firms. Human resource management /HRM0 is one of the principal mechanisms by $hich managers integrate the actions of individuals to "eep their behavior congruent $ith the interests of the firm. !usiness leaders no$ recognize that the human resource /HR0 function has a direct impact on bottom

line results and must be aligned $ith corporate goals. !oth academics and practitioners agree that as the dynamics of competition accelerate, people are perhaps the only truly sustainable source of competitive advantage. %herefore, effective management of human capital may be the ultimate determinant of organizational performance. Rather than focusing on particular HR practices that are used in isolation, strategic human resource management /(HRM0 researchers loo" more broadly at bundles of HR practices that are implemented in combination. (HRM researchers have established a broader perspective that is oriented to$ard managing the $or"force as a $hole since the era of (HRM $as ushered decades ago. (ince that time, behavioral perspective has emerged as the predominate paradigm for the research /.isher, 3CDC; (chuler, 3CDC; (nell, 3CC60. >ccording to behavioral perspective, different strategies re7uire different behaviors and different HRM practices to elicit and reinforce those behaviors. %his vie$ of the lin" bet$een strategy and HRM provides a clear e#planation for $hy such management should be lin"ed to strategy. %o date, a gro$ing body of empirical evidence supports this perspective. HRM has evolved over the years from a dis&ointed collection of employment practices. *f $e are to develop a more parsimonious depiction of the field as a $hole, an overarching construct is needed to describe ho$ particular patterns of practice fit together. Oontrol is an important if sometimes neglected facet of organizational design. *n the past, the construct of control has been used as a lens for combining HRM practices. > control perspective is consistent $ith the behavioral perspective in many $ays; for instance, control systems mold the emergent behavior. >ccordingly, this study used the concept of control to integrate HRM practices and place them in the strategic conte#t of firms. (trategies are only a means to$ard an end. >ccording to contingency theory, a close lin" e#ists bet$een business strategy and HRM methods. %his theory holds that HRM methods are determined by the type of business strategy a firm follo$s. *t moreover assumes that the companies that closely coordinate their business strategy and HRM practices achieve better performance than the companies that do not. %o date, there is an e#tensive research e#ploring the lin"s bet$een competitive strategy and HRM strategy. Ho$ever, one of the areas that is conspicuous by its absence is, based on control perspective, the lin"s bet$een HRM control

and business strategy, and their effects on performance. .urther effort is needed to direct to$ard closing the gap. %he focus in this study is on the performance effects of HRM control and interaction of business strategy $ith HRM control. >s such, this research contributes to "no$ledge about the effects of HRM control on firm performance and, importantly, illuminates ho$ HRM control moderates the relationship bet$een business strategy and firm performance.

LECTURE 9D 96 : &U#1;E## #TR,TE(I : THE7RET1C,L 7<ER<1EW !usiness strategy determines the direction in $hich the enterprise is going $ithin its environment in order to achieve sustainable competitive advantage. (trategy is a declaration of intent, $hich is concerned, $ith the long term allocation of significant company resources. *t is a means of addressing critical issues or success factors at level of the business as a $hole or an aspect of it. %hus, strategic decisions aim to ma"e a ma&or and long term impact on the behavior of the organization. !usiness ob&ectives, plans, financial pro&ections, target for shareholder value or "ey result areas /ER>s0 are the outcomes or e#pressions of strategy. LE<EL# 74 &U#1;E## #TR,TE(I Oorporate level (trategy is li"ely to be concerned in general $ith the composition and performance of the portfolio of businesses that ma"e up a company. *n particular, corporate strategy is concerned $ith+ %he company1s mission

 %he cohesiveness of that portfolio Mergers, ac7uisitions and divestment %he ethos of ho$ to manage and control the business. !usiness unit strategy (trategy is concerned mainly $ith ans$ering the 7uestion Q$here and ho$ are $e going to compete in order to earn sustained high returns21 %his means ma"ing decisions on the business can develop superior effectiveness, a superior cost position and superior 7uality, coupled $ith the ability to meet customer1s real needs. *t puts corporate strategy into effect at the competitive level and refers to definition of the business, gro$th and profitability ob&ectives, product/mar"et scope, mar"eting approach and competitive position.

*E<EL7/ME;T 74 &U#1;E## #TR,TE(I *t is generally assumed that strategy formulation is an analytical, systematic and rigorous process. !ut this is not necessarily so. >ccording to Mintzberg, strategy formulation is not necessarily a rational and continuous process. He believes that, rather than being consciously and systematically developed, strategy reorientation happen in brief 7uantum leaps. (trategies are not al$ays deliberate. 1n theor!, strategy is a systematic process. Q.irst $e thin", then $e act. 4e formulate then $e implement1 1n ractice, Qa realized strategy can emerge in response to an evolving situation. >nalysis of the concept of business strategy as a basis for HR strategy has to ta"e into account not only the different levels and styles of strategy but also of the diversity of $ays in $hich strategy is formed.

,RT1CUL,T1;( &U#1;E## #TR,TE(1E# !usiness strategies are not necessarily e#pressed in $riting, although there are advantages in doing so from the point of vie$ of having a defined point of vie$ of having a defined point of reference for planning and control purposes. (trategic management and control companies are more li"ely to prepare formal, long term strategic plans. .inancial control companies $ill rely on one year budgets $ith interim reforecast as re7uired. > business unit may have a formal strategy but it is more li"ely /especially in the case of a financial control company0 to have an un$ritten strategic orientation $hich is based on an assessment of future mar"et opportunities.

#TR,TE(1C M,;,(EME;T *t involves follo$ing considerations+ Mission and strategy .ormal structure Human resource system /HR(0 =rganizations e#ist to accomplish some mission or set of ob&ectives. Ohange in the mission or ob&ectives are more of incremental in nature as the organization adapts to changing customer tastes or competitive threats. %o accomplish its mission or ob&ectives, the firm must decide $hat optimal structure is needed to carry out its ob&ectives. =nce the nature of the structure is decided upon, it must attract and retain sufficient number of people to carry out the tas"s needed to see that its ob&ectives or strategies are effectively implemented.

*E<EL7/1;( HR #TR,TE(I2 #TR,TE(I *R1<E; R7LE &EH,<17UR# ,;* /R,CT1CE# HR strategy can be used as an integrating force, lin"ing various strands together into an overall strategic thrust $hich complements and is consistent $ith the overall business strategy. *n some circumstances this may be highly desirable; for e#ample, $hen !oo" club >ssociates, a leading mail order boo" club, embar"ed on a programme of sustained gro$th and diversification, it developed an integrated HR strategy aimed at achieving significant cultural change in four main areas+ communications, involvement, performance management, and re$ard management. %he lin"s bet$een each aspect of this strategy $ere emphasized and ne$ communication channels $ere developed and used to ensure that everyone "ne$ and could discuss the implications of the business strategy. %he "ey re7uirements of HR strategy are that it should be+ Fustified from the business strategy, i.e. in alignment $ith the business strategy *maginative and innovative Olear and actionable (elective, focusing on priorities .le#ible

(trategic HR thin"ing may indeed concentrate on one area such as resourcing or performance management, although it $ould be important to ensure that the implications of change in one direction are considered for other aspects of human resource management. .or e#ample, the development of a performance management system raises 7uestions about career development, training and performance related pay. 3EI 1##UE# =f all the re7uirements of HR strategy referred to above, perhaps the most critical is that HR strategy should be &ustified by business strategy. 4ithout this, top management and line

managers as of little relevance to the real priorities of the business $ill see HR strategies, and the credibility of the HR function $ill be in doubt. *t is therefore; instructive to consider the vie$s of senior e#ecutives on ho$ they ran" HR issues among the "ey business issues that their organizations face. 7r$ani-in$ an' mana$in$ HR strate$! 'evelo ment )ffective integration of HR strategy is best achieved if the personnel director is closely involved at top management level $ith the formulation of business strategy. =ne $ould e#pect the head of the personnel function to be a member of an e#ecutive and management committee, or at least to have access to the O)=, in order to obtain information about the direction business strategy is ta"ing and ma"e contributions at an early stage on any HR *mplications. HR strategies should be based on information concerning+

%he business strategy and plan %he e#ternal environment, $ith particular reference to the supply of people /demographics0 and the availability of s"ills %he internal environment, including the implications of product development and ne$ technology, the re7uirement for increased fle#ibility and the need for ne$ s"ills and multi s"illing HR issues related to productivity, motivation, communications, commitment, involvement, employee relations etc.

HR strate$! areas %here are specific aspects of HR strategy, $hich, collectively, $ill form the building bloc"s of overall HR strategy development. @o t$o organizations $ill face 7uite the same issues, and each $ill address in its o$n $ay those issues that it does face .irst ho$ever, a human resource management strategy should provide ans$ers to three fundamental 7uestions, $hich relate to all the specific aspects discussed belo$+

3. Ho$ are $e going to ac7uire and retain the number and 7uality of people re7uired to meet the forecast needs of the organization2 6. Ho$ are $e going to ensure that $e have a $ell motivated and fully committed $or"force2 8. 4hat actions $ill be needed to train, develop, and fit people for greater responsibility and responsiveness to change and the resulting demands for different s"ills and abilities2 ,CKU1#1T17; ,;* RETE;T17; #TR,TE(1E# > starting point in the development of a human resource strategy is often the identification of the long term human resource re7uirements of the organization. %hese provide the basis for more detailed human resource planning processes. %he aim of these strategies should be to ensure, =n the one hand, that the achievement of corporate ob&ectives $ill not be inhibited by human resource shortages or inefficiencies and, or other, that impending surpluses can be dealt $ith in good time $ith the minimum individual hardship and disruption to employee relations. >t this stage broad 7uestions need to be ans$ered concerning+ H$man reso$rce re+$irements Ho$ many employees are needed2 =ver $hat period2 4hat "ind of abilities and s"ills $ill be re7uired2 ,vailability 4hat is available no$ inside the company2 4hat $ould be made available from inside and outside the company2 Retention 4hat is the company1s e#perience in retaining staff2 4hat are the problems and ho$ can they be overcome2 Human resource utilization+

Ho$ $ell are human resources used in the company2 4hat is the scope for increasing productivity2 M7T1<,T17; #TR,TE(I Motivation strategy should aim to increase the effective contribution of members of the organization in achieving its ob&ectives. Motivation strategy $ill refer to the performance management and re$ard systems, and in particular to the type and scale of financial incentives $hich are to be provided. !ut it $ill also be considered $ith other processes $hich should yield favorable attitudes, including &ob design, participation, &oint ob&ective setting, career development, and nay other processes relating to the individual1s need to achieve and maintain a sense of personal $orth and importance. Motivation is also affected by the 7uality of leadership in an organization+ therefore the selection, training, and development of effective leaders should be part of the strategy. HUM,; RE#7URCE *E<EL7/ME;T ,;* TR,1;1;( #TR,TE(1E# > human resource development strategy is concerned $ith the longer term programmes needed by an organization to improve operational performance at all levels, in accordance $ith the additional demands $hich the business strategy $ill place on people in future. %he strategy $ill provide continuous development processes lin"ed closely $ith the programmes designed for the organization as a $hole to implement its product, technology and mar"et development strategies. %he associated training strategy $ill be concerned particularly $ith the development of ne$ or e#isting competencies and $ith multi s"illing. .or e#ample, it $ill ta"e account of the introduction of ne$ technology and of increased demands for X"no$ledge $or"ers1 and for Xsystems techniciansX on production lines. %he training strategy may be lin"ed to the re$ard strategy by the development of s"ills or competency based payment systems. 7R(,;1=,T17; *E<EL7/ME;T #TR,TE(I

%he aim of on organization should be to ensure that an effective organization is maintained $hich $ill respond appropriately to changes in its internal and e#ternal environment and ma"e the best use of the individual and collective capacities of its members. %he main strategic areas in $hich organization development ta"es place are+ %he implications of change and the actions re7uired to ensure that the organization $ill continue to function effectively $hen sub&ected to pressures resulting from change Ohanges in organization structure as $ell as values and culture development programmes, and changes in organization climate and management style %he proper integration of increasingly diversified activities $hich are li"ely to result from change %eam development %he management of conflict 4or" on planning and ob&ective setting processes for individuals and teams

Ho$ can HR strategies be fully aligned2 *n setting business strategies, line managers need to be fully in tune $ith $hat their customers say they $ant from the organization. %he same is true of HR strategies, e#cept that such strategies may have to be attuned to the needs of each organizational unit. HR and line managers need to thin" through the "ind of culture needed in each unit if the people in that unit are able to deliver the business strategy. 4hat ma"es a difference to the delivery of business strategy is people1s behaviors. (o, for instance, all the Qcustomer focus1 training in the $orld is of no use if clients perceive that the company1s representative is rude to them over the phone. HR needs to thin" through the behavioral character desired of employees. %his+ includes both behaviors, $hich the company $ants to encourage, and dysfunctional behaviors, $hich the company $ishes to stop. HR also needs to thin" through the HR processes, $hich are aligned to that behavior. %his $ill include issues such as recruitment, training, resources, location, $or"ing environment etc.

4or"ing through these issues $ith line managers in a systematic $ay helps line managers to se the lin" bet$een managing the cultural aspects of the organization and achieving business goals. Ma&or action plans can establish $hat the HR team needs to do ne#t to ma"e the change happen. %hese plans need to be developed $ith the management team and can be both short and long term. Ohanging the structure, for instance, can be a short term measure $hile changing the culture can ta"e several years and may need to be phased. LECTURE 9F 9G : ,L1(;1;( HR ,;* &U#1;E## #TR,TE(1E# THR7U(H HR /L,;;1;( (trategic planning is a "ey tool for HR. %ony <rundy defines HR strategy as Qthe plans, programmes and intentions to develop the human capability of an organization to meet the future needs of its e#ternal and internal environment1. HR strategy may be planned, emergent or some combination of these. Research by %yson and 4itcher as $ell as <rundy suggests that emergent HR strategy may be damaging by organizational effectiveness. =ther research pro&ects also suggest that the more planned and timely the implementation of HR strategies, the more value is perceived to be added to the business. %here are many reasons $hy many HR teams do not ta"e a planned approach. (ome HR teams may prefer $or"ing in an emergent $ay and $ould rather $ait until there is a clear business strategy on $hich to model the HR strategy. %his may be a long $ait and opportunities for adding value may be missed. (ome teams fear criticism of being seen to create their o$n policy in the absence of business strategy, on the one hand, or being seen to drive business strategy, on the other. %he sheer comple#ity of the lin"s $hich need to be managed bet$een HR strategy and organizational effectiveness amy mean that the overall focus of the delivery is diffuse and therefore not appreciated. (imilarly, periods of ongoing change and active organizational politics can cause the lin"s to be undermined. %his may be a 7uestion of o$nership of the HR1s strategy and $here it sits in the organization structure. Ho$ever, Lam and (chaubroec"1s research suggests that leaders in firms $ith relatively highly formalized HR planning are more li"ely to perceive its usefulness compared $ith those firms

$here the Hr strategic ob&ectives are less clear. *n strategic HRM, planning needs to go beyond being focused on operations and control.$hether a formal or informal approach is used, the important thing is to "eep the plan simple. >s Hr teams move to$ards a strategic HRM approach, the need for integration among the different HR practices increases. %hese clear ob&ectives are than li"ely to be useful in strategic planning activities, helping the organization, to enhance organizational performance, rather than simply being a means of ma"ing the case for more resources. HR planning is critical to the effective development of strategy since it should identify gaps and surpluses in capabilities as $ell as issues of utilization of talent. *ndeed so central is this identification of organizational capability considered by some researchers that they argue for an enhanced role for HR planning in overall strategic palnning. Tarious researchers have suggested that the most effective lin"s are made $hen HR strategy as such disappears and is more fully integrated into other resource strategies supporting the operational management process. %his $ould mean that the role of Hr $ould be to facilitate the development of an organizational strategy, $hich is o$ned and developed by line managers. %his $ould probably be issue based and directly lin"ed to the business strategy. *ndeed, <rundy argues that the "ey role of a strategic HRM function is to facilitate =rganization and people strategy, together through &oint coordination $ith line management of strategic programmes such as management development and succession planning. %he effectiveness of HR planning very much depends on the organizational conte#t. HR planning ob&ectives are li"ely to be contingent upon different competitive strategies and different organizations $ill therefore be unli"ely to use identical approaches to similar issues. Ho$ever, unless the ob&ectives are clear, building commitment to the strategy among line managers and employees is difficult. Lam and (chaubroe" suggest three different "inds of Hr ob&ectives+ 7 erational: $hich see" to identify current capabilities and $ith short term re7uirements in mind.

 Tra'itional: $hich attempt to incorporate forecasts about the numbers of employees and their s"ill types to meet longer term demands. %his type of planning needs to ta"e account of career development, succession planning, e#ternal recruitment and appraisal data. *t can establish $hether it is possible for the organization to achieve its strategic ob&ectives. #trate$ic: $hich is $here HR planning provides valuable data and is carried out as an integral part of the overall strategic planning process. %his involves line managers in developing and evaluating HR practices since this approach recognizes that those $ho are most "no$ledgeable about the $or"force should be involved in building commitment of the strategy across the organization. =ften the main thrust of strategic HR planning is finding $ays to establish and maintain core competencies. %ypical ob&ectives associated $ith different areas of HR responsibility includes+ Ma#imum strategic impact >lign HR practices $ith business ob&ectives Oonduct development programmes to support strategic changes Oarry out &ob analysis for long term ob&ectives *mprove HR adaptability on changing environment )nhance $or"force capability and innovation Ooordinate *mprove coordination bet$een various HR functions *mprove team effectiveness *mprove HR pro&ect management :evelop compensation and benefit programmes Ooordinate any potential HR problems

 *ntegrate diverse HR functions and operations Oommunicate Oommunicate HR policies inside the organization *mprove management acceptance of current HR policies, improve employee involvement and understanding of HR Oonduct &ob analysis for long term ob&ectives Oommunicate HR policies outside the company Oontrol Olarify budget and resources availability Manage personnel related costs *mprove HR budget control *mprove HR resource procedures and control Revie$ Hr operations procedures >lignment through organization development Oorporate strategy usually involves revie$ing the business the organization is in, or $ants to be in and its relative competitive positioning in the mar"et place. %his allo$s a strategic intent to be developed. > revie$ is then carried out of the human capabilities through $hich competitive advantage can be achieved, enabling the organization to compete in a distinctive and sustainable $ay. %he decentralized structure has led to a $ide range of management practices in different business units and little sharing of good practice across the organization. >n organization development team at the center of the organization has the challenge of helping to bring about change as $ell as creating greater coherence across the organization $hile not diminishing the autonomy of the business units. %his delicate balancing act is achieved by ensuring that the

heads of the different business units are fully involved in developing the =: strategy and can perceive the potential value added by the unit to their o$n operations. %he =: team is aiming to focus its delivery on a fe$ "ey areas. %hese include strategy and planning, orgainsation and management culture and values, people and performance. Learning and change $ill be at the heart of al =: activities and provide inner coherence to the =: strategy. %he team consists of e#perienced =: practitioners $ho have both internal consultancy and business e#perience. %he =: strategy is as follo$s+

7)r foc)s is on: Ohange in organizations and culture =rganizations and team effectiveness Leadership and management processes =rganization learning and corporate "no$ledge

7)r o)t )ts will 0e: *nvolvement in ma&or change initiatives (upporting business management and ma&or functions developing change s"ills in the company; )valuating organization effectiveness

7)r metho's incl)'e: Oonsultancy and facilitation ?ro&ect management )ducation and training &acCe' ) with @e$ management tools and processes :iagnostic audits and surveys (eminars, case studies and information net$or"s !est practice action research

Olear lines of communication e#ist bet$een the =: team and those responsible for providing training, management and leadership development and succession planning. 4hile at any point in time, the specific focus of the team1s activity $ithin this general remit $ill be tailored to the needs of a particular business unit, the core thrusts remain the same and have a corporate perspective. %he team can then pursue ma&or corporate pro&ects $hile $or"ing $ithin different business units to help them achieve their local =: ob&ectives, such as managing a specific change process. %he clarity of outputs means that the team $ill be able to measure their achievement and gain client feedbac" $hich can feed further into the ongoing development of strategy. *t could be argued that a coordinated organizational strategy such as this could be the &oint staring pint for developing corporate strategy. ,li$nin$ the str)ct)re of HR with the or$ani-ational strate$! *n recent years, many central HR teams in large organizations have decreased in size. %here has been a noticeable shift to consultancy type roles $ith many HR responsibilities devolved to the line. =perational H>R roles have been the most endangered $ith parts of the operation, such as pay and even recruitment outsourced. Many; organizations have e#perienced problems $ith 7uality and the current trend appears to be too ta"e bac" into the centre the areas of operations $hich leave HR most e#posed if they go $rong. %his includes areas such as e#ecutive compensation and bonus arrangements. %o some e#tent, these consultancy type relationships have left HR $ith less direct po$er, but $here the influence of HR is strong, the function is seen as central. %he converse is also true. %he most common HR structures appear to concentrate the strategic roles in the corporate centre, leaving operational support to the line being provided through divisional support units. 4here such developed support units e#ist, they sometimes report bac" to the head of HR, and are therefore clearly marinating a strong professional lin", $hile other units report to the divisional director, maintaining only a dotted line relationship $ith the head of HR. *n some cases, call centers and help des"s have been established to ensure that operational HR support of some "ind is available to line managers $ho may not have a regular HR contact. Hnisys has established an international on line service centre $hich provides solutions to HR issues in a $ay $hich meets Qlocal1 as $ell as corporate re7uirements.

>s units devolve, there can be tension $hich the HR function attempts to resolve in different $ays. %he centre can come to be seen as increasingly peripheral as most strategic decision ma"ing ta"es place in the business units. %his can be particularly challenging $hen HR attempts to ta"e a corporate perspective on the development of high potential talent, for instance, since business heads can be reluctant to share information $ith the centre $hich might cause them to lose a Qstar1 employee to another region.

Em owerment )mpo$erment has become a clichY and a discredited one at that in some 7uarters. %he main reason according to !arbara )ttore is the myths surrounding it. *f empo$erment is supposed to be defined as an employee1s ability to solve problems, ta"e decisions based on those decisions, management has encouraged the tint t$o but has failed to allo$ the third. =ften the real dilemma for e#ecutives is $hether to trust employees. %he management assumption is that $or"ers cannot fully understand the impact of their actions on the organization1s bottom line. %his assumption is based on the relative lac" of information received by $or"ers $hich $ould give them a clear insight into ho$ their actions affect the $hole operation, stretching from the business strategy and $or" processes to customers, shareholders, suppliers, etc. %his is $here empo$erment $ithout alignment $ith strategy and information is li"ely to bac"fire. Met the benefits of empo$erment can out$eigh the ris"s. )mpo$ered orgainsation are more li"ely than others to respond 7uic"ly to ideas and suggestions, enable managers to ma"e their o$n decisions $ithout having to rely on head7uarters and put customers1 needs first. )mpo$erment needs to be aligned to the strategic aims of the organization so that employees can direct their solutions to real business issues. %ypically, employees need to be clear about $hat the customer $ants, the part their o$n role plays and $hat shareholders are loo"ing for. Oharacteristically, in empo$ered organizations, good ideas are re$arded effectively and authority is appropriately delegated as far do$n the organization as possible. (ystems are a supportive frame$or" rather than a set of constraints and employees $or" to broad principles rather than rules. Oompanies li"e Levi (trauss, He$lett ?ac"ard and

@ordstorm are among high performing orgainsation $hich practice aligned and informed empo$erment. !ut, as )ttore points out, Qas $ith all initiatives, if management is not committed and if HR is not a strategic function, it $ill fail1. ,li$nin$ trainin$ an' 'evelo ment to 0)siness strate$! !enchmar"ing is often used to identify organizations considered to be best in class on particular aspects of their strategy or implementation. %raining and development benchmar"s often focus in the amount of money invested in % ' : activity. %hese figures vary $idely among employees but H( surveys during the last decade suggest that a disproportionate e#penditure, i.e. those $ho spend more than 3.JP of their payroll on % ' :, is made by &ust G.JP of all H( employers. %hese fe$ organizations recognize that having a $or"force $ith high s"ill levels is a primary source of competitive advantage. *n these e#emplary organizations, % ' : is strongly aligned to the strategic leadership and planning processed of the business. %he primary focus of such training is on creating readiness and fle#ibility through training supervisors, managers and e#ecutives since it is these individuals $ho set the tone for the rest of the orgainsation. T! ical of the B0est ractice: 0enchmarC or$ani-ation is that the!: Oreate a systematic lin" bet$een business strategy and the % ' : system. % ' : targets, are revie$ed at least annually to ensure that they are still on trac" $ith changing business re7uirements. % ' : e#ecutives ta"e a full part in the strategic planning process, ensuring that strategic goals ta"e into account the availability of the talent needed to carry out the goals. *nformation support systems are also integrated into the strategic planning process.

Lin"s bet$een training and development activity and the business strategy depend very much on $hither training is integral part of the HR strategy and $hether this is itself fully aligned to business needs. :epending on the type of competitive strategy in use, different analytical lin"s can e#ist. (trategies geared to the life cycle of the organization need employees and especially management styles to be adopted to changing conditions. %hose $hich focus on competitive

positioning through differentiation are li"ely to place a greater emphasis on process innovation and specialization of distinctive s"ills. (imilarly, strategies focusing on realizing strategic intent are li"ely to competency definitions $hich help ht orgainsation to compete effectively. Research carried out in the HE /?oole and Fen"ins, 3CCK0 suggest that core elements in the development of competitive advantage in respondents1 organizations $ere+ Management development Oareer development %he development of high potential employees (upport for continuous training and retraining

Olearly, human resource development as $ell as management is an essential plan for building sustainable competitive advantage. %raining can help in the creation of a more productive, s"illed and adaptable $or"force. #trate$ic ali$nment thro)$h com etencies )nsuring alignment relies on e#cellent performance management so that people are clear $hat their roles are, $hat is e#pected of them and ho$ that might change. > competency frame$or" is a useful $ay of aligning HR processes to the business strategy. *n this section $e loo" at some processes for defining and using competencies. Oompetencies area often defined as Qa particular attribute that people have that collectively helps to develop the capability of the individual and the organization1. *f you ad&ust competencies so that they are continually aligned to the business strategy, the li"elihood of people1s behavior being in line $ith $hat the business needs at any point in time is high. *f these are reflected in the performance standards the organization is see"ing to achieve, the lin" bet$een s"illed behavior and outputs is evident. %hey are a means of describing the "inds of behaviors and approaches $hich should enable the organization to achieve its business ob&ectives and should dra$ employees1 attention to things

$hich need to be commonly applied. (o, for instance, as organizations re7uire people to $or" across boundaries, there is a need to clarity on $hat effectively cross boundary team $or"ing loo"s li"e. :efining the competency can bZhelp those involved become a$are of the applications for the $ay they $or". !y definition, competencies are temporary and need a revie$ process built in to chec" that they are still lin"ed $ith current business strategies. <eneral competencies are a means of ensuring consistency across the orgainsation through the creation of a common language to describe performance. *n addition, professional functionally specific technical competencies to ma"e up the typical competence frame$or". ?erformance management of the 3CCGs has focused on activity management. Oompetencies should be a means of defining $here the 6GP of effort needs to be put in order to achieve an DGP return. Ho$ever, if competencies are used mechanistically, or are not Qo$ned1 by the people for $hom they have been defined, it is unli"ely that they $ill produce the benefits of clarity since they $ill not be used. %here is an increasing a$areness that people1s needs must be ta"en into account if they are to be motivated to carry out activities to a high standard. > competency frame$or" needs to be a means of addressing both organizational re7uirements for performance and individual needs for development, achievement and recognition. The sCills for f)t)re s)ccess :ave Hlrich suggests that organizational s"ills springs from capabilities such as speed, responsiveness, agility, learning capacity and employee competence. %he "inds of s"ills $hich individuals are li"ely to find useful in changing times seem fairly common to organizations of all sectors. Research has found a remar"able similarity among respondents in recent surveys $ho recognize the need to develop high level political influencing s"ills. %his is the ability to ma"e things happen by understanding the informal system, and bringing about change $ithout formal authority. (trategic thin"ing is needed at all levels, so that people can understand the implications of change and $or" in partnership $ith the organization to deliver strategic solutions. *% s"ills, financial and broader business a$areness should enable staff to understand the mechanics of $hat the organization needs to do as $ell as ta"e shre$d ris"s based on informed &udgment. Leadership and change management should be core s"ills for any manager, especially those in senior positions.

)ntrepreneurial s"ills and creative thin"ing should enable people to find innovative solutions and ma"e things happen. %raining may be a part of the ans$er, but in many cases need to be developed on the &ob through effective use of mentors, peer coaching, challenging assignments and learning revie$ processes. Oompetency based approaches to development may ma"e it possible for people to have learning opportunities in different parts of the organization from areas to $hich they had access in the past. Helping people to develop s"ills and employability calls for a strategic approach, $ith a longer term perspective but firmly rooted in the here and no$. %rials of different approaches, $ell evaluated to assess $hat $or"s, can deliver results in the short term and avoid the danger of paralysis $hile officials $it for the $ay ahead to become clear. *eliverin$ 0est val)e an' thro)$h em lo!ees (o if change under !est Talue is to be managed s"illfully, a partnership approach bet$een management and HR is called for. %he business strategy for delivering !est Talue needs to be clear and the HR strategies $hich support this must be directly lin"ed to the business intention. Eey targets for strategic activity $ith regard to employees include+ *mprove communications Olarity career trac"s :evelop people ?rovide feedbac" and recognition )nsure balance *nvolve people

Most importantly, developing an open, problem solving climate can not only e7uip people for learning $hat is appropriate in the short term but can also provide the basis for ongoing change in the longer term. %his involves understanding your current culture, brea"ing established patterns $hich are counterproductive, setting ne$ standards and giving people the chance to e#ercise ne$ s"ills. *n addition, some sacred co$s may need to be challenged. @e$ $ays of $or"ing $hich are positive and moving in the Qright1 direction should be stabilized and achievements celebrated. ?eople1s roles should be lin"ed to the business imperative so that

everyone "no$s $here they fit in, and $hat role they have to play in ensuring successful service delivery $hich really represents best value. >s :avin Hlrich says+ %he successful organization $ill be those that are able to 7uic"ly turn strategy into action+ to manage processes intelligently and efficiently+ to ma#imize employee contribution and commitment; and to create the conditions for seamless change.

LECTURE 3H 39 : 1;TE(R,T1;( &U#1;E## ,;* HR #TR,TE(I #trate$ic 1nte$ration (trategic integration is the process of lin"ing human resource management policies and activities to e#plicit business strategies. %his integrating process $ill aim to match available human resources to the ever changing re7uirements if the organization. *t $ill also establish the competencies re7uired at all levels in the organization to ensure that business strategies are implemented and $ill then ta"e the human resource development initiatives re7uired to provide those competencies. .inally, it $ill provide the levers re7uired to manage strategic change. , coherent a roach

%he history of personnel management, in fact management generally, over the last t$o decades is littered $ith techni7ues and nostrums such as management by ob&ectives, &ob enrichment, =: /organization development0, systematic training, career planning, &ob evaluation, merit rating, assessment centres, psychometric tests, performance related pay, performance management, 7uality circles and competency analysis. %hese have usually been introduced piecemeal and have too often failed to ma"e any real impact on performance. )ach of these techni7ues can play a part in improving organizational effectiveness but not if used in isolation and $ithout the full bac"ing of top management as something they recognize as being important in helping them to get things done. > coherent approach means lin"ing and, as necessary, coordinating the various techni7ues available to ensure that added value is obtained from their combined impact. .or e#ample, a

performance management system $ill generate data on development needs, indicate $here competency related training is re7uired, provide the basis for performance related pay, help managers to lead their teams more effectively, clarify the results e#pected of individuals and teams and assist $ith career and management succession planning. > coherent approach to human resource management, is ho$ever, only possible $here the $hole top team $or"s together in developing and managing the process. *n this situation, the human resource professional acts as an enabler and facilitator, providing ideas, dra$ing the threads together, and helping his or her colleagues to put the ideas into practice. Chan$e mana$ement Human resource strategies should help the organization to move for$ard in the direction set by business strategies. %hey do this first, by providing various levers for change through the introduction of integrated resourcing, human resource development, performance and re$ard management systems and secondly by seeing that change is managed properly. Ohange management programmes should be managed by the top but their implementation re7uires the support and involvement of people at every level in the organization. %hey are sometimes related to abstractions such as participation or culture and are based on the belief that the place to begin is $ith the "no$ledge and attitude of individuals. *n fact, at !eer, )isenstat and (pector point out + Q*ndividual behaviour is po$erfully shaped by the organizational roles that people play. %he most effective $ay to change behaviour, therefore, is to put people into a ne$ organizational conte#t $hich imposes ne$ roles, responsibilities and relationships on them1. %hey suggest a si# step approach to effective change+ 3. :evelop commitment to change through &oint analysis of business problems. 6. :evelop a shared vision of ho$ to organize and manage for competitiveness. 8. .oster consensus for the ne$ vision, competence to enact it, and cohesion to move it along. 9. (pread revitalization all departments $ithout pushing it from the fop, i.e. don1t force the issue, allo$ departments to find their o$n $ay to the ne$ organization. J. *nstitutionalize revitalization through formal policies, systems and structures.

K. Monitor and ad&ust strategies in response to problems in the revitalization process. 4leAi0ilit! *n each area of human resource management it is necessary to develop fle#ible structures, climates, systems and organizations $hich enable the organization to respond readily to change. =rganizations need to embrace the motto Qconstancy to$ards ends but fle#ibility about means1. <reater operational fle#ibility must, of course, be achieved $ithin a strategic frame$or" $hich maintains a strong sense of direction, but there is usually plenty of scope $ithin that frame$or" to develop organization structures $hich are adaptive and receptive to innovation. %he thrust to$ards functional fle#ibility $hich can be achieved by one and more of the follo$ing approaches+ 4or" based &ob related fle#ibilities concerned $ith multi s"illing and the removal of demarcation boundaries Oontract based employee contracts $hich specify fle#ibility as a "ey aspect of terms and conditions and &ob descriptions $hich specify outputs but do not attempt to hamper employees by over rigid descriptions of ho$ they are e#pected to achieve results <al)es ?eters and 4aterman $rote that if they $ere as"ed for one all purpose bit of advice for management, one truth they could distil from all their research on $hat ma"es company e#cellent, it $ould be+ 1.igure out your value system. :ecide $hat the company stands for1. >nd (elznic" emphasized the "ey role of values in an organization $hen he $rote+ Q%he formation of an institute is mar"ed by the ma"ing of value commitments, that is, choices $hich fi# the assumptions of policy ma"ers as to the nature of the enterprise, its distinctive aims, methods and roles. %eam based the use of pro&ect teams, tas" forces and autonomous $or" groups =rganization based the use of contract $or"ers and part timers %ime based the use of fle#ible hours + daily, $ee"ly and annual.

(uccessful companies are value driven, $hether those values direct the beliefs and actions of the chief e#ecutive officer or $hether, preferably, they permeate the $hole organization. )ach aspect of human resource management discussed in this boo" can be enhanced if it is underpinned by a set of values $hich may refer to such areas as care and consideration for people, care for customers, competitiveness, enterprise, e#cellence, financial fle#ibility, gro$th, innovation, mar"et/customer orientation, performance orientation, productivity, 7uality, social responsibility and team $or". Commitment %he effectiveness of any aspect of human resource management depends largely upon the e#tent to $hich it $ill increase commitment, motivation and, ultimately, performance. > strategy for commitment is therefore necessary to support each aspect of the overall human resource strategy. %he aims of a commitment strategy $ill be+ *dentification *ncreasing the identification of every member of the organization $ith the mission, goals and core values of that organization. Mutuality developing unity of purpose and a shared belief that $hat is good for the individual is good for the organization and vice versa. Mutuality therefore involves integrating the needs of these $ho $or" in the organization $ith the needs of the organization. *ndividual creativity and energy Hnleashing the latent creativity and energy of individuals throughout the organization. @ote the emphasis on individuals. 4hile good team$or" is vital, and a commitment strategy $ill aim to enhance it, $hat must not be inferred from the development and application of such a strategy is that the organization $ants to create a colony of clones $ho $ill slavishly conform to norms and standards imposed on them by the company. >s Fohn Harvey Fones 9 says, it is Qthe individual1s uni7ue and personal contribution that matters1. =$nership of change Managing change by getting people to Qo$n1 it. %his means trying to ensure that those affected by change feel the pro&ect is their and not one

imposed upon them by outsiders $hich $ill conflict $ith their values or be detrimental in any $ay. %he reality is that organizations are faced $ith an increasingly unpredictable $orld. Ohange is not susceptible to a one off programme that $ill lead to calmer times. Met to survive and thrive, businesses cannot afford simply to be buffeted by uncontrollable forces, in the hope that luc" $ill be on their side. (uccess $ill not happen by change but through continuous strategic processes that $ill ride these choppy $aters. /*t has been said that the Fapanese in top management see themselves as 4hite $ater rafters0 (ome characteristics of these processes include+ > recognition that short term decisions have long term conse7uences %he processes are value driven. (trategic decisions have a sense of direction, related to a vision of $hat could be %his Q$hat could be1 has to be based on the distinctive capabilities of the firm *t is not &ust a Q$ish list (trategic decisions have implications for resources not least the human resource. Levels of Mana$erial ,ctivit! Let us no$ loo" at the human resource system as they affect the strategic activities of the organization. %o define our focus it is necessary to add one more degree of comple#ity to the frame$or"s already presented. %o do this $e use Robert >nthony1s definition of the three levels of managerial $or"+ 3. (trategic level deals $ith policy formulation and overall goal setting, its ob&ective is to position the organization the best possible $ay to deal effectively $ith the environment. 6. Managerial level focuses on the processes by $hich the organization obtains and allocates the resources needed to carry out its strategy and ob&ectives.

8.

=perational level the day to day management of the organization is carried out at this level.

?rofessional e#ecution of the operational and managerial level activities is a necessary condition, but, not sufficient basis for an effective human resource organization. %he strategic level activities, ho$ever, begin to separate the truly $ell managed companies from competition. #trate$ic selection %he selection process includes all activities related to the internal movement of the people across positions as $ell as to hiring. %he process matches available human resources to &obs in the organization. %hree strategic concerns are particularly important. 3. design of a selection system that supports the organization strategy eg if a company plans to diversify in the ne#t vie years, a careful analysis should be made of the types of people $ho $ill be needed to staff the ne$ business 6. 8. monitoring the internal flo$ of personnel to match emerging business strategies matching "ey e#ecutives to business strategies raisal

#trate$ic a

%he performance appraisal process is the "ey to an effective human resource system. Oompanies must develop a performance appraisal system that is supportive of their business strategy because there is a lin" bet$een such a system and total performance for the firm. )#cellent managers and companies simply recognize that an integral part of management is the process of evaluating performance. #trate$ic rewar's >mong the re$ards that are deemed to be important are the follo$ing+

?ay in its many forms such as salary, bonuses, stoc" options, benefits and per7uisites ?romotion Oareer opportunities, a long term chance for gro$th and development ?ositive feedbac" from clients Responsibility

#trate$ic *evelo ment >ctivities designed to ensure that individuals are properly e7uipped $ith s"ills and "no$ledge to carry out their &obs fall into the management development category. :evelopment that occurs in organizations ta"es the form of on the &ob training, &ob rotation mentoring, formal training etc. (trategic integration is necessary in order to provide congruence bet$een business and human resource strategy so that the latter supports the accomplishment of the former and, indeed, helps to define it. %he aim to provide strategic fit and consistency bet$een the policy goals of human resource management and the business. /ro0lems of inte$ration Ho$ever, integrating the t$o is easier said than done for the follo$ing reasons+ 1+ :iversity of strategic processes, levels and styles as described above, the different levels at $hich strategy is formulated and the different styles adopted by organizations may ma"e it difficult to develop a coherent vie$ of $hat sort of HR strategies $ill fit the overall business strategies and $hat type of HR contributions are re7uired during the process of business strategy formulation. *n other $ords, it may be difficult to focus HR strategies.

9+

%he evolutionary nature of business strategy $hich may ma"e it difficult to pin do$n the relevant HR strategies.

3+

%he absence of $ritten business strategies $hich adds to the problems of clarifying the strategic business issues $hich human resource strategies should address.

5+

%he 7ualitative nature of HR issues business strategies tend, or at least aim to be e#pressed in the common currency of figures and hard data on portfolio structure, gro$th, competitive positioning, mar"et share, profitability etc.

HR strategies may deal $ith 7uantifiable issues such as resourcing and s"ills ac7uisition but are e7ually li"ely to refer to 7ualitative factors such as commitment, motivation, good employee relations and high employment standards. >nd as Fohn ?urcell has $ritten+ *f it $ere possible to demonstrate that Qenlightened1 or progressive approaches to the management of people $ere invariably associated $ith higher productivity, lo$er until costs and improved profit, life $ould be easier for the human resource planner. >s it is, little can be proved because for the comple#ity of the variable and the impossibility of monitoring and measuring all the relevant dynamics and relationships. , roaches to 'ealin$ with these ro0lems

%hese are serious problems and it may be difficult for the HR strategist to overcome them completely. !ut the attempt should be made and the follo$ing approaches are available. 3. Hnderstand ho$ business strategy is forms %he HR strategist should ta"e pains to understand the levels at $hich business strategy is formed and the style adopted by the company in creating strategy and monitoring its implementation. *t $ill then be easier to focus on those corporate or business unit issues $hich are li"ely to have HR implications.

6.

Hnderstand the "ey business issues %he "ey business issues $hich may impact on HR strategies include+ *ntentions concerning gro$th or retrenchment, ac7uisitions, mergers,

investments, divestments, diversification, product/mar"et development ?roposals on increasing competitive advantage through productivity, improved 7uality/customer service, cost reduction %he perceived need to develop a more positive, performance oriented culture =ther culture management imperatives associated $ith changes in the philosophies of all organization in such areas as moving from Qcontrol1 to commitment1, mutuality, communications, involvement empo$erment, devolution and team $or"ing. !usiness strategies in these areas should not be over influenced by HR factors; HR strategies are, after all, primarily about ma"ing business strategies $or". !ut the business strategy must ta"e into account "ey HR opportunities and constraints. !usiness strategy, therefore, sets the agenda for HR strategy in the follo$ing areas+ Resourcing ("ills ac7uisition and development Oulture, values and attitudes Oommitment ?roductivity ?erformance management Re$ards )mployee relations

4hile these may all arise at business unit level, there are a number of strategic issues $hich e#ist at the corporate level and are li"ely to have a decisive influence on HR strategy. %hese are+

Oorporate mission Oorporate values, culture and style =rganizational philosophy and approach to the management of people %op management as a corporate resource

(ome organizations such as *!M, He$lett ?ac"ard and Mar"s ' (pencer $ill have clearly articulated strategies in these areas. =thers $ill not, until events force a re evaluation of the mission, values, philosophies and structure of the organization, as has happened in such companies as !ritish >ir$ays, !?, %hom )M* and *OL. %hese changes have often ta"en place follo$ing the appointment of a O)= $ith a ne$ vision of $here the organization should be going and ho$ it is going to get there. 8. )stablish methods of lin"ing business and HR strategy !usiness and HR issues influence each other, and in turn influence corporate and business unit strategy,. *t must be remembered, ho$ever, that in establishing those lin"s account must be ta"en of the fact that strategies for change have also to be integrated $ith the changes in the e#ternal and internal environments. centre for Oorporate (trategy and Ohange, 4ar$ic" Hniversity %his model sho$s in general the relationship bet$een HR and business strategy and the environment, but ho$ can specific lin"s be achieved2 %o achieve a lin" in rigorous terms $ould re7uire a means of 7uantifying the resources allocated to human resource development, both overall and at the level of each element of HR strategy, and then measuring and comparing the marginal return /in terms of higher profit0 on investing in each element. !ut, to echo ?urcell1s point, such an approach is unli"ely to be practicable. %he lin" must therefore be &udgmental, but it can still be rigorous. Oonceptually, the approach $ould be develop a matri#, for each of the "ey elements of business strategy, identifies the associated "ey elements of HR strategy. %his is illustrated in a model developed by ?rofessor >ndre$ ?ettigre$ and his team at the

4hile it may seldom, if ever, be possible to devise a complete e#pression of these relationship in matri# form, at least this approach $ill ensure that the implications and interrelationship of business and HR strategy are analyzed systematically. %he follo$ing is a disguised e#ample of a real life statement of business strategy $hich has been distilled into an HR strategy statement, $hich in turn has been e#panded into an e#pression of its "ey elements. 1m lementin$ #trate$ic H)man Reso)rce Mana$ement =ne a manager has used these frame$or"s to identify the scope of the human resource function in a particular organization the tas" becomes one of implementation. %he follo$ing steps should prove helpful as guidelines for tas". 3. %he tas" that the organization needs to support its strategic ob&ectives should be identified at the strategic, managerial, and operational level. 6. <aps in the delivery of service to clients at the present time should be identified. Fust as it is not possible to re$ard managers solely for ho$ $ell they meet long term goals, so a human resource system must have its operational house in order before it can afford the lu#ury of concentrating on the formulation and implementation of a human resource strategy. 8. *f the organization has no process by $hich it emerges in strategic planning at the corporate or business level, it $ill not be possible for the human resource function to develop a strategic thrust since the human resource strategy flo$s from the corporate or business strategy. 9. *n terms of staffing the function, the organization $ill need to provide for people trained as business generalists so they can better respond to line management concerns. J. %he re$ard and control systems should be altered to support the strategic human resource function. Fust as managers need to be re$arded for both performance of operational and managerial short term ob&ective as $ell as for progress against strategic goals, there should be a similar system to drive the human resources function. K. (ystematic lin"s should be designed bet$een the human resource function and the line organization. >lthough the debate rages on over $here strategies for managing change are playing an increasingly important parts in human resource management.

The 1nternal Environment Oompetitive pressures have accentuated the need for managements to concentrate on innovation, 7uality enhancement, customer service and cost reduction. %his has influenced the $ay $hich organizations have been structured and managed. %he need to be more responsive to e#ternal events has resulted in a greater emphasis on operational fle#ibility, and the need to ma"e managers more accountable for results has resulted in more decentralization and devolution of authority. %he impact of ne$ technology, especially information technology, has enabled organizations to eliminate layers of management and supervision in the interests of a 7uic"er and more fle#ible response to ne$ demands, increased accountability and, of course, cost reduction. Oellular manufacturing systems, for e#ample, have encouraged the creation of autonomous $or" groups, $hich reduces the need for supervisory and 7uality control staff as $ell as enhancing team accountability and, importantly, cohesiveness. %he ne$ Qfle#ible fir is one in $hich team$or" is more important but it also means the setting of core groups of employees consisting of managers, technicians, "no$ledge $or"ers and multi s"illed craft $or"ers. %hese groups are supported as and $hen re7uired be contracted staff and part timers. %he creation, development and control of teams of core $or"ers operating in a state of constant change places even greater demands on all managers and it is these demands $hich have accentuated the need to adopt a human resource management approach. What maCes strate$ic HRM Bmore strate$ic: that HRM? (trategic HRM has become topical in recent years but definitions as to $hat is meant by the term very $idely. (haun %yson defines .R strategy as the intentions of the corporation, both e#plicit and convert, to$ard the management of its employees, e#pressed through philosophies, policies and practices1/ %ypically, strategic HRM bridges business strategy and HRM and focuses on the integration of HR $ith the business and its environment. Researchers

distinguish bet$een Qhard1, traditional HRM and Qsoft1. QHard1 HRM reflects a contingency approach based on the assessment of the best $ay to manage people in order to achieve business goats in the light of conte#tual factors. Q(oft1 HRM focuses on a high commitment high performance approach to the management of people. =ne of the "ey elements of soft1 HRM is the internal approach to the management of people. =ne of the "ey elements of Qsoft1 HRM is the internal integration of HR policy goals $ith each other. *n the HE, :avid <uest incorporated the HR policy goats of strategic integration, commitment, 7uality and fle#ibility into a model. He suggests that these HRM policy goals are a pac"age $hich ?urcell considers to have si# common elements+ Oareful recruitment and selection. )#tensive use of systems of communication. %eam $or"ing $ith fle#ible &ob design. )mphasis on training and learning. *nvolvement in decision ma"ing. ?erformance appraisal $ith tight lin"s to contingent pay. %he main rationale for strategic HRM thin"ing is that by integrating HRM $ith the business strategy, rather than HR strategies being a separate set of priorities, employees $ill be managed more effectively, organizational performance $ill improve and therefore business success $ill follo$. %his is itself may not be enough. %ony <rundy suggest+ Human Resources (trategy in itself may not be effective. *ntegrating Oorporate (trategy and HR matters into an Q=rganization and ?eople (trategy1 may prove more successful. (ome researchers have argued that technical HRM focuses on building company1s performance, $hile strategic HRM creates competitive advantage by building HR systems $hich cannot be imitated. (trategic HRM therefore has a clear focus on implementing strategic change and gro$ing the s"ill base of the organization to ensure that the organization can compete effectively in the future. *ndeed, strategic HR departments are future oriented and operate in a manner consistent $ith the overall business plan in their organizations. (uch departments assess the "no$ledge, s"ills and abilities needed for the future and institute staffing, appraisal and evaluation, incentives and compensation, training and development to meet those needs. %his also suggests

that facilitating organizational learning, both for implementing change and in helping to develop strategy, is a "ey element to strategic HR. >ccording to this approach, people are a "ey resources and a critical element in a firm1s performances since they build organizational effectiveness. %ony <rundy defines organizational effectiveness as + Q%he capacity of the organization to adapt rapidly to its e#ternal environment and to meet mar"et and other e#ternal demands and $ith good resulting business performance.1 4hat remains unclear is ho$ organizations can achieve consistently superior performance via HR strategy necessarily so. >s Fohnson comments+ Q(trategic decisions are characterized by the political hurly burly of organizational life $ith a high incidence of bargaining and a trading off of costs and benefits of one group against another; all $ithin a notable lac" of clarity in terms of environmental interests and ob&ectives. <oold and Oampbell also emphasise the variety and ambiguity of influences $hich shape strategy+ *nformal understandings $or" alongside more formal processes and analyses. %he head7uarters agenda becomes ent$ined $ith the business unit agenda, and both are interpreted in the light of personal interests. %he se7uence of events from decision to action reversed, so that Qdecisions1 get made retrospectively to &ustify actions that have already ta"en place. (trategy formulation is not necessarily rational and continuous process, as $as pointed out by Mintzberg. He believes that, rather than being consciously and systematically developed strategy reorientations happen in brief 7uantum leaps. (trategies, according to Mintzberg, are not al$ays deliberate. *n theory, he says, strategy is a systematic process. ,.irst $e thin", then $e act. 4) formulate, then $e implement1 in practice, Q a realized strategy can emerge in response to an evolving situation1 and the strategist is often Qa pattern organizer, a learner if you li"e, $ho manages a process in $hich strategies, and visions, can emerge as $ell as be deliberately conceived. ,rtic)latin$ 0)siness strate$ies !usiness strategies are not necessarily e#pressed in $riting, although there are advantages in doing so from the point of vie$ of having a defined of references for planning and control

purposes. (trategic management and strategic control companies are more li"ely to prepare formal, long term strategic plans, but financial control companies $ill rely on one year budgets $ith interim reforecasts as re7uired. > business unit or independent company may have a formal strategy but it is more li"ely, especially in the case of financial control company, to have an un$ritten strategic orientation $hich is based on an assessment of future mar"et opportunities. *n Mintzberg1s phrase, these organizations Qcraft1 their strategies, being responsive situations as they emerge $hile still ta"ing a vie$ on the general direction in $hich they are going.

LECTURE 33 3D : #TR,TE(1C /ER47RM,;CE M,;,(EME;T ,;* C7M/E;#,T17; #I#TEM# %raditionally, performance appraisal has been used as the guide for employee performance. ?erformance appraisal also "no$n as Qperformance evaluation1, Qmerit rating1, and Qperformance assessment1 is a process of recording assessment of employees1 performance, potential and development needs. >ccording to 4ayne . Oascio /3CCJ0 performance appraisal is defined as ,the systematic description of &ob related strengths and $ea"nesses of an individual or a group5. ?erformance appraisal is a system of revie$ and evaluation of an individual1s /or team1s0 performance. Lately it has been supplanted in more and more companies $ith performance management /?M0, a more comprehensive human resource management process. 4ithin the recent past there has been a shift from traditional annual performance appraisal to continuous performance management . %he obvious reasons behind this have been the inade7uacy of ?erformance appraisal in serving as a performance enhancement tool. ?erformance appraisal is "no$n to be a contentious and unpopular activity of Human Resource Management. *t is contentious because employees do not readily accept their manager1s assessment about their performance, and managers feel uncomfortable $hen they have to defend their &udgment. *t is unpopular because managers do not $ant to play the role of a &udge; besides they have feelings of guilt if their evaluation is critical of their employees1 performance. %here could be other reasons for performance appraisal being unpopular+ Many a times appraisal is based on hunches, opinions and reflects $hat appraiser can readily recall since real performance measurement ta"es time and follo$ up. )mployees are often less certain about $here they stand after the appraisal than before it. )mployees don1t "no$ $hat constitutes performance or $hat precisely is e#pected out of them. Many a times employees don1t ta"e appraisals seriously because they feel it is an annual or si# monthly ritual underta"en by the organization.

4ith these problems $ith the conventional performance appraisal, there $as a transition in the approach, organizations started moving to$ards developmental performance appraisal. %his led to additions in the definition of performance appraisal also. .letcher has defined performance appraisal more broadly as activities through $hich organizations see" to assess employees and develop their competence, enhance performance and distribute re$ards. .letcher holds that as a set of practices /and as a part of performance management0, performance appraisal has no$ become part of a more strategic approach to integrating HR activities and business policies. Later on, a ne$ field of study has emerged in the form of performance management, $hich is a holistic approach to$ards management of employee and organizational performance. ?erformance management is a means of getting better results from the organization, teams and individuals by understanding and managing performance $ithin an agreed frame$or" of planned goals, standards and competence re7uirements. *t is a process for establishing shared understanding about $hat is to be achieved and an approach to managing and developing people in a $ay that increases the probability that it $ill be achieved in the short and longer term />rmstrong, 3CCD0. ?erformance Management becomes essential because most of the contemporary organizations possess some or the other of the follo$ing features+ > diversity of locations, units, programs, pro&ects and specialized disciplines. Oomple# cultural interactions and varied tas"s and problems. *nterdependence and dynamism $hat one segment of the organization does, affects the total organization. :ecentralization and empo$erment. (ome of the benefits of an effective ?erformance Management system are as follo$s+ *t creates a culture of e#cellence in the organization that inspires every employee; aligns organizational ob&ectives to individual aspirations; e7uips people $ith the s"ills and the infrastructure necessary to perform their duties and imbibes team$or"; clears gro$th paths for specially talented individuals; provides ne$ challenges to re&uvenate plateauing careers;

?erformance management systems are $idely recognized as a "ey business strategy for driving strong business results. %hrough goal setting, performance appraisal and feedbac", continuous training and development efforts, and performance related pay, ?erformance Management can help companies incorporate strategy into individual employee efforts and turn their potential into desired results. ?erformance Management can assist in motivating employees for good performance and can strengthen their commitment to the organization. .urthermore, it can assist in organizational processes that are important to organization1s long term success such as organizational learning, "no$ledge management, change management and succession management. ?erformance management is necessary to develop a Qperformance consciousness1 and it can be used as a po$erful employee development tool. )ffective performance management ma"es people a$are of $here they stand and also helps in retention of star performers. %he thrust of an effective ?erformance Management (ystem /?M(0 has been identified as the ability to understand and reinforce the desired $or" behavior by all employees. %he performance management process lin"s individual &ob performance to the attainment of organization1s vision, mission and goals. ?erformance management is a continuous process that involves supervisors and employees in the identification and evaluation of "ey &ob performance ob&ectives and competencies that contribute to the achievement of organizational goals. )mployees $ho understand $hat they are trying to accomplish and ho$ their $or" fits into the $or" of the organization as a $hole are more li"ely to perform at a higher level. 4ith this in mind, the performance management process is designed to+ ?rovide supervisors and employees $ith a method to identify individual &ob performance ob&ectives and discuss their alignment $ith organization ob&ectives; ?rovide supervisors and employees $ith a forum for ongoing communication and feedbac" on the attainment of individual ob&ectives and performance in core competency areas; .acilitate the identification of areas for improvement needed by employees to perform more effectively on the &ob; ?rovide employees $ith the opportunity to collaborate $ith their supervisor to develop a personal &ob performance development plan.

%he goal of performance management is to help employees improve their performance and their effectiveness. ?erformance is the results accomplished by an employee in meeting specific ob&ectives or the development of competencies necessary for effectively doing a &ob. ?erformance management is a continuous process of supervisors and employees $or"ing together to+ (et performance e#pectations lin"ed to organizational ob&ectives; )stablish criteria against $hich individual and unit performance can be measured; *dentify areas for competency improvement; ?rovide performance feedbac"; Oontinually enhance performance. #TR,TE(I 7R1E;TE* C7M/E;#,T17; #I#TEM# 4or"force alignment, the concept of aligning the contributions of individual employees $ith corporate goals, is one of today1s hottest business topics, on the mind of every business manager from the O)= to the HR director. Met for all of the urgency associated $ith $or"force alignment, many organizations are stymied in their attempts to achieve it. ?ay for performance plays an essential role in achieving $or"force alignment. Many leading companies practice this compensation management discipline $ith varying degrees of success. %ypically they rate their managers on a bell curve annually, assigning an overall performance rating from ,)#ceeds ob&ectives5 to ,:oes not meet ob&ectives.5 >t many companies, the ,:oes not meet ob&ectives5 generally have to go, $hile others are a$arded bonuses, raises and stoc" option grants commensurate $ith their rating. Hnfortunately, although most organizations profess to subscribe to pay for performance philosophies, many simply cannot e#ecute. %here is a bro"en lin" bet$een senior e#ecutives1 desire to differentiate pay based on performance and line managers1 ability to do so. Relating compensation to individual performance for tens or hundreds of thousands of employees across large global companies is nearly an impossible tas" today. Oomple#ity in compensation processes creates apathy among managers $ho do not see themselves as compensation e#perts and instead ta"e the path of least resistance.

Hence, the companies use the ,peanut butter5 approach to compensation distribution, spreading merit increases, bonuses and stoc" options e7ually across the employee population. %op performers are not given re$ards commensurate $ith their contributions, and under performers are over compensated. (hoc"ingly, the peanut butter approach is used in company after company, $here employee related compensation spending consumes up to DG percent of each operating e#pense dollar, according to industry research. %his reality practically screams for a pay for performance solution that "eeps compensation e#penditures in line $ith the allocated budget [ a system that ma"es managers compensation e#perts and, above all, ma"es them believe in the pay for performance process and ta"e o$nership of it. Challen$es %oday1s business environment provides a star" bac"drop for the ongoing disconnect bet$een corporate performance and individual compensation. Hnfortunately, in all too many companies, $or"force misalignment is the norm. :espite strong commitment from senior e#ecutives to differentiate pay based on performance, managers throughout the organization have a difficult time doing so. Mean$hile, economic pressures conspire to force organizations to do more $ith less. >s compensation funds shrin", ho$ are limited resources best used2 )very day ne$spapers are filled $ith the latest ne$s on lo$er than e#pected earnings, mergers, ac7uisitions and corporate restructurings, all of $hich beg the 7uestion+ 4hich employees $ill be chosen to stay, $hich $ill go, and ho$ shall the remaining ones be motivated2 4ithout a connection to compensation, performance management lac"s the element of e#ecution. Ho$ can companies ensure that employees $ill actually be financially re$arded for meeting performance ob&ectives2 >dding compensation to the e7uation brings the re7uired element of e#ecution to performance management, ensuring that it is a true pay for performance strategy that can deliver tangible business results. Olearly, there are no company$ide common denominators for compensation practices, let alone guidelines or systems for implementing them. .aced $ith this constant state of flu#,

many managers 7uic"ly give up on attempts to become compensation e#perts, and instead muddle their $ay through the compensation planning process as 7uic"ly as possible to ,get it over $ith.5 What:s ;ee'e' ,<etting it over $ith5 does not constitute the proper respect due to employee related compensation. 4hat1s needed is a system for implementing pay for performance that balances compensation e#penditures $ith available financial resources. Oompensation management technology applications play a critical role in supporting pay for performance initiatives that ultimately lead to $or"force alignment. %hese systems provide the structure, processes and "no$ledge re7uired to ma"e pay for performance initiatives successful at all levels of the organization. >mong the benefits of on demand compensation management applications include+ Em lo!ee 'ifferentiation2 $hich puts an end to the peanut butter style of compensation disbursement. Tr)e mana$er self%reliance2 in $hich managers can leverage drill do$n analytics and situation specific advice and guidance to help them become self sufficient and confident in administering their group1s compensation. *n turn, this boosts their o$nership of the pay for performance corporate mandate. #it)ation%s ecific a'vice an' $)i'ance: .ar more sophisticated and personalized than previous generation "no$ledge management technologies, today1s most advanced systems provide the infrastructure to harness and share "no$ledge $ithin the enterprise, delivering it on an individualized basis. #tron$2 'irect ret)rn on investment: !ecause compensation consumes such a large portion of corporate budgets, administering it can significantly improve process efficiency. %his, in turn, can result in increased profitability and productivity, saving dramatic amounts of time and effort. %he goals and ob&ectives for automated compensation analyses and delivery systems are the same as those for any other mission critical application+ to bring the needed information to those $ho must ma"e pay decisions and do so 7uic"ly, accurately and in the form in $hich

they can best use the information. 4eb based compensation management applications do all of this better than any other previous system. >llen ?. Fac"son, principle at %o$ers ?errin, describes the follo$ing capabilities and features of 4eb based compensation management applications used to implement and administer pay for performance programs. %hese include+ *etermine the mana$er:s o )lation: !efore a manager can administer the

compensation plan, the population must be determined. !ecause it is role based, the 4eb based application must "no$ $ho is a manager and to $hom the manager directly reports. Ratin$ em lo!ees: %he manager no$ accesses the rating that $as generated during the performance management process or, if that process $as not 4eb enabled or the data are not in machine readable form, enters the appropriate performance rating into the application for each employee. %he system then automatically generates graphics that depict the distribution of the ratings, both the actual distribution for the manager1s employee population and the desired distribution. Com ensation lannin$: /erformance vers)s osition%in%ran$e matriA: %his useful tool contains a list of performance categories and increase percentages, and highlights one employee. %he guidelines in the range 7uartiles sho$ the suggested percentage increases that could be given by a manager to an employee depending on the employee1s position in the range. > $ide variety of variables, including mar"et rates, traditional evaluation methods, and ne$er competency based approaches, as $ell as minimum and ma#imum guidelines, ensure that managers are properly prepared to plan actual compensation changes. /lannin$ new 0ase salaries: 4hen the performance rating versus position in range matri# is finalized, the manager can proceed $ith compensation planning, entering either the percentage increase provided by the matri# or the actual dollar amount. /lannin$ new varia0le com ensation: *n a fashion identical to that used for base salaries, each employee $ho is eligible for variable compensation is no$ revie$ed and a suggested amount of compensation is calculated. /lannin$ stocC com ensation awar's: %he manager can then decide on the a$ard of any stoc" /typically stoc" options0 that is part of the total compensation pac"age. 4hen this step is completed, managers can generate statistics for their o$n $or" group and, under certain

conditions, determine $here they stand in relation to other groups. *n addition, reports are available sho$ing roll ups and grouped departmental or line of business statistics. , rovin$ com ensation lans: >fter a manager submits a compensation plan, it is accessible to the approving manager for revie$ and approval. %he manager can then roll up for an aggregate vie$ of pay for performance and drill do$n to e#amine any one individual1s pay plan. <roup level analytics provide visibility at each level in the management hierarchy before compensation actions are ta"en. *n delivering these capabilities, the compensation management application must support corporate re7uirements for a predictable total cost of o$nership and for li"ely high levels of R=*. Ohanges in ob&ectives must therefore be easily incorporated into the pay for performance system to "eep up $ith fre7uent modifications to corporate ob&ectives and compensation plans. %he application must provide fle#ibility for constant tuning and substantial change, or it $ill need to be essentially re deployed on a fre7uent basis[at a significant cost of both time and money. (ystem deployment needs to be revie$ed carefully to monitor and measure e#pected R=*. %o support a broad user base, the compensation management system also must have an outstanding capability to deliver situation specific advice and guidance to line and senior managers. %he advice and guidance management system should offer tailored support, instructions and learning for each company based on corporate defined compensation ob&ectives, employee compensation records and compensation mar"et survey data. Fust in time, situation specific advice and guidance should be delivered to each line manager $hen they need it and must be relevant to the situation under revie$ by the manager, helping to shape manager behavior and affect more appropriate and consistent pay decisions. .inally, an online compensation management application that supports managers $ith a situation specific, "no$ledge based administration approach helps them become e#perts in the art of compensation and fosters manager o$nership of the resulting decisions. >lthough these managers are focused on their particular fields of e#pertise [ $hether it is sales, engineering, manufacturing, distribution or finance [ they are loo"ed to as compensation e#perts during the annual corporate compensation planning process. >s a result, it is critically important that the company striving to realize a pay for performance culture provide a best in class

compensation management application that supports managers each step of the $ay. %he system must provide information for both decision ma"ing and employee e#planations, thereby giving managers competence, confidence and o$nership in their abilities and "no$ledge to administer effective compensation plans. Oompensation management plays a critical role in forging a lin" bet$een corporate goals and individual performance. %hese solutions help organizations achieve $or"force alignment by supporting pay for performance initiatives $ith the structure, processes and "no$ledge re7uired to ma"e them a success at all levels of the organization. >s companies implement pay for performance, $hich often starts $ith incremental efforts, compensation management applications can be the catalyst for their deployment, acceptance and ultimate success. LECTURE 3E 3G : R7LE 74 #TR,TE(1C HR LE,*ER#2 4UTURE R7LE# ,;* LE,*ER#H1/ C7M/ETE;C1E# !usinesses can recapture the innovative spirit that initially launched their success. *t has been done in companies old and ne$, big and small, and in &ust about every industry you can imagine. )ach case is different, but there are three common threads. .irst, corporate lea'ers recognized the intellectual capital and potential that resided $ithin their o$n employees. (econd, they turned to the Human Resources :epartment to find the "ey to unloc"ing that potential and putting that capital to $or". %hird, the company reaped tremendous re$ards in terms of productivity and profitability as a result. 4hat is common to each strand of this process is the importance of HR departments to the process of strate$ic innovation. *deas are the lifeblood of business success. Most of todayAs corporate giants began $ith little more than a great idea and an entrepreneurial gleam in their eye. %hey leveraged their intellectual capital to build financial strength. Met, along the $ay, many corporations lose the ability to innovate and ta"e ris"s. )ntrepreneurship gives $ay to entropy, and ne$ ideas are relegated to the suggestion bo# in the employee cafeteria. *t does not have to be that $ay.

!usinesses can recapture the innovative spirit that initially launched their success. *t has been done in companies old and ne$, big and small, and in &ust about every industry you can imagine. )ach case is different, but there are three common threads. \ .irst, corporate leaders recognized the intellectual capital and potential that resided $ithin their o$n employees. \ (econd, they turned to the Human Resources :epartment to find the "ey to unloc"ing that potential and putting that capital to $or". \ %hird, the company reaped tremendous re$ards in terms of productivity and profitability as a result. 4hat is common to each strand of this process is the importance of HR departments to the process of strategic innovation. Rarely are the terms Ustrategic innovationU and Uhuman resourcesU uttered in the same breath. HR departments in many corporations have come to be little more than service providers offering basic training and re$arding performance based on formulas created out of a coo"ie cutter process. >s" yourself+ Ho$ often does an HR department see its role as building corporate $ide capabilities, as opposed to increasing the general competence of the $or"force2 Loo" at $here the innovation movements usually ta"e their lead+ *n most companies, the push to ma"e 7uality a priority starts $ith manufacturing. Oustomer service efforts got their start in mar"eting. Ho$ much has HR contributed2 %he real 7uestion should be+ Ho$ much more can HR contribute2 Loo" closely, and it becomes clear that the HR function has a distinctive ability to create $ealth. >fter all, HR departments have at their disposal the means and the tools to have a more strategic impact. %heir product is people, and it is people $ho are indispensable to the innovation process. Moreover, it is people $ho can carry the innovation message and the innovation approach to all corners of an organization. 4hen HR professionals put their focus on developing employee innovation and pushing it deep $ithin the organization, they can drive change and gro$th company $ide. HR ,# 1;;7<,T17; 1;CU&,T7R

%here are many $ays an HR :epartment can drive the innovation function. *t can do it as the incubator of ne$ ideas, as the crossfertilizer of concepts and teams, or even &ust by focusing on the teaching/learning dimensions of its traditional training mandate. .irst, loo" at an e#ample of HR Ugoing for the gold,U as an incubator of ideas by harnessing the passion of a $or"force. >n e#ample of this dynamic in action can be found at 4hirlpool, the appliance ma"ing giant. Loo"ing for $ays to enhance customer loyalty and get beyond the seas of U$hite bo#esU that confront consumers $hen they begin shopping for a ne$ range or refrigerator, 4hirlpool turned to its employees for ne$ ideas. %hey tapped their creativity through a ne$ process that gave every employee accessible tools and an environment that propelled innovation. >mong the tools they established $ere a Eno$ledge Management intranet site and an innovation database to help employees share insights and spar" ideas. %he intranet site paired those $ho had good ideas but perhaps lac"ed the business s"ills to put them in action $ith Uinnovation coaches,U in house e#perts s"illed at $or"ing $ith employees to bring their ideas to fruition. %heir efforts have paid off+ 4hirlpool employees have helped develop and introduce path brea"ing ne$ products, including ?olara, the first refrigerated range; the <ladiator line of garage appliances, and the first in sin" dish$asher. %oday, innovation is so deeply embedded in the corporate culture that every employee is encouraged to participate. =ne senior manager summed up the results this $ay+ U4e donAt have teams to ma"e people feel good; $e have teams to run the business here, and $e feel that engages people in the business.U %he results spea" for themselves+ 4hirlpoolAs stoc" is up significantly since its employee innovation program began, and 9G percent above that of one of its closest competitors, Maytag. /@o $onder their repair people are so lonelyB0 4hirlpoolAs model engaged many employees in the innovation process nearly 3G,GGG of them in one manner or another. %his e#ample illustrates the important role employee driven innovation can play in a companyAs success. Ho$ever, innovation for innovationAs sa"e does not $or". > fe$ top people sitting around an U*nnovation :epartmentU trying to thin" of ne$ ideas amounts to an ineffective echo chamber, yet having a thousand bright employees going off in different directions, all pursuing their personal ideas about ho$ to build a better mousetrap, is a recipe for a different sort of disaster. 4hat is needed is a corporate function

designed to drive innovation in support of a companyAs overall goals and ob&ectives. %hat is a role HR departments are $ell suited to fill. 4hen they do it right, the results benefit employees, shareholders, and consumers ali"e. HR ,# C7;CE/T CR7##%4ERT1L1=ER ?art of the HR supportive role, as mentioned earlier, can be as a cross fertilizer of concepts and teams. > good e#ample of that occurred Udo$n underU at the @ational >ustralia !an". *t started $ith an idea in the head of the )#ecutive <eneral Manager responsible for ?eople and Oulture, @>!As rather elegant moni"er for its HR department. (he began $ith a values based concept+ ?eople li"e to save. Oonsidering the age of baby boomers, there is increasing $orry about retirement, but people also li"e to shop, $hich can undercut the urge to save. 4hat the @>! e#ecutive sa$ $ere t$o values in contradiction. %he goal $as to combine them and allo$ them to $or" together rather than at cross purposes. %he idea that emerged from this values based analysis $as the notion of a credit card $hich automatically sent a percentage of the cost of any purchase made on the card to the customerAs savings account. 4hat @>! did $as reconcile t$o apparently conflicting values and come up $ith a uni7ue notion+ (pend to saveB 4hat one sees here is an inherent strength of HR being integrated into the ban"As mar"eting/product strategy+ HRAs fundamental understanding of people. *n the great save versus shop conflict, the pull of an immediate ob&ect of desire meets the intangible distance of a fara$ay goal such as retirement, and the immediate ob&ect usually $ins. Recognizing this conflict, @>!As Uspend to saveU program connected the t$o, so that savings $ere also buttressed $hen the customer shopped. ?erhaps even more uni7ue than the idea itself $as the $ay it $as developed and shepherded through the corporate development process. %he )#ecutive <M for ?eople and Oulture pushed this program through as part of a people pro&ect $ithin the broad purvie$ of HR. *n fact, it started as part of a corporate values pro&ect $hich involved a broad cross section of employees to define values that motivated them such as Uhumanizing values.U @>! pushed the underlying long/short term values inherent in the Ushop to saveU concept from the dra$ing board into the mar"etplace by pulling together a core, cross functional team that originated $ith and $as coordinated by the HR department. %he e#ercise demonstrated the intimate lin" bet$een

classic HR values and innovation. Oorporate innovation e#ercises that do not ma"e this lin" $ith underlying values remain &ust that e#ercises. *n fact, the @ational >ustralia !an" e#ample demonstrates that innovation is the e#pression of values, a means of bringing them to life. >nother e#ample of HR as the pivot of cross functional development too" place at Oeme#, the large Me#ican based multinational cement company. *n this instance, the Oeme# HR department started $ith a value that is central to any organization the strength of the promises people ma"e to their corporate colleagues. *n a sense, one can see business as a net$or" of promises people ma"e to each other, either implicitly or e#plicitly. %a"e internal meetings. 4hen people say they $ill attend a meeting at a certain time and then sho$ up late, they are brea"ing a promise, a lo$ priority promise, but a promise nonetheless. *t undermines the degree of trust that e#ists $ithin the organization and reduces the companyAs ability to operate effectively. (ometimes this can even be the result of a conflict in values /some alphatypes seem to thin" that, in the corporate &ungle, sho$ing up late for a meeting demonstrates their importance, rather than their inability to manage their o$n time0. Met this conflict in values can have significant, negative implications for a company. (upply chains are complicated these days+ *mmediate delivery depends upon every lin" in the chain connecting seamlessly. > bro"en promise in one place can lead to gridloc" in a great number of places. Oeme# decided the value of its people "eeping their time commitments to one another $as too important to leave to personal $him or chance. *t demanded a company $ide effort. %he companyAs HR department addressed the problem head on. %he first thing they did $as see" out a consulting company $ith e#perience in improving the 7uality of promises made $ithin companies. ?erhaps it serves as proof of the gro$ing importance of this function that Oeme# found a firm that does indeed specialize in that. Ho$ do you get people to "eep their promises2 *t comes do$n to getting people to $or" together to &ointly find the fla$s in their $or"ing relationship and address them collectively. .or e#ample, they $ill bring together departments to map the $ays they are supposed to $or" together and diagnose the recurrent brea"do$ns in e#ecution. %hey improve the process by redesigning the coordination mechanisms and improve s"ills levels by training people to ma"e contracts, ones that are more precise, realistic, and ultimately more achievable.

>s a result of this effort and technological innovations to improve scheduling of truc" routes, Oeme# $as able to guarantee delivery of cement to construction sites $ithin a 6G minute $indo$. %$enty minutes+ %hat is the length of time $e associate more $ith delivering hot pizza than $et cement. *t is even more impressive considering the industry average delivery $indo$ is three hoursB HR >( *@@=T>%*=@ >O>:)MM %hese are e#amples of $ays that HR serves as the cross fertilizer of concepts and teams, or, in the case of 4hirlpool, the incubator of ideas. Ho$ever, not all HR departments are in a position to do those things. 4hether they have the opportunity to do that may depend upon the organizational structure of the company and its culture. 4hat about the HR department that does not have the mandate, the independence or the corporate fle#ibility to do that2 Ho$ can HR departments advance corporate strategy or competitive values $ithout producing or developing the Ubig idea2U *s it possible for HR departments to generate company$ide innovation by focusing on the teaching/learning dimensions of its traditional mandate2 %he ans$er is+ (ome companies do it, so it obviously can be done. <eneral Motors, a firm for $hich * $or"ed, $as involved in a pro&ect that did not involve corporate transformation, but focused instead on traditional HR functions. >ll large companies have high potential younger e#ecutives $hose attitudes and cultural outloo"s are still being formed. Ho$ can their thin"ing be influenced2 > common $ay is to bring them together to listen to a fe$ $ell "no$n gurus for a fe$ days. ?art of the core team that learned our methods and became familiar $ith our tools helped set up a :iscovery Oenter a sort of innovation academy in @orth >merica. %he :iscovery Oenter sought to further the development of talented individuals $ith leadership potential $ithin the company. )very $ee", high potential <M employees $ould do tours of duty at the :iscovery Oenter, learning our tools and methods to address "ey strategic issues as defined by <MAs (trategy !oard. .or e#ample, the board $anted to e#plore emerging characteristics and re7uirements specific to emerging cities in developing countries, an especially important strategic area given <MAs

massive investments in productive capacity across >sia. %he team developed an original point of vie$ on the sub&ect, not only through on site study missions to factories or intervie$s $ith luminaries, but also by directly e#periencing and understanding ho$ consumers live and $hat their needs are. %he benefits of this revolutionary approach $ill become more and more apparent as the high potential young managers learning this approach reach higher levels of responsibility. <M insiders themselves refer to their company as the big oil tan"er. %he purpose of this pro&ect is to help turn the big oil tan"er around. %hat ta"es a lot of people sharing a customer focused and values based attitude. HR departments are in a good position to help shape and sharpen that attitude. HR >( >@ *@@=T>%*=@ )@<*@) Olearly, there are a great many things that HR leaders can do to help a company change direction. %hey can ta"e big dramatic steps, as they did at 4hirlpool. %hey can bring together teams from across the firm to address customersA needs, as they did at @ational !an" of >ustralia. =r they can slo$ly change the $ay of thin"ing by influencing the ne#t generation of corporate leaders, as they are trying to do at <eneral Motors. ?erhaps the 7uestion is not, U4hat can HR do2U %he 7uestion might more properly be, U4hy donAt more HR departments ta"e a leading edge role in corporate transformation and rene$al2U *t is indicative of the state of things that in $riting this article, it $as difficult to find many e#amples of companies $here HR departments had ta"en a broad leadership role in fostering innovation. HR e#ecutives should be as"ing t$o 7uestions, U4hy arenAt there more2 >nd $hy isnAt my company one of them2U ?erhaps part of the reason is the division $ithin the discipline. HR is the <emini of the corporate gala#y its t$ins are the innovation side and the enforcement side. %he enforcement side ensures the organization follo$s the relevant la$s and regulations, but a police force is not li"ely to lead a revolution. *f revolution is to come, if it is to come at all, it $ill be from the organizational effectiveness/development side of HR. %hat means, in the beginning, perhaps only half of the discipline is a potential source of innovation. =f that half, ho$ many have the freedom and the opportunity to pursue innovation2 Ho$ many are permitted to reach out,

e#amine values, and turn them into pro&ects that can e#pand a companyAs gro$th potential and add value2 Ho$ many HR e#ecutives have heard UnoU so many times, they $ould not recognize the sound of Uyes2U

LECTURE 5H 59 :W7R347RCE *1<ER#1TI ,;* 1T# 1M/L1C,T17;# . CULTUR,L 1##UE# 74 EL/,TR1,TE#

*1<ER#1TI
>ny attribute that humans are li"ely to use to tell themselves Qthat person is different from me1 and thus includes such factors as race, se#, age, values and cultural norms, etc.

W7R347RCE *1<ER#1TI
@arro$ definitions tend to reflect )7ual )mployment =pportunity /))=0 la$ and define diversity in terms of race, gender, ethnicity, age, national origin, religion, and disability. !road definitions may include all the different characteristics that ma"e one individual different from another. *t includes se#ual orientation, values, personality characteristics, ethnicity, religion, education, language, physical appearance, martial status, lifestyle, beliefs, ideologies and bac"ground characteristics such as geographic origin, tenure $ith the organization, and economic status and the list could go on.

4,CT7R# 1;4LUE;C1;( *1<ER#1TI 1; THE W7R3/L,CE

/30 :emographic changes /60 <lobal mar"etplace /80 )conomics /90 Oomfort $ith being different /J0 > diverse customer base /K0 )7ual )mployment =pportunity and >ffirmative >ction programs.

M,;,(1;( W7R347RCE *1<ER#1TI Ho$ administrators manage diversity greatly depends on the needs of the organization. .or e#ample, some companies may $ant a diversified $or" force in order to ma"e them more competitive in the global mar"et. :iversity helps them to better understand international mar"ets. 4hile other organizations consider diversity as a means to bring about greater harmony in the $or"place and an opportunity to prepare employees and volunteers to deal $ith the nationAs changing demographics. Regardless of the reasons, managing diversity is here to stay. (o, itAs no longer an issue $hether to implement diversity training, but ho$ diversity training $ill be implemented. UMana$in$ for *iversit!U pertains to a philosophy that is purely motivated by business purpose and mar"et advantage. *t is seen as a strategy for improving organizational competitiveness and efficiency. *t is distinctly different from policies grounded in social purposes such as e7ual employment opportunity or affirmative action. *t focuses on managing the mi# of individuals assigned to a tas", involved in the subordinate supervisor relationship, or employed in the organization. *t may address decisions about composition of $or" groups, choice of supervisor, and training and other support for diverse groups. ,TTEM/T# T7 &ETTER M,;,(E *1<ER#1TI THR7U(H:% <7UL;T,RI ,441RM,T1<E ,CT17; /R7(R,M# %hrough voluntary affirmative action programs, the employer ma"es an e#tra effort to hire and promote those in the protected /female or minority0 groups. >ffirmative action refers to legally mandated $ritten plans and statistical goals for the recruitment, training and promotion of specific under utilized groups. %his 7uantitative, compliance driven approach is remedial in that it attempts to set right past $rongs. %here are 9 0asic strate$ies used under affirmative action are as follo$s+ 1. (77* 4,1TH E447RT #TR,TE(I+ *t emphasizes on identifying and eliminating the obstacles to hiring and promoting $omen and minorities on the assumption that eliminating these obstacles $ill result in increased utilization of $omen and minorities.

2. KU7T, #TR,TE(I+ *t mandates bottom line results by instituting hiring and promotion restrictions.

TI/E# 74 *1<ER#1TI
(E;*ER *1<ER#1TI 4omen have been moving steadily into occupations, professions and managerial &obs previously reserved for men. %heir access to education and training continues to improve, providing many $ith the necessary 7ualifications to aspire to &obs in senior management. /R7CT7R . (,M&LE Motto+ gender diversity is not a problem to be fi#ed but a strength to be leveraged. %here1s actually a very strong business case for ?'< to ta"e it up+ ?'< is into business li"e cosmetics, sanitary nap"ins, baby diapers, etc, since the ultimate consumers or decision ma"ers for several of our businesses are $omen themselves, they are able to relate to the consumer needs a lot better than male managers. #H7//ER:# #T7/ 6 years ago, shoppers stop too" a call+ it planned to correct the disproportionately lo$ percentage of $omen $or"ing for it. %here $ere 6 reasons $hy they close to act on it. .irst, they felt that $omen inherently possess s"ills li"e empathy, intuition and nurturing instincts, $hich ma"e them more amenable to handling functions such as customer care and human resource. (econd, gender diversity helped them in creating a positive culture, $here the behaviour and conduct of employees tended to be more acceptable. ,(E *1<ER#1TI Mature $or"ers are competent, dependable, strong $or" ethics, punctual, committed to 7uality, lo$er absenteeism, less li"ely to change &obs, proven ability to ta"e of business. .resher/ young people are enthusiastic, innovative and have the zeal to prove them. >n organization should try to maintain a balance bet$een mature and young employees because it provides the organization a competitive benefit.

 CULTUR,L *1<ER#1TI %he biggest driver for a higher level diversity strategy is the need to tap the creative, cultural and communicative s"ills of a variety of employees and to use those s"ills to improve company policies, products and customer e#periences. =ne company &ust did that+ %he Latino employee net$or" at .R*%= L>M, the snac" food division of ?)?(*O=, proved invaluable during the development of :=R*%=( <H>O>M=L) .L>T=HR): %=R%*LL> OH*?(. Members of the net$or", called >delante, provided feedbac" on the taste and pac"aging to help ensure that the product $ould be regarded as authentic in the Latino community. %he >delante member1s insights helped ma"e the guacamole flavored :oritos one of the most successful ne$ product launches in the company1s history.

RE,#7;# 47R <,LU1;( *1<ER#1TI

Oompanies today are increasingly striving for racial, ethnic and se#ual $or" force balance ,@ot because of legal imperatives, but as a matter of enlightened economic self interest5. /30 :iversity among the $or"force introduces ne$ ideas or $ays of thin"ing that improve the 7uality of decisions and organizational outputs. /60 %o respond to competition, labor shortages, changing demographics and changing $or"force values. /80 %o sho$ that the organization is strategically driven, $ell managed and 7uality focused. /90 %o form better $or" relationships among employees /J0 %o enhance social responsibility /K0 %o address legal concerns.

/N0 *t has become necessary to recruit, train and promote diverse ne$ groups because this $ill adapt best to e#ternally changing sociological realities and to changing mar"et preferences. 4or' Motor Com an! %he $orldAs second largest automa"er, selling vehicles in 6GG mar"ets and $ith appro#imately 89J,GGG employees on si# continents. .ord has a $ell defined diversity policy aimed at creating an inclusive corporate culture. . .or .ord, diversity is an essential ingredient in the mi# to transform the company to a team based $or"place and to help understand our customer needs. *ts diversity philosophy is based on the premise that the diversity of its $or"force, dealer net$or" and supplier community can help it to access and serve $orld mar"ets better. . ?eriodic interactions among employees help in surfacing diversity related issues of the employees, and to promote diversity vision and values. Moreover, it has specific programs aimed at reducing gender imbalance, respecting individual employee needs such as holidays to celebrate.

THE

FUTURE

TRENDS

RELATED

TO

WORKFORCE

DIVERSITY
(ociety $ill become more diverse and, therefore, the $or"force and the mar"etplace $ill become more diverse. %here $ill be more globalization of corporations, $hich $ill lead to a more global $or"force, mar"etplace, and economy :iverse $or" teams $ill be a reality in organizations :iversity $ill become more of a business concern than a social concern and be more closely lin"ed to competitive strategies :iverse populations $ill ma"e more money and spend more money and this increase in $ealth $ill empo$er diversity (enior managers $ill become more involved in diversity issues because they $ill realize that the diverse $or"force needs to be better utilized in order to remain competitive

More managers $ill face the challenge of dealing $ith bac"lash and diversity training $ill be integrated more $ith other types of training.

CULTURAL ISSUES OF EXPATRIATES The trend of globalization is providing opportunities for Indian firms to reach foreign markets. The business model of many upcoming industries like the information technology sector is dependent heavily on the foreign markets. This increases the need of professionals working in foreign cultural settings. The merger and acquisition activity especially the crossborder acquisitions have reached much higher levels. The trend of acquisitions is not only restricted to the new sectors like Information Technology Telecom and !usiness "rocess #utsourcing but core sector companies like $anufacturing %&or '(ample) !harat &orge acquiring *arl +an "eddinghaus in ,ermany- and $ining %&or '(ample) .terlite group acquiring mines in /ustralia- have observed spurt in such activities too. The sheer size of certain deals in the range of 200- 100 $illion dollars %acquisition of Tetley 23 &lag Telecom in !ermuda- indicates global aspirations of the Indian firms. The "harmaceutical companies have widened their reach in world market with e(amples like 4anba(y and +45 having presence in many countries. The globalization dreams present a new challenge for the Indian firms6 the challenge to develop competent managers who would be able to work in new environments efficiently and will act as a bridge between the parent company and its subsidiaries. The globalization will also bring new employees to the Indian firms the ones with different origin language and national culture adding comple(ities to the culture of Indian organizations. The firms thus need to develop systems and processes not only to train managers for e(patriate assignments but also to handle cultural diversity. This task can be achieved by well designed cross-cultural training programs which will help employees in coping up with the stress and cultural shock while dealing with a new culture. The need for cross-cultural training will be for both)

Indian e(patriates and employees dealing with e(patriates of other origins. The cross-cultural training will also be required for the Indian companies getting into !usiness "rocess #utsourcing as the clients belong to culturally different environments. 7orking effectively in cross-cultural conte(t is becoming vital competence for aspiring managers. The present article attempts to define the possible sources of cross-cultural differences its impact on business practices competencies required for the e(patriates evolution of employees. Determinants of !"t!ra" #ifferen es$ There have been many attempts to define cultures and what differentiates them. The study by 8ofstede defined and differentiated between cultures on various dimensions 9 viz. collectivism vs. individualism power distance uncertainty avoidance masculinity vs. feminism and long vs. short term orientation. The author classified a number of countries on these parameters. These parameters can be defined as) 1. "ower distance) degree of inequality in power between a less powerful individual and a more powerful one in which they belong to same social system. 2. $asculinity vs. feminism: refers to the distribution of emotional roles between the genders. It opposes a tough masculine to tender feminine society. 1. 2ncertainty avoidance) is the extent to which a culture programs its members to feel either comfortable or uncomfortable in unstructured situations. :. Individualism vs. collectivism) is the degree to which individuals are supposed to look after themselves or remain integrated into groups usually around the family cross-cultural training issues to be considered while developing cross-cultural training and different ways of training the

5. 5ong term vs. short-term orientation) refers to the extent to which a culture programs its members to accept delayed gratification of their material, social and emotional needs. The differences in cultural values were shown by the study of 8ofstede %2001- which involves ;0 plus countries where each one of them was classified on these parameters.These cultural differences may effect motivational factors collectivism at work place organizational structure design etc.<arious studies have tried to study these differences. The difference in cultures has been associated with perceptions and parado(es. The study by #sland and !ird %2000- lists down the parado(es and the reasons for them. The parado(es arise because of perceptual schemas %cultural myopia and lack of e(perience- theoretical limitations emic and etic studies which present one sided views of the cultures %&rom inside and outside the culture while ignoring the other ones.-. The other reasons for misunderstandings are tendency for observers to confuse individual and group values unresolved cultural issues role differences and real vs. espoused values. The cultural differences and varying approaches lead to significant difference in business practices which must be recognized by the trainers and employees receiving e(patriate assignment. Ho% #o &eo&"e an# &ra ti es #iffer a ross !"t!res $ The differences in cultures lead to significant differences in the way people react to a stimulus. The motivational needs of the managers and e(ecutives vary across the cultures. The motivational factors that work in India may not be relevant in *hina hence the e(patriates will need to understand the basic differences in the employee behavior. The production facilities of firms may be similar across all the subsidiaries but the employee behavior in these facilities may not remain the same. Im&a t of #ea"in' %it( a #ifferent !"t!re

The cultural change leads to cultural shock which is a mental state of stress caused by acute changes in the culture. The e(patriates tend to feel lonely because all of a sudden every thing changes including the work environment peers processes and to an e(tent organizational culture and value system. The employees react by comparing the new culture to their own values and beliefs and at times are unable to accept the vast difference between the two. The process of encountering and accepting the new changes or in other words process of acculturation can be classified in four stages. Initial stage of elation and optimism Period of frustration, depression and confusion Gradual satisfaction Mastery stage #berg described four stages of ad=ustment) .tage I the initial or improvement of mood leading to optimism and

honeymoon stage6 .tage II the disillusionment or culture shock stage6 .tage III the ad=ustment or adaptation stage6 and .tage I< the mastery stage. The honeymoon stage is a period lasting less than two months. 8ere the employee is thrilled with the new e(perience. The culture shock stage occurs as the individual copes seriously with living in the new culture on a daily basis as a lack of understanding of the culture inhibits awareness of what is appropriate or inappropriate behavior in the new cultural environment resulting in confusion frustration tension and depression. The frustration occurs as the person begins to realize that past behaviors are inappropriate in the host culture but has not yet learned what behaviors to substitute. The ad=ustment stage is characterized by increased ability to adapt in the new culture6 and in the mastery stage ad=ustment is about as complete as possible and an(iety is largely gone. 4hinesmith %1>?0- classified reactions to a different culture in three categories that are flight fight and adaptation. The flight here characterizes reactions like re=ecting new culture and people and withdrawing from any opportunity of

interacting with new people or situations that cause discomfort. The &ight is approaching new culture with hostility and term adaptation is used for people who undertake the process of understanding the difference and ad=usting to the new culture. Definin' E)&atriate Com&eten ies$ The e(patriates need to perform the same set of functions but in a completely different environment which can cause lot of stress to the person. The cultural stress will have significant impact on various aspects of the =ob related behavior. $ost of the e(patriate failures are related lack of ad=ustment in new culture. 8ence while defining the competencies for the e(patriates human resource professionals also need to assess the soft skills of employees which will be handy in the new environment like tolerance of cultural difference ability to adapt new culture and interpersonal relationships. The cross-cultural skills required for successful e(patriate assignment can be listed broadly as %8ofstede 2001-) The capacity to communicate respect The capacity to be non =udgmental The capacity to understand relativity of one@s own knowledge and perception The capacity to display empathy The capacity to be fle(ible Tolerance for ambiguity

The focus is clearly on the soft skills and emotional maturity. The people undertaking foreign assignments must be mature and stable enough to accept the e(istence of cultural differences. They should also be able to understand the conte(t of various situations and happening which calls for ob=ective evaluation of a situation without bringing in one@s own biases and perceptions. The cross-cultural competencies have can be viewed as

combination of three different dimensions %!lack and $endenhall 1>>0that are self maintenance dimension %mental health psychological wellbeing stress reduction and self confidence- relationship dimension %ability to foster relationship with the people of host nations and perceptual dimension %perceptions of host nation@s culture and its social systems. Thus perceptions have been given an important role in defining competencies. $ost often employees tend to make perceptions based little information they receive through the media or stories. This leads to general stereotyping causing formation of wrong notions about the host culture. The employee should instead form opinions and beliefs related to the host nation only after spending considerable amount of time over there. The events which are used to form these perceptions should be seen in depth using the back ground information like social value system political system and cultural values. #nly then a clear picture of host nation culture will emerge. The employees on e(patriate assignments must be able to decode various verbal and non-verbal ways of communication used in the new culture and work in unstructured and ambiguous situations %+emers 2002-. The e(patriate employees should have capabilities to deal with alienation and isolation willingness to communicate and empathy for people of other cultures %$endenhall and #dou 1>A;-. The competencies required for e(patriate assignments have been classified under categories of stable and dynamic competencies in the paper by .ullivan %1>>>-. The author has broken the dimensions proposed by !lack and $endenhall %1>>0- in stable and dynamic components. The components are listed in the following table)

8ence the employees should have the ability to question the perceptions and resolve conflicts arising out of the cultural differences. The stress management skills have been given importance because the cultural differences and lack of proper socialization along with cultural shock causes stress on the e(patriates. The stress might also arise from living at a distance from the family.