Unit 4

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UNIT-4

HR in knowledge era: •HR in knowledge industry, •HR in virtual organizations, •HR in mergers and acquisitions, outplacement, outsourcingHR functions:•Employee leasing, •HR audit•International HRM.

1-2HR in Virtual Organizations

A virtual organization is a network of corporations made possible by ICT,which is flexible and comes to meet the dynamics of the market. In this way virtual organization gains benefit with regard to the traditional hierarchical systems. This new form of organization emerged in 1990,known as modular organization, network organization or digital organization.

A virtual organization is a social network in which all the horizontal and vertical boundaries are removed. It consists of individual working out of physically dispersed workspaces, or even individuals working from mobile devices and not tied to any particular workplace.

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HR in Virtual Organizations

IT plays a very important role.ICT-information n communication technology coordinates the activities, combines the worker’s skills and resources in order to achieve a common goal.

Managers spend time coordinating and controlling external relations with the help of computer links.

Example-Nike,Dell,Puma

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Characteristics of Virtual Organization

Power flexibilityInformal CommunicationFlat organization,multi disciplinary teamsGoal orientationDynamicsHome workCustomer OrientationOrganizational boundaries are vagueSharing of informationCommunication through electronic communication

systems-WAN, videoconferencing and email

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Characteristics of Virtual OrganizationCollaboration and virtual teamwork.

3 primary factors that differentiate virtual organizations from face to face teams are:

1.Absence of Para verbal and non verbal cues

2. Limited social context

3.Ability to overcome time and space constraints.

The advantages provided by such teams are as follows:

1.It saves time, travel expenses and eliminates lack of access to experts.

2.Teams can be organized whether or not members are in reasonable proximity to each other.

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Characteristics of Virtual Organization

3.Firms can use consultants from outside without incurring expense for travel, lodging and downtime.

4.Employees can accommodate both personal and professional lives.

5.Dynamic team membership allows people to move from one project to another.

6.Employees can be assigned to multiple ,concurrent teams

7.Team communications and work reports are available online to facilitate swift responses to the demands of a global market.

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Features of Virtual organization

Technology: has transformed the traditional way of working. Worlds of Computing and telephony .Computer Telephony Integration(CTI)

Email Integration: Email and SMS

Office Systems integration: SMS Technology

Voice mail Alert: SMS with Voice mail system

Mobile Data: one can retrieve information through mobile phone notebook. Mobile data communication revolutionize where and how work is done. Link mobile phone to laptop.

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Types of Virtual Organizations

Types Least Virtual Most VirtualTelecommuters Core Corp. with

Virtual outsourcingCompletely Virtual

Employees Combination of employees

Virtual Employees and or

With Virtual Office Virtual Employees, outsourcing,(Virtual office, Virtual production)

Participants in a completely virtual organization

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Emerging HR issues in Virtual Org.

Virtual Organizations is a loose web of individuals, capital and technology.

Project focus collaborative networks uninhibited by time and space. No defined structure.

There is loose connections of highly proficient ppl who are left to do their own thing in order to produce innovative products.

The positive side is that there is greater job autonomy and more financial stability ,coz of reduced commuting, lunches and clothing cost.

Less work stress, increase in performance(with more working hours)

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Negative aspects-longer hrs,increase in perceived work demands, poorer physical working conditions, less social support from work, poorer social position and few career opportunities.

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Career Dynamics

In a virtual organization, the following HR issues are a matter of concern:

Recruitment is conducted under time pressure and requires high performance expectations.

Human Capital (knowing one’s job)and Social capital (knowing each other)become extricable linked. Reputation is a key asset.

The formation of some stability in social relationship is not very much required.

Work pace is variable. The need for a state of readiness to be mobilized at any moment is high.

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Career Dynamics

Value of idleness is shown in terms of learning by watching what others do. Master apprentice relationship and craft-based techniques become important.

Job status and project feedback is very short. Therefore it can be seen that virtual org. require a heavy investment to create systems and staffing structures.

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Performance management

Define Performance: clear idea of what he is supposed to do??challenging goals to be set. Appraisal system to be objective rather than subjective. Measurement of work is important as theses are distantly located.

Facilitate Performance: eliminate obstacles-inability to access centrally maintained files and databases from remote locations.

Provide tools and resources. Here employee has to be self managed, more autonomous, risk taking in a virtual set up. Motivate the performance.

Encourage Performance:

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Sharing Information

Selection Process: Certain requirements for working in a virtual organizations are:

Familiarity and comfort ability with the jobs.Self Motivation, Non requirement of high structure and

detailed instructions in order to work effectivelyAn effective communication, both orally and in writingAdaptabilityKnowledge about organizational proceduresTechnical self sufficiencyResult oriented

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HR in Mergers and Acquisitions

Today Organizations: Development oriented,agile,fast,consistent in growth,adaptable,flexible,profitably proactive.

Firms need Merger and AcquisitionExample:Daimler-Chrysler,Chas-J.P.Morgan,Mc

Kinsey-Envision,Nation’s Bank-Bank of America,GE-Honeywell,

India-chemical,finance,communication,IT sector,BPO

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Mergers and Acquisitions

Mergers: Two Companies come together and create a new entity

Acquisition: One co. buys the other company and manages it by implementing terms and conditions consistent with the acquire's needs.

Size of investment,control,integration reqd,people mgmt issues

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Why do Mergers and Acquisitions fail??Attention paid on Strategic and Financial aspect,

Human aspect is neglected.Key aspects-Retention of good talent, integration of

cultures and communication

Schuler & Jackson gave typical reasons for failure:

1.Expectations are unrealistic

2.Hastily constructed Strategy, poor planning, unskilled execution.

3.Failure/inability to unify behind a single macro message.

4.Talent is lost and mismanaged

5.Power and politics are the driving force.

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Why do Mergers and Acquisitions fail??

6.Requires an impossible degree of synergy.

7. Culture clashes between 2 entities goes unchecked

8.Trasition Mgmt fails

9.The underestimation of transition cost.

10.Financial drain

11.Defensive Motivation

12.Focus on executives is distracted from the core business.

13.Cultural differences

14.Ill conceived human resource integration strategy.

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Why do Mergers and Acquisitions fail??Culture-internalisation of set of

values,feelings,attitudes,expectations and mindsets of people with in an organization.

2 companies have different cultures-anxiety,anger,low employee morale, communication issues.

Top Management ignores soft issues-culture clash“They” rather than “We” feeling.Example-P&G and Godrej

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Why do Mergers and Acquisitions fail??

Steps in the post acquisition phase to manage the apprehensions of employees:

Clear communication by the new mgmt to employees about strategy and performance

Mgmt commitment not to retrench the people of the acquired company & reach an agreement of redeployment.

1-21Stages of Merger and Acquisition

The role/importance of HR in the 3 stages are as follows:

1.Pre Union: Prior to M& A, understand the org. and ppl process.

a. Identify the reason for M&A

b.Assign a team dedicated on due diligence of all areas of M&A.

c.Pay attention to Human capital issues-diffrences in HR functions.

d. Identify key risks and differences, then estimate the difficulty and expenses of rationalizing and aligning these practices.

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Stages of Merger and Acquisition

e.Transition team should study options for combining the two companies. Do culture assessments,HR issues of the company-Recruitment,manpower planning,selsction,labour relations,govt compliance,compensation and benefit programmes,HRIS,traing and development, safety and environment issues.

2.In-Process Union: Under this stage, one should have a smooth integration managing all transaction to address all the apprehensions of people at work.

Select integration mgr who will lead the process of integration.-project mgr,communicator,advisor,advocate,relationship

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builder,facilitator,teamwork,negotiator.Do talent assessment-restructuring process to be faster

to manage the transition psychology of people.Place structure, manage change process, retain and

motivate employees, communication.Prepare organizational chart-vacant positions will be

there-as few ppl did not accept the job or lack of qualified ppl internally.

Prepare severance plan & retention –bonus programme.Outplacement strategy to be prepared to know the type

of employees being affected and how long will they take for adjustment.

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Finally communicate by assimilating employees in the org.Individual and group meetings. Educational seminars.

3.Post Union: the structure and staffing patterns need to be tested in action in terms of value creation in the org.

Culture that emerged in the org due to two organizations need to be monitored in line with the objective set in for the organization.-senior mgmt.

HR should see the new teams formed, interpersonal conflicts, undefined roles and responsibilities.

HR should develop transparent communication channel to disseminate info to stake holders to satisfy them for

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Co. performanceHR policies should be reviewed, created ,implemented

and communicated. Compensation and Benefit pakages,staffing n manpower planning, training n development,

HR dept should identify core competencies of individuals for development and growth.

1-26 Key Communication Principles & tactics for smooth integration

Maximize face to face presentationsRemember nature abhors a vacuumRealize that ppl assume the worstPush information outUse multiple forms of communicationWatch the informal channelBelieve that repetition countsCommunicate timeliness in general termsCommunicate logic and empathy

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Key to success of M & A

Well thought out goals and objectivesDue diligence on hard and soft issuesWell managed m & A teamEffective leadershipTaking lessons from previous experienceFriendly climateHigh commitment to deadlinesKey trained retainedTrust building across all levels of employeesProper allocation of resources and responsibilities.Accept the unwilling people and plan for their change.

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Skills and Competencies for HR Prof.Planning for in process union and post union steps

completed earlyExtensive and timely communications to all stake

holders.

Skills & competencies for HR professionals:Good strategic knowledge to develop and implement

the strategic plan for M & A.Effective Communication skillsMotivating skills to motivate self and othersAnalytical ability to understand and access people

dynamics

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Skills and Competencies for HR Prof.

Thorough knowledge of assessing work culture and bring about changes

Planning, monitoring and bringing change effectively.Good mediator having sound negotiation skills.Effective in selection and retaining people.Effective trainer and facilitator.Visionary,dreamer,and good leader who identifies and

embraces new roles.

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International HRMLiberalizationMergers and acquisitionsIHRM:is an interplay between three important

dimensions of HRM

Types of employees Country of operations

HR activities

Morgan (1986) highlighted 3 broad functions of IHRM in a model that consists of 3 dimensions:

1.3 broad HR activities- procurement, allocation and utilization.

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International HRM

2. 3 major country categories involved in international HRM activities: host country where a subsidiary may be located, home country where the firm is headquartered and the other countries(source of labour and finance)

3. 3 types of employees of an international firm-HNC(host country nationals,PCN(parent country nationals and TCN(third country nationals.

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Domestic v/s International HRM

Basis DOMESTIC HRM

INTERNATIONAL HRM

More HR activities International taxation, international relocation, orientation, administrative services for expatriates, host govt. relations.immigration,traveling details,

Broader perspective. Single govt. scenario Expatriates benefits and cross cultural work dynamics

More involvement in employees’ personal lives

HR is just related with employee insurance programmes,transfer,assistance in relocating employee.

Selection,training,placement-PCN and TCN.make expatriates understand housing, health care,culture,compenation,

Emphasis change Remains same Changes over a period of time

Risk exposure Less risk as compared to IHRM

Chances of failure-performance,premature return,terrorism,

More external influences Less influence. Govt, state of economy,biz policies and practices, cost of labour,

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Domestic v/s International HRM

Industry within which the MNC is primarily involved.

Attitudes of Senior Management

Complexity involved in operating in diff. countries and employing diff national categories of employees

Cultural environment

Extent of reliance of MNC on its home country or domestic mrkt.

HRM function-domestic as well as international

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Domestic v/s International HRMCultural environment: values,attitudes,behaviour.-

homesickness,counseling.Industry within which MNC is

involved:multidomestic and multinationalExtent of reliance of multinational on its home

country marketAttitudes of the senior management: determine the

role the HR has to play.

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International HRM

Recruitment: the response of International firms to an International recruitment and selection depends on :

Its general staffing policy on key positions in HQs and subsidiaries

Its ability to attract the right candidate andThe constraints placed by the host govt. on hiring

policies.

Ethnocentric approach:

Polycentric Approach:

Geocentric approach:

Regiocentric Approach:

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International HRMSelection: of people of the parent company nationals

for their home country and selection of expatriates.Expatriate selection: “expatriate failure”-premature return of an expat from

an international assignment-Direct cost and Indirect cost.

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International HRM

US firms Japanese Firms Indian Firms

Inability of the spouse to adjust.

Inability to cope with larger intl responsibility.

Home sickness, home country hangover

Manager’s inability to adjust Difficulties with new environment

Adjustment problem in a new culture

Other family reasons Personal or emotional problems

Difference in work habits, lifestyle and values

Manager’s personal and emotional maturity

Lack of technical competence

Personal and emotional maturity

Inability to cope with larger intl responsibility

Inability of the spouse to adjust

Other family reasons

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International HRM

Selection criterion for expatriates:Dowling,Welch &Schuler model

Individual

Situation

Factors impacting probable success if intl. assignment

Selection Decision

Country/cultural requirement

LanguageMNE requirements

Family requirements

Cross cultural suitabilityTechnical

ability

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International Performance Management

International Performance Management:Multinational’s internationalization strategies and goals

Subsidiary Goals

Individual(PCH,HCN and TCN)

Job analysis and description

Job goals,standards,competencies

Performance assessment

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MNC makes its strategic choices based on economic and political imperatives. Now to analyze the subsidiary performance against these expectations, its imp to recognize the constraints that affect the goal attainment:

Whole as against a partVolatility of international environmentVariable levels of maturity

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Factors associated with individual perf .and appraisal in an intl context:

To determine expat. performance, it is important to consider the impact of the following variables and their relationships.

Compensation package:

Task:

Headquarters’ support:

The environment in which performance occurs:

Cultural adjustments

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International Compensation Management

Knowledge of taxation, employment laws, foreign currency fluctuations,socio economic conditions.

Broad Objectives:Compensation package to be in line with structure,biz

needs and strategy of the org.Attract and retain the best talentEnhance employee satisfactionConvenient to administerProper package as per performanceShould give financial gain for employee and family

comfortPolicy should be progressive in nature

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International Compensation Management

Major aspects of an Intl Comp. Package:Base salary:Foreign service inducement premium:Allowance: COLA-cost of living allowanceBenefits:

Approaches to International Compensation:Market Rate approach: base salary linked to the

structure in the host country.Bechmark conceptBalance Sheet approach: compensate for the cost of

intl assignment. No tangible loss.

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HR audit

Human Resource audit is the systematic assessment of an organization’s HR service excellence. A good HR audit helps org. to

Identify the HR programmes that are most important to achieving org goals.

How well HR deptt is delivering these programmesBenchmark HR work to ensure continuous

improvement.Promote change and creativityDirect the focus of HR staff to imp. IssuesBring HR closer to the line functions of the org.

1-45Human Resource Accounting

Is an information system that tells the mgmt what changes have been occurring in the HR deptt of the biz over a period of time.HRA also involves accounting for investment in ppl,their replacement costs, and the economic value of the people in an org.

Issues:CompetenciesCommitmentCulture

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HR Audit

Assess the current position of an org.What can be done to improve HR function.It’s a review with the help of a checklist in order to

ensure that the regulations and corporate policies are adhered to.

HR Audit Process:

Comprehensive process, firstly understand the future biz plans and corporate strategies of the org.Important questions:

What is the five –ten years plan of the org?

What competencies are reqd for it?

Does the org has learning culture

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HR AuditHow are the various HR systems and subsystems being

geared up to meet these reqts.?

HR systems and sub systems are examined in totality and in relation to the various linkages and relationships with other aspects such as quality improvement processes, strategic planning.

Reasons for HRD audit:Make the hr function more biz drivenEvaluate hr systems and processesImprove productivity and efficiency levelSupport growth and expansion plansPrepare org for change in leaderships

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HR Audit

Methodology of HRD Audit:Individual interviewsGroup interviewsWorkshopsQuestionnairesObservationsSecondary analysis

Few tips:

Combination of all these

Interview hierarchically-macro view

Varios aspects look out-physical layout,workenvironment

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HR Audit

Challenges in HRD Audit:org has to Build and improve quality consciousnessStrive to recruit and retain competent ,creative

employeesAlign biz processes with technology infrastructureNurture creative and supportive work cultureTrain and develop the ppl thru 360 degree feedbacks,

appraisals.Promote learning orientation-informal networks

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HR Audit

The Audit Process has different phases:Pre audit informationPre audit self assessmentOn site reviewRecord reviewAudit report-Urgent and Important(UI),not urgent but

important(NUI),not urgent and not important(NNI),important opportunities needs are sorted out(IO)

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HR Audit

Using Audit Findings:

Org have 3 options for dealing with HR auditUse it as a blue print or action plan for addressing HR

needs.Address as many needs as possible using the

organization’s internal expertise and resources.Contract out those need areas where internal expertise

and resources are not available or do not fit in the core objectives of the organization.

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HR Audit

Modules of HR audit:Recruitment and selection assessment modulePerformance management moduleCompensation management module

HR audit-Action Plan:Define the role of HR function in the line org and biz

plans.Create a system for cost effective hiring.Develop programmes for the orientation and training of

the new employees.

1-53HR Audit

Prepare key personnel policies and make it available to employees and also train the employees in policy adherence.

Implement and install the HR IS systems.

Limitations of HRD Audit:Top mgmt can influence HR audit.Failure of implementation of corrective action based on

the feedback.Victimize the HR deptt and remove some HR staff, due

to negative audit feedback.

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Balance ScorecardProvides a framework for organizations to mange the

implementation of strategy in an org by linking the objectives, initiatives and corresponding measures for evaluating success in the org.

It is an overall view of the organization’s performance by integrating financial measures along with the key performance indicators such as the perspective of customers, internal biz processes.

STEPS for individual balance scorecard.Defining objectives and levels at the corp level.Linking corp. objectives to individual line of biz and

measures

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Balance Scorecard

Linking line of biz objectives ad measures to critical biz processes.

Building a Balanced Scorecard:Building the biz caseIdentifying strategiesIdentifying tactical objectivesIdentifying perf measurementsIdentifying data sources for calculating the measurementsCreating a data warehouse to supply the dataSelecting IT to create data warehouseCreating balance scorecard report

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Balance ScorecardManaging the strategy using balance scorecardRefining the tactical objectives in support of the

strategy

Balance Scorecard-Strategic InitiativeStrategy clarificationCommunication of strategic objectivesPlanning and aligning strategic initiativesLearning from feedback

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Knowledge Management

The advent of the networked org. means that organizations can no longer function in isolation within their economies and have to function on a global scale.Mgmts are finding it increasingly necessary to align their structures and culture to the requirements of knowledge mgmt.

Globalization-Impact on HR:

Globalization is defined as the process wherein the production and distribution of goods and services by organizations are not restricted within geographic boundaries.

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Globalization-Impact on HR:

Human resource Development: is a process encompassing a gamut of activities in an organization-manpower planning,recruitment,selection,training and development and providing for satisfactory exit of employees.

Strategic activities linked with HR activities.

HR processes have their origin in the strategic activities of an organization aimed at improving the bottom line while maintaining or improving the market place.

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Global Marketplace

Increased salary structures and expectations/aspirations of the employees are forcing the HR functionaries of firms to adopt innovative HR systems, such as ESOPs, Performance Management systems and Flexible working Hours

Orgs have to understand the 4 Ps- Product, price ,promotion, PEOPLE.

ESOPs, Performance Management Systems,flexiwork hours

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Technological RevolutionDeveloping countries have bigger markets and

increasing purchasing power but scarce invest for resources and R n D.The thrust areas in HRD are education and training of employees to manage technology transfer.

Tech savvy manpower, train the trainers, training in network management, IT audit,biz process reengineering, MIS.

Change in Employer-Employee relations

Emergence of intellectual property rights and internet marketing has changed the scene of IR.-restructuring, performance linked promotions, contractual or task based employment

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Hayek's insight was that an organization's perf. depends on the allocation of decision making authority with the knowledge important to these decisions.

What is Knowledge??

Is the fact or condition of knowing something with familiarity gained through experience or association.

It’s a set of models that described various properties and behaviors within a domain or stored in org processes, products ,facilities, systems and documents.

Knowledge Asset: as applied to biz firms means know regarding markets,products,technologies and the org that generates profits and value.

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Sources of Knowledge:

Formal: notes, manuals,reports,memos

Informal:Experts,end users, multiple experts, literature.

What is Knowledge management??

Its about connecting people to people and people to information to create competitive advantage.

Systematic process of finding ,selecting,organizing,distilling and presenting information in a way that improves employees’ comprehension in specific area of interest.

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What are the knowledge assets a co. possesses?Where is the Knowledge asset?What does it contain?What is its use?What form is it in?How accessible it is?How can the knowledge add value?What are the opportunities for using knowledge assets?What are the current obstacles in its use?What would be the effect of its use?What are the actions to use know asset planned???

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Knowledge Management-ApproachesApproaches:

Mechanistic Cultural/Behavioural

Systematic

Approach It is with application of technology and resource to do better

Focus on innovation and creativity rather than leveraging existing explicit resources

This approach is rational coupled with new ways of thinking.

Assumption Accessibility to info is the Key.resuse f docs,intranet,netwrking tech,groupwares

Behaviour culture and environment needed to be changed and not just technology.

A systematic way of reviewing the processes, cultural pattern, and practices is needed

Assessment Unless experience is combined in this model, it yet becomes yet another paper model.

Interplay of culture and org change may not be measured, cumulative or replicable.

It has shown sustained positive result

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Process of Knowledge mgmt

Identification: Knowledge that exists in various forms-files,computers,conversations is located.

Elicitation: next is to retrieve the know that is identified. Appropriate systems used to retrieve the knowl.-interviews,case study,protocols,observations,

Classification: Next is to classify the retrieved information. make it accessible for those who need it.

Storing: Store it in a way that it is readily and easily accessible. Building a robust infra will allow knowledge to be leveraged thru systems and tech platforms

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Knowledge Work and Worker

Knowledge workers basically use their intellect to transform ideas,products,services and processes. Their main value to an org is their ability to gather and analyze info and make decisions to benefit the company.

They are essentially investors. The main discretionary choices as to how and when their energies and skills may be invested in their companies. The decision to invest or apply the skill may be contingent on their ability and motivation and opportunity available top them

Emphasis on relationships,collaborations,professionalism.

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Performance Planning and Improvement

Perf planning-of the employees vis avis the goals and objectives of the org, thru continuous or gradual improvement can be termed as performance planning. Objective is to improve the performance.

Organizational Strategy and Performance

Researchers in the field of organizational change have emphasized the need for change from the perspectives of survival requirements and perf improvement.

Change and Learning: The concept of learning organization and organizational learning have made it imperative for org to understand the correlation between learning environment and employee performance

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Knowledge, learning and Performance

The learning concept has made it necessary for orgs to understand knowledge, capture it, facilitate its dissemination to achieve the objectives of organizational learning.

Key concepts:Organizational knowledgeKnowledge management

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Knowledge management and HR

The impact of knowledge management on HR can be seen in the following lines:

Organizational culture and performanceHR strategy and performance PlanningOrganizational learning and Performance FeedbackTechnology based learning and Performance

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Technology and Innovation mgmtThe modern organization relies upon talent and

knowledge mgmt and effectiveness of the org is measured more in terms of RoT-return of talent rather than return of investment.

Organizational innovation is a new idea that leads to a tangible product, process or procedure with the organization and should be able to benefit a part of or the entire organization.

Documents

Unit 4