DBA7022 Strategic HRMAND Development

DBA 7022
MASTER OF BUSINESS
ADMINISTRATION
STRATEGIC HRM &

DEVELOPMENT
CENTRE FOR DISTANCE EDUCATION

ANNA UNIVERSITY
CHENNAI – 600 025
STRATEGIC HRM & DEVELOPMENT
SYLLABUS
UNIT-I
Human Resource Development: Meaning – Strategic framework for HRM and HRD – Vision, Mission and Values –
Importance – Challenges to Organisations – HRD Functions - Roles of HRD Professionals - HRD Needs Assessment -
HRD practices – Measures of HRD performance – Links to HR, Strategy and Business Goals – HRD Program
Implementation and Evaluation – Recent trends – Strategic Capability , Bench Marking and HR Audit.
UNIT-II
E-HRM: E-Employee profile–e-selection and recruitment - Virtual learning and Orientation–E-Training and development
– e- Performance management and Compensation design – Development and Implementation of HRIS – Designing HR
portals – Issues in employee privacy – Employee surveys online.
UNIT-III
CROSS CULTURAL HRM: Domestic Vs International HRM - Cultural Dynamics - Culture Assessment - Cross
Cultural Education and Training Programs – Leadership and Strategic HR Issues in International Assignments - Current
challenges in Outsourcing, Cross border M and A- Repatriation etc - Building Multicultural Organisation - International
Compensation.
UNIT-IV
Career & Competency Development: Career Concepts – Roles – Career stages – Career planning and Process – Career
development Models– Career Motivation and Enrichment – Managing Career plateaus- Designing Effective Career
Development Systems – Competencies and Career Management – Competency Mapping Models – Equity and
Competency based Compensation.
UNIT-V
Employee Coaching & Counseling: Need for Coaching – Role of HR in coaching – Coaching and Performance – Skills
for Effective Coaching – Coaching Effectiveness– Need for Counseling – Role of HR in Counseling - Components of
Counseling Programs – Counseling Effectiveness – Employee Health and Welfare Programs – Work Stress – Sources -
Consequences – Stress Management Techniques.- Eastern and Western Practices - Self Management and Emotional
Intelligence.
STRATEGIC HRM & DEVELOPMENT
SCHEME OF LESSONS
Page No.
UNIT I
Lesson 1 Introduction to SHRM 7
Lesson 2 Human Resource Development 34
UNIT II
Lesson 3 E-Employee Profile and E-Recruitment and Selection 51
Lesson 4 E-Training & Development, Performance Management
and Compensation Design 70
Lesson 5 Development and Implementation of HRIS
and Designing of Portals 95
UNIT III
Lesson 6 Domestic vs International HRM Cross Cultural Education
and Training Programmes 115
Lesson 7 Current Challenges in Outsourcing 137
Lesson 8 Cross Border Merger and Acquisition Repatriation 155
Lesson 9 Building Multi-Cultural Organisation
and International Compensation 170
UNIT III
Lesson 10 Career Management 197
Lesson 11 Competency–Mapping, Assessment and Development 221
UNIT V
Lesson 12 Employee Coaching and Counselling 255
Lesson 13 Employee Health and Welfare Programs 274
Model Question Paper 305
Lesson 1 - Introduction to SHRM
Notes
UNIT I
LESSON 1 - INTRODUCTION TO SHRM
CONTENTS
Learning Objectives
Learning Outcomes
Overview
1.1 Meaning of Strategic Human Resource Management
1.1.1 Evolution of Strategic Human Resources
1.1.2 From Personnel Management to Human Resource
Management
From Traditional HRM to Strategic HRM
Growth of Strategic Human Resources
Strategic Framework of HRM
HRD Vision, Mission and Values
Importance of SHRM
Challenges to Organisations
Views on SHRM
Recent Trends in HR
Strategic Capability
Traditional Role
Strategic Role
Benchmarking and HR Audit
Benchmarking
HR Audit
Summary
Keywords
Self-Assessment Questions
Further Readings
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Strategic HRM & Development
Notes LEARNING OBJECTIVES

After studying this lesson, you should be able to:
 Explain the Strategic HRM and Strategic Framework of HRM
 Describe the Importance of SHRM
 Discuss the Recent Trends in HRM
 Define the Benchmarking and HR Audit
LEARNING OUTCOMES
Upon completion of the lesson, students are able to demonstrate a good
understanding of:
 basics of strategic human resource management and explain its evolution
 analysing growth and importance of SHRM
 strategic framework of HRM and explain views on SHRM
 recall recent trends in HR and identifying strategic capability
 concept of benchmarking and HR audit
OVERVIEW
The Strategic Human Resource Management is built around three important
propositions and those being Human Resource of a firm are a major source of
competitive advantage; in a way, people can make or break an organisation.
Successful organisation performance depends on a close fit between business
and human resource strategy. Individual HR Strategy should cohere by being
linked to each other to offer mutual support.
In this lesson, you will learn about the meaning and strategic framework of
HRM and HRD, which are meant for the development of employees. You will
also learn about the vision, mission and values, current challenges faced by an
organisation, recent trends in HRD and their share in competitive advantage of
the organisation.
MEANING OF STRATEGIC HUMAN RESOURCE

MANAGEMENT
The first thing that needs to be done is to provide an actual definition and
analysis to what it actually means to be SHRM. In order to define this concept,
it is first important to actually explain what is meant by human resources in
general. Appleby & Mavin explain that
Human resources are the efforts, skills, and capabilities that people contribute
to an employing organisation which enable it to continue in existence.
Although difficult to define, SHRM is generally perceived as a distinctive
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approach to managing people which seeks to achieve competitive advantage Notes

through the strategic development of a highly committed and capable
workforce.
The definition that is provided here explains that human resources is really
about the skills that the people of an organisation bring together in order to
keep it alive. In addition, the authors explain that moving into the realm of
SHRM is about managing the human capital of an organisation in such a way
as to achieve some type of competitive edge. Having not only a committed
workforce, but also having a workforce that is highly trained for the job that
must be performed achieves the competitive edge. Moving in this direction is
where human resources become SHRM.
Schuler has developed a more comprehensive academic definition of SHRM:
Strategic human resources management is largely about integration and
adaptation. Its concern is to ensure that:
1. Human Resources (HR) management is fully integrated with the strategy
and the strategic needs of the firm;
2. HR policies cohere both across policy areas and across hierarchies; and
3. HR practices are adjusted, accepted, and used by line managers and
employees as part of their everyday work.
Truss & Graton, has defined SHRM as “defined as the linking of HRM with
strategic goals and objectives in order to improve business performance and
develop organisational cultures that foster innovation and flexibility.”
Hence, SHRM, in general, can be defined as the process of linking the human
resource functions with the strategic objectives of the organisation in order to
improve performance.
Some authors describe SHRM as ‘the process by which

organisations seek to link the human, social, and intellectual capital of their
members to the strategic needs of the firm’.
Evolution of Strategic Human Resources

The appearance of SHR is due internally, to the need to justify the value of the
human resource department and externally, to the changing business
environment in technology, globalisation and diversity. While HRM has grown
spontaneously in recent decades, the search for sources of sustainable
competitive advantage in the increasingly intense global competition has led to
the need for a more strategic approach for HRM. Consequently, SHR has
become a major paradigm among scholars and practitioners in many parts of
the world.
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Notes The relevance of SHR issues has grown in such an exponential way that
research has now spread across various academic disciplines (for example,
psychology, sociology and economics), also across diverse geographic regions
in recent decades. Even though research has been primarily carried out in the
United States and Europe, it is also emerging in the Asian Pacific region and
some Arab countries.
Nevertheless, this explosion seems not to be making progress in the literature,
which is in need of integration and synthesis: different prominent scholars still
argue that there is a lack of a solid theoretical framework (Wright, 2003;
Boxall & Purcell, 2003). In order to better understand the controversies and
dilemmas in the field, a comprehensive overview of the emergence, growth,
and uncertainties of SHR is presented here to summarise its evolution.
From Personnel Management to Human Resource Management
Since the 1970s, HRM has appeared as a replacement for personnel
management, and has changed the boundaries, substance and objectives of the
function. Burack & Miller united both terms in their article entitled The
Personnel Function in Transition early in 1976. These two terms were often
referred to as ‘synonymous’, and without ‘fundamental differences in meaning’
in the 1970s and early 1980s. Legge (1995) in Human Resource Management:
Rhetoric and Realities presents a thorough review of the similarity and
differences between personnel management and human resource management
by analysing four models of approach. The change from personnel
management to HRM is considered as a strategic movement, grounded on the
following key characteristics. First, the increasing pace of innovation and
technological shift is forcing and pressurizing a function that is subject to vast
changes; second, growing institutional size and form is adding complexity to
this environmental turbulence and pushing the function towards becoming a
comprehensive resource system; third, personnel have shown potential to
contribute to the strategic aspects of organisation, such as decision making,
performance, and accomplishment.
From Traditional HRM to Strategic HRM

In the early 1980s when the strategic importance of personnel or human
resource management first came to the fore, a dramatic shift in the field
occurred spontaneously. This shift broadened the focus of HR from the micro-
analytical research that had dominated the field in the past to a more macro-
generic or strategic perspective, namely strategic human resource management.
This appearance of SHR, emphasizing the integration of human resource
planning with the strategy of the organisation, departed radically from
traditional models (Ulrich, 1987).
Arguably, the birth of the research field of SHR, fuelled by both practitioner
and academic concerns, took place with an article entitled Human Resources
Management: A Strategic Perspective by Devanna, Fombrun & Tichy (1981).
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Truss & Gratton (1994) distinguished the ‘Harvard Group’ and the Notes
‘Michigan/Columbia Group’, both of which had been strongly influencing the
academic world and leading developments towards a new wave of interest in
HRM. On the one hand, this shift to SHR was developed to justify HR
expenditure and the added value of the HR function in the organisation. HR
professionals were trying to identify HR departments and programs as
elements of the firm’s profit equation instead of costs. That is, HR needed to be
maximized as a value-adding component for a firm’s strategy. As a
consequence, HR practitioners and theorists tried to demonstrate the value of
the HR function, particularly by demonstrating its impact on the firm’s
performance.
Besides this internal factor, externally SHR appeared to respond to the ever-
increasing global business environment. Intense global competition,
technological and product innovation, and volatile market conditions were
creating greater competitive pressures in almost every industry. Organisations
needed a process of SHR to help deal with the rate of ‘strategic surprises’ that
generated the need for flexibility and innovation, developing a culture to
harness creativity and enterprise; the adaptation of strategies to create and
sustain competitive advantage might provide an answer to these pressures. This
contextual change forced managers to reconsider and reinforce the
management of all resources within the organisation, paying specific attention
to the effective management of human resources, thus leading to general
statements such as “People are our most valuable asset” (Biswas & Cassell,
1996: 20).
Coincidentally both shifts, from personnel management to HRM and from
traditional HRM to strategic HRM, were meant to respond to the strategic
needs of both external and internal evolutions. This shift from personnel
management towards a more sophisticated HRM has been reported so
repeatedly and extensively that it has led HRM to acquire a more strategic role
in organisations. The shift from traditional HRM to strategic HRM is also
intended to attain a more strategic role for HR in organisations, and hence
competitive advantage for organisations. With ‘strategic’ as the common
thread for the two movements, these two shifts have fuzzy boundaries. The
appearance of HRM at the end of the 1970s, and SHR at the beginning of the
1980s, could be viewed as a transitional period for these strategic movements;
or arguably the shift from personnel management towards HRM was in fact the
starting point of a strategic move of the function inside the firm. Therefore, this
is a continuum leading to the appearance of SHR rather than two independent
movements.
During this emergence period of SHR, case studies were often used as the
methodology for justifying a proactive HRM presence at strategic level. The
strategic need for and nature of HR is usually demonstrated through criticism
of the functional role, in terms of perceived weakness or evidence of
environmental pressures.
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Notes Growth of Strategic Human Resources

Since the mid-1980s, the field of SHR has been growing steadily both as a
sphere of management practices and as an important nucleus of research
focuses. Growing out of researchers’ desire to demonstrate the importance of
HR practices for organisational performance, SHR has been a source of debate
among business executives, academics and students as regards what taking a
‘strategic approach’ to HRM means.
This explosion of research in SHR has spread worldwide. Truss & Gratton
(1994) observed that the number and scale of research projects under way had
increased, for example, in the UK, led by Andrew Pettigrew at Warwick and
John Storey at Loughborough, in the US led by Randall Schuler, and in
Australia led by Dexter Dunphy.
In the mid-1990s, recession brought SHR back to the centre stage of research
in the face of a newly defined and highly competitive marketplace. In that
period, organisations at all levels were increasingly turning to SHR techniques
to pave the way for facing challenges, linking HRM with strategic goals and
objectives in order to improve business performance, developing organisational
cultures to foster innovation and flexibility, bringing former personnel
departments to the forefront of organisational transformation and survival. This
explosive growth served to indicate the underlying vibrancy of this new subject
area, even though a careful examination of the published work revealed widely
disparate views regarding both the definitions of core SHR concepts and the
range of topics and issues discussed within this domain.
Characterized by case method at the emergence phase, an early review of SHR
by Dyer (1985) reported that progress had been made, but that a fully
articulated theory of personnel and human resource management had still to
appear. Boxall (1991) and Noon (1992) argued that lack of progress was
because there was a relative shortage of empirical data to disprove or support
any hypotheses made; large-scale surveys were needed to provide a broader
sweep of evidence rather than the current emphasis on case-study research. In
addition, much research seemed to be descriptive and there was a need to build
up models leading to the development of generalisable concepts.
STRATEGIC FRAMEWORK OF HRM

We shall try to understand about strategic HR framework formulated by Ulrich
and Lake (1990) aims to leverage and/or align HR practices to build critical
organizational capabilities that enable an organization to achieve its goals. This
framework offers specific tools and paths to identify how a firm can leverage
its HR practices. Business strategy, organizational capabilities and HR
practices are the three important elements in this framework.
12 ANNA UNIVERSITY
Dave Ulrich (1997) presented a framework for HR professionals in terms of Notes

four key roles:
1. Management of strategic human resource
2. Management of firm infrastructure
3. Management of the employee contribution
4. Management of transformation and change
The Integrative Framework: This has been offered recently by Yeung and
Berman (1997) and builds on earlier approaches. This framework identifies
three paths through which HR practices can contribute to business
performance:
 By building organizational capabilities
 By improving employee satisfaction
 By shaping customer and shareholder satisfaction.
Role of HRM in Strategic Management

A strategic business plan is formulated to achieve competitive advantage. From
this, specific strategy for each functional area, viz., marketing, finance,
production/operations and human resources need to be drawn in alignment
with strategic business plan to carry out the organizational plan. Here, human
resource strategy assumes more importance because it provides human
resources for other functional areas too. We must understand that human
resources integrally affect the overall strategy of an organisation. With this in
mind, we will now discuss role of HRM in strategy formulation and role in
strategy implementation.
Role in Strategy Formulation

Environmental scanning is followed by strategy formulation. Environmental
scanning helps an organization to identify its opportunities and threats
prevalent in the external environment. Here, HRM proves to be of great help in
scanning the existing (external) environment, and thus, identifies the specific
opportunities and threats to the organization arising from the environment.
Besides, HRM is also of great help to make the organization competitive with
the help of intelligence available. This may include the incentive plans being
used by the competitors, customer-complaints, labour laws, etc.
HR also participates in strategy formulation process by supplying information
regarding the company’s internal strengths and weaknesses. Instances are
available to mention that the unique HR capabilities of an organisation serve as
a driving force in strategic options and strategy formulation.
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Notes
It is very important to go in for a SWOT analysis before planning
out a strategy, i.e. Internal strength and weaknesses and external threats and
opportunities should be jotted down.
Role in Strategy Implementation

As stated earlier, HRM provides competent human resources to other
functional areas too. In this way, HRM plays a crucial role in the successful
execution or implementation of company’s strategic business plan. HR
practices that build employee commitment can help improve an organization’s
responsiveness.
Example: Many such stories of success abound in our country. Maruti

Udyog and Hindustan Motors are two. We know that Maruti Udyog and
Hindustan Motors are manufacturing cars, essentially using identical
technology. The secret behind the meteoric rise of Maruti is its human
resources/workforce.
Learning Activity
Visit a company and study its framework for Strategic HRM.
Discuss the role of HRM in strategic management, strategy
formulation and strategy implementation with their HR
manager. Prepare a short report based on your discussion.
HRD Vision, Mission and Values

 Vision: It is the one, which says regarding what you want to do or how you
want to see yourself in future. Now as we have understood the general
meaning of vision lets co relate the same with HRD so the prime vision of
HRD should be the development of their employees, which differentiates
their employees with that of rest of the organisations in the industry.
Example: Vision statement of HR department: Growth of the

organization lies in the development and satisfaction of employees.
 Mission: It is the one which says how are we going to achieve the vision
which is planned so in terms of HRD it can be said as the one which says as
to what is to be done to in order to achieve the vision statement.
Example: Mission statement of HR department: Continuous

development and tracking employees work for their growth.
14 ANNA UNIVERSITY
Notes
Learning Activity
Gather Vision and Mission statements of two different companies
and try to analyse the ideology behind setting them.
 Values: This includes few terms that help the organisation to form and
grow to greater heights and which is very necessary to have good values for
the success of the organisation. In contrast with HRD, it can be said that the
organisation should work with good values and commitment for betterment
and safety of the employees.
Example: Values: Honesty, Passion, Diversity, quality.
It is important to note here that vision and mission statement are to

be set at the same time as they both go hand in hand.
IMPORTANCE OF SHRM
In today’s intensely competitive and global marketplace, maintaining a
competitive advantage by becoming a low cost leader or a differentiator puts a
heavy premium on having a highly committed or competent workforce.
Competitive advantage lies not just in differentiating a product or service or in
becoming the low cost leader but in also being able to tap the company’s
special skills or core competencies and rapidly respond to customer’s needs
and competitor’s moves. In other words, competitive advantage lies in
management’s ability to consolidate corporate-wide technologies and
production skills into competencies that empower individual businesses to
adapt quickly to changing opportunities.
1. In a growing number of organisations, human resources are now viewed as
a source of competitive advantage. There is greater recognition that
distinctive competencies are obtained through highly developed employee
skills, distinctive organisational cultures, management processes and
systems. This is in contrast to the traditional emphasis on transferable
resources such as equipment. Increasingly, it is being recognized that
competitive advantage can be obtained with a high quality workforce that
enables organisations to compete on the basis of market responsiveness,
product and service quality, differentiated products and technological
innovation.
2. Strategic HR means accepting the HR function as a strategic partner in the
formulation of the company’s strategies as well as in the implementation of
those strategies through HR activities such as recruiting, selecting, training
and rewarding personnel.
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Notes 3. Whereas strategic HR recognizes HR’s partnership role in the strategizing

process, the term HR Strategies refers to specific HR courses of action the
company plans to pursue to achieve its aims. HR management can play a
role in environmental scanning, i.e. identifying and analyzing external
opportunities and threats that may be crucial to the company’s success.
4. Similarly, HR management is in a unique position to supply competitive
intelligence that may be useful in the strategic planning process. HR also
participates in the strategy formulation process by supplying information
regarding the company’s internal strengths and weaknesses.
5. The strengths and weaknesses of a company’s human resources can have a
determining effect on the viability of the firm’s strategic options. By design
the perspective demands that HR managers become strategic partners in
business operations playing prospective roles rather than are passive
administrators reacting to the requirements of other business functions.
6. Strategic HR managers need a change in their mindset from seeing
themselves as relationship managers to resource managers knowing how to
utilize the full potential of their human resources. The new breed of HR
managers needs to understand and know how to measure the monetary
impact of their actions, so as to be able to demonstrate the value added
contributions of their functions.
7. HR professionals become strategic partners when they participate in the
process of defining business strategy, when they ask questions that move
strategy to action and when they design HR practices that align with the
business strategy. By fulfilling this role, HR professionals increase the
capacity of a business to execute its strategies.
8. The primary actions of the strategic human resource manager are to
translate business strategies into HR priorities. In any business setting,
whether corporate, functional, business unit or product line, a strategy
exists either explicitly in the formal process or document or implicitly
through a shared agenda on priorities. As strategic partners, HR
professionals should be able to identify the HR practices that make the
strategy happen. The process of identifying these HR priorities is called
organisational diagnosis, a process through which an organisation is
audited to determine its strengths and weaknesses.
9. Translating business strategies into HR practices helps a business in three
ways. Firstly, the business can adapt to change because the time from the
conception to the execution of a strategy is shortened. Secondly, the
business can better meet customer demands because its customer service
strategies have been translated into specific policies and practices. Thirdly,
the business can achieve financial performance through its more effective
execution of strategy.
16 ANNA UNIVERSITY
10. Strategic Human Resource Management (SHRM) involves a set of Notes

internally consistent policies and practices designed and implemented to
ensure that a firm’s human capital (employees) contribute to the
achievement of its business objectives.
11. SHRM practices are macro-oriented, proactive and long-term focused in
nature; views human resources as assets or investments not expenses;
implementation of SHRM practices bears linkage to organisational
performance; and focusing on the alignment of human resources with firm
strategy as a means of gaining competitive advantage.
CHALLENGES TO ORGANISATIONS
According to Dave Ulrich in his article, “A new Mandate for Human
Resources”, companies today face five critical business challenges:
globalisation, profitability through growth, technology, intellectual capital, and
change.
1. Growth and Globalisation: With the rapid expansion of global markets,
managers have to think globally and act locally. Globalisation requires that
organisations increase their ability to learn and collaborate. Ethics also play
an important role here; companies have to be able to adapt to new cultures
and to manage diversity, complexity, and ambiguity.
Lately, a lot of companies have realised the gains of downsizing,
reengineering, delayering, and consolidation to increase efficiency and cut
costs. Executives will now have to be creative and innovative, and must
encourage the free flow on information and shared learning among
employees. They must also become more focused on the market and of the
fast changing needs of their customers. From hiring and firing labour force
to formulating selection, training, and compensation policies for expatriate
employees, managing globalisation will be a major HR challenge in the
next few years.
2. Technology: In modern organizations, HR strategy is supported by
information technology in the form of human resource information systems
and workforce management systems. Developments in IT are leading to
significant changes in the measurement of performance. Extensive statistics
can be generated but how meaningful are they? Not all technology adds
value, but it can and will affect how and where work gets done. That’s why
managers have to make sense and good use of what technology offers, to
make technology a viable, productive part of the work setting. They will
need to stay ahead of the information curve and learn to take advantage of
information for business results.
3. Change: In order to adjust to non-stop change, companies must be able to
learn rapidly and continuously, innovate at all times, and take on new
strategic imperatives faster and more comfortably. They must detect
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Notes emerging trends quicker than the competition, be able to make rapid
decisions, and the flexibility to seek new ways of doing business.
4. Human Capital: Knowledge has become an indirect competitive advantage
for companies attempting to differentiate themselves by how they serve
customers. The challenge for organisations is to make sure they have the
capability to find, attract, assimilate, develop, compensate, and retain
talented individuals who can drive an organisation that is responsive to
both its customers and the opportunities of technology.
According to William M. Mercer, Human Capital can be seen as the sum of
intellectual capital (competence and commitment), social capital (network,
access to people, reputation, etc.), and emotional capital (behavior, traits,
character, etc.).
‘Human Capital’ of quality employees will play a key role as the human touch
of quality service will still remain important in different hotel services. Our
hospitality Industry needs people with a passion for people and for service
quality that can achieve highest profits due to their ability to see coming
changes and adapt strategies to them. In a world of work that is demanding so
much more from people in an environment of increasing complexity,
competition and uncertainty a well trained high performance workforce
capable of rapid change provides the key to sustainable competitive advantage
and future success. Concluding on these business challenges, one can say that
trends like globalisation and technological innovation are changing the way
firms are managed.
VIEWS ON SHRM
The term HR strategies refer to the specific HR courses of action that the
company uses to achieve its aims. Like production, marketing and finance, HR
strategy is a functional strategy. Again, the overall HR strategy of a company is
composed of a range of strategies. It is because a company formulates a
specific HR strategy pertaining to a specific HR function. HR strategies
combine all people management activities into an organized and integrated
program to meet the strategic objectives of an enterprise. HR strategy is the set
of ideas, policies and practices which management adopt in order to achieve a
people-management objective. Some authors conceptualize HR strategy as an
outcome: ‘the pattern of decisions regarding the policies and practices
associated with the HR system.’ From this point of view, there can be as many
HR strategies as many HR functions are there.
Devanna suggest four ‘generic functions’ of HRM, namely, selection,
appraisal, rewards and development that act as independent variables, in a
cycle of human resource interventions on the dependent variable of
performance.
Schuler and Jackson mention six HR practices, namely, planning, staffing,
appraising, compensating, training and development.
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Milkovich and Glueck identify five functions of HRM, such as (i) staffing, Notes
(ii) development, (iii) employment relations, (iv) compensation, and
(v) evaluation. Heneman classified the functions of human resource
management into five categories namely, (i) external staffing, (ii) internal
staffing and development, (iii) compensation, (iv) labor relations and, (v) work
environment.
In the opinion of Decenzo and Robbins, human resource management consists
of four basic functions: (1) staffing, (2) training and development,
(3) motivation and (4) maintenance.
Dessler identifies such practices of human resource management as (i) job
analysis, (ii) HR planning, (iii) recruitment, (iv) selection, (v) orientation,
(vi) wage and salaries management, (vii) incentives and benefits planning,
(viii) performance appraisal, (ix) communication and (x) training and
development.
Michael Jucius classifies the HR functions into four broad types:
(i) Procurement (job analysis, recruitment and selection); (ii) Development
(training and development, appraising performance); (iii) Maintenance (pay
plans, financial incentives, pay for performance); and (iv) Utilization (labour
management relations). Hence, we can see that different firms place different
emphasis on the various HRM practices.
Table 1.1: Differing Views on SHRM
Nomenclature Example of major Suggested perspective
of view contribution(s) to
this view
Strategy-focused Mathis and Jackson HRM is strategy focused, i.e. by itself it is strategic in
(1985): Beer et al nature.
(1984)
Decision- Tichy et al (1981) There are three levels of decisions, namely strategic,
focused managerial/administration, and operating; HRM at
strategic level is SHRM.
Content-focused In the model of HRM process, there are some elements
and in every such element there are strategic aspects,
which are called SHRM.
Implementation- Miles and Snow (1984) In order to formulate and implement business
focused strategies, appropriate type of HRM systems are
required and such blending of business strategies with
HRM systems is called SHRM.
Source: Kazmi and Ahmed (2000)
However, after considering all the cases, it is unclear whether SHRM is an

outcome or a process. To others, ‘strategic HRM’ is an outcome: ‘as
organisational systems designed to achieve sustainable competitive advantage
through people’. However, there is another group who views SHRM as a
process, ‘the process of linking HR practices to business strategy’. The aim of
SHRM is to ensure that the culture, style and structure of the organisation, and
the quality, commitment and motivation of its employees contribute fully to the
achievement of business objectives.
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Notes Like HRM, SHRM is also facing an identity crisis. From the beginning, it is
viewed from different perspectives. These perspectives, as perceived by Kazmi
and Ahmed, can be consolidated as strategy focused, decision-focused,
content-focused or implementation-focused. These four perspectives are
highlighted below:
1. Many authors, like Mathis and Jackson (1985), Beer et al. (1984) and so
on, see HRM and SHRM as identical. In their opinion, HRM is strategy
focused and it contains certain elements. But their views do not seem to be
fully acceptable. For example, HR planning is to some extent strategic –
but not every aspect of this is strategic; on the other hand, for instance,
recruitment and selection are administrative and operational functions
according to their opinion, but there are some strategic issues in these
functions too.
2. According to authors like Tichy et al. (1981), there are three management
levels: strategic (long-term), managerial (medium-term) and operational
(short-term) and HR functions performed by the strategic management
level is called SHRM. It is implied in their discussion that management and
operational management level activities which deals with medium and
short-term HR functions are not SHRM – rather they are functional HRM
activities. IT can also be inferred that the strategic management level
activities are directed to achieve organisation’s strategic goal.
3. Some authors opined that in the model of HRM process, there are some
elements and every such element has some strategic aspects, which are,
called SHRM. This means that in every element of HRM, there are two
kinds of aspects: strategic and functional.
4. Some authors like Miles and Snow (1984), expressed that organisations
have some competitive objectives which are achieved by some business
strategies and in order to formulate these business strategies, appropriate
type of HRM systems are required. According to them, these blending of
business strategies with the HRM system are called SHRM.
RECENT TRENDS IN HR
While defining the roles and responsibilities of the future HRD manager, the
context of following current or recent business trends should be kept in mind.
1. Competition is global: Organizations do not compete any more with their
local competitors in terms of products, quality, costs, durability, and speed,
etc. Unlike the early years, every organization has to compete with global
players. Be it in watches, televisions, food items, education and training,
competition is usually with global players. This is the reality of life.
2. Competencies also have gone global: Most Indian organizations have
started recruiting expatriates as their global or even local managers. The
competition for talent no longer remains local nor is limited to management
20 ANNA UNIVERSITY
schools. MNCs for example are scouting around Indian business schools Notes
for talent. Thus, competency requirements have become global.
3. Technology and finances have become a relatively lesser issue: Most
organizations are buying excellent technologies. Thanks to the Internet and
global changes, technologies as well as finance are being made globally
available. If you have good ideas, it is not difficult to raise finances. The
cost of money is getting under control as never before. Several institutions
are vying with each other for supporting innovative ideas. The HRD
manager may reduce himself to a talent searcher or enhance himself as a
talent developer. If you are looking for talent remember someone else is
also looking for it and what you have found may not be permanent. If you
are a developer, you perhaps have an advantage.
4. Speed has become a competitive advantage: Everyone looks for speed and
reliability in offering services. There is global competition as regards speed
and reliability. The funniest thing to note in this context is that pizza arrives
faster than ambulance or police. That is the level of competition. Those
who can supply, repair and service faster, have a competitive edge.
5. Quality and cost also give a competitive advantage: This needs no further
explanations. It is worth noting that one of the reasons for the gradual
encroachment of foreign automakers in the US car market is the insistence
of said makers on turning out a quality product, while the US makers
continue to downplay the importance of quality.
Example: Buyers looking for dependable luxury almost reflexively

look to Toyota/Lexus, Honda/Acura, Mercedes/Daimler, BMW, Audi, even
VW over GM/Cadillac or Ford/Lincoln.
6. Outsourcing too, has become global: There need not be any better
evidence to this, than the number of BPO organizations, customer service
cells or call centers that have come into existence in India.
Example: The fact that leading IT organizations like Infosys,

WIPRO, TCS and Satyam are on a recruitment extravaganza and setting up
a number of BPOs is indicative of the increased global outsourcing. Most
Indian IT companies serve other companies abroad.
7. Structures are changing fast: Flat and matrix structures have become
more sophisticated and organizational structures are emerging to take care
of the complexities of business.
8. Management technologies have come within everyone's reach: It is not
confined to business schools anymore. You do not need to go to business
schools to learn management. You have to only visit one of the nearest
airport bookstalls to get hold of the most modern concepts of management.
ANNA UNIVERSITY 21
Notes In addition, online education and certification put management within

everyone's reach.
9. Knowledge improvements are taking place at a fast rate: The current
generation is more knowledgeable than the earlier generations and are
learning at much faster rates.
10. Workforce at all levels has become much more intelligent: Trade unions
have lost their sting these days mainly because of this factor. The workers
know for themselves what is good and what is not for them in the
organization they work in.
11. Customer expectations are growing at a fast rate: A few years ago, most
managers did not know what 360 degree feedback is. But the customers
want the sky and satisfaction yesterday. Customers determine the price of a
product. The manufacturers of goods and service providers have to cut
down their margin and fix the price.
Example: Levi Strauss goes to the extent of making the jeans

according to individual customer's requirement – design to measurement,
material to delivery. No mass production of readymade garments in such
situations.
12. Brand distinctions are slowly disappearing: They are likely to disappear
as people discover the real quality behind brands and how some brands do
business by getting low-cost and poor-quality services and branding them.
More new brands will come in and HR will be required to focus on them.
There is no more brand loyalty as in the past even in FMCGs. All this adds
to diverse strategic considerations.
Example: Traditionally, Hindustan Lever's (now Hindustan

Unilever) carbolic soap under the brand name Lifebuoy, which was reddish
looking and hospital-smelling (old) had its own loyalists. But now they
have to attract the youth who are not very much for that brand in its
original form and so they have come out with different shapes, colours and
odour as well.
13. New business models are emerging: The speed of implementation is
becoming a crucial factor in determining the success of a company. Credit
cards enable the companies to clinch the deal faster. E-business models
customer to business, business-to-business, business to customers and
customer to customers are widely available.
Example: An example of developmental marketing in rural areas is

Hindustan Petroleum Corporation Limited's (HPCL's) rasoighars to
introduce their LPG cylinders by educating the villagers in the use of the
product.
22 ANNA UNIVERSITY
14. Product innovations are on the increase and will go on increasing: There Notes
are new products every day. Product innovations are increasing in all
spheres.
Example: A prototype of a car, which will run for 200 miles per
gallon of gas, is on the anvil by the students of MIT, IITs and IISc on a
global project. Innovation will have no end as long as the human race
exists.
Learning Activity
Visit any three FMCG company and try to understand the
recent HR trends which are being followed there. Prepare a
comparison report.
STRATEGIC CAPABILITY
Strategic HRD practices are a holistic framework encompassing developmental
fundamentals and initiatives. For any activity to be successful, certain
fundamental conditions have to exist before they can yield desired results.
SHRD fundamentals are those components of HRD, which have to be strong
enough to ensure a congenial atmosphere in an organization for
implementation of SHRD initiatives.
Strategic HR management activity is classified into two categories by HR
experts, namely the traditional administrative functions and the participatory
‘Strategic HR’ management functions.
Traditional Role
The Traditional Role includes activities related to:
 Preparation, interpretation and implementation of policies and rules for HR
functions.
 Ensuring compliance of statutory obligations and legal provisions.
 Administration of employee benefits schemes.
 Selection, recruitment and training of workforce based only on the strength
required.
 Looking after attendance, transfers, placements and promotions.
 Ensuring official discipline
 Resolving official grievances/disputes.
ANNA UNIVERSITY 23
Notes Strategic Role

Strategic role includes the following:
 Gathering information from within the unit.
 Gathering information from without, i.e., about the opportunities that may
arise and threats that may loom, now and then, in the market.
 Assessing the suitability of the HR resources through a detailed application
of the SWOT principles from the angle of integral approach towards
realization of the business goals.
 A detailed programme to participate in defining and identifying the
business targets of the unit and formulation of steps to achieve the same.
 Participation in implementation of business strategies.
 Participation in organizational developmental schemes including adoption
of the fast evolving IT applications.
 Treating every step taken by the general management team towards
achievement of targets as a very high priority requirement in the HR
agenda.
BENCHMARKING AND HR AUDIT

Benchmarking
Benchmarking is a principal tool to assist managers in their efforts to integrate
human resource plan and practices with the strategic business plan. Operating
benchmarks help managers evaluate their unit’s position and performance on
critical workforce such as retention, training learning and productivity.
Based on his extensive study of benchmarking organizations, Spendolini
(1992) observes that:
 Most benchmarking projects use employees help plan, conduct, analyse and
present benchmarking efforts. This ensures greater employee involvement.
 Larger number of employees receives training as a consequence of
benchmarking practices. For example, Xerox used to encourage all
employees to attend benchmarking training sessions whether they had a
benchmarking project or not.
 One of the key skills associated with benchmarking is the ability of the
employees to communicate. However, the ability to plan and organize a
benchmarking investigation will be offset by an inability to communicate
these plans and objectives to others.
24 ANNA UNIVERSITY
According to Bogan and English (1994), benchmarking organizations Notes

encourage the following:
1. Employee potential
2. Holistic, systematic thinking and learning, in addition to problem-solving
3. Cross-functional team working
4. A corporate culture that rewards meaningful difference or departures from
the status quo
5. Reward and recognition systems in support of the new culture
6. Transformation of employees from change resistors into change champions
7. Development of skills and behaviours.
HR Audit
HRD audit begins with an understanding of the future business and corporate
strategies. While HRD audit can be done even in organizations that lack well-
formed future plans and strategies, it is most effective as a tool when the
organization already has such long-term plans. The HRD audit starts with the
following questions:
 Where does the company want to be ten years from now, three years from
now and one year from now?
 What is the current skill base of the employees in the company in relation
to the various roles and role requirements?
 What are the HRD subsystems available today to help the organization
build its competency base for the present, immediate future and long-term
goals?
 What is the current level of effectiveness of these systems in developing
people and ensuring that human competencies are available in adequate
levels in the company?
 Does the HRD structure exist in the company adequate enough to manage
the HRD in the company?
 Are the top-management and senior manager styles of managing people in
tune with the learning culture?
HRD Audit Examines Linkages with Other Systems: HRD audit also
examines the linkages between HRD and other systems like Total Quality
Management (TQM), personnel policies, strategic planning, etc.
The auditors make suggestions on the basis of evaluation about the future HRD
strategies required by the company, the structure the company needs to develop
new competencies, the systems that need to be strengthened, and the styles and
culture that have compatibility with the HRD process.
ANNA UNIVERSITY 25
Notes HRD Audit is Business-driven: HRD audit always keeps business goals in
focus. At the same time, it attempts to induct professionalism in HRD. In
keeping the business focus at the centre, HRD audit attempts to evaluate HRD
strategy, structure, system, staff, skill, style, and their appropriateness.
Benefits of HRD Audit

Following are the benefits of HRD Audit:
1. It makes the HR function business-driven
2. It takes stock of things and improves HRD for expanding, diversifying, and
entering into a fast growth phase.
3. It promotes professionalism among employees and helps organizations
switch over to professional management
4. It gives the multinationals knowledge about the reasons for lower labour
productivity and ways to improve their HRD strategies in the Indian
context.
5. It helps an organization to decide on growth and diversification.
6. It sets right dissatisfaction with a particular component of HRD subsystem
7. It helps in deciding on change of leadership.
Sometimes, HRD audit can also be used against the HRD

department. It can be used to get rid of some staff in the department. Such a
decision can have an adverse effect on the overall HRD of the company
subsequently, unless it is made carefully and after adequate time and scope
is given to develop the competencies of the employees concerned.
Role of HRD Audit in Business Environment
The auditors bring with them their experience of HRD with a large number of
companies and provide a good degree of qualitative data. Thus, the returns on
such low-cost audit can be substantial.
The following are the gist of some of the favourable roles of HRD in the
business environment:
 It can get the top management to think in terms of strategic and long-term
business plans.
 It can influence changes in the styles of the top management.
 It provides role clarity of HRD department and the role of line managers in
HRD.
 It effects improvements in HRD systems.
26 ANNA UNIVERSITY
 It enhances focus on human resources and human competencies. Notes

 It helps better recruitment policies and more professional staff.
 It ensures more planning and more cost-effective training.
 It strengthens accountability through appraisal systems and other
mechanisms.
 It streamlines other management practices.
 It refines TQM interventions through committed involvement of
employees.
 It enhances the ROI (Return on Investment) of the HR function.
Limitations of HRD Audit

The HRD audit itself is rarely a failure. However, when HRD audit is
conducted as a fashion or as a requirement of someone else and the CEO have
no way of refusing such an HRD audit, it can have some negative results. For
example, in one organization where HRD audit was conducted at the
headquarters located at a different place, the CEO was very cooperative but
later became very defensive and started justifying everything that was going on
in his unit. The message went fast down the line and the employees formed
into groups – those who were in favour of the CEO and those who were against
him. As a result, the auditors had a difficult time finding the truth and it
became more of a political game than a genuine effort for improvement.
However, such cases are rare.
Most HRD audit failures are due to failures of implementation. Some CEOs are
simply curious. They are restless until they know the results of the audit. But
once they know the audit results, they feel reassured that they are above
average and therefore forget about the audit.
Integrating Strategy and Human Resource Management
T he experiences of several organizations provide good examples of

the integrations of strategy and human resource management. One
such example is provided by the experiences of People's Bank, a
financial services company headquartered in Bridgeport, Connecticut.
Massive changes began to take place in the business environment of
banking with deregulation and relaxation of ceilings on interest. Money
markets began to drain off funds that ordinarily went into banks' deposits,
forcing them to rely on more expensive sources of funds. Further, the
money centre banks began to compete in the same middle markets as
regional banks. People's, which was a small regional bank, responded by
changing its strategy from product orientation to one directed toward
Contd…
ANNA UNIVERSITY 27
Notes markets. With product orientation, products are developed and then markets
are sought out in which to sell the product. Conversely, a market orientation
involves an opposite approach in that market demands are determined and
then products developed to serve the market. As a result of these changes,
People have transformed itself into a diversified financial services company
with 139 branches and a fully-integrated banking services and stock trading
presence on the Internet.
Because of major changes in People's strategy, there was recognition that
new organizational structures would be needed to accommodate the
changes. The organization was decentralized, hierarchical levels removed,
strategic business units formed, and new senior vice presidencies created
within a matrix structure. The bank then conducted a study of the types of
employees that would be needed with the new strategy's skill and
organizational requirements. Major changes were undertaken as a result of
the audit. For example, the performance appraisal system was revised. The
revised system emphasized goal setting, linked individual goal
accomplishment and rewards with the attainment of the bank's objectives,
and placed greater emphasis in performance appraised on marketing and
sales. Further, human resource planning was more fully integrated with the
strategic planning process through synchronization of its scanning processes
with the bank's overall environmental scanning processes.
The experiences of the US Navy provide another example of the integration
of strategy and human resource management. As a result of its linkage of
strategic planning with human resource management, the Navy was able to
pursue a proactive strategy that provided lower labour costs. In the Navy's
case, its human resource planners analysed the labour cost savings of a
strategy involving its civilian employees that would substitute local wages
policies. By developing human resource forecasts to determine labour
market reactions to these changes, planners could determine whether
sufficient labour supplies would be available with the cost-saving strategy.
In this example, the planners also examined the impact of the reduction of
private sector middle management positions and fond that higher-quality
employees could be hired.
Ingersoll-Rand's experience with one its divisions also provide a good
example of the outcome of a strong linkage between strategy and human
resource management. Ingersoll-Rand's rock-drilling division was
experiencing rapid growth and had shortages of labour. It also needed to
train its employees to work with new technology and wanted to control
labour costs. The outcome of integrating its human resource capabilities
with its strategic planning process was that the company implemented a
number of programmes, including gain sharing and employee involvement
teams. It also had employees participate decisions on the purchase of new
technology and made a major commitment to technological training.
Contd…
28 ANNA UNIVERSITY
A final example of the integration of strategy and human resources is Notes

provided by Maid Bess, a manufacturer of uniforms. The company faced
intense competition from foreign manufacturers, and control of labour costs
became very critical. Because of its labour intensity, the company closely
integrated human resource management with the strategic planning process.
As an outcome of the integrated strategic planning process, the company's
executive vice president designed a compensation programme that
incorporated bonuses that enhanced productivity, increased employee
wages, and reduced turnover.
Questions
1. Based on these descriptions of the experiences of People's Bank,
Ingersoll-Rand, and Maid Bess, what is the unifying theme of the role
played by human resource management?
2. How does the strategic role of human resource management in the US
Navy case differ from the others?
3. What were the environmental influences stimulating the actions
described for each of these organizations?
4. What managerial trends are indicated in the experiences of these
organizations?
5. The Ingersoll-Rand case indicates that its solutions to the problems it
faced were based largely on employee empowerment approaches.
Explain how employee empowerment can provide a viable source of
competitive advantage to be considered in strategic decision-making.
Source: Charles R Greer, Strategic Human Resource Management, Pearson Education, Inc., 2nd Edition 2002
1. Strategic HRM is seen as a partner in organizational

success, as opposed to a necessity for legal compliance
or compensation. Strategic HRM utilizes the talent and
opportunity within the human resources department to
make other departments stronger and more effective.
2. Human resources overall purpose is to ensure that the
organization is able to achieve success through people.
HR professionals manage the human capital of an
organization and focus on implementing policies and
processes.
ANNA UNIVERSITY 29
Notes SUMMARY
 Human resources are the efforts, skills, and capabilities that people
contribute to an employing organisation which enable it to continue in
existence. Although difficult to define, SHRM is generally perceived as a
distinctive approach to managing people which seeks to achieve
competitive advantage through the strategic development of a highly
committed and capable workforce.
 SHRM, in general, can be defined as the process of linking the human
resource functions with the strategic objectives of the organisation in order
to improve performance.
 The relevance of SHR issues has grown in such an exponential way that
research has now spread across various academic disciplines (for example,
psychology, sociology and economics), also across diverse geographic
regions in recent decades.
 In the mid-1990s, recession brought SHR back to the centre stage of
research in the face of a newly defined and highly competitive marketplace.
In that period, organisations at all levels were increasingly turning to SHR
techniques to pave the way for facing challenges, linking HRM with
strategic goals and objectives in order to improve business performance,
developing organisational cultures to foster innovation and flexibility,
bringing former personnel departments to the forefront of organisational
transformation and survival.
 Dave Ulrich (1997) presented a framework for HR professionals in terms
of four key roles: (1) Management of strategic human resource, (2)
Management of firm infrastructure, (3) Management of the employee
contribution and (4) Management of transformation and change
 Competitive advantage lies not just in differentiating a product or service or
in becoming the low cost leader but in also being able to tap the company’s
special skills or core competencies and rapidly respond to customer’s needs
and competitor’s moves. In other words, competitive advantage lies in
management’s ability to consolidate corporate-wide technologies and
production skills into competencies that empower individual businesses to
adapt quickly to changing opportunities.
 Strategic HR means accepting the HR function as a strategic partner in the
those strategies through HR activities such as recruiting, selecting, training
and rewarding personnel.
 The primary actions of the strategic human resource manager are to
translate business strategies into HR priorities. In any business setting,
whether corporate, functional, business unit or product line, a strategy
exists either explicitly in the formal process or document or implicitly
30 ANNA UNIVERSITY
through a shared agenda on priorities. As strategic partners, HR Notes

professionals should be able to identify the HR practices that make the
strategy happen. The process of identifying these HR priorities is called
organisational diagnosis, a process through which an organisation is
audited to determine its strengths and weaknesses.
 The term HR strategies refer to the specific HR courses of action that the
company uses to achieve its aims. Like production, marketing and finance,
HR strategy is a functional strategy. Again, the overall HR strategy of a
company is composed of a range of strategies. It is because a company
formulates a specific HR strategy pertaining to a specific HR function.
 Strategic HR management activity is classified into two categories by HR
experts, namely the traditional administrative functions and the
participatory ‘Strategic HR’ management functions.
 Benchmarking is a principal tool to assist managers in their efforts to
integrate human resource plan and practices with the strategic business
plan. Operating benchmarks help managers evaluate their unit’s position
and performance on critical workforce such as retention, training learning
and productivity.
 HRD audit begins with an understanding of the future business and
corporate strategies. While HRD audit can be done even in organizations
that lack well-formed future plans and strategies, it is most effective as a
tool when the organization already has such long-term plans.
KEYWORDS
Human Resources: Human resources are the efforts, skills, and capabilities
that people contribute to an employing organisation which enable it to continue
in existence.
HRM: A process of bringing people and organisations together so that the
goals of each one are met, effectively and efficiently.
Strategic Human Resource Management: SHRM is generally perceived as a
distinctive approach to managing people which seeks to achieve competitive
advantage through the strategic development of a highly committed and
capable workforce.
Strategic HR: It means accepting the HR function as a strategic partner in the
those strategies through HR activities such as recruiting, selecting, training and
rewarding personnel.
Benchmarking: Benchmarking is a principal tool to assist managers in their
efforts to integrate human resource plan and practices with the strategic
business plan.
ANNA UNIVERSITY 31
Notes HR Audit: HRD audit begins with an understanding of the future business and
corporate strategies. While HRD audit can be done even in organizations that
lack well-formed future plans and strategies, it is most effective as a tool when
the organization already has such long-term plans.
SELF-ASSESSMENT QUESTIONS
Short Answer Questions
1. What do you mean by Strategic Human Resource Management (SHRM) as
explained by Appleby & Mavin?
2. What are the major concerns of SHRM?
3. What do you mean by Human Resource Management?
4. Describe evolution of strategic Human resources in brief.
5. HRM has appeared as a replacement for personnel management. Comment.
6. Describe, in brief, the growth of strategic human resources.
7. What do you understand by Mission, Vision and Value Statement?
8. Give two examples of HR departments Mission and Vision Statements.
9. Which framework for HR professionals in terms of four key roles was
presented by Dave Ulrich?
10. What are the three paths through which HR practices can contribute to
business performance?
11. List out any five challenges faced by present organisations.
12. Describe the role of HRM in strategic Management.
13. What do you mean by strategic capability?
14. What do you understand by the term Benchmarking?
15. What do you mean by HR audit?
16. Write down any four necessities for HR audit.
17. Write down any four limitations of HR audit.
18. Describe the role of HRM in strategy formulation.
19. What is the role of HRM in strategy implementation?
20. Describe, in brief, the importance of SHRM.
Long Answer Questions

1. Brief the concept of Strategic Human Resource Management (SHRM) with
its different definitions and examples.
2. Explain the importance of Strategic Human Resource Management.
32 ANNA UNIVERSITY
3. Explain, in brief, HRD vision, mission and values. Notes

4. Explain the major challenges faced by the organisations in today’s
competitive scenario.
5. Describe various views on SHRM by different authors.
6. Describe the framework of Strategic HRM in detail with examples.
7. Describe the evolution of strategic Human resources starting from
personnel management to Human resource management to strategic
management. Also describe the growth of strategic Human resources.
8. List out the recent trends carried out in HRD.
9. What do you mean by Benchmarking and SHRD system?
10. Write down the meaning, pros and cons of HR Audit.
FURTHER READINGS
Jeffrey A Mello, Strategic Human Resource Management,

Cengage Learning, Southwestern, 3rd edition, 2010.
Robert L Mathis and John H Jackson, Human Resource
Management, Cengage Learning, Southwestern, 13th edition, 2010
Monir Tayeb, International Human Resource Management,
Oxford, 2007.
Randall S Schuler and Susan E Jackson, Strategic Human
Resource Management, Wiley India, 2nd edition, 2008.
McLeod, The Counsellor’s Workbook, Tata McGraw Hill, 2011
Richard Regis, Strategic Human Resource Management and
Development, Excel Books, 2008
ANNA UNIVERSITY 33
Notes
LESSON 2 - HUMAN RESOURCE
DEVELOPMENT
CONTENTS
Learning Objectives
Learning Outcomes
Overview
HRD Functions
Role of HRD Professionals
Administrative Roles
Operational Roles
Strategic Roles
HRD Need Assessment
Need of HRD at Macro and Micro Level
HRD Practices
Measures of HRD Performance
Links to HR, Strategy and Business Goals
HRD Program Implementation and Evaluation
HRD Program Implementation
HRD Program Evaluation
Summary
Keywords
Further Readings
LEARNING OBJECTIVES
 Discuss HRD Functions
 Describe the Role of HRD Professionals
 Discuss the HRD Practices and Need Assessment
 Understand HRD Implementation and Evaluation
34 ANNA UNIVERSITY
Lesson 2 - Human Resource Development
LEARNING OUTCOMES Notes

understanding of:
 list out functions of HRD
 explain role of HRD professionals and HRD need assessment
 basics of HRD practices
 analysing measures of HRD performance
 explain HR strategy and business goals
 identifying HRD program implementation and evaluation
OVERVIEW
In the previous lesson, we have studied about the concept of strategic human
resource management. You have also learned about framework of HRM and
HRD as well as its vision, mission and values. You have also studied the
importance of SHRM and challenges which are being faced by organisation in
today’s competitive environment. At the end of the lesson, you have learned
about the recent trends in HRM, strategic capability, benchmarking and HR
audit.
Human Resource Development (HRD) is the framework for helping employees
to develop their personal and organizational skills, knowledge, and abilities.
Human Resource Development includes opportunities such as employee
training, employee career development, performance management and
development, coaching, mentoring, succession planning, key employee
identification, tuition assistance, and organization development.
In this lesson, you will learn about the HRD functions and HRD need
assessment. Also, you will learn about roles of HRD professionals as well as
HRD practices. You will also understand the measure of HRD performance
and links to HR, strategy and business goals. At the end of the lesson, you will
acquire knowledge about HRD program implementation and evaluation.
HRD FUNCTIONS
We shall now try to understand the various functions of HRD before that lets
have a look into the meaning of HRD, It is the one which aims at helping
people to acquire competencies required to perform all their functions
effectively and make their organizations do well.
Human resource development is a positive concept in human

resource management. It is based on the belief that an investment in human
beings is necessary and will invariably bring in substantial benefits to the
organisation in a long run.
ANNA UNIVERSITY 35
Notes HRD functions refer to the various developmental activities carried out by the
HRD Department. Structurally, HR function is to be a subsystem of HRD and
its integration with the other two subsystems (personnel administration and
worker affairs) to be done by the person at director level through task forces
and subsystem linkages.
Following are the HRD dimensions/functions:
 Structure: Ways in which people and task are specialized and divided, and
authority is distributed. There are mainly four structures viz. Functional,
Divisional, Matrix and Network structure.
 Performance Appraisal: Performance appraisal is a method of evaluating
the behaviour of employee in the work spot, normally including both the
quantitative and aspects of job performance.
 Potential Appraisal: It is to identify the potential of a given employee to
occupy higher positions in the organizational hierarchy and undertake
higher responsibilities.
 Feedback and Counselling: This is a dyadic relationship between two
persons: a manager who is offering a help and an employee whom such
help is given. Performance counselling is given after assessment of
employees work at a given point of time.
 Career Planning and Development: Extending help to employees to form
realistic career goals and opportunities to realize them.
Example: Helping out a MBA HR who has entered the organization

recently as a HR executive, communicating him the future career in the
field of HR in the organization and helping realize that he can become HR
manager
 Organizational Development: It is a planned, organization-wide effort to
increase an organization's effectiveness and/or efficiency and/or to enable
the organization to achieve its strategic goals.
Learning Activity
Visit a nearest company and try to understand different HRD
Functions carried out and also try to understand the role of
HR manager and prepare a small report on the same.
ROLE OF HRD PROFESSIONALS

The HR managers today are required to be multi-tasking; they perform mainly
three different types of roles while keeping in view the requirements of
employees and customers, namely administrative, operational and strategic.
36 ANNA UNIVERSITY
Administrative Roles Notes

The administrative roles of human resource management include policy
formulation and implementation, housekeeping, records maintenance, welfare
administration, legal compliance, etc.
1. Policy maker: The human resource manager helps management in the
formation of policies governing talent acquisition and retention, wage and
salary administration, welfare activities, personnel records, working
conditions, etc. He also helps in interpreting personnel policies in an
appropriate manner.
2. Administrative expert: The administrative role of an HR manager is
heavily oriented to processing and record keeping. Maintaining employee
files, and HR-related databases, processing employee benefit claims,
answering queries regarding leave, transport and medical facilities,
submitting required reports to regulatory agencies are examples of the
administrative nature of HR management. These activities must be
performed efficiently and effectively to meet changing requirements of
employees, customers and the government.
3. Advisor: It is said that personnel management is not a line responsibility
but a staff function. The personnel manager performs his functions by
advising, suggesting, counselling and helping the line managers in
discharging their responsibilities relating to grievance redressal, conflict
resolution, employee selection and training. Personnel advice includes
preparation of reports, communication of guidelines for the interpretation
and implementation of policies, providing information regarding labour
laws etc.
4. Housekeeper: The administrative roles of a personnel manager in
managing the show include recruiting, pre-employment testing, reference
checking, employee surveys, time keeping, wage and salary administration,
benefits and pension administration, wellness programmes, maintenance of
records etc.
5. Counsellor: The personnel manager discusses various problems of the
employees relating to work, career, their supervisors, colleagues, health,
and family, financial, social, etc. and advises them on minimising and
overcoming problems, if any.
6. Welfare officer: Personnel manager is expected to be the Welfare Officer
of the company. As a Welfare officer he provides and maintains (on behalf
of the company) canteens, hospitals, educational institutes, clubs, libraries,
conveyance facilities, cooperative credit societies and consumer stores.
7. Legal consultant: Personnel manager plays a role of grievance handling,
settling of disputes, handling disciplinary cases, doing collective
bargaining, enabling the process of joint consultation, interpretation and
implementation of various labour laws, contacting lawyers regarding court
cases, filing suits in labour courts, industrial tribunals, civil courts.
ANNA UNIVERSITY 37
Notes
In some organizations, the above administrative functions are being

outsourced to external providers in recent times, with a view to increasing
efficiency as also cutting operational costs. Technology is being put to good
use to automate many of the administrative tasks.
Operational Roles
These roles are tactical in nature and include recruiting, training and
developing employees coordinating HR activities with the actions of managers
and supervisors throughout the organisation and resolving differences between
employees.
1. Recruiter: “Winning the war for talent” has become an important job of
HR managers in recent times in view of the growing competition for people
possessing requisite knowledge, skills and experience. HR managers have
to use their experience to good effect while laying down lucrative career
paths to new recruits without increasing the financial burden to the
company.
2. Trainer, developer, and motivator: Apart from talent acquisition, talent
retention is also important. To this end, HR managers have to find skill
deficiencies from time to time, offer meaningful training opportunities, and
bring out the latent potential of people through intrinsic and extrinsic
rewards, which are valued by employees.
3. Coordinator/linking pin: The HR manager is often deputed to act as a
linking pin between various divisions/departments of an organisation. The
whole exercise is meant to develop rapport with divisional heads, using PR
and communication skills of HR executives to the maximum possible
extent.
4. Mediator: The personnel manager acts as a mediator in case of friction
between two employees, groups of employees, superiors and subordinates
and employees and management with the sole objective of maintaining
industrial harmony.
5. Employee champion: HR managers have traditionally been viewed as
‘company morale officers’ or employee advocates. Liberalisation,
privatisation and globalisation pressures have changed the situation
dramatically. HR professionals have had to move closer to the hearts of
employees in their own self-interest. To deliver results they are now
seriously preoccupied with many tasks and some of them are placing
people right on the job, adopting family – friendly policies, rewarding
creditable performances etc.
38 ANNA UNIVERSITY
Strategic Roles Notes

An organisation’s success increasingly depends on the knowledge, skills and
abilities of its employees, particularly as they help establish a set of core
competencies hat distinguish an organisation from its competitors.
Example: ONGC’s oil exploration capabilities and Dell’s ability to

deliver low cost, high-quality computers at an amazing speed distinguish from
their competitors.
1. Change agent: Strategic HR as it is popularly called now aims at building
the organisation’s capacity to embrace and capitalize on change. It makes
sure that change initiatives that are focused on creating high-performing
teams, reducing cycle time for innovation, or implementing new
technology are defined, developed and delivered in a timely manner. The
HR manager in his new avatar would help employees translate the vision
statements into a meaningful format (Ulrich, 1998).
2. Strategic partner: HR’s role is not just to adapt its activities to the firm’s
business strategy, nor certainly to carry out fire-fighting operations like
compensating employees. Instead, it must deliver strategic services cost
effectively by building a competent, consumer-oriented work force. It must
assume important roles in strategy formulation as well strategy
implementation.
Learning Activity
Visit any MNC of your choice and meet its HR manager. Discuss
his various roles and responsibilities in the company. Then prepare
a short report in which you have to categorize his roles in the
company under administrative, operational and strategic roles with
your understanding of the above topic.
HRD NEED ASSESSMENT

Here let us understand why HRD is required and the need of it at micro and
macro level of operations. HRD, basically, needed at developing:
 The capabilities of each employee as an individual;
 The capabilities of each individual in relation to his or her present role;
 The capabilities of each employee in relation to his or her expected future
role(s);
 The dyadic relationship between each employee and his or her employer;
 The team spirit and functioning in every organisational unit.
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Notes 2.3.1 Need of HRD at Macro and Micro Level

HRD as stated earlier is mainly concerned with developing the competencies of
people. HRD applies to both institutional (micro) as well as national (macro)
issues. The main objective, however, is to develop the newer capabilities in
people so as to enable them to tackle both present and future challenges while
realizing organisational goals. However, it is useful both at macro and micro
levels.
1. Macro Level: At the macro level, HRD is concerned with the development
of people for the nation’s well-being. It takes health, capabilities, skills,
attitudes of people, which are more useful to the development of the nation
as a whole. While calculating the national income and economic growth,
the prospective HRD concept examines the individuals’ potentialities, their
attitudes, aspirations, skills, knowledge, etc., and establishes a concrete
base for economic planning. However, HRD’s contribution at macro level
has not gained popularity as yet.
2. Micro Level: HRD has concern for grass root development in the
organisations. Small wonder, then, that HRD was well received by
companies’ managements as they realised its importance and foresaw its
future contribution for the individual and organisational development.
Generally, HRD at micro level talks of the organisations’ manpower
planning, selection, training, performance appraisal, development, potential
appraisal, compensation, organisational development, etc.
HRD PRACTICES
Recent research worldwide has shown that good HR practices and policies can
go a long way in influencing business growth and development. The researches
indicate the following HR practices that effective firms adopt (Pfeffer, 1994):
 Financial incentives for excellent performance
 Work organization practices that motivate employee effort and capture the
benefits of know-how and skill
 Rigorous selection and selectivity in recruiting
 Higher than average wages
 Employee share-ownership plans
 Extensive information sharing
 Decentralization of decision-making and empowerment
 Work organization based on self-managing teams
 High investment in training and skill development
 Having people do multiple jobs and job rotation
 Elimination of status symbols
40 ANNA UNIVERSITY
 A more compressed distribution of salaries across and within levels Notes

 Promotion from within
 A long-term perspective
 Measurement of HR practices and policy implementation
 A coherent view of employment relation.
Yeung and Berman (1997) point out that HR practices can play three major
roles. These are:
1. Building critical organizational capabilities
2. Enhancing employee satisfaction
3. Improving customer and shareholder satisfaction
Good HR practices do matter. However, the relationship between good HR
practices and organizational effectiveness is not so simple. It is not that all one
has to do is to have good HR practices and everything else will automatically
follow: though good HR practices can ensure a number of things. They can
lend competitive advantage to a corporation if other things are equal.
Relationship between good HR practices and organizational

effectiveness is not so simple. One has to do good HR practices as well as
focus on other areas for organizational effectiveness.
MEASURES OF HRD PERFORMANCE

Let us now try to understand how does the performance of HRD is Measured.
Once the employee understands the company and its working and gets, starts
performing his task after induction and training the next thing in his/her career
would be assessing of his/her performance i.e. Measuring of employee
performance with that of expected results. Performance measurement is an on-
going activity for all managers and their subordinates. Performance
measurement uses the following indicators of performance, as well as
assessments of those indicators.
 Quantity: The number of units produced, sold or processed is the objective
of assessment of performance. There should not be much concentration
given on quantity, as quality is what is expected from customers.
 Quality: The quality of work can be measured by several means depending
upon the nature of job the quality measurement differs from job to job.
Example: For a salesman the quality is measured in terms of

number of calls converted into sales.
ANNA UNIVERSITY 41
Notes  Timeliness: Time is the performance indicator. Depending upon the time
used by an employee to accomplish the task is the indicator of
performance.
Example: In field service, the average customer’s downtime is a

good indicator of timeliness. In manufacturing, it might be the number of
units produced per hour.
Cost Effectiveness: Cost effectiveness is the other measure of performance.
The cost of work performed should be used as a measure of performance
only if the employee has some degree of control over costs.
Example: A customer-service representatives of marketing

department performance is indicated by the percentage of calls that he or
she must escalate to more experienced and expensive representatives.
 Creativity: It is precisely very difficult to measure creativity, but there are
some jobs where in creativity is the indicator of performance.
Example: Advertising agency employee’s performance is measured

in terms of the creativity he/she includes in the advertisement assigned for
him to be created. Many white collared jobs also measure performance in
terms of creativity.
 Gossip and Other Personal Habits: They may not seem performance-
related to the employee, but some personal habits, like gossip, can detract
from job performance and interfere with the performance of others. The
specific behaviours should be defined, and goals should be set for reducing
their frequency.
 Self-Appraisal: Here the employee analyses his/her own performance
before the review with the management or comparing the review of the
management by appraising his/her own performance.
 Peer Appraisal: It is also a kind of measurement of employees
performance here the people who review the performance are the co-
workers, the intention behind this kind of assessment is for the reason that
employees work together and they know them better than management.
 Assessment Centres: Here the employees are assessed by professional
assessors who evaluate the performance by simulating the actual work
activities.
 Management By Objectives: Here in this type the assessment is carried out
by setting the objectives at the beginning of the year, Project etc. the same
is communicated to the concerned departments and in turn department
heads to employees, there is continuous review and monitoring being done
and assessment is done on the basis of performance and new objectives are
set if previous set objectives are achieved.
42 ANNA UNIVERSITY
LINKS TO HR, STRATEGY AND BUSINESS GOALS Notes

As of now, we are familiar with challenges and these challenges suggest that
the following focus is needed in HRD efforts strategically to achieve the
business goals, which are to beat these challenges. The business goals include:
 Business excellence, including profitability and other outcomes the
organization is expected to achieve.
 Internal operational efficiencies
 Internal customer satisfaction
 External customer satisfaction
 Employee motivation and commitment
 Cost-effectiveness and cost-consciousness among employees
 Quality orientation
 Technology adoption
HRD systems should focus on the above dimensions and these focal points
may be taken as strategic focal points. The HR system and HR strategies
adopted have to be in conformity with the business goals.
The following narrative on various HR strategies and system adopted or to be
adopted by some organizations to match their business goals are only
illustrative, not exhaustive.
 Communication Strategy: Continuous communication with employees,
their families and the community is a critical factor. Making employees at
all levels understand the need for change through information sharing about
global changes, our country's standing in the global scene, the standing of
the particular organization or business group in the international arena, the
mission, etc., helps secure their commitment to change.
 Accountability, Ownership and Commitment: In a competitive world,
employee commitment to his or her work, the ability to take ownership and
feel a high sense of responsibility is very critical. Committed and satisfied
employees increase the chances of high productivity and high customer
satisfaction. HR strategies should aim at enhancing accountability and
ownership. Various HR systems and processes can be used in combination.
 Quality Strategies: Globalization has brought into focus the need for
quality products and services. Today's world is quality-driven and
customer-driven. HR strategies, therefore, should aim at total quality and
highest customer satisfaction. Ensuring quality products and services
requires quality consciousness in every employee. Quality should be
promoted in everything and it should become a way of life.
ANNA UNIVERSITY 43
Notes  Introducing Quality and Customer-Orientation all through the

Company: Continuously ensuring the availability of good quality products
and services throughout the company through increased feedback, reviews,
surveys, discussions and other forms that facilitate an understanding of the
internal customers as well as suppliers, should become a way of life.
Satisfied customers enhance the company's image and contribute to
company profits.
 Cost Reduction: Cost reduction strategies have begun to play a significant
role in the current corporate world. Control of costs becomes very critical
when competition goes up and there are price wars.
 Developing Entrepreneurial Spirit among All Employees: This effort
should aim at enabling employees at all levels to take charge of their tasks
with full autonomy, accountability, cost-effectiveness, and service
orientation.
 Culture Building Exercises: These exercises should aim at upholding the
dignity of the human being and increasing organizational effectiveness.
Culture should be characterized by openness, collaborative attitudes, trust,
authenticity, pro-action, autonomy, and confrontation of issues, problems
and experimentation.
 Competitive Strategy and Value Chain: The value chain positions human
resources as central in determining how business competes on an on-going
basis (Porter, 1985). The Value Chain Concept, developed by Michael
Porter, is useful for helping you to decide when and how to apply the
strategic capabilities of IT. In this way some activities are seen as primary
processes, while others are seen as support processes that provide direction
and support for the specialized work of primary activities. Thus, the
framework highlights where competitive strategies can best be applied in a
business. For each activity, the role of Strategic Information Systems (SIS)
can contribute significantly to that activity's contribution to the value chain.
Example: Administrative Coordination & Support Services: The

key role of SIS here is in enterprise communication and collaboration.
 Human Resources Management. SIS role: Career development Intranet
for employees.
 Technology Development. SIS role: Computer-Aided Design Extranets
with partners.
 Procurement of Resources. SIS role: E-Commerce Extranet with
suppliers.
Primary Activities: These activities directly contribute to the
transformation process of the organization.
 Inbound Logistics. SIS role: Automated Warehousing, JIT.
44 ANNA UNIVERSITY
 Operations. SIS role: Computer-Aided Manufacturing. Notes

 Outbound Logistics. SIS role: Online Data Entry.
 Marketing and Sales. SIS role: Interactive Targeted Marketing.
 Customer Service. SIS role: Customer Relationship Management.
This concept views a firm as a series, or chain, of basic activities

that add value to a firm's products and services, and thus add a margin of
value to the firm.
 Life Cycle Analysis and Types of Strategy: Product life cycle has an
impact on HR strategies. The type of strategy has a key implication in the
way human resources are managed.
 Competencies and Strategic Intent: Human resources are clearly a critical
ingredient in any organization's core competence. A further concept is the
notion of strategic intent and the related notion of core competencies.
 Strategy and Styles: This is another variable, which may have an impact in
shaping HR and corporate strategy links.
HRD PROGRAM IMPLEMENTATION AND

EVALUATION
Here in this section, we will try to understand concept of HRD program
Implementation and evaluation i.e. it says about putting the HRD programmes
into practise and evaluating the programs implemented.
HRD Program Implementation

Strategy implementation involves the integration of the larger organisational
strategy into the HR functions of the organisation, and it is arguably as – or
more – complex than strategy formulation. Employee recruitment and
selection, training and development, performance management, and labour and
employee relations may all have to be altered by HR in order to integrate with
the organisational strategy. Unlike the formulation process, implementation is
an organisational intervention; and organisational interventions require
assistance – at the very least, cooperation – from members of the organisation.
Example: Implementation of HRD program like training for adoption

of new technology for manufacturing process.
HRD Program Evaluation

Once the program is implemented, the next step is to evaluate the implemented
program through various techniques available for measuring performance,
training outcome, potential for succession planning, etc.
ANNA UNIVERSITY 45
Notes
Example: Evaluation of performance of employee through various
techniques like Management by Objectives, Ranking System, etc.
Learning Activity
Visit any MNC and study its HRD program implementation
and evaluation system and prepare a power point
presentation.
Shell Chemicals Company
T he main strategic objective of most of the refineries is to produce

fuels for the transportation market. They look for high yields of
gasoline, so they buy crude that have more naphtha. But Shell
Chemicals Company (SCC) on the other hand, purchases paraffin crude to
produce higher quality olefins feed. Their strategic objective is to serve the
ethylene cracker market first, but they also make gasoline and other
transportation fuels for sales.
As a result, the refinery produces a high quality, low-cost feedstock that the
SCC plants at Deer Park, Texas, and Norco, Louisiana, use to produce
ethylene. It gives them a competitive advantage in a tough market where the
most popular feedstock is low cost ethane from natural gas. During last
winter when natural gas prices shot up, SCC was able to lower its product
cost to the crackers. This enabled them to run hard while other producers
had to shut down operations.
SCC can survive and continue to operate in a low-cost environment, which
makes the Shell Chemicals network a more reliable source of supply for
customers. They can produce their product for less than the cost of low
sulfur gas oil and because they are part of Shell's chemicals businesses, the
ethylene production plants don't have to pay profit margins for the
feedstock. They then use other byproducts to offset the price of crude oil,
keeping their olefins feed at the lowest possible price.
In addition to 18,000 to 20,000 barrels a day of olefins feed production, the
plant produces 20,000 barrels of gasoline products which serves more than
60 % of the local demand for fuels.
The refinery supplies its fuel to Shell jobbers and other gasoline marketers
in Mobile, Biloxi, Mississippi, and Pensacola, Florida, through a partnership
with Motiva. It also produces several grades of jet fuel for the military,
diesel for the trucking and shipping industries, and residual cat feed for the
marine industry.
Contd…
46 ANNA UNIVERSITY
While the main strategic objective of most of the refineries is to produce Notes
fuels for the transportation market, they buy crudes that have more naphtha
so that they can look for high yields of gasoline. But Shell Chemicals
Company purchases paraffinic crude to produce higher quality olefins feed.
Their strategic objective is to serve the ethylene cracker market first; but
they also make gasoline and other transportation fuels for sales.
Based on the strategic linkage to the business goals, HR priorities also
change. SCC is also an oil refinery. In this case, the HR practices being
followed in other refineries cannot be totally adhered to.
This is a good example of how strategy of a company has links with its
business goals.
Questions
1. Explain how strategy of the company has linked with its business goals?
2. What was the strategic objective of the Shells Chemical Company?
3. Discuss the link of HRD performance to HR, strategy and business goals
in the above case.
1. In today’s scenario of recruitment, most of the

companies go in for Recruitment Process Outsourcing
in order to save their time and money and it has given
rise to new business called HR Consultancies.
2. There are certain factories where wages are paid to
employees based on quantity produced i.e. called as
Piece rate system of paying wages.
SUMMARY
 Whether an organization's business is global or local, it has to face global
competition. All HR strategies should flow from corporate business
strategies and plans.
 The following functions of HRD are of paramount importance: Structure,
Performance Appraisal, Potential Appraisal, Feedback and Counselling,
Career Planning and Development and Organizational Development.
 HR practices can play three major roles. These are: building critical
organizational capabilities, enhancing employee satisfaction and Improving
customer and shareholder satisfaction. Even within HR there are a number
of variables to be understood and differentiated. It is a good HRD climate
rather than HRD practices by themselves that are responsible for
organizational performance.
ANNA UNIVERSITY 47
Notes  Roles leading to alignment of HR strategies and practices with business

needs of the firm and management of corporate transformation and change,
go to the extent of changing both the culture and processes within the firm.
 In order to change the mindsets of people for corporate transformations,
HR has to adopt reflective mindset for managing the self, analytical
mindset for managing organization, worldly mindsets for managing
contexts, collaborative mindsets for managing relationships and action
mindset for managing change.
 The most important challenge is developing new roles: Roles for the HRM
and HRD functionaries, roles for line personnel. The growing expectations
of the customers both external and internal have to be met by the HR
professionals.
 Communication Strategy, Accountability, Ownership and Commitment,
Quality Strategies, Introducing Quality and Customer-Orientation all
through the Company, Cost Reduction, Developing Entrepreneurial Spirit
Among all Employees, Culture Building Exercises, Portfolio theory and
Competitive Strategy and Value Chain and Life Cycle Analysis Types of
Strategy, Competencies and Strategic intent, and Strategy and Styles are
the HRD strategic focal points which may differ from organization to
organization.
KEYWORDS
Performance Appraisal: Performance appraisal is a method of evaluating the
behaviour of employee in the work spot, normally including both the
quantitative and aspects of job performance.
Potential Appraisal: It is to identify the potential of a given employee to
occupy higher positions in the organizational hierarchy and undertake higher
responsibilities.
Organizational Development: It is a planned, organization-wide effort to
increase an organization's effectiveness and/or efficiency and/or to enable the
organization to achieve its strategic goals.
HRD: A planned way of developing individual employees, groups and the total
organisation to achieve organisational goals, in an atmosphere of mutual trust
and cooperation.
Cost Effectiveness: The cost of work performed should be used as a measure
of performance only if the employee has some degree of control over costs.
Self-Appraisal: Here the employee analyses his/her own performance before
the review with the management or comparing the review of the management
by appraising his/her own performance.
Peer Appraisal: It is also a kind of measurement of employee’s performance
here the people who review the performance are the co-workers.
48 ANNA UNIVERSITY
SELF-ASSESSMENT QUESTIONS Notes

1. What do you mean by Human Resource Management?
2. What do you understand by the term Human Resource Development
(HRD)?
3. List the functions of HRD Department.
4. Describe the administrative roles of HRD manager.
5. What are the operational roles of HRD professional?
6. What is the need of HRD at Micro level?
7. Discuss the need of HRD at macro level.
8. Good HR practices and policies can go a long way in influencing business
growth and development. Comment.
9. What are the various HR practices being followed in today’s world?
10. Yeung and Berman (1997) point out that HR practices can play three major
roles. What are they?
11. What is performance measurement?
12. What are the various measures of HRD performance?
13. What is cost effectiveness and creativity?
14. How self appraisal and peer appraisal different from each other?
15. What are the business goals of a company?
16. What do you mean by strategy implementation?
17. Explain in brief some of the HR strategies.
18. Enumerate examples of HRD functions carried out in a manufacturing unit.
19. How is HRD program implemented?

1. Briefly explain the HRD functions.
2. Discuss various roles of HR manager.
3. Explain in brief the HRD practices carried out in this highly competitive
global world.
4. Describe how HRD implementation and evaluation takes place?
5. Describe how HRD is linked to strategy and business goals?
6. Describe in detail various measure of HRD performance with examples.
ANNA UNIVERSITY 49
Notes 7. What practices do effective firms adopt according to Pfeffer? Describe

them in detail.
8. The HR managers today are required to be multi-tasking. Discuss this
statement keeping in view various roles of HR managers.
9. Discuss the concept of Human resource development with its various
dimensions.
10. Discuss how competitive strategy and value chain is linked with HRD with
the help of examples.
FURTHER READINGS

Resource Management, Wiley India, 2 nd edition, 2008.
McLeod, The Counsellor’s Workbook, Tata McGraw Hill, 2011.
Rajib Lochan Dhar, Strategic human resource management, Excel
books, 2nd edition, 2010
Development, Excel Books, 2008.
Management, Cengage Learning, Southwestern, 13th edition,
2010.
Oxford, 2007.
50 ANNA UNIVERSITY
Lesson 3 - E-employee Profile and E-recruitment and Selection
Notes
UNIT II
LESSON 3 - E-EMPLOYEE PROFILE AND
E-RECRUITMENT AND SELECTION
CONTENTS
Learning Objectives
Learning Outcomes
Overview
E-HRM
Meaning and Definition of E-HRM
Types and E-HRM Tools
Advantages and Disadvantages of E-HRM
E-employee Profile
Meaning
Contents of E-employee Profile
E-selection and Recruitment
Meaning of E-Recruitment and Internal Sourcing
Assessment and Selection
E-Hiring
E-Recruiting Agencies and E-Recruitment in India
Future of E-Recruitment Industry
Virtual Learning and Orientation
Introduction and Meaning of Virtual Learning
Advantages and Disadvantages of Virtual Learning
Summary
Keywords
Further Readings
ANNA UNIVERSITY 51

 Discuss the Meaning of E-HRM the Advantages, Disadvantages and its
Tools
 Define the Contents of E-employee Profile
 Explain the Meaning of E-Selection and Recruitment
 Explain E-Recruiters in India and E-recruiting Agencies
 Define the Virtual Organisation
 Analyse Virtual Organisation and HR Issues in Virtual Organization
LEARNING OUTCOMES
understanding of:
 basics of E-HRM
 explain types of E-HRM and E-HRM tools
 recall e-employee profile
 concept of e-recruitment and internal sourcing
 analysing virtual learning and orientation
 list out advantages and disadvantages of virtual learning
OVERVIEW
In the previous lesson, we have discussed about HRD functions and HRD need
assessment. Also, we have learned about roles of HRD professionals as well as
HRD practices. We have understood the measure of HRD performance and
links to HR, strategy and business goals. At the end of the lesson, we studied
about HRD program implementation and evaluation.
Companies need to address the issues surrounding the creation, maintenance,
and use of a continuously flowing pipeline of external and internal candidates
for open and future positions. They need to determine the best sources for the
people they need and how best to access them. The solutions are invariably
company-specific, but the Internet has revolutionized this phase of the staffing
process. Virtual world is where the future lies. Everything is ‘here and now’
and yet not in one’s real physical reach.
In this lesson, we will study about meaning of E-HRM, various types and tools
of E-HRM as well as advantages and disadvantages of the same. Also, we will
discuss about E-selection and E-recruitment in detail which will cover the
topics like E-Hiring, its meaning, selection and assessment of employees,
52 ANNA UNIVERSITY
various e-recruitment agencies and scenario of E-recruitment in India. At the Notes

end of the lesson, you will learn about meaning, advantages and disadvantages
of virtual learning.
E-HRM
This section will help you understand the meaning of e-HRM and what it is all
about.
Meaning and Definition of E-HRM

The method of processing and transmission of digitalized HR information is
called electronic human resource management (e-HRM). It contains
information regarding payroll, employee personal data, performance
management, training, recruitment and strategic orientation.
Employees can also track their achievements without undergoing

traditional routine procedures. It reduces paperwork and allows access for
huge data. It uses intranet or other web based technology as per the
convenience of the company.
Definition
E-HRM is a way of implementing HR strategies, policies, and practices in
organization through a conscious and direct support of and/or with full use of
web-technology based channels.
Types and E-HRM Tools

Now after knowing what is E-HRM is now let us tried to understand types of
E-HRM and various tools used by E-HRM.
Types of E-HRM
Lepak and Snell (1998) distinguished three areas of HRM as, operational
HRM, relational HRM and transformational HRM.
 Operational HRM: E-HRM is concerned with administrative function like
payroll, employee personal data, etc. The data contained in this e-HRM is
all concerned to personal matters.
 Relational HRM: E-HRM is concerned with supportive business process
by the means of training, recruitment, performance management, and so
forth.
 Transformational HRM: E-HRM is concerned with strategic HR activities
such as knowledge management, strategic re-orientation, etc.
ANNA UNIVERSITY 53
Notes E-HRM Tools

The various e-HRM tools are as follows:
 E- Employee Profile: Refer Section 3.2
 E-Recruitment and Selection: Refer Section 3.3
 E-Learning: Refer Lesson -4
 E-Training: Refer Lesson -4
 E-Performance Management System: Refer Lesson -4
 E-Compensation: Refer Lesson 4
Advantages and Disadvantages of E-HRM
Advantages of E-HRM
E-HRM business models are designed for HR managers, executive, and HR
professionals who would need support to manage the workforce, identify
changes and collect information needed for the purpose of making decisions. In
meanwhile, it also helps employees to track their achievements and their finger
tip.
 Gathers and store of information pertaining to the work force, which will
act as the basis of stuff for real time strategic decision-making.
 Integral support for the management of human resources and all other basic
and support processes within the company.
 Crystal clear insight into reporting and analysis.
 A more dynamic workflow in the business process, productivity and
employee satisfaction.
 An initiative towards a paperless office.
 Time saving.
Disadvantages of E-HRM
 Most of the employees will be reluctant towards change so their mindsets
need to be changed: they have to realize and accept the usefulness of web-
based HR tools.
 They generally feel that they lack the time space needed to work quietly
and thoughtfully with web-based HR tools and so, if there is no need, they
will not do it.
 Most of the times safety and privacy plays a vital role in web based
working, so prompt step has to be taken care for safe better usage of web
based information.
54 ANNA UNIVERSITY
E-EMPLOYEE PROFILE Notes

So now let us try to understand the different E-HRM tools and firstly let us
understand about E-employee profile and the contents in the profile.
Meaning
The E-employee profile is a web application which acts as a central point of
access of the employees overall information and it acts a comprehensive
database solution, it further simplifies HR management and team building
giving information pertaining to employee skills, organisation chart and even
diagrams and pictures. The maintenance of E-employee profile lies with
individual employee, the manager and the database manager.
Contents of E-employee Profile

As now we have understood the meaning of E-employee, profiles now let us
try to understand various information that it contains about an employee.
Contents of E-employee Profile as understood in Section 3.2.1, E-employee
profile is the one which contains information pertaining to employee in a web
based system and the contents of it are as follows:
 Certification
 Education
 Honour/Awards
 Membership
 Past Work Experience
 Competency
 Assignment Skills
 Employee Availability
 Employee Assignment Rules
 Employee Utilisation
 Employee Tools
 Employee Working and Exception Hours
 Service Details
 Calendars
 Job Information
 Employee Locator
 Sensitive Job Information
 Calendar Administration.
ANNA UNIVERSITY 55
Notes
Employees and management should give utmost importance for
the security and privacy of the employee profile maintain in the system
database.
Learning Activity
Visit a company and try to understand about E-profile system
in the company and try to co relate that with above mentioned
contents and information.
E-SELECTION AND RECRUITMENT

Let us look at what the web has done to revolutionize the process of sourcing
and attraction, the area most directly impacted by its technology.
Companies need to address the issues surrounding the creation, maintenance,
and use of a continuously flowing pipeline of external and internal candidates
for open and future positions. They need to determine the best sources for the
people they need and how best to access them. The solutions are invariably
company-specific, but the Internet has revolutionized this phase of the staffing
process.
They need to determine the best sources for the people they need
and how best to access them. The solutions are invariably company-specific,
but the Internet has revolutionized this phase of the staffing process.
Web-based technology has, in effect, created a global employment office for
companies seeking applicants from outside the organization, and from internal
staffing. Intranets permit electronic posting of open positions and automate a
full range of employment processes for both internal and external candidates.
Websites and specific electronic advertisements can now generate tens of
thousands of resumes for a single position! This is where cool technology leads
the way and content follows.
Leading-edge websites contain a lot of information arrayed in a very clear
manner. They have:
 Press releases from corporate public relations.
 Articles on hot topics by noted scholars (internal and external) with
information that current and potential employees want to know.
 Reference centres with links to important topics.
 Regularly scheduled chat rooms with key company executives, politicians,
scholars, or well-known company spokes-people.
56 ANNA UNIVERSITY
 Recruiting events and other employment-related information. Notes

 Tips on how to interview, what to wear, and what to do.
 Chats with new employees and live views of offices.
 Bios and points of view of key executives.
 Who the competition is and how we compare with them.
 Community investments.
 Information about what the future holds.
 What positions are available and how to apply.
Meaning of E-Recruitment and Internal Sourcing

E-Recruitment
It is the way of stimulating prospective employees to apply for the job in the
organization through specific websites.
Internal Sourcing
Web-based external recruitment systems can be readily integrated with intranet
staffing systems, conceptually and technically, bringing both strategic cohesion
to these traditionally separate sourcing functions and huge efficiencies through
the elimination of redundant, duplicative work. The internal sourcing process
typically follows business rules of its own, especially in organizations where
broader opportunities play a key role in retention or collective bargaining
agreements impose union rules or restrictions on staffing. However, these two
naturally related functions are driven by the same business imperatives and
share numerous procedures and information requirements best handled by a
single, integrated system.
There are other business-based rules and policies differentiating external and
internal sourcing in most companies: the employee/applicant may need a
certain amount of time in a current position, a current manager’s approval, or a
certain level of performance, or background checks may be required for
external applicants. The hiring manager needs qualified candidates and the
information to make the right choice promptly and without additional
paperwork or back-and-forth policy memoranda. The qualifications, when built
into the system, allow only those people who have met the internal or external
requirements to meet the hiring manager.
Example: A job requisition can go simultaneously to external and

internal markets for applicants. Even if business policies dictate that current
employees get “the first shot” at answering the job advertisement, the same job
requisition can later go to recruiters, the service centre, and eventually the
world at large.
ANNA UNIVERSITY 57
Notes Assessment and Selection

Assessment and selection rely on competency requirement identified by the
organization. For the assessment process, Web-based systems have helped with
automating scores of previously time-consuming processes, from scheduling of
tests and individual psychological assessment(s) to analysis of past
performance evaluations. Some organizations already use the Web to conduct
on-line skills testing or critical competency validations for external applicants.
Assessment of an applicant’s “fit” with the organization can also be
determined. An internal staffing system can include not only the employee’s
self-written resume, but performance appraisals, salary history, and e-mail
addresses of current or former managers and colleagues. And at any given
point in time, the individual can find out exactly where he or she is in the
process. Technology may never replace face-to-face meetings between hiring
managers and job applicants, but video conferencing has made such “virtual”
meetings more acceptable.
The end result of this component is the creation and filling of a qualified
candidate pool – people who the competencies and attributes have needed to
fill a specific position and contribute to business goals. Depending on the depth
and breadth of competency requirements and other factors, including the terms
of the employment exchange, the pool of qualified candidates may be large or
small. In Web-based staffing and recruitment, given the reach and capacity of
the Web, the pool is likely to be immeasurably larger than ever before, despite
more rigorous competency requirements for many types of work.
Selecting the right people from these invariably larger pools of candidates for
increasingly demanding jobs requires the identification and implementation of
the process to match individual competencies with business needs and
organizational culture.
The selection process differs between organizations and within organizations
by type of work, but increasingly it is viewed as optimal when a broad range of
managers and HR staffers can participate. On-line systems permit the process
to include the advice and recommendations from many individuals without
slowing down the process, even when only one makes the final selection
decision.
E-Hiring
E-hiring is in vogue today as a matter of fact. Both the employer and
employees acknowledge its presence in their lives and make use of the services
of such service providers. Reversing the persistently long downtrend, past
couple of years it has been a good year for the e-recruitments markets in India.
Growing at 100%, the players, which have emerged as the clear winners were –
Naukri.com, JobsAhead.com, Jobstreet.com and Monster.com. Today, each
one of them is aggressively making strategies to grab the maximum share of
the growing Indian e-recruitment market.
58 ANNA UNIVERSITY
The online job market will continue to grow faster than the conventional Notes
recruitment market (between 80-100% growth rate), and will grab a sizeable
share of traditional channels like newspaper recruitment advertising.
E-Recruiting Agencies and E-Recruitment in India
E-recruiting Agencies
Now let us try to understand what are E-recruiting agencies are and who are
the players in our country providing this services.
The reason why both employers and the aspirants to be recruiters are flocking
to job-sites is because of the success factors they see in them as the following:
 Value-added services
 Increase in number of products
 Modular, cost-effective, customized solutions
 Relationship management programme with HR managers
 Focus on brand building
E-recruiting agencies in India have a wider reach and render better service both
for job seekers and for organizations.
Beware of fraudulent job websites, which take your personal

information and misuse it.
E-recruitment in India
India is on its way to become a global hub for human resource sourcing in the
coming years with the InfoTech industry leading the way. India is already the
fastest growing e-recruitment market in the Asia-Pacific region also it is
growing faster than the Indian software industry. Though online recruitment
sites cater to just about 3 per cent of the estimated $250 million job market in
the country, their share is slated to grow with increase in Net penetration.
After sending or receiving e-mails, job search is considered to be among the
most popular activities on the Net. The recruitment market in India is slated to
grow at a steady pace in the coming years as most developed countries are
expected to experience a drop in labour force growth. Quoting World
Development Indicators, it is believed that the projected average annual labour
force growth rate for the United States, Europe, Australia and New Zealand
will be very less in the coming years. Not surprisingly, these countries have to
necessarily recruit from the Asia-Pacific region or shift business to this part of
the world. India, which is more in touch with the western world than China, is
more likely to get these jobs. China may become a manufacturing base but
India would become a major source of skilled manpower. Thus it will give a
remarkable increase in the E-recruitment activities in India. Thus, jobs
ANNA UNIVERSITY 59
Notes advertisements are posted regularly on online communities like forums, blogs,
and other websites as shown in the Figure 3.1 below. Recruiters are
aggressively using social networking sites like Linked in, Orkut, face book,
yahoo-360, Google+, for sourcing qualified candidates. Then Interview process
is done in two stages, initial discussion is done on telephone/mobile and Final
discussion through video conference on meeting in person if that is possible.
Source: http://www.slideshare.net/saxenashanu/e-recruitment-market-in-india
Figure 3.1: Effective E-recruitment Strategies in India

We provide some details of a few players in e-recruitment in India. In olden
days, some consultants were doing this job of recruiting for their client
companies through print media – sometimes by keeping the identity of their
clients camouflaged. The sites given below are not exhaustive but only
illustrative.
 Timesjobs.com – the smart move: (www.timesjobs.com)
 Elanceonline: (www.elanceonline.com)
 Dice– Look to the tech leader first: (www.dice.com)
 ASTD – Linking people. learning and performing: (www.astd.org)
 Job-hunt.org: (www.job-hunt.org)
 onrec.com: (www.nrec.com)
 Naukri.com.
60 ANNA UNIVERSITY
Few job portals are being described in the figure 3.2 below: Notes
Source: http://www.slideshare.net/saxenashanu/e-recruitment-market-in-india
Figure 3.2: Few Job Portals

Apart from the above, there are some more web sites for job search in India,
such as www.jobstreet.com, www.jobsdb.com, www.overseasjobs.com,
www.careerforum.com and www.clickjobs.com.
These sites are widely used both by employers as well as by the job seekers.
Employers are offered various packages by the recruiting agency. At one go,
which stays in operation for 30 days, employers get the database of prospective
candidates in various hues and colours for the employers to choose from. All
this comes economically. At the same time job seekers are also encouraged to
post their resumes, etc. in the web site to enrich the database.
Thus, in India E-recruitment has shown its escalation in terms of commercial
values and also in adoption by recruitment agencies and jobseekers
(applicants). Most of the Indian companies are using their own websites as well
as some third party vendors (agencies) as part of the solution for recruitment.
Indian recruitment agencies are finding online recruitment as the most effective
and efficient approach to find candidates, one that is targeted to their needs and
is also cost efficient.
Learning Activity
Create your account in any of the job portals and try to understand
how it works.
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Notes Future of E-Recruitment Industry

Experts believe that increase in Internet population, growth in sectors like
software and a change in the mind-set of the audience will drive the future of
the e-recruitment market. Currently, the bulk of the Internet recruitment
business comes from software companies as most of the software professionals
seek jobs through the Net. As the penetration of the Internet grows rapidly, the
profile of the job-seekers will expand and that will drive the demand from
traditional sectors like manufacturing also.
Research indicates that 25% of all Internet users search for jobs online which is
a good sign for the business. In terms of changing mind-set, a large number of
companies have still reservations about the power of the Internet to help them
in recruitment. As more and more employers taste success with their Internet
recruitment efforts, the mind-set of the late-adopters is changing and the
market will explode.
In addition, contrary to popular belief, placement agencies will benefit from the
growth of jobsites to provide value-added services to their clients. Earlier e-
recruitment was considered as a competition by placement agencies; today
there is a change in the market perception. Placement consultants can
immensely benefit through this mode on account of faster reach, and also fast-
mover advantage.
VIRTUAL LEARNING AND ORIENTATION

Introduction and Meaning of Virtual Learning
We shall now try to understand what is virtual learning and orientation. Virtual
learning or learning platform is an electronic learning education, which is
based on the web that caters conventional education to a person by providing a
virtual access to classes, class content, tests, homework, and assessments and
provides other resources like links to some useful information.
Virtual learning can take place in two ways synchronously or asynchronously.
In synchronously learning happens in a real time that is both instructor and
participants meet at the same time and conduct live classes in virtual
classrooms. Participants communicate through microphone, writing on the
board or live chatting whereas in asynchronously the participants are expected
to complete the learning independently through the system. So, it is also called
as "Self Paced" learning as the synchronous learning the asynchronous learning
has also got deadlines but each participant is learning on his own.
Example: Synchronous leaning – Two way live satellite telecast, Audio

video conferencing, online lectures.
62 ANNA UNIVERSITY
Notes
Example: Asynchronous learning – Video-taped classes, audio taped
classes, reading e-mail messages, CD-ROM.
Table 3.1: Comparison between Traditional Classroom and Virtual Learning
Traditional Classroom Virtual Learning
Classroom Physical- Limited size (Synchronous) Unlimited (anytime, anywhere)
Content PowerPoint, textbook, library, videos Multimedia, simulation, digital library,
on demand
Personalisation On learning path Learning path and pace determined by
learner
Orientation
Orientation is a systematic and planned introduction of employees or
participants to their co-workers and organisations or to the prescribed learning
system with respect to virtual learning. It is also called as induction. It is done
to provide realistic approach towards the work or leaning material.
Advantages and Disadvantages of Virtual Learning

We shall now try to number out certain advantages and disadvantages of
virtual leaning as its rightly said everything has something good and bad in it ,
in the same way virtual learning has got much of advantages and less of
disadvantages let us try to understand them.
Advantages of Virtual Learning

 Virtual learning can be scheduled anywhere and everywhere.
 It saves time and cost of the participant
 Participants have an advantage of selecting their own materials based on
their interest and knowledge.
 Can discuss the matters of problem at any point of time through web based
system.
 Different learning styles are addressed and facilitation of learning occurs
through varied activities.
 Self-knowledge and self-confidence is built and encourages participants to
take responsibility of their learning.
Disadvantages of Virtual Learning

 Lack of exposure towards internet may frustrate the participant.
 Participants may feel isolated.
 Connection errors may reduce the participant’s interest in learning.
 Some courses which may require lot of computer interactive skills may
boredom the participant.
ANNA UNIVERSITY 63
Notes
HR Parameters
L ike most of the progressive public sector companies, the assigned

company has well developed HR systems comprising of
comprehensive manpower planning, well defined roles and job
descriptions, scientific recruitment procedure, precise career and succession
plans, effective performance appraisals, etc. The company has a full-fledged
training department, which includes a management development centre at
corporate office and technical training institute at its locations.
As a part of social obligation and also as required under the Apprentices
Act, the company imparts training to engineering diploma-holders and
craftsmen in various technical and non-technical disciplines. This normally
results in the biennial recruitment spree of about eighty candidates. The
screening is done through the process of written test, group discussion and
personal interview.
The recruitment process was both time-consuming and expensive. The
erstwhile process was based on newspaper advertisements followed by
thousands of applications, which needed to be manually processed. At least
25 attributes had to be recovered from the applications and entered by the
data entry operators. All these activities required on an average four
hundred man-days for data entry and its screening resulting in at least two
months of application and date of the written test.
The fully re-engineered online recruitments developed in-house avoided all
these delays. The company merely inserted a small ad indicating the online
recruitment through its website. The detailed advertisement was displayed
on the website. The on-line recruitment system had an in-built feature of
immediately assessing the application and providing feedback to the
candidate. Relevant feedback was instantly provided to the candidate if he
was not meeting the advertised criteria such as age, percentage of marks,
etc. Candidates meeting the requirement were provided promptly an on-
screen Registration Slip indicating the Registration Number allotted to them
which included the key data such as date of birth, address, telephone
number, e-mail address, details of the demand draft, etc. The candidate was
instructed to take a printout of this registration slip and send it to the
company along with the demand draft. In case of candidates belonging to
reserved category, they were required to send the registration slip along with
a copy of their caste certificate.
The response was overwhelming. The company could receive as many as
5,300 applications of which the system identified 3,700 valid applications
and screened out the balance 16,000 applications considered ineligible.
Contd…
64 ANNA UNIVERSITY
The analysis and toning up of the data received from the server did not take Notes
more than seven working days and the company was successful in
dispatching, the call letters for the written test by post as well as through the
e-mail, to all the 3,700 candidates within two weeks of the last date of
applying online.
Benefits
1. Reduction in Clerical Work: Around one hundred and fifty bits of
information was obtained from each candidate. This amounted to
7, 95,000 bits of information in aggregate of all the 5,300 candidates put
together. Since each individual application had to be punched in by the
data operators in traditional setting, it would have been a marathon task
for them.
2. Relevant data in prescribed form: The information required from the
candidates regarding their profile was obtained from them in a pre-
determined format. Certain key fields were made mandatory. Pull down
options, etc. was provided wherever possible. As a result, exhaustive
data of all the applicants was made available in a uniform format.
3. Meaningful data: The data so obtained was very much useful in making
various kinds of analysis such as state-wise/category-wise/gender-wise
profile of the candidates.
4. Instant feedback: The candidates could get an instant feedback about
the fait accompli of their application. In case, the application was
positively considered by the system based on a programmed logic, a
registration number was provided to the candidate or else they were
apprised of the reason as to why their application was not considered.
5. Multiple utility: The data served as a base for generating various
voluminous reports/documents.
6. Correspondence through e-mail: The short-listed candidates were
intimated about the schedule of their written test through e-mail also in
addition to the snail mail. This resulted in quicker communication and
made more time available to them for railway reservation, etc. There
were a few cases wherein the candidates could not get the call letter in
time due to postal delays, but the intimation through e-mail alerted them
and as a result they could make themselves available for the written test.
7. Feel good image: The online recruitment system reflected the
progressive outlook of the company by reinforcing the positive image of
the company in the minds of the prospective candidates.
8. More recall value and wider reach: The recruitment advertisement in
the newspapers does not have a life for more than one day. On the
contrary, the advertisement on the web can be made available all the
time during its currency, i.e., from the day of its release till the last day
of the application.
Contd…
ANNA UNIVERSITY 65
Notes However, unless certain precautionary steps are taken, any system,
howsoever sophisticated it may be, is likely to go haywire and produce
disastrous results. The basic premise that though computers do tend to think
like humans, humans should not think mechanically like computers, needs
to be kept in mind all the time.
From the data of online applications received from the server, it was found
that there were cases wherein:
 Some applicants had entered their data on more than one occasion.
 Some impish respondents had entered junk data.
 Some applicants had filled up certain parts of the online form incorrectly
and hence were getting rejected.
 The data furnished by the candidates was accepted on outright basis, i.e.,
without any documents, in order to reduce the paperwork. This involved
a small risk of a few candidates punching in incorrect information in
their favour for seizing the opportunity for appearing at the written test.
A thorough analysis of all such cases was made and necessary corrective
action was taken to ensure that only the eligible candidates were getting
through in the recruitment process.
This exercise provided a challenging assignment to the executives of the HR
and EDP departments. The successful implementation of this work boosted
their confidence and provided them a lot of intrinsic satisfaction.
Question
As HR professional what are the parameters on which you will require EDP
department's help in this case? Explain.
1. In a well-designed strategic staffing approach, all

applicants are considered, all candidates are assessed,
but only some are selected to be employees.
2. The E-selection process usually starts when the
analysis on the data or candidate helps in the decision
making process. The major method is the key word
selection, which help the firm judge the congruence
between the organizations requirement in alignment
with that of an individual.
66 ANNA UNIVERSITY
SUMMARY Notes
 The method of processing and transmission of digitalized HR information
is called Electronic Human Resource Management (e-HRM). It contains
information regarding payroll, employee personal data, performance
management, training, recruitment and strategic orientation.
 There are three types of e-HRM such as operational HRM, relational HRM
and transformational HRM.
 The E-employee profile is a web application which acts as a central point
of access of the employees overall information and it acts a comprehensive
database solution.
 Various contents of e-profile are Certification Education, Honour/Awards,
Membership, past work experience, competency, etc.
 E-recruitment industry is booming where in most of the companies are
going on with e-recruitment and some with recruiting agencies.
 In today’s scenario, job consultancies are coming in a large scale.
 Major Job websites are Naukri.com, Monster.com, timesjob.com, etc.
 Virtual learning is electronic learning where in web is used for the purpose
of learning it can be done by two ways synchronous and asynchronous.
 Some of the advantages of virtual learning are its time saving and cost
efficient, it can be scheduled anywhere any time, etc. The disadvantage is
that it participants feel isolated and problems in the web connections may
reduce the interest of participant in learning.
KEYWORDS
RM: E-HRM is a way of implementing HR strategies, policies, and
practices in organization through a conscious and direct support of and/or
with full use of web-technology based channels.
E-employee Profile: The E-employee profile is a web application which acts as
a central point of access of the employees overall information and it acts a
comprehensive database solution.
E-recruitment: It is the way of stimulating prospective employees to apply for
the job in the organization through specific websites.
Virtual Learning: Virtual learning or learning platform is an electronic
learning education, which is based on the web that caters conventional
education to a person by providing a virtual access to classes, class content,
tests, homework, and assessments and provides other resources like links to
some useful information.
Synchronously Learning: Happens in a real time that is both instructor and
participants meet at the same time and conduct live classes in virtual
classrooms. Participants communicate through microphone, writing on the
board or live chatting.
ANNA UNIVERSITY 67
Notes Asynchronously Learning: The participants are expected to complete the

learning independently through the system. So, it is also called as "Self Paced"
learning as the synchronous learning the asynchronous learning has also got
deadlines but each participant is learning on his own.
Orientation: Orientation is a systematic and planned introduction of employees
or participants to their co-workers and organisations or to the prescribed
learning system with respect to virtual learning.
1. What do understand by the term E-HRM?
2. Define E-HRM.
3. Name the different types of E-HRM.
4. Give any two advantages and disadvantages of E-HRM.
5. What do you mean by E-employee profile?
6. Provide the contents of E-employee profile.
7. What do you mean by internal sourcing?
8. What do you mean by E-recruitment?
9. Discuss the scenario of E-recruitment in India in brief.
10. What do you mean by virtual learning?
11. What do you understand by orientation?
12. What is synchronous learning?
13. What is asynchronous learning?
14. Differentiate between traditional learning and virtual learning.
15. Bring out any two advantages and disadvantages of virtual learning.
16. Describe different types of E-HRM tools.
17. Give two examples for synchronous learning
18. Give two examples for asynchronous learning.
19. Give two examples where virtual learning is made use.
20. What do you mean by assessment and selection?
68 ANNA UNIVERSITY
Long Answer Questions Notes

1. Explain in brief about E-HRM.
2. Explain different types of E-HRM.
3. Write advantages and disadvantages of E-HRM.
4. What do you mean by E-profile? List various contents of E-profile.
5. Write a note on future of E-recruitment industry.
6. Write a note on E-recruiting agencies and E-recruiters in India.
7. Write in brief about Virtual learning.
8. Explain the advantages and disadvantages of virtual learning.
9. Explain in brief, how virtual learning is different from traditional learning.
10. Write a note on the following:
(a) Sourcing and Attraction
(b) E-hiring
FURTHER READINGS

2010.
McLeod, The counsellor’s workbook, Tata McGraw Hill, 2011.
Oxford, 2007.
Development, Excel Books, 2008
Rajib Lochan Dhar, Strategic Human Resource Management,
Excel books, 2nd edition, 2010
ANNA UNIVERSITY 69
Notes
LESSON 4 - E-TRAINING & DEVELOPMENT,
PERFORMANCE MANAGEMENT AND
COMPENSATION DESIGN
CONTENTS
Learning Objectives
Learning Outcomes
Overview
E-training and Development
Introduction and Meaning of E-training
Need of E-learning
Models of E-learning
Benefits of E-learning
Contributors to Employee Development
E-performance Management
Introduction and Meaning of E-performance Management
Link to Other Systems
Role of Technology in Supporting Management
E-compensation
Introduction to Compensation and E-compensation and Nature of
Compensation
Determine the Manager’s Population
Rating Employees
Compensation Planning
Web Based Total Reward Linkages
Summary
Keywords
Further Readings
70 ANNA UNIVERSITY
Lesson 4 - E-training & Development, Performance Management and Compensation Design
LEARNING OBJECTIVES Notes

 Explain the Nature and Need of E-training
 Define the Benefits of E-training
 Describe the E-performance and its Link to Other Systems
 Illustrate Insight to E-compensation and Compensation Planning
LEARNING OUTCOMES
understanding of:
 basics of e-training and development
 recall contributors to employee development
 concept of e-performance management
 explain role of technology in supporting management
 analysing e-compensation and its nature
OVERVIEW
In the previous lesson, we have studied about meaning of E-HRM, various
types and tools of E-HRM as well as advantages and disadvantages of the
same. Also, we have discussed about E-selection and E-recruitment in detail
which included E-Hiring, its meaning, selection and assessment of employees,
various e-recruitment agencies and scenario of E-recruitment in India. At the
end of the lesson, we have learned about meaning, advantages and
disadvantages of virtual learning.
After employees have been selected for various positions in an organisation,
training them for the specific tasks to which they have been assigned assumes
great importance. It is true in many organisations that before an employee is
fitted into a harmonious working relationship with other employees, he is given
adequate training. Training is the act of increasing the knowledge and skills of
an employee for performing a particular job. The major outcome of training is
learning.
After an employee has been selected for a job, has been trained to do it and has
worked on it for a period of time, his performance should be evaluated.
Performance Evaluation or Appraisal is the process of deciding how employees
do their jobs. Performance here refers to the degree of accomplishment of the
tasks that make up an individual’s job. It indicates how well an individual is
fulfilling the job requirements. Compensation is what employees receive in
exchange for their contribution to the organisation. Compensation forms such
as bonuses, commissions and profit sharing plans are incentives designed to
encourage employees to produce results beyond normal expectation.
ANNA UNIVERSITY 71
Notes In this lesson, you will learn about the e-training and development the need of
e-training and also about e-performance management and how it is linked to
other systems and you will also learn about e-compensation and compensation
planning.
E-TRAINING AND DEVELOPMENT

Now after knowing about e-employee profile, e-recruitment in previous lesson
now let us learns about training and development through electronic media.
Introduction and Meaning of E-training

We have moved, over the past decade, from viewing employees as assets,
however valued, to a much more pointed realization about them: Employees
are discretionary investors of their human capital. They are, for the most part,
free to involve themselves, or not, in the organization for which they work.
They can provide their best insight and energy, they can hone their skills so
that their personal service to the enterprise excels, or they can hold back for
whatever reason.
E-training means the delivery of learning or training program by electronic
means. E-training involves the use of a computer or any other electronic device
to provide training or educational material. E-training is the blend of internet
and learning or internet enabled learning.
Most of the times e-training is misrepresented as Employee

training, but it is electronic training
Need of E-learning
We shall now try to know the need of e-training/e-learning. In the knowledge
era, the pressures on organizations are mounting on account of competition,
constantly changing technology, shorter product cycles and shorter time to
market. Organizations are adopting networking ideas to speed up cycle times
and to take on competition. There is an urgent need today for organizations to
enable frontline fast decisions, and people must know how to make them.
However, the shelf-life of knowledge is short. Therefore, learning has become
a vital business function, and old-style training cannot keep pace with Internet
speeds.
The challenges in learning for today’s organizations are:
 Geographically dispersed learners
 Phenomenal growth
 Difficult/expensive training logistics, and
 Need for knowledge on demand.
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Traditional workshops cost a fortune in aeroplane tickets and time away from Notes
the job. In the eyes of many senior managers, offsite workshops have always
been a total waste of time. Training has grown too important to be delegated to
training departments alone. E-Learning is attractive to corporations as it
promises better use of time, accelerated learning, global reach, fast pace, and
accountability. It is manageable. It cuts paperwork and administrative
overheads.
Example: In the Birla group of companies they have Gnanodaya, the

group’s learning centre. It helps in the transfer of best practices across group
companies, thus, sharpening the group’s competitive edge. The training
calendar is accessible to employees via Aditya Disha, the group-wide intranet,
and the teaching programmes consist of a mix of classroom, outreach, and e-
learning initiatives.
A comparison of education in the old economy versus the knowledge economy
indicates the importance and the need of e-learning.
Table 4.1: Comparison of Education
Old Economy Knowledge Economy
Four year degree 40 year degree
Training as cost centre Training as competitive advantage
Learners Mobility Content mobility
Distance education Distributed learning
Correspondence and video High-tech multimedia centres
One size fits all Tailored programmes
Geographic instituting Brand name universities and celebrity professors
Just-in-case Just-in-time
Isolated Virtual learning communities
Beware of certain websites which offer training on certain topics

and try to collect fees and later do not process any materials or train for the
fees collected.
Models of E-learning
Models of e-learning describe where technology plays a specific role in
supporting learning. These can be described both at level of pedagogical
principles and at the level of detailed practice in implementing these principles.
Learning in the academic world emphasizes broad foundational knowledge,
theory and analytical skills. E-learning may be used to supplement either
traditional education or distance education or it may be a complete replacement
of the traditional modes. E-learning should be based on using the technology to
support a good learning experience. An effective learning experience is one in
which a student can gain new knowledge and skills, understand assumptions
and beliefs, and engage in an stimulating, shared quest for wisdom and
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Notes personal, holistic development. The most valuable activity in a classroom is the
opportunity for learners to work and interact together and to build and become
part of a community of scholars and practitioners. E-learning models have
evolved from classroom replication towards models that integrate technology
and pedagogical issues. The e-learning models emphasize on the role of the
technology in providing content (information), delivery (access) and electronic
services, and now more recent models focus on pedagogical issues such as
online instructional design and the creation of online learning communities.
Content, Service and Technology Model
E-learning went through a hype cycle triggered by technology expectations and
technology vendors. It only slumped into a trough of disillusionment when the
realities of e-learning became clear: educators and learners have not adopted e-
learning as expected and desired learning outcomes are not being achieved. In
the growth and experimentation phase of e-learning in the 1990s, universities,
public and corporate institutions, incited by technology learning management
system vendors, based their e-learning initiatives on an e-learning model
comprising three elements: service to the customer (learner), content and
technology. Owing to the continuous ICT developments, the focus was
primarily on the use of technology to create convenient virtual learning
environments for learners to access anywhere, any time. The learning design
(content development) and the training of educators and learners for online
teaching and learning received less attention.
Many educators and technology vendors assumed that the delivery of
traditional learning content via the Internet constitutes e-learning.
Figure 4.1: The Demand-driven Learning Model (MacDonald et al 2001:19)
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The demand-driven learning model (see Figure 4.1) was developed in Canada Notes
as a collaborative effort between academics and experts from private and
public industries (MacDonald et al 2001). This model is based on the
technology learning management system vendors’ model of technology,
content and service, and the technology is seen as support or a tool to achieve
the desired learning outcomes in a cost-effective way. The main focus of the
model is to encourage academics to take a proactive role in the development
and use of technology in the teaching process. It focuses on the three consumer
demands: high quality content, delivery and service. Content should be
comprehensive, authentic and researched. Delivery is web-based and the
interface of e-learning programme should be user-friendly with communication
tools to support interactivity. The provision of resources needed for learning as
well as any administrative and technical support needed should be included in
service.
As technology is fundamental to e-learning, this model provides an important
framework for understanding the importance of investing in ICT infrastructure
to support content, delivery and service. However, this model also highlights
the importance of realizing the changing needs of learners and their employers
and the instructive changes that must be done in content and services to meet
these needs.
Instructional Design Models
One of the most critical fundamentals for successful implementation of e-
learning is the need for careful reflection of the underlying pedagogy, or how
learning takes place online. Effective e-learning is defined as the integration of
instructional practices and Internet capabilities to direct a learner toward a
specified level of proficiency in a specified competency.
Instructional value is added by:
 Customizing content for the needs of the learners
 Presenting outcomes-based learning objectives
 Logically sequencing material to reinforce those objectives
 Basing navigational options (hypertext links) on existing and desired skills
and knowledge of learners
 Designing objective-based, interactive learning activities that learners must
complete to receive some form of evaluation.
Instructional design models for e-learning which are based on the processes of
designing, developing and delivering curriculum material are generally closely
aligned with traditional classroom learning models which specify some
combination of planning, implementing and evaluation to organize and present
curriculum content.
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Notes Successful e-learning takes place within a complex system involving the
student’s experience of learning, teacher’s strategies, teacher’s planning and
thinking, and the teaching/learning context. However, they all emphasize the
following issues:
1. Needs analysis that will investigate the following:
 Demand for instruction in the specific subject
 Demand and need for an online course
 Equivalence of an online course with face-to-face programme costs.
2. Student profiles that will identify their needs and expectations, as follows:
 Age, gender, culture and work experience
 Prior knowledge
 Prior experience with e-learning
 Goals and motivation
 Attitude towards e-learning
 Learning patterns and styles
 Computer literacy
 Access to computers and the Internet
 Affordability of e-learning.
3. Institutional support for e-learning initiatives investigates the following:
 The vision and mission of the institution
 Lifelong learning as a goal of the institution
 Implementation costs and sustainability
 Experience of the lecturers and web designers
 Training for the lecturers
 Technological infrastructure
 Hardware and software and staff training in the systems and equipment.
4. Pedagogical choices that meet the requirements of the subject and the needs
of the target learner group:
 Learning models (constructivism versus behaviorism)
 Learning objectives
 Delivery methods
 Assessment
 Interaction
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The instructional design models provide valuable frameworks for those Notes
responsible for developing e-learning materials. These models are valuable for
strategic planning, because they emphasize the issue of quality; quality of
learning materials and quality of learning support.
Community of Inquiry Model

Interaction in all its forms (between and among learners, learners and
educators, learners and information or content) is an essential element in the
learning process. E-learning has the capacity to support interaction as "the true
uniqueness of e-learning lies in its multidimensional forms of communication
and interaction that are truly multiplicative. Learners are able to assume control
and directly influence outcomes".
Lately more researchers in the field of e-learning have shifted their center of
attention to online communication in the e-learning environment – the
facilitation of online interaction, effective use of online communication tools,
the adoption of online communication and methods of motivating learners to
participate. Most universities that were early adopters of e-learning have sorted
out their technology infrastructure and electronic administrative and library
services and are now addressing pedagogical issues. The learners may not
participate in the learning experience as expected, while educators could design
their learning materials according to an appropriate instructional design model.
The community of inquiry model developed by Garrison and Anderson (2003)
is an attempt to give educators an in-depth understanding of the characteristics
of e-learning and direction and direction to facilitate critical discourse and
more learning through the use of e-learning. According to the authors,
"institutions of higher education have slowly begun to appreciate that the
content of an educational experience alone will not define quality learning but
that the context – how teachers design that experience, and the interactions that
drive the learning transaction – will ultimately distinguish each institution".
A community of inquiry provides the environment in which learners can take
responsibility for and control of their learning through interaction and is a
requisite for higher-order learning. an e-learning environment has distinct
advantages as a means of providing support to communities of inquiry to
promote higher-order learning, given the information access and
communication facilities of the Internet.
The community of inquiry model has three key elements that must be
considered when planning and delivering an e-learning experience as shown in
the Figure 4.2. They are cognitive presence, social presence and teaching
presence.
ANNA UNIVERSITY 77
Notes
Figure 4.2: Community of Inquiry Model (Garrison & Anderson 2003:28)

Cognitive Presence: The authors see cognitive presence as the extent to which
learners are able to build and confirm meaning through persistent reflection
and discourse in a critical community of inquiry. In essence, cognitive presence
is a condition of higher-order thinking and learning.
Social Presence: Social presence is defined as the ability of participants in a
community of inquiry to project themselves socially and emotionally, as ‘real’
people (i.e. their full personality), through the medium of communication being
used.
Teaching Presence: Teaching presence is defined as the design, facilitation
and direction of cognitive and social processes for the purpose of realizing
personally meaningful and educationally worthwhile learning outcomes.
The community of inquiry e-learning model builds on the demand-driven
model and the instructional design models and draws attention to the
complexities of communication in a virtual learning environment. Even in
higher education today, the reality is that the concept of communities of
inquiry that encourages learners to approach learning in a critical manner and
process information in a deep and meaningful way has not been widely
established. While this model may seem idealistic, the issue of interaction in
the learning process has to be addressed.
Benefits of E-learning
After understanding the need and difference between traditional and
knowledge based e-learning now let us try to understand the benefits of e-
learning. E-learning assists in achieving business goals as it helps:
 Condense the time taken for employee induction/orientation
 Facilitate rapid and targeted deployment of knowledge and skills transfer
across the enterprise
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 Improving training logistics i.e. travel time, accommodation costs, etc. Notes
 Make administration and management of training efficient, i.e. consistent
measurement and tracking.
 Integration of e-learning with enterprise wide applications, e.g. HR, SAP
 Facilitate distributed learning and simultaneously delivery of content
 Different learning styles, i.e. auditory, visual, kinesthetic
 Improve motivation, morale and results in learner empowerment
 Create a more cohesive environment for integrating and augmenting
generic content with company-specific content more rapidly, to reflect
changing organizational and market dynamics and needs
 Facilitate capture of organizational knowledge in a structured manner.
In this scenario, where human capital is the chief source of

economic value, education and training have to become lifelong endeavours
for the workforce. E-learning fits the bill as it is a mix of activities and
people learn better that way.
Training’s Competition
When we speak of training and development, we should first look at some
definitions to ensure that we are speaking of results rather than activities.
Activities are visible and measurable and give us the comfort of believing that
we are genuinely accomplishing something. However, they are still only
activities. Results are measurable as well, but defining the activities that
contribute directly to results in a tortuous path. Organizations are interested in
results; they directly affect bottom line.
 Training is an activity
 Learning is a personal result: One person’s absorption of ideas, skills, and
competencies.
 Development is the ultimate result for employees and for the organization;
it means a person moves from one level of potential contribution to a
higher one.
Training, both formal and informal, in whatever mode it is delivered, is one of
many important activities with a desirable result: workforce development to
increase productivity, innovation, and competitiveness.
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Notes Contributors to Employee Development

Now let us try to understand the things, which contribute for the development
of the employee. There are four contributors to Employee Development,
namely, Training: Coaching, Mentoring and On-the-job Training;
Communities of Practice; and Organization-wide Learning Communities. We
shall elaborate each of these one by one.
Training
For years, classroom training was seen as the primary means of employee
development. An organization decided on a course of action – perhaps
introduction of a new product or an initiative to combat increasing worker
compensation claims – and decided that some or all employees would take a
classroom course in new product sales or safety or TQM, ISO, etc. All
employees took the same course and, hopefully, all employees gained the same
knowledge.
Over the past few years, we have seen synchronous training, where employees
in remote locations attend the same class at the same time and have enhanced
interactivity through real-time e-mail or voice-to-voice conversations with their
instructor and classmates.
Training is a useful tool for imparting knowledge and information,

and, when combined with skill-building exercises, can create a knowledge-
sharing experience.
Most computer-based training, despite the hype given to it recently, is still
training. Its goal is to impart predetermined knowledge. It uses an anytime,
anywhere classroom, but is still individualistic and imparts intellectual content,
with perhaps a bit of skill building and motivation thrown in. It is usually
cheaper (at least for large groups being trained) and often more convenient.
Computer-based training has radically altered the corporate training field in a
number of ways in the following manner:
 Conquered distance and enabled employees around the world to benefit
from knowledge previously available only in selected sites.
 Reduced the attendant costs of training: travel, accommodations, and class
size limitations.
 Enabled companies to purchase off-the-shelf courses at a fraction of the
cost of developing them and providing stand-up trainers.
 Opened entire free libraries of secondary sources to bolster course content.
 Added course-specific chat rooms to replace student dialogues.
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 Opened the doors to innovation in distance learning by providing a Notes

business base for training field is almost overwhelming, and the consequent
competition among them will spark continuously improved products.
 Raised the bar for course developers by increasing demand for better
graphics, real-time video and audio, expectations of “edutainment” as part
of education.
 Raised the bar for instructors, since the competition for great teachers will
only increase exponentially as a more sophisticated audience of learners
sees the possibilities of this new distance learning.
Coaching, Mentoring and On-the-job Training
An EDS (Electronic Data System) study from 1996 claims that 70% of
workplace learning is informal, that is, not predetermined by the company. As
people on the job ask for advice, read an article recommended by another
worker, or discuss a problem, learning takes place. When informal learning
involves a more-experienced employee, we might call it “coaching” if task-
related, or “mentoring” if it concerns the general increase of skills valued in
this particular company. It must be emphasized that, even when companies set
up formal coaching and mentoring programmes for their employees, the only
formal part is the programme itself; the content is, and must be, informal, tied
to the moment, and sought after by the employee who wants to learn.
The role of a training department is more than being an imparter of knowledge
in a formal setting. It must find technological ways to deliver just-in-time
answers to those who need them now. The same course content that seemed so
remote when taken in a classroom can, if part of a knowledge capital database,
give the immediate answer to a pressing question, settle a problem that
employees could take weeks researching, or offer an insight that eventually
affects the bottom line.
Whether we call it “knowledge capital database” or “just-in-time training” or
“technology-enhanced information” delivered when needed and in the required
dosage, it extends the reach of formal training and helps foster the learning
environment required in world of uptight competition.
Organization-wide Learning Communities

Over one-half of the Fortune 500 companies from 25 years ago no longer exist
now. A case can be made that many of these successful companies reached the
limits of their learning capacity and were simply overtaken by unforeseen
events. Learning and communication were top-down, warning signals heard on
the front lines were ignored, and, enamoured of their past, they failed to see the
future rising up before them. They stopped learning right before they
disappeared.
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Notes Three key requirements are needed to set the stage for growth into a learning
organization:
 Core technologies: Provide knowledge management capabilities and are
open to all members of the organization and to external sources of
knowledge. Databases, individual knowledge agents, and groups with
specialized skills are all connected in a high-priority knowledge ecosystem
driven by technology.
 Critical interdependencies: Just as the worth of an e-commerce company
is based more on its audience reach than its present profitability, an
increasing number of nodes and links in a company’s knowledge
ecosystem increase its value exponentially.
 Learning is an action, not a passive ingestion of knowledge. The more
people and departments a company has drawing from and replenishing its
knowledge base, the more the entire organization will have actions and
activities that are more realistic, more consistent, and more successful in
the marketplace.
 Knowledge engines and agents: These are the sources and producers of the
knowledge needed to populate databases, answer questions, reformulate
issues for better understanding, and set up feeds for a constant stream of
usable knowledge into the process.
A learning organization requires continual feeds of information and knowledge
organized in easily accessible ways to maintain its value. All these feed,
whether individual people or purchased information, cost the company
something: time, money, recognition for the effort involved. There must be
some reward given to the people who populate the knowledge database and,
perhaps, another kind of reward for those who use it.
E-PERFORMANCE MANAGEMENT
Introduction and Meaning of E-performance Management
Now let us try to understand the concept of e-performance management and
the meaning of e-performance management.
In recent years, we have seen significant improvement in companies’ abilities
to reduce the administrative burden required to deliver an effective
performance management system. Technology, especially Web-based
solutions, now exists to help companies streamline many of the mundane tasks
associated with performance management, including:
 Performance rating and scoring
 Cascading goals
 Notifying employees and supervisors of the need for feedback sessions
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 Tracking actual performance against performance measures through the use Notes
of interlocking databases that cascade data from overall organizationally
balanced scorecards
 Monitoring competencies and skills to enhance developmental discussions
 Monitoring completion of performance appraisals and related
documentation.
Meaning of Performance Management

According to swan (1991:11) Performance management means more than
assessing an employee performance at regular intervals. It invites a number of
related tasks: monitoring, coaching, giving feedback, gathering information,
and assessing an employee’s work.
The performance management system, which uses electronic media

like computer to assess performance and give feedback on the performance,
is called e-performance management.
The key to maintaining an effective process is to stop thinking of performance
management as an ineffective but necessary burden, and instead start viewing
it as a powerful motivator of behaviour. Reports, systems, and tools make the
difference, and Web-based delivery system can reach all managers and
employees on a 24 by 7 basis.
One should be aware of errors in rating of the performance by

Appraisers (Raters) as there might be some errors like recency effects,
primary effects, Halo error, biased ratings, favouritism, diplomatic rating,
etc.
Link to Other Systems
After understanding what is, e-performance now let us try to understand how
performance management is linked to other systems in the organization.
In general, performance management systems that help to create and sustain a
high-performing organization are well integrated into other strategies and
programmes. Thus, we are seeing companies beginning to systematically create
and maintain strong linkage points among various system, including:
 Rewards programmes: Using performance management system summary
ratings as a direct link to recommendations for merit pay, variable
incentives, and stock.
 Managing ‘out’ systems: Strengthening managing out or severance
programmes in recognition of the fact that organizations without a high
ANNA UNIVERSITY 83
Notes percentage of strong performers cannot expect candidates for

organizational renewal to be identified through performance management.
 Leadership development and succession planning: Using 360 degree
input gathered through performance management to identify leadership
needs and to serve as a “circuit breaker” to prevent candidates with
inappropriate competencies from being promoted to key positions or roles.
 Annual operating cycles: Many organizations are borrowing a tactic from
GE and creating an annual operating cycle that includes specific time set
aside to develop performance criteria and measures, followed by goal
cascading and end-of-year measurement. This approach ensures that the
performance management cycle is in accordance with the overall business.
 Retention systems: Employers with acute retention problems are beginning
to identify those employees who are always on the cusp of receiving
significant rewards, but for some reason have not done so. Such employees
are at special risk of employees with strong 360-degree rating and
performance measures, yet who are consistently offered average reward
levels, can identify employees who are at risk.
Role of Technology in Supporting Management

As cited previously, technology has played a major role in helping managers to
move away from the administrative burdens associated with performance
management. HR departments now routinely use technology to assist in
streamlining systems.
Typical technology applications include the following examples within three
categories:
 Use of the Internet and company intranets to support performance
management systems, including the following: Online performance
appraisal forms administration and analysis of full-circle feedback or other
types of customer input creation of self-paced learning programmes to help
managers understand performance management systems and the like.
Example: The University of California, San Diego, has placed their

entire management reference guide on the Web, making it accessible to
employees and managers. Their system provides comprehensive assistance
with a five-phase model: job description and essential functions, standards
of performance, observation and feedback, performance evaluation, and
performance development plan.
Creation of individual scorecards that cascade company-wide balanced
scorecards: A major telecommunications company has created a report that
automatically sends employees a monthly update of their individual
performance against goals and objectives.
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 Use of third-party vendors to assist with routine administration, Notes

including:
 Administration of competency and skill databases.
 Tracking completion of performance appraisals.
 Technology-driven databases of performance objectives and language
to provide timely and meaningful feedback are available.
Example: One Web-based vendor provides a tool that contains

competencies tracked to specific job categories (managers, professional,
supervisors, etc.), sample goals, blank appraisal forms that can be
customized, sample rating categories, and a database of areas for
improvement tied to performance deficiencies. The programme is modestly
priced.
 Modules created by ERP (Enterprise Resource Planning): Provides to
manage and track performance management. We can assume that
technology will take us into new areas in the next few years, further
reducing administration and tightening the linkage with overall business
strategy.
Example: PeopleSoft’s Workforce Analytics module tracks

company-wide performance against a balanced scorecard and calculates
retention probabilities for individuals, groups, and departments, using
performance criteria and output as one of the key variables.
Learning Activity
1. Visit a company where e-performance management is
followed and prepare a small report on how it works.
2. Meet an ERP programmer or visit a company nearby
where the company follows ERP performance management
system.
E-COMPENSATION
Introduction to Compensation and E-compensation and Nature of
Compensation
Now let us try to understand what compensation is and what is e-compensation
and its nature. Compensation is what employees receive in exchange for their
contribution to the organisation. The term compensation is a comprehensive
one including pay, incentives, and benefits offered by employers for hiring the
services of employees. In addition to these, managers have to observe legal
formalities that offer physical as well as financial security to employees. All
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Notes these issues play an important role in any HR department's efforts to obtain,
maintain and retain an effective workforce.
E-compensation
The compensation system, which uses electronic media for the compensation
purpose, is called e-compensation. Enter the Web-based total compensation
planning tool.
However, the goals and objectives for automated compensation analysis and
delivery systems remain largely the same: to bring the needed information to
those who must make pay decisions, and do so quickly, accurately, and in the
form in which they can best use the information. Web-based systems do all of
that better than any previous system.
Nature of Compensation
Compensation offered by an organisation can come both directly through base
pay and variable pay and indirectly through benefits.
 Base pay: An employee gets the basic compensation, usually as a wage or
salary.
 Variable pay: The compensation that is linked directly to performance
accomplishments (bonuses, incentives, stock options).
 Benefits: These are indirect rewards given to an employee or group of
employees as a part of organisational membership (health insurance,
vacation pay, retirement pension etc.).
Learning Activity
Visit a company and check out components involved in a
salary and make a small report of different components of the
salary structure.
Determine the Manager’s Population

So after knowing what all it includes now let us try to understand how to
determine managers population i.e. Number of employees under a manager.
Before a manager can administer the compensation plan, the population must
be determined. Because it is role-based, the Web-based application must
“know” who is a manager and to whom he or she directly reports. In the
absence of a manager, each employee must be given a “default” manager –
generally as second-line supervisor.
Each plan has eligibility rules, and an employee must be assigned to the
appropriate compensation plans. Then the HRIS, or compensation programme
logic, determines if an employee is covered under that plan as of a specified
date. In other words, HR indicates the date for “freezing” the employee
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population that is, calculating eligibility verifying who worked for whom on Notes
that date, assigning managerial responsibility for performance management and
compensation, and creating budget pools.
Rating Employees
Now let us try to understand how the rating of an employee is done. Whatever
rating was generated during the performance management process or, if that
process was not Web-enabled or the data are not in machine-readable form, the
appropriate performance rating is entered by the manager into the application
for each employee. The system automatically generates graphics that depict the
distribution of the ratings – both the actual distribution for the manager’s
employee population and the desired distribution.
Compensation Planning
We shall now try to understand how compensation planning is done and the
process involved in it.
 The Performance versus Position-in-Range Matrix: One of the more
popular tools used by managers in the analysis and planning phase of salary
administration is the performance/increase percentage matrix. It contains a
list of performance categories and increase percentages, and highlights one
employee. The guidelines in the range quartiles show the suggested
percentage increases that could be given by a manager to an employee
depending on the employee’s position in the range. Position-in-range is a
function of current pay versus external market benchmarks, internal jobs
deemed to be of similar value to the organization, or both. Jobs can be
assigned to salary ranges strictly according to market rates; on the basis of
traditional evaluation methods such as point factor, classification, or
slotting; or via newer, competency-based approaches Both “narrow ranges”
and “broad bands” typically have a midpoint or control point set to reflect
the approximate market rate for those jobs, as well as a minimum and
maximum reflecting the least and most amounts of money normally paid
for those jobs in the marketplace. Armed with these data, the manager is
properly prepared to plan actual compensation changes.
Broad bands: Traditional pay ranges have a fairly narrow spread

from the minimum to maximum pay rates of 20-50% and are designed to
reflect a range of pay for a discrete job. Broad bands, on the other hand,
tend to have a range spread of 70-150%. They allow for a broader view of
work and more readily accommodate variable levels of skill, performance
and progress. Generally, they are designed to streamline pay administration
and encourage lateral career growth.
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Notes  Planning New Base Salaries: When the performance rating versus
position-in-range matrix is finalized, the manager can proceed with
compensation planning. The manager can enter either the percentage
increase provided by the matrix or an actual rupee amount. Running totals
are maintained for total compensation amounts and for the budgeted pool
amount, offset by the amount the manager allocates to each individual,
along with the remaining total available. The manager then plans each
employee’s change (or no change, as the case may be) until all of the
employees are reviewed, using as many real-time updated iterations as he
or she believes are necessary.
 Planning New Variable Compensation: In a fashion identical to that used
for base salaries, each employee who is eligible for variable compensation
is now reviewed, and a suggested amount of compensation is calculated.
The graphic suggested amount of compensation amount (in the bar form)
for each employee, taking into account the amount of the new annualized
salary that was suggested, as well as the suggested variable amount. These
amounts are added together, along with any other variable amounts that the
employee is eligible for.
 Planning Stock Compensation Awards: The manager can now decide on
the award of any stock (usually stock options, except at the senior
executive level) that is part of the total compensation package. Companies
often outsource the administration of this component using either dedicated
software or the financial services firms that handle option exercise and
other stock transactions for the companies.
When this step is completed, managers can generate statistics for their own
work group and, under certain conditions, determine where they stand in
relation to other groups.
In addition, reports are available showing roll-ups and grouped
departmental or line-of-business statistics. Compliance reports for equal-
pay purposes should also be produced for managers to review.
 Approving Compensation Plans: After a manager submits a compensation
plan, it is accessible to the approving manager for review and approval.
The manager can both “roll up” for an aggregate view of pay-for-
performance and “drill down” to examine any one individual’s pay plan.
Individual plans are automatically rolled up, and compensation managers
can review programme status and summary data at any time. Group-level
analytics provide visibility at each level in the management hierarchy
before compensation actions are taken. Insightful graphs help managers
accelerate the roll-up process while giving them a clear vision of the
planning and budgeting of their groups.
Web Based Total Reward Linkages

In this section, we will learn about how rewards provided to employees are
linked with web and how it works.
88 ANNA UNIVERSITY
If the compensation plan is part of the overall total rewards programme, then it Notes
should be delivered as a fully integrated programme. This means that the plan
should be accessible from the HR home page as a major hyperlink and should
be labelled as such. The total rewards home page should provide applications
for the subcomponents of the total rewards programme. For instance, all the
compensation plans could be grouped under the “My Finances” icon and
applications. Regardless of the application’s place on the site map, the
compensation user should be able to navigate easily through the application to
connect with the other components of the total rewards programme. From the
compensation pages, users should at any time have access to the benefits
components, the career applications, and those applications pertaining to the
employee’s work environment. This in turn would help ensure that the primary
goal for the total rewards programme is met to communicate the overall value
of an employee’s experience at the company.
360-Degree Feedback on the Internet
P erformance appraisal systems serve many purposes, such as providing

formal feedback to employees on how they stack up with respect to
the organization's performance standards, serving as input for
compensation decisions, identifying areas in which future development is
needed, reinforcing good performance, providing input for promotional
decisions, and establishing the documentation needed to justify termination
of employment. Nonetheless, while performance appraisal is one of the
fundamental activities in human resources, it has always been a lightning
rod for criticism and has recently come under renewed attack.
Some criticisms of traditional performance appraisal systems, in which
supervisors appraise subordinates, are that they frequently do not provide
good assessments of managers. More specifically, traditional performance
appraisal systems often do not provide accurate evaluations of opportunistic
managers who take advantage of their own subordinates in order to enhance
their superiors' perceptions of their own performance. For example, such
managers may not give credit where credit is due, such as to employees who
may have created an innovative process that helped improve the unit's
productivity. Instead, they may attribute improved performance to their
managerial skills and take the credit or themselves.
With this background in mind, there is much to be learnt from the
experiences of the Otis Elevator Company. The company had concerns that
its old paper-based performance appraisal system was too slow and
cumbersome. There were also concerns about whether the raters could be
assured of the confidentiality of their ratings. Because of these problems,
the company wanted a better system for appraising and developing the
Contd…
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Notes performance of its engineering managers. Specifically, the company was

interested in enhancing these managers' project management and project
team leadership skills. The engineering managers needed substantial
improvement in their skills, and the company wanted a performance
appraisal system that would provide feedback from the managers'
subordinates, peers, and customers as well as their direct superiors.
Given these concern, it is not surprising that Otis Elevator decided to
develop a 360-degree feedback system. With 360-degree feedback systems,
superiors, peers, and subordinates evaluate managers. The innovative aspect
of the on the Internet and its own intranet. An independent contractor,
E-Group, developed the system and handles the collation and analysis of the
feedback information.
E-Group chose a 75-item survey called LEAPS, which measures seven
dimensions of leadership, for the 360-degree instrument. The instrument
was loaded on a web site so that all raters can pull up the information and
complete the appraisal in approximately 20 minutes. After completing the
appraisal, they simply submit the results via-email to E-Group to process.
Because the system is encrypted, the company is able to provide greater
confidentiality and anonymity for the raters than with the previous paper-
and-pencil system. In addition, the LEAPS items, the company included a
fairly large set of other items to assess managers' technical competency and
their contributions to the business. E-Group was able to province appraisal
profiles for the managers within three days after the last of evaluators e-
mailed their input for the manager. In addition, the profile of actual ratings
for each manager from E-Group also includes an ideal leadership profile
developed by Otis executives. By comparison, of his or her actual ratings
with the ideal profile, managers can identify areas for future development.
Otis Elevator chose to use the system only for developmental purposes,
although recently it began to consider other purposes for the system.
Questions
1. Aside from the advantage of instantaneous transmission of information,
what other advantages do you see with this type of performance
appraisal system on the Internet?
2. What problems do you think Otis Elevator experienced once the 360-
degree system was successfully implemented on the Internet?
3. In the past, many human resource professionals have been almost
obsessed with the forms or format used in performance appraisal
systems. How is the Internet application of 360-degree performance
appraisal systems different from the old obsession with form or format?
4. What else is necessary to help ensure that a performance appraisal
system will be successful? How would you determine if the system
affects the firm's performance?
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1. High on the list of contributions workers make to their Notes

organization are those that come from their knowledge
base. It has been learnt through a survey that
increasing worker education results in greater
productivity than increasing capital allocation or work
hours.
2. E-compensation is intended to generate a fair salaries

culture within the corporation, based on complying
with performance evaluation components and the
measurement system. The purpose of this model is to
provide greater salary incentives for employees who
follow company guidelines and achieve results in
accordance with clear instructions.
SUMMARY
 E-training means the delivery of learning or training program by electronic
means. E-training involves the use of a computer or any other electronic
device to provide training or educational material. E-training is the blend of
internet and learning or internet enabled learning.
 There are number of difference between traditional way of learning and
web enabled learning some of the differences being participant interest,
cost, time etc.
 “Knowledge capital database” or “just-in-time training” or “technology-
enhanced information” delivered when needed and in the required dosage,
it extends the reach of formal training and helps foster the learning
environment required in world of uptight competition.
 The performance management system, which uses electronic media like
computer to assess performance and give feedback on the performance, is
called e-performance management.
 Technology plays a vital role in assessing and giving feedback of
performance.
 Compensation is what employees receive in exchange for their contribution
to the organisation.
 Compensation planning includes the following:
 The performance versus position-in-range matrix
 Planning new base salaries
 Planning new variable compensation
 Planning stock compensation awards
 Approving compensation plans
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Notes  The web based total reward linkages helps the employees to know about
reward linkages and the career ladder in the organization and ultimately
helps in ensuring primary goal for total rewards is met and also
communicates the overall value of an employee’s experience in the
company.
KEYWORDS
E-training: E-training means the delivery of learning or training program by
electronic means. E-training involves the use of a computer or any other
electronic device to provide training or educational material. E-training is the
blend of internet and learning or internet enabled learning.
Performance Management: It means more than assessing an employee
performance at regular intervals. It invites a number of related tasks:
monitoring, coaching, giving feedback, gathering information, and assessing an
employee’s work.
E-compensation: The compensation system, which uses electronic media for
the compensation purpose, is called e-compensation. Enter the Web-based total
compensation planning tool.
Compensation: It is what employees receive in exchange for their contribution
to the organisation. The term compensation is a comprehensive one including
pay, incentives, and benefits offered by employers for hiring the services of
employees.
Training and Development: Training is an activity, which tends for learning
that is absorption of ideas, skills and competencies and the ultimate result is
development that is an employee moves from one level of potential
contribution to a higher one.
Learning Organization: A learning organization is one, which is trying to
learn new things and adapt to the changing business scenario. It requires
continual feeds of information and knowledge organized in easily accessible
ways to maintain its value.
1. What do you mean by training and development?
2. Write any two need for e-training.
3. What do you mean by e-training?
4. List out any two benefits of e-training.
5. Write down the contributors to e-development.
6. What do you mean by knowledge engines and agents?
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7. Define Performance Management System. Notes

8. Explain e-performance management.
9. What do you mean by e-compensation? Write down the components of
compensation.
10. Explain the models of e-learning in brief.
11. What do you mean by determining managers population?
12. What do you understand by the term ‘rating employees’?
13. What do you mean by core technologies with respect to contributorse-
development?
14. What do you mean by broad bands in compensation planning?
15. List out any two companies, where e-performance management system is
adopted.
16. List out the steps in compensation planning.
17. Name the companies where e-compensation system was first adopted.
18. Name the contributors to e-development.
19. List the companies where e-training is adopted as a part of their training
programme.
20. Write any two advantages of your own about e-training and development.

1. Write a brief note on e-training and development.
2. Write a note on contributors to e-development.
3. Explain briefly on benefits and nee of e-learning.
4. Discuss all the models of e-learning in detail with the help of diagrams and
examples.
5. Write a note on performance management link to other systems.
6. Brief the role of technology in supporting management.
7. What do you mean by e-compensation and nature of compensation?
8. Write a short note on the following:
(a) Determining the manager’s population.
(b) Rating employee
9. Explain compensation planning.
10. Write a short note on web-based total reward linkages.
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Notes FURTHER READINGS

2010.
Oxford, 2007.
94 ANNA UNIVERSITY
Lesson 5 - Development and Implementation of HRIS and Designing of Portals
Notes
LESSON 5 - DEVELOPMENT AND
IMPLEMENTATION OF HRIS AND DESIGNING
OF PORTALS
CONTENTS
Learning Objectives
Learning Outcomes
Overview
Introduction to HRIS
An Overview of MIS, Strategy and Information Need
Assessment of Information Need
Strategy and Information Need
HRIS Design
System Functions
Steps in Implementing HRIS
Applications
Necessary Capabilities of an HRIS
Benefits
Limitations
Introduction to Portals
Employee Service
A Door to More than HR
Benefits of HR Portals
Employee Online Survey Design
Employee Online Survey Administration
Employee Online Survey Analysis
Summary
Keywords
Further Readings
ANNA UNIVERSITY 95

 Explain the Concept of HRIS and MIS
 Discuss Design and Implementation of HRIS
 Illustrate the Applications of HRIS
 List out Pros and Cons of HRIS
 Describe the Concept of Portals and Survey Online
LEARNING OUTCOMES
understanding of:
 basics of human resource information system
 recall assessment of information need
 analyzing strategy and information need
 identifying design of HRIS and explain steps in implementing HRIS
 explain necessary capabilities of an HRIS
 list out benefits of HR portals and explain employee online survey
administration
OVERVIEW
In the previous lesson, we have learned about the e-training and development
the need of e-training and also about e-performance management and how it is
linked to other systems. We have also discussed about e-compensation and
compensation planning.
In order to conduct an audit properly, human resource professionals need
considerable amount of data. Gone are the days when decisions about the
future could be based on guesswork. Now you need to collect concrete
information in order to make future events more manageable than before.
Manpower planning, too, demands a lot of information about people and jobs.
A comprehensive data system is, therefore, necessary to fulfil the HR
informational needs of an organisation.
The Human Resource Information System (HRIS) is a method by which an
organisation collects analyses and reports information about people and jobs. It
applies to information needs at macro and micro levels. HRIS is basically a
data base system that offers important information about employees in a central
and accessible location. When such information is needed, the data can be
retrieved and used to facilitate human resource planning decisions.
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The best web portals offer users a high degree of customization. They organize Notes
information and news in useful, related links to other websites. A good web
portal helps one navigate through all the information on the public Internet.
Yahoo is one example of a portal.
In this lesson, you will learn about HRIS and how it is designed and
implemented the various applications and also a view to job portals and
employee survey online.
INTRODUCTION TO HRIS
Now let us try to understand what HRIS is all about and understand how it is
useful in the field of HR.
An Overview of MIS, Strategy and Information Need
Information is the life-blood of an organization. Information consists of data
that have been retrieved, processed, or otherwise used for inference purpose,
argument, or decision-making. Data are facts and figures that are not currently
being used in a decision process and usually take the form of historical records
that are recorded and filed without immediate intent to retrieve for decision-
making. Information is vital for an organization.
Looking at the role of information in organization functioning, every
organization designs some sort of system for collecting, screening, collating,
rearranging, storing, and disseminating data required by management. Since
this is done on some systematic pattern, it is known as information system or
more popularly, as Management Information System (MIS). MIS may be
defined as follows:
“Information System is an organized method of providing past, present and
projected information relating to internal operations and external intelligence.
It ensures providing of needed information to each manager at the right time, in
right form, and relevant one which aids his understanding and stimulates his
action.”
“A Management Information System is an integrated user-machine

system for providing information to support the operations, management,
analysis, and decision-making functions in an organization.”
In designing MIS, two aspects are quite important which determine its
effectiveness: assessment of information need and design of operating system –
known as system analysis and system design respectively.
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Notes Assessment of Information Need

A large organization requires information of various types. From the strategic
management point of view, information requirement for various purposes is
different. Since different activities are emphasized at different management
levels, the information need for a particular management level differs from that
of others. For example, the top management needs information for strategic
decision-making while at the lowest level, it is required for transaction
processing, enquiry responses, etc. with which the top management may not be
concerned. Thus, the information need of different level managers differs and
this must be identified so that MIS is designed to be tailor-made and relevant
information reaches where it is needed.
Strategy and Information Need

Not only does information need differs in terms of managerial level, it also
differs in terms of strategy that an organization adopts. Thus, an organization’s
strategy will determine the information need and the types of processing that
are required for processing the information. In a stability strategy, there is
lesser emphasis on environmental analysis and lesser amount of external
information is required as compared to other strategies.
The organization pursuing growth strategy, particularly diversification strategy,
needs more information and decision support systems. Decision support system
is a tool to help management to analyse data to make decisions on semi-
structured problems. It needs more microprocessors than a mainframe
computer. Information need for strategies between the two extremes varies
according to strategies.
HRIS DESIGN
The second aspect in MIS is its design and operation by prescribing blueprint.
The blueprint incorporates the methods of collection, processing, and retrieving
the relevant information from internal and external sources. It also prescribes
the relationship of information system with other aspects of the organization.
The blueprint of information system may differ according to the basis adopted
for the purpose.
Whatever the basis of information system is adopted, the guiding principle will
be the information needs of the managers as well as the cost involved in
meeting such needs and the benefits derived.
In the overall Management Information System, Human Resource Information
System (HRIS) has to be part of the organizational strategy.
98 ANNA UNIVERSITY
Notes
HRIS is a systematic way of storing data and information for each

individual employee to aid planning, decision-making, and submitting of
returns and reports to the external agencies.
Information is needed for internal control, feedback and corrective actions, and
for statutory obligation. HRIS is utilized basically for the following four
purposes:
1. Storing information and data for each individual employee for future
reference.
2. Providing a basis for planning, organizing, decision-making, controlling,
and a host of other human resource functions.
3. Meeting daily transactional requirements such as marking the attendance
and granting of leave.
4. Supplying data and submitting returns to government and other statutory
agencies.
SYSTEM FUNCTIONS
Now let us try to understand and know the system function which is considered
mandatory in any computerized HRIS and those are as follows:
1. In a networked-PC environment, an unlimited number of users each having
potentially different security groups should be allowed. However, the
security of a human resource information system is critical. The super user
should control the access to the software and various segments of the
database. Alterations to payroll data within a human resource environment
must be reported in detail.
Example: Leave clerk should have access to leave data in the

enquiry mode, whereas the personnel manager may be given the authority
to delete all the records on the database. Security provisions control access
to individual employee records based on criteria such as organizational
level and/or job grade.
2. User-driven ad hoc enquiries must be made available to format and select
data from the database. One of the weaknesses of database management
system is that the query facility can only be driven by someone having a
detailed knowledge of the database structure and the query language. This
approach is unsatisfactory. A human resource information system must be
capable of giving the users a simple query facility. Other facilities should
include options to be output data to a terminal and/or creating American
Standard Code for information Interchange (ASCH) files for porting data to
other systems.
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Notes 3. A human resource information system should be a part of a Management

Information System (MIS) with interfaces to other sub-systems. Typical
sub-systems that interact with the human resource data include production
planning and control, costing, corporate planning, etc.
STEPS IN IMPLEMENTING HRIS

After knowing the mandate requirements for system functions now let us try to
learn the steps in implementing HRIS. The following steps should be followed
in setting up an HRIS:
 Inception of Idea: An idea must originate somewhere. The originator of
the idea should make a preliminary report justifying the need for an HRIS.
The most critical part of this step is to clearly illustrate how an HRIS can
assist in making certain decisions.
 Feasibility Study: The present system should be studied to highlight the
problem areas and the likely benefit of an HRIS. Economic Feasibility,
Technical Feasibility and Operational Feasibility are the three major studies
which should be made. Cost-benefit analysis of the HRIS in terms of labour
and material as also the intangible savings, such as increased accuracy and
fewer errors will be part of Economic Feasibility, while availability of the
technology to back up the organization’s aspirations will form the basis of
Technical Feasibility. Finally, the trained and knowledgeable manpower to
operate the system evolved and the conducive environment will form the
Operational Feasibility.
 Selecting a Project Team: Once the feasibility study has been accepted and
the resources allocated, a project team should be selected. The project team
should consist of a human resource representative, who is knowledgeable
about the organization’s human resource functions and activities, and the
organization itself, and also a representative from the management
information system. As the project progresses, additional clerical people
from the human resource department will need to be added.
 Defining the Requirements: A statement of requirements specifies in detail
exactly what the system needs to do. A larger part of the statement of
requirements normally deals with the details of the reports that will be
produced, the objective here being to make sure that the mission of an
HRIS truly matches with the management’s needs of an HRIS.
 Vendor Analysis: The purpose of this step is to determine what hardware
and software are available that will best meet the organization’s needs at
the least price. This is a difficult task. This involves discussions with
various vendors on how their HRIS will meet the organization’s needs.
This will help in making a decision of going to the ‘off-the-shelf’ package
or to develop the system internally.
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 Contract Negotiations: The contract stipulating the price, delivery, Notes

vendors’ responsibilities with regard to installation, service maintenance,
training to organization employees, etc. may be negotiated.
 Training: Project team members may first be trained to use the system and
then they could train all users from other departments.
 Tailoring the System: It involves making changes to the system to best fit
the organizational needs.
 Collecting Data: Data is collected and fed into the system.
 Testing the System: Purpose of the testing is to verify output of HRIS and
make sure that it is doing what it is supposed to do. All reports need to be
critically analysed.
 Starting up: This is also known as implementation stage. Even after
testing, some additional errors surface during the starting-up. During
implementation, whatever pitfalls or shortfalls are found are rectified while
operating the system.
 Running in Parallel: Just for the security, the new system is run in parallel
with the old till the new system stabilizes and people gain confidence in its
operation.
 Maintenance: Whenever there is change in environment, either internal or
external, the system has to undergo certain modifications. These are
categorized as maintenance. This also includes the literal sense of the term
as and when preventive or breakdown maintenance is needed.
 Audit: After a year or so, the project team should audit the performance of
HRIS and if required, corrective actions should be taken. This is also
known as System Audit.
It is very important to periodically assess the performance of

HRIS and take corrective actions if required or else the time and money
invested tends to lose the value.
APPLICATIONS
Now after knowing the designing and implementation of HRIS now let us
understand the applications of HRIS. Some of the applications which could be
computerised and the nature/types of information that can be recorded and
stored are as follows:
 Personnel Administration: It will encompass information about each
employee, such as name, address, date of birth, date of joining the
organization, and information about next of kin and family. The facility
should allow the user to maintain a number of address records such as
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Notes permanent home address, local postal address, and the address of next of
kin.
 Salary Administration: Salary review procedures are an important function
of the human resources department. A good human resource information
system must be able to perform ‘what if’ analysis and present the proposed
increases in a report suitable for distribution to various departments. The
report should give the details of present salary, last increase, and the
proposed increase.
 Leave/absence Recording: An essential requirement of HRIS is to provide
a comprehensive and accurate method of controlling leave/absences. A
fundamental aspect of leave management is to maintain a complete leave
history for each employee with the ability to increase entitlement according
to leave rules. Every employee can be issued with an identity card with an
employee token number coded (electronic bar code) on it. The identity card
of the employee entering/leaving the gate will be swiped through and
timing logged-in/logged-out. This will avoid manual effort in recording
data, and calculating wages for employees with any possibility of errors by
oversight/malpractice. This kind of time-keeping electronically will also
enable line managers to monitor the attendance through exception reports
generated by the computer in each shift in every department.
 Skill Inventory: Human resource information system is used to record
acquired skills and monitor a skill database at both employee and
organizational level. This will provide the opportunity to identify
employees with the necessary skills for certain positions or job functions.
 Medical History: The human resource information system may be used to
record occupational health data required for industrial safety purposes (as
per the Factories Act, 1948 certain periodical medical tests have to be
carried out on employees engaged in specific jobs.
Crane operators should undergo eye-tests, canteen workers should

not have any contagious disease, or some who are engaged amidst dust and
fume should be checked for contracting tuberculosis, etc.
 Accident Monitoring: The system should record the details of the accidents
for the injured employees. This can be used to highlight accident-prone
areas or accident-prone time within the organization. The history of
accidents also will help tackle the requirements of the Workmen’s
Compensation Act.
 Performance Appraisal: The system should record individual employee
performance appraisal data such as the due date of the appraisal, scores for
each performance criteria, potential for promotion, and other information to
form a comprehensive overview of each employee including the
performance reviews held with the employee periodically and the result of
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such reviews. The textual data relating to appraisals can be retained in Notes
paper form and can be combined with the overview obtained from the
human resource information system for training, transfer and promotion
purposes.
 Training and Development: The system should consider the training and
development needs of an employee, with the ability to record and enquire
on courses completed, those underway, and any projected training needs.
This will enable any gaps in training to be identified and also allow training
costs to be monitored at the organizational level. The system could also be
used for recording the details of training imparted to various employees.
 Human Resource Planning: An organization hires people because it has a
need to fill a position to ensure that it continues to operate efficiently and
within the budget restraints. Therefore, a fundamental aspect of a human
resource information system should be to record details of the
organizational requirements in terms of positions. A human resource
information system can be used to connect employees to required positions
and keep track of their movements. This philosophy provides the user with
a means of identifying vacancies and establishing staff numbers, using
either reports or on-line enquiries.
 Recruitment: An essential function of any HR department is recruitment.
Recording details of recruitment activity such as the cost and method of
recruitment, and the time taken to fill the position can be used to provide a
picture of the cost of recruitment in terms of time as well as rupee value.
 Career Planning: HRIS could record projected positional moves. The
system must be capable of providing succession plans to identify which
employees have been earmarked for which positions.
 Collective Bargaining: A computer terminal can be positioned in the
conference room and linked to the main database. This will expedite
negotiations by readily providing up-to-date data and also facilitating ‘what
if’ analysis. This will provide the means for discussions based on facts and
figures and not feelings and fictions.
The system can also be made accessible through telephone lines and
modems to all employees to file personnel queries.
NECESSARY CAPABILITIES OF AN HRIS

We shall now study about the three major functional components of HRIS and
they are inputs, data maintenance and output.
 Inputs: The input function provides the capabilities needed to get the
human resource information into HRIS. Some of the first things that must
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Notes be established are the procedures and processes required to gather the
necessary data. In other words, when and how will the data be collected?
After collection, data must be entered into the system after codification.
Once the data has been fed, it must be validated to ensure that it is correct.
Validation tables may be used to determine if the data is acceptable. The
system should have the capability of easily updating and changing the
validation table.
 Data Maintenance Function: The data maintenance function is
responsible for the actual updating of the data stored in the storage devices.
As changes occur in human resource information, these should be
incorporated into the system. As new data is brought into the system, it is
often desirable to maintain the old data for posterity.
 Output Function: The output function of an HRIS is the most familiar one
because the majority of HRIS users are not involved in collecting,
editing/validating and updating data, but they are concerned with the
information and reports of the total population for further evaluation,
performing some type of calculations, using the population and providing a
report containing specific information regarding the selected population
and/or calculation of results. The demands on the output function are the
major factor that influences the particular type of software to be used.
BENEFITS
Now let’s have a look on benefits of HRIS and the following benefits are
derived from the system:
 Higher speed of retrieval and processing of data
 Reduction in duplication of efforts leading to reduced cost
 Ease in classifying and reclassifying data
 Better analysis leading to more effective decision-making
 Higher accuracy of information/report generated
 Fast response to answer queries
 Improved quality of reports
 Better work culture
 Establishing of streamlined and systematic procedures
 More transparency in the system
LIMITATIONS
As the computerized Human Resource Information System, described, has
many benefits, it also has many problems which need to be addressed to before
it can really be useful. Some of them are described below:
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 It can be expensive in terms of finance and manpower. Notes

 It can be threatening and inconvenient to those who are not comfortable
with computers. For computerized information to be useful at all levels
there is an urgent need for large-scale computer literacy.
 Often, the personnel designing HRIS do not have a thorough understanding
of what constitutes quality information for the users.
 Computers cannot substitute human beings. Human intervention will
always be necessary. Computers can at best aid the human effort. The
quality of responses is dependent upon the accuracy of data input and
queries fired. The “Garbage-in-Garbage-out” (GIGO) is the key expression
in any computerized system.
 In many organizations, the system is operated in batch mode with the
records being updated once a week. Online facility in multi-user
environment needs to be developed so that the reports generated are not out
of place with the realities. In many a situation, the stale information is as
good as no information.
INTRODUCTION TO PORTALS
Let us take a break from writing and click over to www.yahoo.com. What do
we find? The first screen has links to lots of stuff: headlines, news stories,
online stores, movie reviews, weather, chat rooms, e-mail and more. There’s a
section of related links organized by categories: arts, education and science, for
example. We click on “Society & Culture.”
We get a set of topics to click on to take us to other links. Let us choose
“Bibliographies” and get a screen of web-based bibliographies for a range of
topics from the erotic to the esoteric. Further we choose “Freedom of the
Press” and find ourselves at a site that gives us all kinds of sources on and off
the web regarding press freedom.
But what’s it got to do with HR portals? Let us keep in mind what Yahoo does
for the visitor on the Internet, while we imagine the following corporate
intranet experience:
From the company’s home page a user can click on Employee Services, which
takes him to three possible links: “My Life”, “My Career”, “My Staff”. If he
clicks on “My Life”, he’ll find places where he can make changes to basic
information in the employee database: change a phone number, add
dependents, record his new address and the like. He can make these changes
without dealing with a human being. From My Life, he can also click on a link
that takes him outside the corporate firewall to the company’s vendor. There he
can move money around and see how his investments are doing.
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Notes A job portal is a website dedicated for online information about recruiters as
well as job seekers. A job portal helps both the job seekers and recruiters
finding the right organization for the employees. In the case of job seekers,
according to their educational qualification, experience and their preferences,
the job portal shows the list of companies to the job seeker. And, to the
recruiters, provides the suitable candidates from a pool of lacks. So, a job
portal is the perfect online arena, where both the job seekers and the employers
find their goal in the pursuit of getting a top notch company for the suitable
candidates.
Learning Activity
Register yourself with a job portal and try to analyse the
process of working of a job portal.
EMPLOYEE SERVICE
Here in this section you will learn about various services provided by portals to
employees. There are several technologies, some of them fairly new to the
scene, that are enabling these new methods of delivering HR work, all of which
should operate in a fully secure and confidential manner.
 Workflow: With this technology, users are directly involved in a process,
using their computer terminal, where they can access employee records or
initiate an event by entering key data, and then submitting the work to the
next appropriate person for further action or review – all electronically.
 Manager Self-Service: At the front end of the HR Portal and workflow is a
set of fully functional desktop applications that permit line managers to
view and change their employees’ records; access policies and procedures;
gain opinions from others (including HR staffers) relating to personnel
problems; and perform many of their duties as managers on their PCs.
Some of these applications enable the managers to rate their employees,
model the salary increase budgets, grant employee salary increases, and
enrol employees in training courses and the like. HR Portal technology will
“push” important information to managers and alert them to upcoming due
dates.
 Employee Self-Service: Similar to the manager’s self-service, employees
are able to become more self-sufficient with respect to many items
previously handled by the HR staff. These include such activities as
making changes and additions to their own benefits programme,
participating in annual benefits enrolment, selecting training programmes
and development plans, investigating job opportunities and postings,
handling payroll deductions, and participating retirement planning.
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A DOOR TO MORE THAN HR Notes

Now let us learn something more important about portals most of the corporate
portals will not be limited to HR – they will offer applications for everything
the employee needs to do his job: HR processes, procurement, travel
arrangements, expense filing, information and content directly related to his
job responsibilities. The broadband wireless revolutions present the HR
function with an exciting range of new opportunities that can enrich
employees’ service delivery. The opportunity is even more seamless than the
last wave of ERP and Employee Self-service (ESS) platforms offered.
BENEFITS OF HR PORTALS
After understanding about portals now let us understand benefits of HR portals
to employees and employers.
A portal solution creates huge benefits for employers and they are as follows:
 Eliminates high print and distribution costs for printed materials
 Enables real-time sharing of information with your employees
 Changes the workflow in HR to more mission-critical tasks like recruiting
and retention
 Redirects IT resources to revenue-producing projects
 Reduces your costs related to HR, payroll and benefit administration
 Electronic Acknowledgement feature that keeps an audit trail of policy
acknowledgement by employee to improve compliance.
Portal Solutions means huge benefits for employees:
 Easy-yet-secure access to up-to-date company information such as news,
events, forms and policies
 Access to a company directory to make it easier for employees to
communicate with each other
 Increased satisfaction – the pivotal building block for employee retention.
EMPLOYEE ONLINE SURVEY DESIGN

In this section we will learn about how the employee online survey is designed.
Obtain valuable employee feedback with employee online surveys either
through company’s intranet or through consultants engaged for the same.
Whoever it is, they begin the process by designing a customized employee
online survey for the organization, or taking the existing survey and preparing
it to be administered via the Internet, telephone, fax, or paper. Standard
questionnaires are designed by all consultation services to all clients, and
reviews of all employee online survey instruments are made to assure validity,
reliability, and bias reduction.
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Notes As an optional service, it is also possible that one of the researchers can work
interactively with the organization to create an employee online survey
questionnaire “from scratch” tailored specifically to their information needs
and strategic objectives.
The standard employee online surveys are comprehensively designed to
identify and isolate key independent and dependent variables.
Table 5.1
Independent Variables Dependent Variable
Supervisor relation Overall satisfaction
Pay and benefits Likelihood to recommend
Work environment Likelihood to say
Corporate communication Employee loyalty
Employee Online Survey Administration

We have now understood employee online survey design, once the employee
online survey design phase is complete, the management should be consulted
to determine the best security level, incentives, deadlines, and respondent
notification method for their particular project. Therefore, expertise should be
available either within or without the organization to help the organization with
every decision along the way, applying expert experience and expertise to
make the process as easy and stress-free as possible.
Using the unique Personal Access Code (PAC) system, we can virtually
guarantee against duplicate or unauthorized responses, while maintaining
100% respondent anonymity when necessary.
For employee online surveys, a personalized email invitation is to be sent to
each employee with simple directions how to access and complete the survey.
Embedded in each survey link may be respondents’ unique Personal Access
Code (PAC) and/or demographic data. This means that when the respondents
click on their link to access the survey, the surveyor can automatically identify
them, validate their responses, and even assign them to a specific demographic
sub-group for analysis.
The management can track the results of their survey in real-time throughout
the survey administration period. The secure real-time, 24/7 reports menu
should allow the management to login via a secure link and view their current
survey response rate, review preliminary results, and even download an
updated raw data file.
Learning Activity
Visit any online survey sites and check out the contents in
terms of question being framed the process of working and
make a presentation on the same.
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Employee Online Survey Analysis Notes

Employee opinion survey results data is useless without insightful analysis.
Therefore, a company’s or consultant’s in-house data analysis staff and senior
level researchers should be trained to turn the raw survey responses into
meaningful and actionable conclusions. Naturally, all this is supposed to be
carried out within the budget constraint the organization may put in.
Sometime, the standard computer-generated analysis reports are designed to
provide a variety of statistical, graphical and verbatim results summaries. All
these reports can be “cut” by respondent sub-groups or time periods.
Where will I go?
N arasimhan was an MBA and got a job in a small firm as a general

manager. However, due to his poor family background he had to
fulfil his commitments to his parents and his two brothers and three
sisters. Initially he had been managing all this with his earnings. Soon he
got married to Nandini and became the father of a baby girl. They had no
one to help them from their families, because they married against the
wishes of their parents and families. Everybody around could only
sympathize with them. But that sympathy did not take them anywhere and
so Nandini had to take up a job in yet another small company to make ends
meet. They had to bank on their neighbours to take care of their infant
daughter when both of them were off to work.
At this juncture, there was a talk about downsizing in the company where
Narasimhan was working. One day his manager called him to his cabin and
told him, "Narasimhan, you know very well that our company is going
through a very bad time and our order book is very much depleted.
Therefore, we do not need so many area sales managers in the company.
Your past sales record has not been very bad. Yet the management feels that
because of your qualification you stand a good chance to get employed
elsewhere than some others in the company. Moreover, you are one of the
new entrants to the company compared to others. Hence, you are requested
to resign and collect your dues by the end of this month."
Narasimhan was struck dumb and he felt a lump in his throat. He felt he was
becoming cold. Within seconds he rushed to the nearest wash basin and
vomited. His colleagues rushed to him and found him swooning and so they
immediately arranged a vehicle to take him to the nearby hospital. There the
doctor examined Narasimhan and found that the blood pressure was quite
low. He was put through a battery of pathological and clinical tests. He was
physically found quite normal. Therefore he was sent away from the
hospital with some vitamin tablets.
Contd...
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Notes Questions
1. Discuss the reactions of Narasimhan after hearing his manager talk to
him.
2. What are the causes for Narasimhan to respond the way he did?
1. The design of information blueprint based on manual

is quite different as compared to that based on EDP.
The difference lies primarily in the context of
information
collection, processing, and communication.
2. Employee attitudes and opinions are a better predictor
of future employee behaviour than past behaviour. The
employee online surveys are specifically designed to
accurately measure attitudes that affect real business
metrics, like employee retention rates and turnover.
SUMMARY
 Human Resource Information System (HRIS) is part of Management
Information System (MIS). Therefore, it cannot be in isolation from other
functional systems in an organization.
 HRIS is a systematic way of storing data and information for each
individual employee to aid planning, decision-making, and submitting of
returns and reports to the external agencies.
 The following steps should be followed in setting up an HRIS: Inception of
idea, feasibility study, selecting project team, defining requirements,
vendor analysis, contract negotiations, training, tailoring the system to the
requirement, collecting data, testing the system, starting up, running in
parallel, maintenance and audit.
 Some of the applications which could be computerized and the nature/types
of information that can be recorded and stored are as follows: Personnel
Administration, salary administration, leave/absence recording, skill
inventory, medical history, accident monitoring, performance appraisal,
training and development human resource planning, recruitment and
collective bargaining.
 Any HRIS has three major functional components – inputs, data
maintenance and output. However, HRIS has its own limitations in as much
as all computerized systems have. The human face of HRM fades out and
the garbage-in-garbage-out concept many a time defeats the purpose of
Information System in general and HRIS in particular.
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 In workflow, users are directly involved in a process, using their computer Notes
terminal, where they can access employee records or initiate an event by
entering key data, and then submitting the work to the next appropriate
person for further action or review – all electronically.
 Employee online surveys obtain valuable employee feedback with
employee online surveys either through company’s intranet or through
consultants engaged for the same. The standard employee online surveys
are comprehensively designed to identify and isolate key independent and
dependent variables.
 Employee opinion surveys cover nearly every factor that affects
employees’ motivation and retention including: Overall Satisfaction,
Corporate Culture, Supervisors Relations, Training, Pay and Benefits,
Work Environment and Communications.
KEYWORDS
Human Resource Information System (HRIS): Human Resource information
system is a method by which an organisation collects analyses and reports
information about people and jobs. It applies to information needs at macro and
micro levels.
Input Function: The input function provides the capabilities needed to get the
human resource information into HRIS. Some of the first things that must be
established are the procedures and processes required to gather the necessary
data.
Data Maintenance Function: The data maintenance function is responsible for
the actual updating of the data stored in the storage devices.
Output Function: The output function of an HRIS is the most familiar one
because the majority of HRIS users are not involved in collecting,
editing/validating and updating data, but they are concerned with the
information and reports of the total population for further evaluation,
performing some type of calculations, using the population and providing a
report containing specific information regarding the selected population and/or
calculation of results.
Job Portal: Job portal is a website dedicated for online information about
recruiters as well as job seekers. A job portal helps both the job seekers and
recruiters in finding the right organization for the employees.
Employee Online Surveys: Employee online surveys are personalized email
invitation sent to each employee with simple directions how to access and
complete the survey. Embedded in each survey link may be respondents’
unique Personal Access Code (PAC) and/or demographic data.
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Notes SELF-ASSESSMENT QUESTIONS

1. What do you mean by Information System?
2. What do you understand by Management Information System?
3. Define HRIS.
4. Name the two things, which are very important in designing a MIS.
5. What do you mean by HRIS design?
6. List out the steps in implementing HRIS.
7. Name any two applications of HRIS.
8. List out the necessary capabilities of an HRIS.
9. List few benefits of HRIS.
10. Name any two limitations of HRIS.
11. What do you mean by portals?
12. Give two examples of job portals.
13. State the benefits of HR portals to employers.
14. How can Job portal solutions be beneficial for employees?
15. What are the independent and dependent variables on which employee’s
online survey are comprehensively designed?
16. What do you mean by employee online survey?
17. What do you mean by Employee Online Survey Administration?
18. What do you mean by Employee Online Survey Analysis?
19. Expand the following:
(a) HRIS
(b) MIS
(c) ERP
(d) ESS
(e) PAC
(f) ASCH
20. What type of information can HRIS provide with respect to training and
development?
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1. Give an overview of MIS, Strategy and Information Need.
2. Explain HRIS design.
3. Explain System functions.
4. Briefly explain steps in implementing HRIS.
5. Explain the applications of HRIS.
6. List out various advantages and disadvantages of HRIS.
7. Give a birds eye of view of portals and their importance.
8. Elaborate the sentence “A Door More Than HR”.
9. Bring out the benefits of HR portals to employees and employers.
10. Explain briefly on Employee Survey Online Administration and Employee
Survey Online Analysis.
FURTHER READINGS

Oxford, 2007.
Management, Cengage Learning, South-western 13th edition,2010
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Notes
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Lesson 6 - Domestic vs International HRM Cross Cultural Education and Training Programmes
Notes
UNIT III
LESSON 6 - DOMESTIC VS INTERNATIONAL
HRM CROSS CULTURAL EDUCATION AND
TRAINING PROGRAMMES
CONTENTS
Learning Objectives
Learning Outcomes
Overview
Defining International HRM
Six Factors Differentiating IHRM from Domestic HRM Functions
Cross Cultural Education and Training Programs
Purpose of Training and Development
Training Process
Alignment between the Business Strategy, Culture and Training Strategy
A Simplified Model of the Process for the Strategic Training& Development
How to Show Return on Money Invested in Training
Expatriate Training
Cultural Diversity and Work Culture
Cultural Awareness Training Programme
Cultural Training
Language Training
Practical Training
Management Development and Strategy
Summary
Keywords
Further Readings
ANNA UNIVERSITY 115


 Explain the Concept of International HRM
 Discuss the Culture Dynamics and Culture Assessment
 Discuss the Cross Cultural Education and Training
 Define the Expatriate Training
LEARNING OUTCOMES
understanding of:
 concept of international HRM
 analyzing factors differentiating IHRM from domestic HRM functions
 purpose of training and development
 a simplified model of the process for the strategic training & development
 how to show return on money invested in training
 basics of expatriate training
 cultural diversity and work culture
 explain cultural awareness training programme
 recall management development and strategy
OVERVIEW
In previous lesson, we have studied about HRIS and how it is designed and
implemented. We have also discussed the various applications, necessary
capabilities, benefits and limitations of HRIS. At the end of the lesson, we have
learned about job portals, its benefits and employee online survey.
The world is shrinking in all major respects. People, goods, capital and
information are moving around the globe like never before. With faster
communication, transportation and financial flow, the barriers between nations
have disappeared and the world is becoming a ‘borderless market’. For
instance, people drive Fords in Germany, use Dell computers in India, eat
McDonald’s hamburgers in France, and snack on Mars candy bars in England.
They drink Coke and wear Levi Strauss jeans in China and South Africa. The
Japanese buy Kodak film and use American Express credit cards. People
around the world fly on American Airlines in planes made by Boeing. Their
buildings are constructed with Caterpillar machinery, their factories are
powered by General Electric engines and they buy Chevron oil. Coca Cola has
over 80 per cent of its sales outside of its home market. Nestle has fifty per
116 ANNA UNIVERSITY

cent. Procter and Gamble 65 per cent and Avon 60 per cent. They source and Notes
coordinate resources and activities in the most suitable areas, to offer cost
effective products and services to customers all over the globe. Welcome to the
global village where no organisation is insulated from the effects of foreign
markets and competition.
Careful selection is only the first step in ensuring the foreign assignee’s
success. The expatriate may then require proper orientation, cross-cultural
training, assistance in career planning and development, etc., in order to handle
the assigned jobs in a competent way.
In this lesson, you will learn about international and domestic HRM and their
differences and also about the international education and training programs.
DEFINING INTERNATIONAL HRM

Before we offer a definition of International HRM (IHRM), we will first define
the general field of HRM. Typically, HRM refers to those activities undertaken
by an organization to utilize its human resources effectively. These activities
would include at least the following:
 Human resource planning
 Staffing
 Performance Management
 Training and Development
 Compensation and Benefits
 Labour Relation
We now consider which activities change when HRM goes international.
According to Morgan the IHRM consists of three dimensions:
1. Three Broad Human Resource Activities: procurement, allocation, and
utilization. (These three broad activities can be easily expanded into six HR
activities listed above.)
2. Three National or Country Categories involved in International HRM
activities: the Host Country where a subsidiary may be located, the Home
Country where the firm is headquartered, and “Other” Countries that may
be the source of labour or finance.
3. Three Types of Employees of an International Firm: Host-country
Nationals (HCNs), Parent-country Nationals (PCNs), and Third-country
Nationals (TCNs). Thus for example, TCS employs Chinese citizens
(HCNs) in its Chinese operations, often sends Indian Citizens (PCNs) to
European countries or the USA on assignment, and may send some of its
Singaporean employees on an assignment to its on its Japanese operations
(as TCNs).
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Notes (a) Host Country Nationals (HCNs): Also called local nationals, they are
the employees from the local population. A worker from Bihar
employed by an American firm operating in India would be considered
a host country national.
(b) Parent or Home Country Nationals (PCNs): Also called expatriates,
they are the people sent from the country in which the organisation is
headquartered. An American manager on assignment in India is an
expatriate.
(c) Third Country Nationals (TCNs): TCNs are from a country other than
where the parent organisations’ headquarters or operations are located.
If the American firm employs a manager from Great Britain at facilities
in India, he would be considered a third country national.
Morgan defines International HRM as the interplay among these three
dimensions – human resource activities, types of employees, and countries of
operation.
The complexities of operating in different countries and employing different
national categories of workers are a key variable that differentiates between
domestic and international HRM, rather than any major differences between
the HRM activities performed. Many firms underestimate the complexities
involved in international operations, and there is some evidence to suggest that
business failures in the international arena may often be linked to poor
management of human resources.
SIX FACTORS DIFFERENTIATING IHRM FROM

DOMESTIC HRM FUNCTIONS
In this section let us try to understand the differences which differentiate
International HRM from Domestic HRM functions.
Dowling has summarized the literature on similarities and differences between
international and domestic HRM and argues that the complexity of
international HR can be attributed to six factors that differentiate international
HRM from domestic HRM. These factors are as follows:
1. More HR activities;
2. Need for a broader perspective;
3. More involvement in employees’ personal lives;
4. Changes in emphasis as the workforce mix of expatriates and locals varies;
5. Risk exposure; and
6. More external influences.
 More HR Activities: The scope of IHRM is much broader than managing
domestic HR activities. There are issues connected with international
taxation, international orientation and relocation, administrative services
118 ANNA UNIVERSITY

for expatriates, host-government regulations, and language translation Notes

services.
 Need for Broader Perspective: When compared to domestic HRM, IHRM
requires a much broader perspective on even the most common HR
activities.
Example: While dealing with pay issues, the corporate HR manager

must co-ordinate pay systems in different countries with different
currencies that may change in relative value to one another over time.
While handling fringe benefits too, complications tend to arise.
Such a policy issues arise when employees of various nationalities work
together, and the resolution of these issues remains one of the major
challenges in the international HRM field.
 More Involvement in Employees’ Personal Lives: A greater degree of
involvement in the employees’ personal lives is necessary for the selection,
training and effective management of both parent-country and third-
country nationals. The HR department needs to ensure that the expatriate
employee understands housing arrangement, health care, and all aspects of
remuneration packages provided for the foreign assignment. Many
international businesses maintain an “International Human Resource
Service” section that coordinates administration of the above programmes
and provides service for the parent-country and third-country national such
as handling their banking, investments, home rental while on assignment,
coordinating home visits, and final repatriation.
Involvement of the HR department in the personal lives of the employees is
limited in domestic.
Example: Some governments ask to submit a marriage certificate

before granting visa to an accompanying spouse. Thus, marital status could
become an important consideration in the selection process.
 Changes in Emphasis as the Workforce Mix of PCNs and HCNs Varies:
As foreign operations mature, the emphases put on various human resource
activities change.
Example: As the need for PCNs and TCNs declines and more
trained locals become available, resources previously allocated to areas
such as expatriate taxation, relocation, and orientation are transferred to
activities such as local staff selection, training, and management
development.
The latter activity may require establishment of a programme to bring high-
potential local staff to corporate headquarters for developmental
assignments. The need to change emphasis in HR operations as a foreign
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Notes subsidiary matures is clearly a factor that broadens the responsibilities of

local HR activities.
 Risk Exposure: Risk exposure is high in domestic HRM. Unfair hiring
practices may result in a firm being charged with the violation of the
constitutional provisions and be liable for penalties. Failure to maintain
cordial relations with unions may result in strikes and other forms of labour
unrest. In IHRM, these risks exist and in addition, there are other hazards,
unique and more threatening. Depending on the countries where the MNC
operates, the headquarters and subsidiary HR managers may have to worry
about the physical safety of the employees.
Learning Activity
Visit a MNC and try to interact with HR about the PCN,
HCN, and TCN and make a small report on the same.
 More External Influence: Major external factors that influence

international HRM are the type of government, the state of the economy,
and the generally accepted practices of doing business in each of the
various host countries in which the multinational operates.
In developed countries, labour is more expensive and better organized than
in less-developed countries, and governments require compliance with
guidelines on issues such as labour relations, taxation, and health with
insurance and safety. These factors shape the activities of the subsidiary
HR manager considerably. In less-developed countries, labour tends to be
cheaper and less organized, and government regulation is less pervasive –
factors that are less time-consuming. The subsidiary HR manager also must
spend time learning and interpreting the local ways of doing business and
the general code of conduct regarding activities such as gift giving. It is
also likely that the subsidiary HR Manager will become more involved in
administering benefits either provided or financed by the multinational
such as housing, education, and other facilities not readily available in the
local economy.
Variables that Moderate between International and Domestic HRM

Culture Dynamics
From the above discussion it has been brought out that the complexity involved
in operating in different countries and employing different national categories
of employees, rather than any major differences between the HRM activities
performed, is a key variable that distinguishes domestic and international
HRM.
In addition to complexity, there are four other variables that moderate (i.e.,
either diminish or accentuate) differences between domestic and international
HRM. These variables are the cultural environment, the industry (industries)
120 ANNA UNIVERSITY

with which the multinational is primarily involved, the extent of the reliance of Notes
the multinational on its home-country domestic market, and the attitudes of
senior management. Of these the most important variable is cultural dynamics,
which embraces practically all other three variables. Therefore, it is worthwhile
to understand this in detail.
There are many definitions of culture, but the term is usually used to describe a
shaping process; that is, members of a group or society share a distinct way of
life with common values, attitudes, and behaviours that are transmitted over
time in a gradual, yet dynamic, process. As Phatak (1995) explains in
International Dimensions of Management:
“A person is not born with a given culture: rather she or he acquires it through
the socialization process that begins at birth: an American is not born with a
liking for hot dogs, or a German with a natural preference for beer: these
behavioural attributes are culturally transmitted.”
An important characteristic of culture is that it is so subtle a process that one is
not always conscious of its effect on values, attitudes, and behaviours. One
usually has to be confronted with a different culture in order to fully appreciate
this effect. Anyone travelling abroad, either as a tourist or businessperson,
experiences situations that demonstrate cultural differences in language, food,
dress, hygiene, and attitude to time. While the traveller can perceive these
differences as novel, even enjoyable, for people required to live and work in a
new country, such differences can prove difficult.
Culture shock – a phenomenon experienced by people who move

across cultures. The new environment requires many adjustments in a
relatively short period of time, challenging people’s frames of reference to
such an extent that their sense of self, especially in terms of nationality,
comes into question. People, in effect, experience a shock reaction to new
cultural experiences that cause psychological disorientation because they
misunderstand or do not recognize important cues. Culture shock can lead to
negative feelings about the host-country and its people and a longing to
return home.
Culture Assessment
Now let us try to understand about culture assessment Despite the
methodological concern about cross-cultural research, it is now generally
recognized that culturally insensitive attitudes and behaviours stemming from
ignorance or from misguided beliefs (“my way is the best,” or “what works at
home will work here”) not only are inappropriate but also often cause
international business failure. Therefore, an assessment of cultural differences
is essential for the HR managers at corporate headquarters as well as at the host
location. Activities such as hiring, promoting, rewarding, and dismissal will be
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Notes determined by the practices of the host country and often are based on a value
system peculiar to that country’s culture.
Some of the aspects of culture of a country that really need to be assessed are:
the style of negotiation; time, punctuality and deadlines; Business courtesies;
Emotional expressions; Body language; Eye contact; Facial expression;
Personal space; Gestures; Postures; and ensuring verbal clarity. It is necessary
for IHRM managers to be more aware of the differences in each of these
aspects in various countries where subsidiaries are set up so that they can train
the expatriates accordingly.
CROSS CULTURAL EDUCATION AND TRAINING

PROGRAMS
Now let us try to understand few things pertaining to cross cultural education
and training programs. Careful selection is only the first step in ensuring the
foreign assignees success. The Expatriate may then require proper orientation,
cross-cultural training, assistance in career planning and development, etc. in
order to handle he assigned jobs in a competent way. (Barley; lein)
Purpose of Training and Development

Reasons for emphasizing the growth and development of personnel include:
 Creating a pool of readily available and adequate replacements for
personnel who may leave or move up in the organization.
 Enhancing the company’s ability to adopt and use advances in technology
because of a sufficiently knowledgeable staff.
 Building a more efficient, effective and highly motivated team, which
enhances the company’s competitive position and improves employee
morale.
 Ensuring adequate human resources for expansion into new programmes.
Research has shown specific benefits that a small business receives from
training and developing its workers, including:
 Increased productivity.
 Reduced employee turnover.
 Increased efficiency resulting in financial gains.
 Decreased need for supervision.
Employees frequently develop a greater sense of self-worth, dignity and well-
being as they become more valuable to the firm and to society. Generally, they
will receive a greater share of the material gains that result from their increased
productivity. These factors give them a sense of satisfaction through the
achievement of personal and company goals.
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TRAINING PROCESS Notes

Now let us try to understand the process of training and the process is as
follows:
 Organizational Objectives
 Needs Assessment
 Is there a Gap?
 Training Objectives
 Select the Trainees
 Select the Training Methods and Mode
 Choose a Means of Evaluating
 Administer Training
 Evaluate the Training
Business should have a clearly defined strategy and set of objectives that direct
and drive all the decisions made especially for training decisions. Firms that
plan their training process are more successful than those that do not. Most
business owners want to succeed, but do not engage in training design that
promises to improve their chances of success. Why? The three reasons most
often identified are:
 Time and Cost: Businesses managers find that time and cost demands do
not allow them to train employees.
 Lack of trust and openness: Many managers prefer to keep information to
themselves. By doing so they keep information from subordinates and
others who could be useful in the training and development process.
 Skepticism as to the value of the training: Some business owners believe
the future cannot be predicted or controlled and their efforts, therefore, are
best cantered on current activities i.e., making money today. A well-
conceived training programme can help your firm succeed. A programme
structured with the company’s strategy and objectives in mind has a high
probability of improving productivity and other goals that are set in the
training mission.
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Notes
The purpose of formulating a training strategy is to answer two

relatively simple but vitally important questions: (1) What is our business?
and (2) What should our business be? Armed with the answers to these
questions and a clear vision of its mission, strategy and objectives, a
company can identify its training needs.
Alignment between the Business Strategy, Culture and Training

Strategy
Establishing a clear “line of sight” on the constraints to achieving business
goals, and then determine which of those constraints can be addressed through
training and development. Focus early training efforts on those behaviors most
necessary to accomplish current goals. The steps for aligning training strategy
with business strategy include in the following Figure 6.1:
Business Plan
and Strategy
HR plan Other Functional

and Strategy Plans
Training and Other Plans

Development
Figure 6.1
Step 1: Determine how the organization creates unique value.
Step 2: Identify the employee talent pools and the behaviours of people in
those pools that have the most significant impact on that value.
Step 3: Develop a training strategy that supports the development of these
people and the needed behaviours.
Step 4: Promote a culture that supports the sustainability of such behaviours.
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Organisational
Notes
Vision and Mission
Organisational Training and

Shared Values
Strategy Strategy
Assigned Training
Shared Practices
Goals Objectives
Specific Training
Tasks Individual Behaviour Programmes
End Results Evaluation

and ROI
Figure 6.2
A Simplified Model of the Process for the Strategic Training &

Development
Now let us try to understand model for the process of Strategic Training &
Development with the help of a Figure 6.3.
Clarify the purpose of

training and
development effort
Evaluate T&D Assess present

Strategy conditions
Implementing the Scan the external

organizational strategy for environment
training and development
Compare the
Choose a long term strength to the
strategy for T&D future threats and
opportunities
Figure 6.3
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Notes HOW TO SHOW RETURN ON MONEY INVESTED IN

TRAINING
Now let us try to understand how to show return on money invested in training
and it as follows:
 Determine how the Training is Connected to a Business Need: Too often,
training is put in place without enough forethought. “Management says, ‘I
want these 10 core competencies in all our employees.’ It may be the right
thing to do, but we would like to precede that with an understanding of how
it helps the business if we do that.”
 Make Sure the Programme has Clear Objectives: Training programmes
should have a learning objective: some observable and measurable
behaviour at the end of the process. There are three types of learning
objectives: awareness – a familiarity with terms, concepts, and processes;
knowledge – a general understanding of concepts, process, or procedures;
and performance – an ability to demonstrate skills on at least a basic level.
 Good Training should have two More Objectives: application – “What do
we expect you to do differently?” and impact – “What business measure
will drive if you do this?”
Determine the Return on Investment

The idea of evaluating training on four levels – reaction and implementation;
learning; application; and impact – was developed nearly 30 years ago by D. L.
Kirkpatrick. But even a programme that had a measurable business result
might have been delivered at too great an expense. A fifth element should be
added, called: Return on Investment (ROI).
The steps for determining the return on investment could be as follows:
 Collect data to demonstrate the change in behaviour
 Isolate the effect of training
 Convert the data to monetary value
The steps in the conversion process are:
1. Focus on a unit of measure
2. Determine a value for the unit
3. Calculate the change in performance data
4. Determine an annual amount for the change
5. Calculate the total value of the improvement
Tabulate Programme Cost: This should be the “fully loaded cost of training.”
That is, the value of the cost of taking people away from their jobs for the
training – including salary and benefits. “That’s what the company lost by not
having people on the job.
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Notes
Cost of training includes Facilitator fees, Training design, Course

materials, Videos and workbooks, facilities rental, equipment rentals,
production down time, video conferencing facilities, specialized computer
equipment, administration, all the costs divided by the anticipated number
of participants gives the cost per participant.
Determine the Potential Savings Generated

These savings might include:
 Fewer errors
 Reduced customer turnover
 Less equipment downtime
 Increased revenue collection
 Faster equipment start-up time
 Reduced employee turnover, when turnover is attributable to poor
supervision
 Proper implementation of new customer strategies
 Higher workplace morale through more effective management practices
 Less time lost to grievance hearings and work stoppages because of
ineffective supervision
 Reduced recruitment costs (because training can create more job-ready
candidates for promotions)
 Maximized productivity of new employees through efficient orientation
training.
Learning Activity
Visit a MNC and try to understand how the cross cultural
training is carried and make a small report on the same.
EXPATRIATE TRAINING
After understanding the concept of how to show return on money invested on
training now let us understand Expatriate training.
The cultural environment in which expatriates operate is an important factor in
determining successful performance. According to the relevant literature,
certain traits and characteristics have been identified as predictors of expatriate
success. Although these traits may not guarantee an expatriate’s success,
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Notes without them the possibility of failure is enhanced. Apart from the obvious
technical ability and managerial skills, expatriates require cross-cultural
abilities that enable the person to operate in a new environment. These include:
cultural empathy, adaptability, diplomacy, language ability, positive attitude,
emotional stability, and maturity.
Managerial or technical competence is regarded as the primary

competence for expatriate success, effectiveness and coping skills are also
required. Effectiveness skills are defined as the ability to successfully
translate the managerial or technical skills into the foreign environment,
whereas coping skills enable the person to become reasonably comfortable,
or at least survive, in a foreign environment.
CULTURAL DIVERSITY AND WORK CULTURE

Now let us try to understand about work culture and cultural diversity. Given
the continuing trend toward globalization, there is a growing need for
managers with cross-cultural understanding. Employees who have cross-border
responsibilities and/or cross-cultural relationships need to be prepared to
effectively handle the inevitable intercultural tasks and challenges involved.
Providing them with the awareness, knowledge, positive attitudes, and skills
they require is an important responsibility of International Human Resource
managers.
The problems stemming from cultural diversity are stretching beyond the
Indian complexities. Domestic companies are going global and India is
becoming more attractive as a job destination. And to leverage the best from
this multinational mix, companies – and their HR departments – are busy
managing diversity.
Diversity is no longer ‘nice to have’, but ‘necessary to have’ as it has
significant implications for a business’ success and high performance. For
Ranbaxy, which has 10,500 employees, representing 51 nationalities, in
49 countries, diversity is an asset. They hire local talent and operate as local
companies. Diversity is a source of strength and they have invested in robust
systems and processes that bond their people across the globe.
Diversity management has seen a paradigm shift since it came into play in the
US about less than a decade ago. Earlier, firms expected people to hide or
adapt their cultural differences to fit the mould of the firm’s dominant culture.
The new way is to treat diversity as an asset that brings a range of problem-
solving skills. The idea is to keep a balance between egalitarianism and
generalization, and heterogeneity and individualism of processes.
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Notes
Companies are yet to fully realize the potential of diversity.
Managing diversity requires extensive research and most companies do not
have the requisite framework to harness its extent and complexity. This is a
challenge that has to be managed carefully.
CULTURAL AWARENESS TRAINING PROGRAMME

In this section we will try to understand about cultural awareness training
programme. It is generally accepted that to be effective the expatriate
employee must adapt to and not feel isolated from the host country. A well-
designed cultural awareness training program can be extremely beneficial, as it
seeks to foster an appreciation of the host-country’s culture so that expatriates
can behave accordingly, or at least develop appropriate coping patterns.
The components of cultural awareness programmes vary according to the
country of assignment, duration, purpose of the transfer, and the provider of
such programmes. As part of her study of expatriate management, Tung
identified five categories of pre-departure training, based on different learning
processes, type of job, country of assignment, and the time available:
 Area that studies programmes that include environmental briefing and
cultural orientation;
 Culture assimilators;
 Language training;
 Sensitivity training; and
 Field experiences.
An expatriate needs pre-departure training before leaving for foreign
assignment. As noted earlier, training is one of the ways of reducing expatriate
failure rate. An expatriate needs culture training, language and practical
training.
Cultural Training
Cultural training seeks to foster an appreciation for the host country’s culture.
The belief is that understanding the host country’s culture will help the
manager empathize with the culture, which will enhance his or her
effectiveness in interacting with host-country citizens. An expatriate should
receive training in the host country’s culture, history, politics, economy,
religion, and social and business practices. If possible, it is also advisable to
arrange for a familiarization trip to the host country before the formal transfer,
as this is likely to ease a likely cultural shock.
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Notes Cultural training is receiving considerable attention now as more and more
managers are required to travel around the globe frequently on business deals.
In 1994 the Japanese spent $17 million in business etiquette training. Never at
home, firms which have recognized the importance of cultural training are
most of our IT companies, Mafatlal, O.P. Jindal Group, etc.
Language Training
Language training is a seemingly obvious and desirable component of pre-
departure programme. One weakness of many MNCs is that they do not give
attention to the importance of language training. English is the primary
language of international businesses, and most expatriates from all the
countries can converse in English. Those who can speak only English are at a
distinct disadvantage when doing business in a non-English speaking country.
It may be reiterated that willingness to communicate in the host-country
language will help build rapport with local employees and improve the
expatriate’s effectiveness. Hence language training is important.
Practical Training
Practical training seeks to help the expatriate manager and family feel ‘at
home’ in the host country. Sooner the expatriate settles down, better are the
prospects that he/she and his/her family will adapt successfully. One important
need is for a support network of friends. Where an expatriate community
exists, firms often try to integrate the new expatriate family quickly into that
group. The expatriate community can be a useful source of support and
information, and can help the family to adapt to an alien culture.
MANAGEMENT DEVELOPMENT AND STRATEGY

Now let us try to understand on the topic Management development and
Strategy. MNCs use management development as a strategic tool. This is
particularly true in firms pursuing a multinational strategy, which is a common
feature among firms these days. Such firms need a strong, unifying corporate
culture and informal management networks to assist in coordination and
control. In addition, MNCs need to be able to detect pressure to conduct
business in a locally responsive manner. This obviously demands knowledge
about country culture.
Management development programmes help build corporate culture by
encouraging new managers to socialize and imbibe the values and norms of the
firm. In-house training programmes and intense interaction during off-site
training can foster esprit-de-corps, shared experiences, informal networks,
perhaps a company language of jargons, as well as competencies. These
training courses often include songs, picnics, and sporting events that promote
feelings of togetherness.
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Notes
Amgen’s Global Workface
S ince its inception, Amgen has grown from a few hundred employees
at its headquarters in Thousand Oaks, California, to 3,900 people
spanning the global Amgen is a biotechnology firm that discovers,
develops, manufactures, and markets human therapeutics (drugs) based on
advanced cellular and molecular biology.
As soon as the company got ready to launch its first product, Amgen
executives decided to establish a facility in Cambridge, England. The
company needed to do clinical trials in every country in which they wanted
to manufacture or sell a product. Doing the research in England gave the
company legitimacy with the British government agencies. Amgen also set
up clinical development locations in Australia and Canada and established
its European headquarters in Luceme, Switzerland.
Originally, when the company first began its distribution abroad, Amgen
executives would send an American manager to scout the location, collect
data, and make an analysis based on a map. These days, the company relies
on the expertise and knowledge of locals in the host country. Another factor
that determines where Amgen sets up shop is where it can form the best
academic and medical collaborations. The company has established a
relationship with the University of Toronto because of its parallel research
in biotechnology and has also created a joint venture with Japan’s Kirin
Brewery to distribute Amgen products in China.
According to their vice president of human resources, Ed Garnett, Amgen
has developed a global mindset that influences the way they manage people.
Garnett puts it this way: “If you’re a multinational, you’ll have an expatriate
programme. If you’re global, you’ll only provide one-way tickets”. Indeed
Amgen’s HR strategy reflects this premise. To gain competitive advantage,
Amgen hires the top international scientists, medical personnel, and global
managers, who are either natives of or familiar with Amgen’s worldwide
locations. Further, approximately 15% of Amgen’s employees in Thousand
Oaks are foreign nationals. With the exception of one worker in Asia, all of
Amgen’s foreign-based managers are locals or third-country nationals.
According to Garnet, “We hire locals for management, but we send expats
to help with the integration of processes and special projects”. The company
has only six expatriates worldwide – and they are deployed only
temporarily, to set things up.
What type of employees does Amgen look for? “Global companies need
people who’ve experienced many different business environments,” Garnett
says. This goes beyond speaking the language and growing up in the
country. It requires someone who can execute when the company is beefing
Contd...
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Notes up its executive development program. While still in the early stages,
Amgen’s curriculum will include more information about different cultures
of countries and business practices, and much of the training will focus on
leadership skills like communication, performance management, and
decision-making.
Another piece of Amgen’s continuous training is team building.
Transnational teams are commonplace in this company. The company’s
European HR director, Michael Bentley, noted, “Our teams cut across
countries, and in the case of product development, they may cross
continents”. Because all team members tend to be focused on advancement
in cellular and molecular biology – the sciences that will provide products to
save and enhance lives – their professional culture unites otherwise very
different people. Their commonalities help Amgen reinforce the company’s
values and still respect the various cultures in which the company operates.
The company’s values of openness, diversity, risk taking, and scientific
collaboration have led to its growing success worldwide.
Questions
1. What inherent problems do you see with Amgen’s global staffing
approach?
2. What do you think would be the biggest HR problems in managing a
transnational team?
3. Would this approach to HR work for other firms? What kinds?
1. Increasingly, domestic HRM is taking on some of the

flavour of international HRM as it deals more and
more with a multicultural workforce. Thus, some of
the current focus of domestic HRM on issues of
managing workforce diversity may prove to be
beneficial to the practice of international HRM.
2. There are two types of training that expatriates need:
hard skills and soft skills training. The hard skills are
technical areas that are specific to one’s job, such as
virtuosity with computer programs like PowerPoint or
Excel. While these are certainly important, the “soft
skills” training for expatriates can be even more
critical.
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SUMMARY Notes
 No organization can afford to be players in domestic market alone, given
the condition that global competition is the hall mark of today’s economy.
If and when an organization becomes a multinational organization, it has to
deal with three categories of countries, viz., Home country, Host Country
and “Other” Country. Consequently three types of employees emerge:
Parent-Country National (PNCs), Host-Country Nationals (HNCs) and
Third-Country Nationals (TNCs) in that order.
 International HRM (IHRM) is the interplay among these three dimensions
– human resource activities, types of employees, and countries of
operation, whereas domestic HRM is the dealing with the employees within
only one national boundary.
 One of the primary reasons of failure in multinational ventures stems from
a lack of understanding of the essential differences in managing human
resources, at all levels, in foreign environments.
 According to Dowling the six factors differentiating IHRM from Domestic
HRM functions are: More HR activities; The need for a broader
perspective; More involvement in employees’ personal lives; Changes in
emphasis as the workforce mix of expatriates and locals varies; Risk
exposure; and More external influences.
 Apart from the technical ability and managerial skill an expatriate should
possess cross-cultural abilities such as empathy, adaptability, diplomacy,
positive attitude, emotional stability, maturity and language ability to
enable him to operate successfully in a new environment.
 At the selection stage itself the candidate has to be assessed for his
relational capabilities. Cultural background influences the manner in which
individuals and organizations scan, select, interpret and validate
information from the environment in order to identify, prioritize and
categorize issues.
 MNCs use management development as a strategic tool. Management
development programmes help build corporate culture by encouraging new
managers to socialize and imbibe the values and norms of the firm.
 In-house training programmes and intense interaction during off-site
training can foster shared experiences, informal networks, perhaps a
company language of jargons, as well as competencies.
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Notes KEYWORDS
 Host Country Nationals (HCNs): Also called local nationals, they are the
employees from the local population. A worker from Bihar employed by an
American firm operating in India would be considered a host country
national.
 Parent or Home Country Nationals (PCNs): Also called expatriates, they
are the people sent from the country in which the organisation is
headquartered. An American manager on assignment in India is an
expatriate.
 Third Country Nationals (TCNs): TCNs are from a country other than
where the parent organisations’ headquarters or operations are located. If
the American firm employs a manager from Great Britain at facilities in
India, he would be considered a third country national.
 IHRM: The interplay among these three dimensions – human resource
activities, types of employees, and countries of operation.
 Cost of Training: Cost of training is the one which includes Facilitator
fees, Training design, Course materials, Videos and workbooks, facilities
rental, equipment rentals, production down time, video conferencing
facilities, specialized computer equipment, administration, all the costs
divided by the anticipated number of participants gives the cost per
participant.
 Cultural Training: Cultural training is one which seeks to foster an
appreciation for the host country’s culture. The belief is that understanding
the host country’s culture will help the manager empathize with the culture,
which will enhance his or her effectiveness in interacting with host-country
citizens.
 Practical Training: It seeks to help the expatriate manager and family feel
‘at home’ in the host country. Sooner the expatriate settles down, better are
the prospects that he/she and his/her family will adapt successfully.
1. Define IHRM.
2. List out any two differences between IHRM and domestic HRM functions.
3. What are the three dimensions of IHRM according to Morgan?
4. List the process of training.
5. What do you mean by Host Country nationals?
6. What do you mean by Parent Country Nationals?
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7. What do you mean by Third Country Nationals? Notes

8. What do you understand by Cultural dynamics?
9. What do you understand by Cultural assessment?
10. Write any two purposes of Training and Development.
11. What do you understand by Cultural awareness training program?
12. What do you mean by Cultural training?
13. What is language training?
14. What is practical training?
15. What is Expatriate training?
16. Write the steps involved in conversion process of determining how to show
return on money invested in training.
17. What are the benefits that a small business receives from training and
developing its workers?
18. Name the three types of employees of an international firm.
19. Name at least six costs incurred in training.
20. What do you mean by management development and strategy?

1. Explain briefly the factors which differentiate between domestic HRM and
IHRM.
2. Explain briefly on the purpose of Training and Development.
3. Explain the process of training.
4. Explain the simplified model of process for the simplified training and
development with a neat diagram.
5. Explain on how to show return on money invested in training.
6. Write a note on cultural assessment training program.
7. Briefly explain on cost of training.
8. Write a short note on Management Development and Strategy.
9. Give an overview of IHRM.
10. Write a note on the following:
(a) Parent Country Nationals
(b) Host Country Nationals
(c) Third Country Nationals.
ANNA UNIVERSITY 135

Notes FURTHER READINGS

Oxford, 2007,
2010.
136 ANNA UNIVERSITY

Lesson 7 - Current Challenges in Outsourcing
Notes
LESSON 7 - CURRENT CHALLENGES IN
OUTSOURCING
CONTENTS
Learning Objectives
Learning Outcomes
Overview
Introduction and Need for Outsourcing in General
Need for Outsourcing in General
Business Process Outsourcing (BPO)
Human Resource Outsourcing (HRO)
Typical HR Functions Outsourced by Organisations
Reasons for HRO
Types of HR Outsourcing
Benefits of Outsourcing
Disadvantages of HRO
Factors Influencing When and Where not to Outsource
Innovative Options
Before you Outsource
Future of HRO
HR BPO Companies
Summary
Keywords
Further Readings
LEARNING OBJECTIVES
 Explain the meaning and need of Outsourcing
 Define Business Process Outsourcing and Human Resource Outsourcing
 Describe the Types of HRO, Advantages and Disadvantages of HRO
 Analyse the Future of BPO
 Explain the HR BPO Companies
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Notes LEARNING OUTCOMES

understanding of:
 explain need for outsourcing in general
 basics of business process outsourcing
 analysing human resource outsourcing
 list out the reasons for HRO
 identifying types of HR outsourcing and explain benefits of outsourcing
 determine factors influencing when and where not to outsource
 analysing future of HRO
OVERVIEW
In the previous lesson, we have studied about international HRM and the
difference between IHRM and domestic HRM functions. We have also studied
about the training. Thereafter, we learned about process and How to Show
Return on Money Invested in Training Expatriate Training and management
development strategy.
Outsourcing as a concept and practice has come to stay all over the world. The
developed countries, especially either with high labour cost, or with paucity of
required labour force, or even to meet deadline initially started off-loading
some of their work done in house to outside parties either having the labour
force or expertise. Even in our country, the practice of off-loading many of the
non-precision jobs to outsiders had been in vogue in some huge manufacturing
companies. Contracting and sub-contracting of jobs were born out of this
which meant that the big companies were off-loading even the core activities to
the outsiders to do. The Government of India came down heavily against such
practices through a blanket legislation known as Contract (Abolition and
Regulation) Act according to which jobs of repetitive nature which are
essential for running the business of the companies could not or should not be
given on contract to outsiders.
In this lesson, you will learn about outsourcing and what is the need of
outsourcing and what are the advantages and disadvantages of HRO, factors
influencing when and where not to outsource.
INTRODUCTION AND NEED FOR OUTSOURCING IN

GENERAL
Now let us try to understand what is outsourcing and need for outsourcing.
Outsourcing is the oft-used word in recent times. It means transferring to the
third parties, the performance of functions once administered in-house.
Outsourcing is of two types:
138 ANNA UNIVERSITY

1. IT Outsourcing (ITO) – Involves a third party which is contracted to Notes

manage a particular application, including all related servers, networks, and
software upgrades.
2. Business Process Outsourcing (BPO) – Features a third party which is
contracted to manage the entire business process such as accounting,
procurement, or human resources. BPO is a broad term, which is referred to
outsourcing businesses in all fields, not just HR. A BPO differentiates itself
by either putting in new technology or applying the existing technology in
a new way to improve a process.
Learning Activity
List out different IT solutions provided by the IT Outsourcing
companies.
7.1.1 Need for Outsourcing in General

Suppose we have got many partners, providing lots of services, privy to lots of
previously propriety information. How do we make sure our organization
survives and thrives – in whatever form it now takes?
Some futurists predict the “end of organizations.” As Peter Drucker notes, this
is one prediction that almost certainly won’t come true. If anything,
organizations will be needed more than ever precisely because we will
encounter so much ambiguity, variation, and need for flexibility with respect to
their mission values and strategy.
Almost a decade ago, Michael Porter drew the attention to the idea of creative
competitive advantage. The notion of continuing to do what one does best may
no longer be sufficient in a world of rapid change where technological
innovation and international competition tend to change the ground rules. This
begs the question, what will it take to stay ahead tomorrow? Beyond
international competition, there is a growing cadre of small knowledge-based
companies that are developing skills good enough to take on and even beat the
big guys.
Contracting for third-party services is as old as business. The difference today
is that people are willing to do more of it, to do it more systematically, and to
hold their suppliers to a level of performance that is cheaper and better than
what they could have done themselves. We may be willing to give some of the
things we need to do to an outsider, but we expect that outsider to do it better
and cheaper – of course, that means we have to define both cheaper and better
in a way that we can measure and feel comfortable about.
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Notes Successful companies today have a pretty good idea of what their core
competencies are, and they play to their strengths and try to bolster their
weaknesses. Being virtual is about finding allies who can help support those
weaknesses. Typically, these are vendor-supplier relationships, the more time
we spend thinking about what we want from them, the better off we shall be.
Outsourcing is a word with a nebulous definition that is used too freely and too
often, just like the term virtual organization. We focus on outsourcing that has
to do with people as opposed to other types of capital management or
technology development. And these are high growth businesses – event
services, flexible staffing, document management, direct marketing – people-
intensive things that can be outsourced.
BUSINESS PROCESS OUTSOURCING (BPO)

Now let us try to understand about Business Process Outsourcing ( BPO). In
the BPO sector, companies that are subsidiaries of large IT firms have
triumphed. Perhaps they have gained due to the sheer strength of the parent
brand, reinforced through subtle name changes. More importantly, IT firms are
increasingly looking at BPO services as a crucial add-on to their offerings.
Business Process Outsourcing (BPO) is a division of outsourcing that involves
the contracting of the operations and responsibilities of specific business
functions (or processes) to a third-party service provider.
The Gurgaon-based IBM Daksh Business Process Services is one such
company. It is likely to receive a part of the ` 26,000 crore (6 billion dollars)
that its parent, New York-based IBM, is pumping into India. A major chunk, of
course, will go to IBM India, the IT services subsidiary.
HUMAN RESOURCE OUTSOURCING (HRO)

After understanding about Business Process Outsourcing, Now let us try to
understand Human Resource Outsourcing and the functions which will be
outsourced. The human resources function in organizations across the globe
has the important task of managing the real assets (employees) of the
organization through efficient delivery of internal services. Employees today
are demanding greater and easier access to employment information and
services. The human resources team is entrusted with the onus of increasing the
efficiency of internal HR processes while controlling costs and contributing
effectively to the organization’s profitability. HR management systems are
becoming increasingly complex with the need to administer and manage
processes forging ahead with revolutionary HR philosophies and governance.
The Human Resources (HR) department is critical for employee well-being in
any business, no matter how small. Just as companies have realized the
importance of customers and are taking proactive steps to ensure their
satisfaction, they have also recognized the key role played by its employees in
140 ANNA UNIVERSITY

winning the battle of the marketplace. A motivated and innovative employee Notes
can work wonders for a company. Hence getting and retaining a motivated
workforce has found its way on to the CEO’s agenda. Also, the slowing
economy has forced the workforce to be productive; once employees become
productive, companies want to retain them at any cost.
HR outsourcing is defined as “a process of outsourcing involving particular
tasks like recruitment, making payroll, employee benefits administration, fixed
assets administration, employee logistics management, training and
development to a third party having expertise in these respective fields”.
One of the most significant forces affecting HRM is the outsourcing of HR
functions. HR outsourcing is commonly understood as permanently contracting
to the third party the activities that were previously performed in-house.
Outsourcing is pursued for several operational reasons such as for greater
efficiency in the performance of functions or better service. Outsourcing is also
seen as a vehicle for cutting costs. In addition, it is used to obtain specialized
expertise that is not available in-house. During the last five years or so,
downsizing has often resulted in reducing number of HR professionals, thus
necessitating organizations to go for outside vendors for specialized services,
such as test validation or in-depth assessments for leadership development.
Major consultancy firms are predicting a boom for HR outsourcing as a whole.
With the growing market, there are a number of vendors available who cater to
the diverse needs of various markets and provide HR services, including
staffing, payroll benefits, administration, training, employee relations and
compensation.
Typical HR Functions Outsourced by Organisations

Outsourcing has become increasingly attractive for many organizations. A
company contracts with a vendor that rents its skills, knowledge, technology,
service and manpower for an agreed-upon price and period to perform
functions, the client no longer wants to do. When a company outsources HR
functions an organization can pick and choose from the services offered. These
services include:
 Payroll Administration: Produce cheques, handle taxes, and deal with sick
time and vacation time.
 Employee Benefits: Health, medical plans, canteen facilities, etc.
 HR Management: Recruiting, hiring and firing. Also background
interviews, exit interviews, and wage reviews.
 Risk Management: Workers’ compensation, dispute resolution, safety
inspection, office policies and handbooks.
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Notes
Shared Service Centres (SSCs): SSCs take routine transaction-

based activities, which are dispersed throughout the organization and
consolidate them at one place. A major advantage of this concept is the
HR managers can assume a more strategic role because they are freed
from more routine tasks. For example, a company with 20 strategic
business units spread over within and outside the country could
consolidate these routine HR tasks and perform them at one location. The
increased volume makes the tasks more suitable for automation, which,
results in the need for fewer HR personnel.
Companies outsourcing more HR activities to achieve a

fundamental shift from an administrative, tactical and compliance-driven
function to a focus on the strategic acquisition, motivation and retention
of talent. The transactional functions must be done right and must be
handled with greater quality and efficiency by a provider who has the
process and technology expertise.
Reasons for HRO

There are various reasons for HR Outsourcing and some of them are as
follows:
 Cost-effectiveness
 Reduced administrative costs
 Capitalizing on technological advances/expertise
 Improved customer service
 Redirecting HR focus toward strategy/planning
 Focus on core business
 Reduced corporate overheads
 Provision of ‘seamless’ delivery of services
 Insufficient staff.
 HR outsourcing is a viable option, if a company lacks internal expertise and
confidentiality and requires unbiased opinion on human resources.
 Outsourcing is also gaining importance as most companies do not have the
time or the expertise to deal with situations.
 Outsourcing helps employees to get out of the routine transactional HR
network.
142 ANNA UNIVERSITY

 External vendors – through “technology” and “economies of scale” – Notes

provide more efficient and cost-effective HR services than in-house
departments.
TYPES OF HR OUTSOURCING
Now after understanding why the HR is outsourced now let us understand the
types of Human Resource Outsourcing.
HR Outsourcing generally falls into four categories:
 Professional Employer Organization (PEO): A PEO assumes full
responsibility of the company’s (client’s) human resource administration. It
becomes a co-employer of the company’s workers by taking full legal
responsibility of its employees, including having the final say in hiring,
firing of employees and the amount of money employees make. Under this
system, PEO handles all the HR aspects and the business.
Example: A company takes responsibility of hiring firing and all

the matters pertaining to HR administration of XYZ company. Here A
company is a PEO and XYZ is a Client.
 Business Process Outsourcing (BPO): BPO is a generic term and could
refer to all fields and activities, but as far as HR is concerned, a BPO
ensures that a company’s HR system is supported by the latest technologies
such as self-access and HR data warehousing.
Example: Vodafone Company out sources its call centre activities

to future group.
 Application Service Providers (ASP): ASP provides host software on the
Web and rents it to users. Some are well-known packaged applications
while others are customized HR software developed by the vendor. These
software programmes can manage payroll, benefits, etc.
Example: Go daddy.com provides website related application to its

clients.
 E-Services: E-Services are those HR services that are Web-based.
Much of the attention should be paid in before selecting the type

of outsourcing because specific type caters specific function and different
responsibilities.
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Notes Benefits of Outsourcing

When a number of companies are outsourcing their HR activities, there must
be certain benefits associated with it. The two major advantages are cost and
time factor. The other benefits of HR outsourcing are as follows:
 Frees the internal HR staff to focus on strategic activities that add more
value than transactional, administrative tasks.
 Enables decentralized structures that support high rates of innovation and
flexibility.
 Alleviates the bureaucratic burden of centralized HR administration.
 Enables the HR department to play its part in overall corporate downsizing
efforts.
 Facilitates access to new ideas and approaches outside the organization.
 Fosters innovation and improves quality.
 Increases speed to market.
Disadvantages of HRO
As it has got advantages it has also got certain disadvantages. The major
disadvantages of HR Outsourcing are as follows:
 Companies will become over-dependent on supplies.
 Companies can lose strength in strategically core competencies.
 HR outsourcing is sometimes perceived to have higher cost, lower quality
and the fear of losing control.
Therefore, outsourcing any business activity creates potential risks as well as
benefits. That is why a need arises to assess the pros and cons of outsourcing
before outsourcing specific HR functions.
FACTORS INFLUENCING WHEN AND WHERE NOT

TO OUTSOURCE
Now let us try to understand when the process can be outsourced.
Innovative Options
Indian enterprises today have a variety of outsourcing options from which they
can choose the right fit. Outsourcing solution-providers offer services that
include desktop client management, server management, cable management,
firewall management, patch management, software license management, IT
audits, backbone and connectivity, website hosting, and IT infrastructure
management.
Thus the available services are innovative, significantly more customized, and
better aligned with individual customer requirements. An enterprise can
144 ANNA UNIVERSITY

pick-and-choose specific services and build a reliable mode of service delivery. Notes
A company can outsource basic desktop management needs, or the
management of the entire nationwide IT infrastructure if needed.
To introduce more flexibility, many service providers offer

clients hire-purchase schemes, infrastructure on-demand, and pay-as-you-
use options.
Before you Outsource

All things said, outsourcing is a strategic business decision that should be made
only if a company sees true business benefits accruing from it. Badly-planned
outsourcing could result in erosion of service value and cost escalation, but a
well-planned outsourcing decision can help you sleep better at night, knowing
that the responsibility of deliverables is in safe hands.
A company should decide what and when to outsource after considering the
following factors:
1. Dependency Risk: If a company has to adapt its operations to do business
with as supplier, it might then find itself dependent on that vendor.
Dependency risks increase when the outsourced activity requires the co-
location of facilities and specialised training. If the supplier fails to perform
the outsourced function that will disrupt other processes, this factor needs
to be taken into consideration when the company outsources. Thus, when
activities are highly interdependent, a company might be reluctant to
outsource any of them.
2. Spillover Risks: Contracting with a supplier can expose a company to
leaking its confidential information, perhaps even to competition. Spillover
risks are exacerbated (aggravated) when the interface between the
outsourced activity and other internal functions is complex, requiring a
company to reveal proprietary information to ensure a good fit between the
two.
3. Trust: To protect against dependency and spillover risk, a company can
rely on detailed legal contracts with vendors. But such documents are time-
consuming and expensive to negotiate, and enforcement is uncertain and
costly, thus discouraging outsourcing.
4. Relative Proficiency: Outsourcers can take advantage of economies of
scale and scope by aggregating the needs of several clients. So companies
need to examine their proficiency relative to that of vendors on a case-to-
case basis.
5. Strategic Capabilities: A company should not outsource an activity that
directly contributes to its strategic competitive advantage. If a company
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Notes believes it can build a sustainable lead in an activity that offers long-term
competitive advantage, then it should refrain from outsourcing that
function and instead devote efforts to building superior capability even if
its current relative proficiency is modest and other factors make
outsourcing attractive.
6. Commitment vs. Flexibility: Irreversible commitments to core activities
can be a powerful weapon for a company to signal to competitors its intent
to defend its advantage. Uncertainty about the future trajectory of a
technology might make a company less inclined to outsource a process that
relies on that technology if the activity is core or critical but more inclined
to outsource if it is neither.
The relative importance of the six factors varies according to situations, and
companies need to weigh each accordingly to form an overall assessment.
FUTURE OF HRO
We have already learnt various things pertaining to HRO meaning types and
factors influencing where to outsource and where not to outsource, now in this
section let us try to understand on the future of HRO.
The future of HR Outsourcing in India is very promising because of its
intrinsic advantages such as low-cost and ready pool of English speaking
manpower. Companies are looking to outsource a complete range of HR
delivery and designing products on policies, compensation, structure and
recruitment. Indian companies are not only providing services for the clients
abroad but are also catering to the local market. Authorities responsible for
outsourcing have to learn to avoid pitfalls and ensure success. They have to:
 Determine the core competencies that should be kept in-house rather than
outsourced.
 Align outsourcing with overall corporate strategy.
 Use outsourcing to support transformation strategies such as restructuring
and TQM.
 Evaluate, compare, and select vendors.
 Develop targeted Request for Proposals (RFPs), negotiate win-win
contracts, monitor how vendors perform, and evaluate financial savings.
 Handle “re-competition” as contracts end.
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HR BPO COMPANIES Notes

Now let us try to understand on the HR BPO Companies. HR BPO vendors add
value to the company by either putting in new technology or applying existing
technology in a new way to improve a process.
This is to make sure that a company’s HR system is supported by the latest
technologies, such as self-access and HR data warehousing. Some HR BPOs
offer all related services in the HR domain, i.e. they offer an end-to-end system
to meet all the company’s HR needs.
Other HR BPO firms allow companies to choose from various offerings (a la
carte); companies can pick and choose from the various services on offer.
Typical services include:
 Payroll administration: Producing cheques, handling taxes, and dealing
with sick time.
 Employee benefits: Health, medical, life, canteen services, etc.
 HR management: Workers’ compensation, dispute resolution, safety
inspection, office policies and handbooks.
Learning Activity
Visit a outsourcing company which caters to the client company
understand what they provide service to the client company and the
way of working fees charged tenure of contract, etc. and make
presentation on the same.
Focus on the Core

Given the pressures of a competitive market, organizations tend to focus on
their core activities — activities that link-up directly with the revenues and
hence the profitability. In such a scenario, companies tend to outsource their
non-core tasks to focus on business decision-making. And IT infrastructure
easily lends itself to outsourcing.
Business Related
It is important to understand that outsourcing is a business-related decision and
not simply an IT need. The ultimate goal of outsourcing is to bring benefits to
the business and subsequently the customer.
As mentioned, HR outsourcing is the fastest growing outsourcing domain.
Several major ventures have been linked between large corporations and
service providers for end to end HR outsourcing.
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Notes
Strategic Knowledge Management
It's not what you know …it's who you know.

The advertisement for the marketing position read like an applicant's
dream.
Employer of Choice for Futuristic Workers!
Manic Marketers need an active and vibrant young professional to join our
outstanding team of sixty markets. We have a huge client base which is
expanding rapidly. We need a new graduate marketer with good
communication and networking skills who is comfortable working in a
world-class knowledge environment. Join us, and share your knowledge and
ideas with our open and collaborative team, as we work towards building
best practice.
You won't believe its work – it's just too much like a party all the time!
Damon was hooked. The interview went smoothly – it was evident that
Manic Marketers were on their way. They provided a very comprehensive
portfolio, outlining their technology systems, their positive and inclusive
culture, and their focus on knowledge management. The whole interview
was brimming with words that filled his heart with enthusiasm, know-how,
collaborative, peer feedback, sharing sessions and focusing on long-term
relationships. Damon accepted the job offer on the day it was e-mailed
through.
The orientation started well. "Our goal," his supervisor outlined
enthusiastically, "is to work smarter, not harder. We don't want to reinvent
the wheel. Everything we do is documented and shared, so that we can
access our corporate knowledge easily." The one-to-one coaching lasted a
week – Damon was exposed to the various systems including an in-house
records management system, the financial system, the library and
knowledge objects collection, the records management system and the
human resources process. He was surprised at the variety of systems, but his
guide assured him it was easy to navigate – he just needed to allow some
extra time to get to know the systems. He was also invited to take his time
working through the processes and the website so that he knew what was
around.
Week 1 was smooth. Week 2… not so smooth. The file was waiting on his
desk on the Monday morning. A note from supervisor asked that Damon
attend a meeting with BG on the following Monday, and start dialogue on
the new project listed in the file. Garabaldon Brothers was emblazoned
across the front in large black letters. Seven staff members were crossed out
Contd…
148 ANNA UNIVERSITY

on the front cover with his own top in fresh pen. These were obviously Notes
significant clients. Daman poured through the file. One million dollars in
business over six years – this was a big client. He looked at the noted further
– the latest record sheet noted:
Contact BG re np.
O/seas, back in November. Left a message. MS
What was up? Who is BG? What was the latest update? Had anything
happened since? Damon combed through the file. No mention of who BG
was. No contact details. What next?
Damon breathed a sigh of relief. Of course, the knowledge management
datatabase! He typed in the initials BG. No problem, he thought, and
entered the full name of the firm. Six entries emerged, blinking on the
screen. Relieved, he checked the records. The first was the most recent. It
was a firm history record.
Firm: Garabaldon Brothers
History:
2000 Contract negotiations: Muzzled mutts. Feb 1995. Fee: $60,000.
Contact:
Sam Smith. Client: Mark Garabaldon
2001 Contract Simple pods. Fee: $280,000. Agent: Sam Smith. Client
contact:
Mark G.
2002 Contract signed Mat, Music mutts. Agent: Collette Taylor. Client
Contact:
Mathew Garabaldon $340 000
2003 Contract for Pasty Pals. Agent: Collette Taylor. Client: Mathew G.
2004 Contract for Loved Ones signed, CT, $500 000. Contact: BG
2005 MS - contact BG. No sale this year.
Damon felt relieved. At least he knew there was a BG in the firm. All he
had to do was to find who that was. He reviewed the other records - a note
of a recent dinner between Michelle, his predecessor, and an unnamed
client; a client interview sheet of a meeting last year to review the success of
Pasty Pals, with MG and Collette; an initial review of the firm's financial
records; an analysis of data from the last campaign.
Over the rest of the week, Damon churned through the organizational
records, the databases, the company's own web site, the hard files in his
section, and any other locatable documents. He realized he didn't even know
Contd…
ANNA UNIVERSITY 149

Notes what the corporation's key products were. He had no idea of their history,
apart from that one cryptic record sheet. He had no clue as to what np
meant. He still had no idea what the projects entailed.
There is nothing worse than looking stupid in a new job in Week 3. He
sighed, and thought about his various attempts to get help. He had contacted
his mentor who had helped him the previous week, and other nearby
colleagues. Each one appeared harassed and almost threatened by his
appeared at their workstations. Sighing again, he dialled the phone number
for Garabaldon Brothers. The youth who answered wasn't very helpful. He
didn't know a BG. He certainly didn't know of anything called Loved Ones.
At this stage, Damon was beginning to wonder where to go next. He looked
at the history file again. Feeling very tentative, he checked for the extension
of Collette Taylor. To no avail – no longer existed. MS was his predecessor,
who apparently had left for a holiday and never returned. Sam Smith was
the general manager. It was very confronting to have to ask for help, but
there was no other option left. Sighing again, Damon dialled Sam's
extension.
Three hours later, his ear phone much reddened and bruised, Damon felt
ready for anything. BG was BABY Garabaldon, the heir apparent, but no
one called him by his real name – Zacchariah. "Flatter him", warned Sam,
"he's had 40 years of being the darling of two families, and he doesn't like
"no". Take him to French restaurants, and never offer him anything but wine
that is over $200 a bottle. Take a chauffeured limo – he likes to be treated in
style. And you won't sign the contract before he has been wined and dined
five times – so don't even try. The projects are always his, and he has an
innate sense of what he wants - and it works. He doesn't want to hear your
ideas; he wants you to repeat his. Luckily, they work …Oh, another thing,
don't wear a suit - he likes us casual, and hates officialdom. He couldn't
work with Michelle Somes because she was too formal. So lighten up. Good
luck, you'll need it!"
Damon felt relieved and alarmed. At least he had some basis for the project
now. And he had his first bit of jargon: np – new project. But he still felt
exhausted and vulnerable. No real knowledge of the last projects, no
knowledge of anyone else who worked on the old projects, no idea of other
useful resources which might be used, no real history of the organization,
and no one keen to help. So much for a knowledge organization. This was
going to be a very demanding project. He pulled his job file towards him,
and started some brief notes.
10/12 Contact BG re np.
That was all he was going to record. Let someone else sort it out when it
was their turn. Why should he bother to make it easy? No one else seemed
to care. He was getting the picture now. It wasn't what you knew. It wasn't
Contd…
150 ANNA UNIVERSITY

what you could find out. It was really all about who you knew. And that was Notes
going to be the biggest challenge of all.
Questions
1. The initial interview and orientation presented a very strong message
about the knowledge environment operating at manic Marketers. What
features were portrayed? How did these differ from the reality?
2. A mentor has certain functions in an organization. Identify the types of
support offered by this mentor. What else could the mentor have done to
help Damon gain organizational knowledge?
3. In this context, the recording of client data is a major benefit to the
organization. Identify the types of information that should be included
and discuss how they might have been recorded as codified knowledge.
4. Manic Marketers needed to develop some very different approaches to
how they share their knowledge. Identify some strategies which might
be considered. How would you implement these strategies? What
impediments to sharing can you identify?
1. Human resources outsourcing is when businesses hire

companies to manage personnel functions. That
includes administration of health benefits plans,
retirement plans, and workers’ compensation
insurance.
2. BPO that is contracted outside a company's country is
called offshore outsourcing. BPO that is contracted to
a company's neighbouring (or nearby) country is called
nearshore outsourcing.
SUMMARY
 Outsourcing means transferring to third parties, the performance of
functions once administered in-house. In each function of a business
organization there may be activities which do not require the expertise of
people performing that function.
 For example, running a canteen, administering watch and ward, etc. do not
need the expertise of an HR executive and his core competency of being a
strategic business partner is dissipated with such ‘non-productive’
activities.
 Historically, reducing operating costs has been the main reason for
outsourcing. However, access to best practices, latest technology, and faster
turnaround are some of the other benefits that outsourcing provides.
ANNA UNIVERSITY 151

Notes  Outsourcing has now become an important element of business

performance transformation, as this allows resources to be concentrated on
core competencies. Outsourcing allows HR to make a stronger and
formidable contribution to the growth and well-being of the company.
 There are four types of HR Outsourcing: Professional Employers
Organizations (PEOs) which assume full responsibility of a client’s HR
administration; Business Process Outsourcing (BPO) which ensures that a
company’s HR system is supported by the latest technologies such as self-
access and HR data warehousing; Application Service Provider (ASP)
which provides host software on the Web and rents it to users; and E-
Services.
 A company should decide what and when to outsource after considering the
following factors: (1) Dependency risk, (2) Spillover risks, (3) Trust,
(4) Relative proficiencies, (5) Strategic capabilities and (6) Commitment vs
Flexibility. While resorting to BPO in HR, it is important to understand that
outsourcing is a business-related decision and not simply an IT need.
KEYWORDS
Information Technology Outsourcing: It involves a third party which is
contracted to manage a particular application, including all related servers,
networks, and software upgrades.
Business Process Outsourcing: Features a third party which is contracted to
manage the entire business process such as accounting, procurement, or human
resources. BPO is a broad term, which is referred to outsourcing businesses in
all fields, not just HR. A BPO differentiates itself by either putting in new
technology or applying the existing technology in a new way to improve a
process.
Human Resource Outsourcing: “A process of outsourcing involving
particular tasks like recruitment, making payroll, employee benefits
administration, fixed assets administration, employee logistics management,
training and development to a third party having expertise in these respective
fields”.
Shared Service Centres: SSCs take routine transaction-based activities, which
are dispersed throughout the organization and consolidate them at one place. A
major advantage of this concept is the HR managers can assume a more
strategic role because they are freed from more routine tasks.
Professional Employer Organization: A PEO assumes full responsibility of
the company’s (client’s) human resource administration. It becomes a co-
employer of the company’s workers by taking full legal responsibility of its
employees, including having the final say in hiring, firing of employees and the
amount of money employees make. Under this system, PEO handles all the HR
aspects and the business.
152 ANNA UNIVERSITY

Application Service Providers: ASP provides host software on the Web and Notes
rents it to users. Some are well-known packaged applications while others are
customized HR software developed by the vendor. These software programmes
can manage payroll, benefits, etc.
E-Services: E-Services are those, which are Web based HR services.
1. What do you mean by Outsourcing?
2. What is IT Outsourcing?
3. What do you mean by BPO?
4. What is the need for outsourcing?
5. What do you mean by Human Resource Outsourcing?
6. Name the typical HR functions that an organization can outsource.
7. What do you mean by SSCs?
8. Give few reasons for HR outsourcing.
9. Name the different types of HR Outsourcing.
10. What do you understand by the term Professional Employer Organisation?
11. What do you mean by Application Service providers (ASP)?
12. Write two advantages and disadvantages of HRO.
13. Which are the points (only names) that company should think before
outsourcing?
14. What do you mean by the term “Focus on the Core”?
15. What do you mean by Dependency Risk?
16. What do you mean by Relative Proficiency?
17. What do you mean by Spill over risk with respect to outsourcing criteria?
18. What do you mean by E-services?
19. List out any two companies, which you know have outsourced their HR
Work.
20. Write the services provided by the HR BPO companies.
ANNA UNIVERSITY 153

Notes Long Answer Questions

1. Explain briefly on Outsourcing and need for Outsourcing.
2. Write a note on Human Resource Outsourcing.
3. Explain the HR functions, which an organization can outsource.
4. Explain briefly the reasons for Outsourcing.
5. Name and explain the types of HR outsourcing.
6. Explain merits and demerits of Human Resource Outsourcing.
7. Write a note on Future of HRO.
8. Explain about HR BPO companies.
9. Explain points to be kept in mind by a company before Outsourcing.
10. Write a note on the following pertaining to Human Resource Outsourcing:
(a) Focus on the core
(b) Business Related Outsourcing
(c) Commitment vs Flexibility
(d) Payroll Administration
(e) Risk Management
(f) HR Management
FURTHER READINGS

2010.
Oxford, 2007.
154 ANNA UNIVERSITY

Lesson 8 - Cross Border Merger and Acquisition Repatriation
Notes
LESSON 8 - CROSS BORDER MERGER AND
ACQUISITION REPATRIATION
CONTENTS
Learning Objectives
Learning Outcomes
Overview
Mergers
Acquisition or Takeover
Joint Venture
HR Issues in Merger and Acquisition
Culture Shock
Mergers, Acquisitions and Takeovers & SHRD System
Repatriation
Summary
Keywords
Further Readings
LEARNING OBJECTIVES
 Define the Merger
 Discuss the Acquisition or Takeover and Joint Venture
 Explain the HR Issues in Merger and Acquisition
 Describe the Mergers, Acquisitions and Takeovers and SHRD System
 Illustrate the Repatriate and its Process
LEARNING OUTCOMES
understanding of:
 basics of mergers and explain acquisition or takeover
 concept of joint venture
ANNA UNIVERSITY 155

Notes  explain HR issues in merger and acquisition

 determine culture shock
 basics of mergers, acquisitions and takeovers
 concept of repatriation
OVERVIEW
In the previous lesson, we have learned about outsourcing and what is the need
of outsourcing and what are the advantages and disadvantages of HRO, factors
influencing when and where not to outsource.
As seen in the last lesson, one of the ways companies go global is through
Mergers and Acquisitions (M&A). The Transaction Services Practice Global
M&A Survey as enumerated in the recent KPMG report titled “The Morning
After” says that more deals enhanced the value than reduced value, despite
increased competition in the M&A market. However, a pie chart therein shows
that 31% of deals enhanced value, while 26% reduced value. The remaining
43% ‘neutral’ companies are using acquisitions to hold their competitive
position. Value neutrality may also indicate ‘a shift in power from the buyer to
the seller through increased use of auctions and professionalism of the sell side
process, postulates the report. Mergers and Acquisitions are expected to create
synergistic advantage to the companies. But the report finding is that nearly
two thirds of acquirers failed to realize their synergy target, though 43% of the
synergy target was included in the purchase price. Having raised all these
statistics at the beginning of this lesson, one has to understand what is merger
and acquisition and then the issues cropping up from it for HR managers.
In this lesson, you will learn about Mergers, Acquisitions and Joint Venture
and you will also learn about Repatriation and its Process.
MERGERS
Merger is an external strategy for growth of the organization. This can be
followed by merging another organization in to or its part to increase
effectiveness of both merging and merged organizations.
Merger strategy is becoming common throughout the world including India.
There are various terms used for the purpose; for example, merger, absorption,
amalgamation (one organization merging with another organization), and
reconstruction (two or more organizations losing their identity and forming
another organization). However, one-term merger can be used for all these
because it can take different forms of arrangement among the organizations
considered for merger.
Reasons for Merger from the Point of View of Merging Organizations are
quick entry in the business, faster growth rate, diversification advantages,
reduction in competition and dependence, tax advantages and synergistic
156 ANNA UNIVERSITY

advantages. However, it should not be taken for granted that these advantages Notes
may be available automatically. Many of these may actually turn into
weaknesses if the present capability is not suitable for merged business.
Example: Much management find it difficult to handle business in

other than their own fields. In such a case, there may not be any management
synergy in merger; rather it may result into weakness.
Learning Activity
Understand how Tata steel and Corus Merger happened.

Dr. Reddy’s Lab and Betapharm merger happened. Prepare a report
on the same.
Hindustan Lever was formed as a result of a merger and there

have been mergers afterwards. ICI India Limited has merged its
interconnected companies – Indian Explosives, Alkalie and Chemicals
and Crescent Dyes and Chemicals. Based on the nature of business of
merging and merged companies, merger may be horizontal, vertical,
concentric or conglomerate.
The horizontal merger is one where merging and merged

companies have the same type of businesses like an automobile company
merging with another automobile company. Vertical merger takes place
between companies of which one is a supplier of the other. In concentric
merger, two companies are related either technology-wise or market-
wise. In conglomerate merger, companies do not have similar products
either technology-wise or market-wise: they have essentially different
products.
Understanding of different types of merger is important because

each of them generates different types of synergistic effect, hence success
or failure rate. This also has a bearing on HRM, both domestic as well as
international.
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Notes
Reasons for Merger from the view-point of Merged

Organizations are liquidation strategy, beating the present slump and
catching up with future growth, and availing one’s own technical
advantage with other’s operational capability.
ACQUISITION OR TAKEOVER
Now let us learn about Acquisition and Take Over. In Acquisition or Takeover
Strategy, one company takes over the control of another company. This can be
done either through the mutual agreement between acquiring and acquired
company or against the wishes of the acquiring company, known as a hostile
takeover.
Learning Activity
Understand how plexicon was acquired by Mahindra and Mahindra,
Satyam computers acquisition by Mahindra.
Acquiring existing organizations, products, technology, facilities, talent or

manpower has the strong advantage of much quicker entry into the target
market, while at the same time, detouring such barriers to entry as suppliers,
substantial economies of scale, establishment of distribution channels, etc.
Internal development of all these may take time and present start-up problems.
Moreover, internal expansion may result into oversupply in the market.
The resultant fierce competition may affect profitability. The

prospect of which situations reduces the number of variable options to
two: entry in the business via acquisition or no entry at all.
Example: Indian Rayon of Birla group saw dramatic changes in

portfolio. Its cement division was demerged. Then it acquired Madura
Garments, the apparels and garments division of Madura Coats for ` 2.6 bn in
January 2000. This takeover gave Indian Rayon ownership of prominent
brands – Louis Philippe, Van Heusen, Allen Solly, Byford, Peter England and
San Frisco. This marked a dramatic change in focus for the commodity-based
group. Though a major player in textiles, Birla had not been able to impact the
branded menswear market. Building brands from scratch takes time as well as
money, and the easiest way was to acquire an established one.
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JOINT VENTURE Notes

When the Indian economy was liberalized in the 1990s and the global players
had easy access to Indian market to sell their commodities including industrial
goods. The government also withdrew its protective arms from many public
sector undertakings to fend for themselves and face the stiff competitions they
were suddenly exposed to. BHEL went through this patch of time with a
trauma, scrambling for diversification into the fields other than their power
generating equipment where their core competency was. ABB, Siemens and
others flooded the power generation equipment market and their prices were
much lower and their product cycle time was also shorter. To top it all, they
were ready to offer soft loans to the buyers of their equipment. Under these
circumstances, the order book position of BHEL dwindled drastically. But this
Navaratna company had its strength in its networking both domestic as well as
global which its overseas competitors lacked. At that point of time, in order to
leverage others’ strength these companies thought of coming together and do
business for mutual advantage.
The term Joint Venture means the creation of a new organizational entity by
two or more partner organizations.
Bleeke and Ernst (1993) say, if all markets were equally accessible, all
managements equally skilled, all information readily available, and all balance
sheets equally solid, there would be little need for joint ventures. But they are
not, so companies increasingly benefit by trading these ‘chips’ across borders.
Joint ventures are formed for a variety of reasons. For instance,
1. Intention to expand their domain overseas (Ballon, 1967; Beamish, 1985;
Beamish and Lane, 1982; Business International, 1965, 1971 and 1972).
2. To deal with the growing world market integration.
3. The intensified degree of international competition.
4. The increasing importance of new technologies (Ohmae, 1985; Bleicher,
1987; Dunning, 1988).
5. To leverage the resources of firms.
6. To reduce manufacturing costs.
7. For diffusing new technologies.
Example: Examples of joint ventures in Indian industry include Tata

Information System Limited (a joint venture of IBM World Trade Corporation
and Tata Industries Ltd.), TTL-Hitachi joint venture (joint venture between
Cummins Engine Company Incorporated of the US and TELCO to
manufacture diesel engines), Ranbaxy-Eli Lilly joint venture, Ansal Group and
Daewoo joint venture to develop roads and express highways, and Unitech-
Hyundai joint venture. Further, the Telecom sector, which has opened up for
private sector firms, has led to formation of a series of joint ventures between
the Indian partners and foreign companies such as Reliance and Nynex
ANNA UNIVERSITY 159

Notes Corporation, Aditya Birla Group and AT&T, Tata Industries and Bell Canada,
Essar Group and Bell Atlantic, Ashok Leyland and Singapore Telecom, etc.
HR ISSUES IN MERGER AND ACQUISITION

Now let us try to understand what are the HR issues in merger and acquisition.
HR Issues in Mergers and Acquisitions
Whether a merger or acquisition is successful depends on more than financial
considerations. Success often depends on how well the two organizations’
human resources are integrated. As a result, the degree to which human
resource aspects of mergers and acquisitions are planned can be critical.
Bruckman and Peters (1987) have stated:
“The amount of time and energy needed to successfully merge two
sophisticated organizations, however, is more likely to resemble the planning
and execution of the invasion of Normandy, accompanied by the resultant
clash of cultures from many elements attempting to work together toward one
end.”
There is much evidence of the failure to work through human resource issues
even when organizations are acquired for their human resources. It also has
been argued that planning for the contingencies of a merger is critical because
human resources will pay the price. If the company loses a takeover battle,
there may be redundant employees and the new entity will have to resort to
layoffs. Conversely, if a company is successful in fending off a takeover,
personnel layoffs are generally required to pay the costs of the defensive
actions.
Mergers and acquisitions may also cause stronger planning and

strategy linkages in the future. Their dismal record, in terms of both
financial performance and adverse effects on employees, may be
improved where human resource issues are planned out before the
merger. In companies having recent merger or acquisition experience,
human resource managers report that the top-level managerial talent of
the firm to be acquired is the most important human resource criterion to
be considered prior to a merger.
Mergers and acquisitions bring in a lot of cultural shocks to the

employees of both the merging and merged companies. This has to be
tackled with care and discretion by the HR professionals.
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CULTURE SHOCK Notes

In this section we will learn about culture shock we have already discussed
about it in our previous lessons now let us learn what happens when two
organisations are merged, it is better to have an idea about the overall culture
shock in the context of International HRM so that one is well prepared to cope
with such eventualities as and when they arise.
The effectiveness of orientation procedures can be measured only after
managers are overseas and exposed to security and socio-political tensions,
health, housing, education, social network and leisure activities, language,
availability of products and services, and climate. Culture shock is the term
used for the pronounced reactions to the psychological disorientation that is
experienced in varying degrees when spending an extended period of time in a
new environment.
Causes and Remedies: Culture shock and its severity may be a function of the
individual’s lack of adaptability but may equally be a result of the firm’s lack
of understanding of the situation into which the manager was sent. Often, goals
set for a subsidiary or a project may be unrealistic, or the means by which they
are to be reached may be totally inadequate. All of these lead to external
manifestations of culture shock such as bitterness and even physical illness. In
extreme cases, they can lead to hostility toward anything in the host
environment.
The culture shock cycle for an overseas assignment comprises of four stages of
adjustments during a foreign assignment. The length of the stages is highly
individual. The four stages are:
 Initial Euphoria: Enjoying the novelty, largely from the perspective of a
spectator.
 Irritation and Hostility: Experiencing cultural differences, such as the
concept of time, through increased participation.
 Adjustment: Adapting to the situation, which in some cases leads to
biculturalism and even accusations from corporate headquarters of “going
native”?
 Re-entry: Returning home to face a possibly changed home environment.
The manager may fare better at the second stage than other members of the
family, especially if their opportunities for work and other activities are
severely restricted. The fourth stage may actually cause a reverse culture shock
when the adjustment phase has been highly successful and the return home is
not desired.
Example: Exxon/Mobil assigns each expatriate a contact person at

headquarters to share general information. This helps top management to keep
tabs on the manager’s progress, especially in terms of management succession.
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Notes Terrorism (Tangible Culture Shock): International terrorists have frequently

targeted corporate facilities, operations, and personnel for attack. Corporate
reactions have ranged from letting terrorism have little effect on operations to
abandoning certain markets. Some companies try to protect their managers in
various ways by fortifying their homes and using local-sounding names to do
business in troubled parts of the world. Of course, insurance is available to
cover key executives; the cost ranges from a few thousand dollars to hundreds
of thousands a year depending on the extent and location of the company’s
operations. The threat of terrorist activity may have an adverse effect on the
company’s operations beyond the immediate geographic area of concern.
Travel may be banned or restricted in times or areas threatened.
Example: The names of some insurance companies are as follows

American International Underwriters, Chubb & Son and Lloyd’s of London.
MERGERS, ACQUISITIONS AND TAKEOVERS &

SHRD SYSTEM
Now let us try to learn about SHRD system and mergers acquisitions and
takeovers.
The success of any merger hinges on human resource systems, not on business
strategies, comments Hamilton (1986). According to him, most corporate
leaders possess highly developed skills in managing the legal, technical and
financial aspects of mergers and acquisitions. Yet, the success depends on
human resource system rather than on products, services and marketing
strategies. Therefore, if mergers and acquisitions are to fully succeed, they
must depend to a large extent on the people.
In their book Mergers and Acquisitions: The Human Factors, Cartwright and
Cooper (quoted Sadler, 1995) raise some important questions related to HR in
the process of mergers and acquisitions. Examples are:
 The handling of merger announcement sets the tone. Does the management
take care to inform employees properly?
 Employees need to be afforded opportunities to participate in change:
Management needs to demonstrate an intention to consult.
 Communication with employees must be of a high order. It needs to use the
language of a shared learning and indicate a grasp of those issues, which
are of great concern to employees.
Three reasons propounded by Srinivas R Kandula for statistically insignificant
association between acquisitions/takeover of units and SHRD System are:
1. Organizations mostly are concerned with legal and financial implications
than the human resources at the time of merger/acquisition. This, perhaps,
is understandable, as there is an urgent need to stabilize the business by
integrating systems, procedures and processes leading to a lower emphasis
on integrating the soft issues.
162 ANNA UNIVERSITY

2. A belief exists that workers have no role and they need not be counted on Notes
in changes like acquisitions/takeover.
3. Organizations believe that protection of compensation and employment is
sufficient and developmental initiatives need not be associated with such
strategic responses.
REPATRIATION
Now we let us try to understand about Repatriation what it is all about. If
companies in HCNs had been acquired or merged with and the PCNs have to
be withdrawn from HCN either due to failure of the merger or acquisition or
even as part of the termination of contract, repatriation process comes into
picture.
Any discussion on expatriates should include their repatriation – the activity of
bringing the expatriate back to the home country. Repatriation needs careful
handling, which has been realized lately. It has been the knowledge of
practitioners and academics that re-entry into the home country presents new
challenges as the repatriate (returning person) copes with what has been termed
re-entry shock, or reverse culture shock. While people expect life in a new
country to be different, they may be less prepared for a possible problem of
adjustment upon homecoming. As a consequence, it can be a traumatic
experience for some, even more than what was encountered in a foreign
location. An MNC may think that repatriation is the final phase in the
expatriation process, but its ability to attract future expatriates depends on how
well the firm handles its repatriation programmes.
Repatriation Process
The Figure 8.1 shows the repatriation process. Before elaborating on the stages
in the repatriation process, it is useful to understand that on completion of the
overseas assignment, the MNC brings the expatriate back to the home country,
although not all foreign assignments end with a transfer to home – rather the
expatriate is reassigned to another international assignment. Some employees
are made to travel around the globe frequently in which case they form part of
the MNC's international cadre managers. Even with such managers,
repatriation is essential, particularly at retirement.
 Preparation: Preparation involves developing plans for the future and
gathering information about the new position. The firm may provide a
checklist of items to be considered before the return to home (e.g. closure
of bank accounts and settling bills) or a through preparation of the
employee and his or her family for the transfer to home.
 Physical Relocation: Physical relocation refers to saying good bye to
colleagues and friends, and traveling to the next posting, usually the home
country. Personalized relocation assistance reduces the amount of
uncertainty, stress, and disruptions experienced by the repatriate and the
family.
ANNA UNIVERSITY 163

Notes  Transition: Transition means settling into temporary accommodation,

where necessary, making arrangements for housing and schooling, and
carrying out other administrative tasks such as renewing driving license,
and opening bank account.
Preparation
Physical
Relocation
Repatriation
Process
Transition
Re-adjustment
Figure 8.1: Repatriation Process

 Re-adjustment: Re-adjustment involves coping with reverse culture shock
and career demands. Of all the steps in the repatriation process,
readjustment is the most difficult one. The re-entry adjustment is a tough
task because of multiple factors. First, there is anxiety experienced by the
expatriate when he or she return home, the apprehension being accentuated
by the uncertainty about the placement in the firm, career prospects, and a
sense of isolation; a feeling of 'devaluating' the international experience;
coping with new role demands; and probable loss of status and pay.
MNCs respond to the repatriation problem in several ways. Many firms have
formal repatriation programmes. Some companies assign the expatriate a
mentor, popularly called as the 'godfather'. The mentor is usually in a more
senior position than the expatriate and knows him or her personally. The
purpose behind the use of a mentor is to remove the sense of alienation through
the provision of information (e.g. workplace changes) on a regular basis, so
that the expatriate is better prepared for the conditions he or she is likely to
face upon re-entry. The mentor should also ensure that the expatriate is not
sidelined when important decisions are made regarding positions and
promotions.
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Notes
Mergers and Acquisitions
I n the past, the decision criteria for mergers and acquisitions were
typically based on consideration such as the strategic fit of the merged
organizations, financial criteria, and operational criteria. Mergers and
acquisitions were often conducted without much regard for the human
resource issues that would be faced when the organizations were joined. As
a result, several undesirable effects on the organizations’ human resources
commonly occurred. Nonetheless, competitive conditions, favour mergers
and acquisitions remain frequent occurrence. Examples of mergers among
some of the largest companies include the following: Honeywell and Allied
Signal, British Petroleum and Amoco, Exxon and Mobil, Lockheed and
Martin, Boeing and McDonnell Douglas, SBC and Pacific Telesis, America
Online and Time Warner, Burlington Northern and Santa Fe, Union Pacific
and Southern Pacific, Daimler-Benz and Chrysler, Ford and Volvo, and
Bank of America and Nations Bank.
Layoffs often accompany mergers or acquisitions, particularly if the two
organizations are from the same industry. In addition to layoffs related to
redundancies, top managers of acquiring firms may terminate some
competent employees because they do not fit in with the new culture of the
merged organization or because their loyalty to the new management may
be suspect. The desire for a good fit with the cultural objectives of the new
organization and loyalty are understandable. However, the depletion of the
stock of human resources deserves serious consideration, just as with
physical resources. Unfortunately, the way mergers and acquisitions have
been carried out has often conveyed a lack of concern for human resources.
A sense of this disregard is revealed in the following observation:
Post combination integration strategies vary from such “love and marriage”
tactics in truly collaborative mergers to much more hostile “rape and
pillage” strategies in raids and financial takeovers. Yet, as a cursory scan of
virtually any newspaper or popular business magazine readily reveals, the
simple fact is that the latter are much more common than the former.
The cumulative effect of these developments often causes employee morale
and loyalty to decline, and feelings of betrayal may develop. Nonetheless,
such adverse consequences are not inevitable. A few companies, such as
Cisco Systems, which has made over 50 acquisitions, are very adept in
handling the human resource issues associated with these actions. An
example of one of Cisco’s practices is illustrative. At Cisco Systems, no one
from an acquired firm is laid off without the personal approval of Cisco’s
CEO as well as the CEO of the firm that was acquired.
Contd…
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Notes Questions
1. Investigate the approach that Cisco System has used in its many
successful acquisitions. What are some of the human resource practices
that have made the acquisitions successful?
2. If human resources are a major source of competitive advantage and the
key determinant of an organization’s ability to pursue a given strategy,
why have the human resource aspects of mergers and acquisitions been
ignored or handled poorly in so many instances in the past?
3. Interview someone who has been through a merger or acquisition. Find
out how they felt as an employee. Determine how they and their co-
workers were affected. Ask about the effects on productivity, loyalty,
and morale. Find out what human resource practices were used and
obtain their evaluations of what was helpful or harmful.
Source: Charles R Greer, Strategic Human Resource Management, Pearson Education, Inc, 2nd Edition 2002
1. A merger is the voluntary fusion of two companies on

broadly equal terms into one new legal entity. The
firms that agree to merge are roughly equal in terms of
size, customers, scale of operations, etc.
2. An acquisition occurs when a buying company obtains
more than 50% ownership in a target company.
SUMMARY
 Merger is an external strategy for the growth of an organization. There are
four types of mergers, namely horizontal, vertical, concentric and
conglomerate mergers. Reasons for merging may be different from the
viewpoints of the merging organization and the merged organization. In
Acquisition or Take over Strategy, one company takes over the control of
another company. The success of the merger or acquisition depends on how
well the two organizations’ human resources are integrated.
 Their dismal record, in terms of both financial performance and adverse
effects on employees, can improve where human resource issues are
planned out before the merger.
 Mergers and acquisitions bring in a lot of cultural shocks to the employees
of both the merging and merged companies. This has to be tackled with
care and discretion by the HR professionals.
 The success of any merger hinges on human resource systems, not on
business strategies.
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 The term Joint Venture means the creation of a new organizational entity Notes
by two or more partner organizations. Joint ventures are formed for a
variety of reasons, such as: Intention to expand their domain overseas; to
deal with the growing world market integration; the intensified degree of
international competition; the increasing importance of new technologies;
to leverage the resources of firms; to reduce manufacturing cost; and for
diffusing new technologies.
 Three reasons propounded by Srinivas R Kandula for statistically
insignificant association between acquisitions/takeover of units and SHRD
System are: (1) Organizations mostly are concerned with legal and
financial implications than the human resources at the time of
merger/acquisition. This, perhaps, is understandable, as there is an urgent
need to stabilize the business by integrating systems, procedures and
processes leading to a lower emphasis on integrating the soft issues. (2) A
belief exists that workers have no role and they need not be counted on in
changes like acquisitions/takeover. (3) Organizations believe that
protection of compensation and employment is sufficient and
developmental initiatives need not be associated with such strategic
responses.
KEYWORDS
Horizontal Merger: It is where merging and merged companies have the same
type of businesses like an automobile company merging with another
automobile company.
Vertical Merger: It takes place between companies of which one is a supplier
of the other.
Concentric Merger: The two companies are related either technology-wise or
market-wise.
Conglomerate Merger: The companies do not have similar products either
technology-wise or market-wise: they have essentially different products.
Acquisition or Takeover: In Acquisition or Takeover Strategy, one company
takes over the control of another company. This can be done either through the
mutual agreement between acquiring and acquired company or against the
wishes of the acquiring company, known as a hostile takeover.
Joint Venture: The term Joint Venture means the creation of a new
organizational entity by two or more partner organizations.
Repatriation: If companies in HCN’s had been acquired or merged with and
the PCN’s have to be withdrawn from HCN either due to failure of the merger
or acquisition or even as part of the termination of contact, repatriation process
comes into picture.
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Notes SELF-ASSESSMENT QUESTIONS

1. What do you mean by Merger?
2. What do you understand by the term acquisition and take over? Do both
mean the same?
3. What do you mean by Joint Venture?
4. List the HR issues in Merger and Acquisition.
5. What do you mean by Culture Shock?
6. What do you mean by Repatriation?
7. Write the process of Repatriation.
8. What do you mean by preparation in Repatriation process?
9. What do you mean by Re-adjustment in Repatriation process?
10. Give some examples of Merger.
11. Give few examples of acquisition or Take over.
12. What do you mean by Transition in Repatriation?
13. What is physical Relocation in Repatriation?
14. What do you mean by horizontal merger?
15. What is vertical Merger?
16. What do you mean by Concentric Merger?
17. What is Conglomerate Merger?
18. What do you mean by culture shock in merger and acquisition?
19. What do you mean by initial euphoria?
20. Give some examples of Joint Ventures.

1. Write a brief note on Mergers.
2. Explain briefly mergers by taking an example of Mergers in India.
3. Explain briefly Acquisition or Takeover.
4. Explain different types of Mergers.
5. What are the HR issues in Mergers and Acquisitions?
6. What is Culture shock and what are the causes and remedies?
7. Write and explain the stages of adjustment during a foreign assignment.
168 ANNA UNIVERSITY

8. Write a note on Mergers, Acquisitions and Takeovers and SHRD system. Notes
9. Explain with a diagram the process of Repatriation.
10. List down the intentions for which joint ventures are formed.
FURTHER READINGS

2010.
Oxford, 2007.
ANNA UNIVERSITY 169

Notes
LESSON 9 - BUILDING MULTI-CULTURAL
ORGANISATION AND INTERNATIONAL
COMPENSATION
CONTENTS
Learning Objectives
Learning Outcomes
Overview
Different Approaches in Building Multinational Organisations
Strategic Choices
Stages of Internationalisation
Leadership and Strategic HR Issues in International Assignments
Expatriate Problems
Performance Management
International Compensation
Key Components of an International CompensationProgramme
Approaches to International Compensation
Summary
Keywords
Further Readings
LEARNING OBJECTIVES
 Explain the Multi-Cultural Organisation
 Compare the Different Approaches in Building Multi-Cultural Organisation
 Describe the Strategic Choices in Building a Multinational Organisation
and Stages of Internationalisation
 Discuss the International Compensation and Components in International
Compensation
 Explain the Approaches to International Compensation
 Tell about the Performance Management and Expatriate Problems
170 ANNA UNIVERSITY

Lesson 9 - Building Multi-Cultural Organisation and International Compensation
LEARNING OUTCOMES Notes

understanding of:
 analysing different approaches in building multinational organisations
 determine strategic choices
 identifying stages of internationalisation
 explain leadership and strategic HR issues in international assignments
 basics of performance management
 define international compensation and explain key components of an
international compensation programme
 recall approaches to international compensation
OVERVIEW
As we have discussed in the previous lessons organizations having their
operations in various countries, it is good to distinguish here among the
terminologies like global, transnational, international and multi-domestic
companies. On the face of it, all these terms may mean the same, but there are
subtle differences among these based on the strategies the companies adopt.
All these have one thing in common, i.e. they have to operate in different
cultures. That is the reason why we talk in general terms of building
multicultural organization. However, if we use the word multinational in place
of multicultural it should not hamper our understanding of the core concept of
the building either a global, transnational or multinational organization.
In this lesson, you will learn about multi-cultural organisations and how they
are built and on the concept of International Compensation.
DIFFERENT APPROACHES IN BUILDING

MULTINATIONAL ORGANISATIONS
In this section, we will try to understand the different approaches in building
Multi-national Organisations. H.V. Permutter (1969), in his article on “The
tortuous evolution of the multinational corporation” in Columbia Journal of
World Business vol. 4, no.1, pp 9-18 has identified four approaches in building
multinational organizations. They are:
 Ethnocentric: Few foreign subsidiaries have any autonomy; strategic
decisions are made at headquarters. Headquarters’ management personnel
hold key positions at the domestic and foreign operations. In other words,
subsidiaries are managed by expatriates from the home country (PCNs).
 Polycentric: The MNC treats each subsidiary as a distinct national entity
with some decision-making autonomy. Subsidiaries are usually managed
ANNA UNIVERSITY 171

Notes by local nationals (HCNs) who are seldom promoted to positions at

headquarters. Likewise, PCNs are rarely transferred to foreign subsidiary
operations.
 Geocentric: Here, the MNC is taking a worldwide approach to its
operations, recognizing that each part (subsidiaries and headquarters)
makes a unique contribution with its unique competence. It is accompanied
by a worldwide-integrated business, and nationality is ignored in favour of
ability. For example, the chief executive officer of the Swedish
multinational Electrolux claims that within this global company there is no
tradition to hire managing directors from Sweden, or locally, but to find the
person best suited for the job; that is, the colour of one’s passport does not
matter when it comes to rewards, promotions and development.
Example: PCNs, HCNs, and TCNs can be found in key positions

anywhere, including those at the senior management level at headquarters
and on the board of directors.
 Regiocentric: Reflects the geographic strategy and structure of the
multinational. Like the geocentric approach, it utilizes a wider pool of
managers but in a limited way. Personnel may move outside their countries
but only within the particular geographic region. Regional managers may
not be promoted to headquarter positions but enjoy a degree of regional
autonomy in decision-making. It may be seen as a precursory step towards
geocentrism.
The above approaches stem from the attitude of top management. However, the
nature of international business often forces adaptation upon implementation.
Example: A firm may adopt an ethnocentric approach to all its foreign

operations, but a particular host government may require the appointment of its
own people in the key subsidiary positions; so, for that market, a polycentric
approach is mandatory, making a uniform approach unachievable.
MNC may use a combination of approaches – for example, it may

operate its European interests in a regiocentric manner and its Southeast
Asian interests in an ethnocentric way until there is greater confidence in
operating in that region of the world.
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Notes
Because of these operating realities, it is sometimes difficult to
equate precisely managerial attitudes towards international operations
with different structural forms. The environmental contingencies facing
the particular internationalizing firm influence its strategic position,
managerial mindset, organizational structure, and staffing approaches.
STRATEGIC CHOICES
Now let us try to understand the strategic choices companies can adopt in
international business. In international business, companies adopt four different
strategies, namely International, Multi-domestic, Global and Transnational
Strategies. The suitability of each of these is determined by the extent of
pressures on cost reduction and local responsiveness.
 International Strategy: Companies adopting this strategy create value by
transferring valuable skills and products to foreign markets where local
competitors lack such skills, products and competencies. Many
international companies offer differential products to new overseas markets
and they tend to centralize R&D functions in their home country. Though
they incorporate local customization of products, it will be limited in scope.
They usually build production facility and marketing functions in all major
markets and the headquarter exercises tight control over marketing and
product strategy.
An international strategy is sensible if the company is in possession of
valuable distinctive competencies and the pressure for local responsiveness and
cost reduction is weak. If pressure for local responsiveness is more it will incur
high operating cost and ultimately it will not succeed.
 Multi-domestic Strategy: Maximum local responsiveness is aimed at by
companies adopting this strategy. They transfer skills and products
developed at home to overseas markets. They customize the product and
market strategies to suit different national conditions. Separate production
and R&D activities are established for each national market. Therefore,
they will incur high operating cost, and cannot utilize experience curve
effects (the learning curve and economy of scale are the underlying factors
with respect to the experience curve, which enable the companies to lower
the costs of value creation) and location economies (the optimal location
will enable business firms to go for value creation at low cost or maximize
value creation). A multi-domestic strategy is appropriate when pressure for
local responsiveness is high and pressure for cost reduction is low.
Duplication of production facilities contributes to high cost structure. Many
multi-domestic companies function like decentralized units in an
autonomous manner. So the ability to transfer skills, products and
distinctive competencies are slowly lost among these autonomous national
subsidiaries.
ANNA UNIVERSITY 173

Notes  Global Strategy: Companies, which adopt global strategy, follow a low
cost strategy. The cost reduction is mainly derived from expensive curve
effects and location economies. For such companies the production,
marketing and R&D activities are confined to a few favourable locations.
They market a standardized product worldwide to achieve the benefit of
experience curve effects and location economies. They do not customize
the product. This strategy is suitable in markets where the pressure for local
responsiveness is low. These conditions prevail in semiconductor industry
where global standards have emerged.
 Transnational Strategy: Companies following transnational strategy face
high pressure for cost reduction and high pressure for local responsiveness
and they try to achieve low cost and differentiation advantages. The
competitive forces are so intense that in order to survive in the marketplace,
global companies are forced to exploit experience curve effects, pay
attention to local responsiveness and transfer distinctive competencies
within the country. Distinctive competencies are found in home country
and host country. The flow of skills and products should be from the home
country to the foreign subsidiary and from the subsidiary and to the home
country. This process is known as global learning. All these objectives
constitute transnational strategy. Companies, which adopt transnational
strategy, are trying to simultaneously achieve low cost and differentiation
advantages.
These four strategies can also be correlated with the four approaches in setting
up the international business, discussed before.
Learning Activity
Make list of at least ten different MNCs and find out the Strategy
and approach they follow and try to correlate them.
STAGES OF INTERNATIONALISATION
After understanding the strategic choices available with companies for
internationalization now let us have idea of stages of internationalization.
Multinationals are not born overnight; the evolution from a domestic to a truly
global organizations may involve a long and somewhat tortuous process with
many and diverse steps, as illustrated in Figure 9.1. As this figure shows, some
firms may use licensing, subcontracting, or other operation modes, instead of
establishing their own foreign production or service facilities. Some firms go
through the various steps rapidly while others evolve slowly over many years,
although recent studies have identified a speeding up of the processes.
Example: Some firms are able to accelerate the process through

acquisitions, thus leapfrogging over intermediate steps. Nor do all firms follow
174 ANNA UNIVERSITY

the same sequence of stages as they internationalize – some firms can be driven Notes
by external factors such as host-government action or an offer to buy a
company. Others are formed expressly with the international market in mind.
In other words, the number of steps, or stages, along the path to multinational
status varies from firm to firm, as does the time frame involved. The concept of
an evolutionary process, however, is useful in illustrating the organizational
adjustments required of a firm moving along the path to multinational status.
Network of
Foreign Subsidiaries
Sales Subsidiary production
Exporting
Licensing
Sub-Contracting
Figure 9.1: Diverse Steps to Multinationalisation
Exporting involves manufacturing the products in a centralized

location and exporting them to other national markets. Exporting avoids
the costs of establishing manufacturing facilities in the host country,
which is substantial in nature.
It takes advantage of experience curve effects and location economies.

Exporting will not be a profitable proposition when there is a possibility of
location economies by manufacturing the products in favourable low cost
locations away from company’s home base. Another limitation is high
transport expenditure involved in exporting bulky items. Hence many
multinational chemical companies manufacture their products on a regional
basis. The threat of tariff barriers by governments of host countries will make
exporting uneconomical. Usually, the company that exports to another country
relies on local agents. There is no guarantee the local agent acts according to
the best interests of the company. Sometimes, the foreign agent to whom
marketing activity is delegated may promote competitor’s products, which is
detrimental to the interest of exporters. Many exporters in course of time
switch over to wholly owned subsidiaries.
ANNA UNIVERSITY 175

Notes Alternately, some companies try out international licensing. This involves an
arrangement by which a foreign licensee buys the rights to manufacture a
company’s product in the licensee’s country for the negotiated fee. Licensing is
pursued as a strategy by manufacturing companies. The licensee has to make
arrangements for the resources required for overseas operations. The company
is saved from the task of contributing to the development cost and the risk
associated with opening a foreign market. This is a useful strategy if the brand
name is popular.
Similar to licensing, service organizations resort to franchising. The companies
sell limited right to use their brand name in lieu of a lump sum one-time
payment and a percentage of the franchisee’s profits.
In wholly owned subsidiaries, the parent company owns 100% of the shares.
They may be established in two ways. A company sets up completely new
operations in the new country or acquires already established host county
company to promote its products.
LEADERSHIP AND STRATEGIC HR ISSUES IN

INTERNATIONAL ASSIGNMENTS
Now let us try to learn about leadership and strategic HR issues in International
assignments. From all that has been said earlier there is an interrelationship
between the HR function and the firm’s involvement in international business
operations. Clearly, it is important that the internationalizing firm considers the
HR implications of its international strategies – recognizing that people are a
critical component for the successful implementation and attainment of these
expansion strategies.
Using an inductive, grounded-theory approach from a study of four Australian
firms, including the Australian subsidiary of the US-based Ford Motor
Company, Welch has developed a theoretical model that links firm-specific
variables (such as stage in internationalization, organizational structure, and
organizational culture) and situation variables (such as staff availability, need
for control) with HRM approaches and activities. Contextual variables (such as
cultural distance and host-country legal requirements) are also included. Welch
suggests these linkages may explain the various interrelationships between
organizational factors and IHRM activities that may determine a firm’s
approach to the staffing of overseas operations; whether a multinational adopts
an ethnocentric, polycentric, geocentric or regiocentric approach to staff
subsidiary operations.
176 ANNA UNIVERSITY

Notes
Approach to Staffing
(i.e. ethnocentric,
Polycentric, geocentric
or regiocentric)
Firm Specific Variables

 Stage in internalization
COUNTRY A
Contextual  Type of Industry
Variables  Strategy & Structure
 Legal
System
 Cultural
Distance
Situation Variables
 Staff availability
COUNTRY B  Location of
assignment
 Need of control
 Locus of decision
IHRM Activities
 Selection
COUNTRY C
 Training &
development
 Compensation
 Repatriation
Figure 9.2: Determinants of HRM Approaches and Activities
ANNA UNIVERSITY 177

Notes
HRM staffing approaches do influence and are influenced by

organizational factors as well as country factors. For instance, a firm that
is maturing into a networked organization (firm-specific variable) will
require HRM approaches and activities that will assist its ability to
develop flexible global organization that is centrally integrated and
coordinated, yet locally responsive – a geocentric approach.
However, a key assumption underlying the geocentric staffing philosophy is

that the multinational has sufficient numbers of high-calibre staff (PCNs, TCNs
and HCNs) constantly available for transfer anywhere, whenever global
management needs dictate. In practice, it is not easy to find or nurture the
required numbers of high-quality staff (firm specific and situation variables),
nor assign them to certain operations due to host-country requirements
(country-specific variables). The IHRM activities – selection, training and
development, compensation, and repatriation role in the development of the
effective policies required to sustain a preferred approach to staffing.
In a recent review of IHRM, research trends identify a line of research that has
come to be termed Strategic International Human Resource Management
(SIHRM). It considers the HRM issues and activities that result from, and
impact on, the strategic activities and international concerns of multinationals.
This line of inquiry parallels that of strategic HRM, which focuses on the link
between organizational strategy and performance, and HRM. Its strength, in
terms of theory development, is that it draws on various schools in strategic
management, rather than solely on domestic human resource management.
Thus institutional theory, resource dependence theory, transaction cost, the
behavioural school, and the resource-based view have been drawn on in order
to develop a more informed perspective of SIHRM.
Commenting on the emerging body of research in SIHRM,

researchers remark that while SIHRM as a distinct area of research has
been a useful step, it may be more appropriate to speak of strategic HRM
in multinationals. This allows a more balanced view to be taken of the
similarities and differences between international and domestic HRM.
178 ANNA UNIVERSITY

In order to understand the integrative framework of Strategic HRM in Notes

Multinational Companies, let us see what each of the components of this
framework contains. First, the Exogenous Factors have industry characteristics,
country-regional characteristics and inter-organizational rewards. Secondly,
Endogenous Factors hold MNC structure comprising of structure of
international operations, intra-organizational networks, and mechanisms of
coordination, organizational and industry life cycle, international entry mode,
MNC strategy having corporate level strategy, and business level strategy as its
constituents, experience in managing international operations and headquarters
international orientation. Thirdly, MNC concerns and goals comprising of
competitiveness, efficiency, balance of global integration and local
responsiveness and flexibility form part of the framework. The hub of it all is
being Strategic HRM with HR function strategy and HR practices.
The endogenous factors range from most “tangible” to most “intangible”.
Multinational structure is used as an umbrella term to cover the structure of
international operations, intra-organizational network, and mechanisms of
coordination. The life-cycle stage of the firm and the industry in which it
operates are important influences for SHRM in multinationals, as are
international operation modes and levels of firm strategy. Intangible
endogenous factors include the multinational’s experience in international
business and its headquarters’ international orientation. Further, the framework
accentuates the reciprocal relationships between endogenous factors, SHRM,
and multinational concerns and goals. It is also possible to identify reciprocal
relationships between strategic issues and SHRM strategy and practices. HR
activities such as expatriate management are influenced by both endogenous
and exogenous factors.
EXPATRIATE PROBLEMS
Now let us try to understand the expatriate problem. The ethnocentric and
geocentric approaches rely on extensive use of expatriate employees working
outside their home country with a planned return to that or a third country. As
expatriates play a major role in international businesses, MNCs take great care
in their selection process. The following figure 9.3 depicts a model of the life
cycle of an expatriate assignment. It involves a process of determining the need
for an expatriate assignment, identifying and then selecting likely candidates,
pre-assignment training, departure, post-arrival orientation and training, crisis
and adjustment of crisis and failure, reassignment abroad, and or repatriation
and adjustment.
ANNA UNIVERSITY 179

Notes
Crisis & Reassignment
Determining Adjustment Abroad
the need for
an Expatriate
Post
Departure Orientation Repatriation
and Training &
Adjustment
Pre-
The Selection Crisis and
Assignment
process Training failure
Figure 9.3: Expatriate Assignment Life Cycle

A major problem connected with expatriates is their premature return to their
home country. Popularly called expatriate failure, the subject has assumed
considerable importance in the literature on international business. As stated
earlier, expatriate failure results in considerable losses to MNCs. Several
reasons have been assigned to explain why people return home before the
assignment period expires.
Cross- Family
Technical
Cultural Requirements
Ability
Suitability
Selection Decision
Country-
MNC
cultural
Requirements
requirements Language
Figure 9.4: Factors in Expatriate Selection
180 ANNA UNIVERSITY

One way to reduce expatriate failure is by improving selection procedures to Notes

eliminate inappropriate candidates. The first step in this direction is to
delineate the selection criteria for expatriates. Figure 9.4 illustrates the factors
involved in expatriate selection, both in terms of the individual and the specific
demands of the situation concerned. The criteria are self-explanatory.
The final step in improving the selection process of an expatriate is to use
appropriate tests to select or reject aspirants. Generally, personality and
psychological tests are used in the selection process, but the effectiveness of
such tests is questioned. Many HR managers tend to equate domestic
performance with overseas performance potential. But the two are not the
same. An executive who performs well in domestic settings may not be adept
to managing in a different cultural environment.
PERFORMANCE MANAGEMENT
Now let us try to understand the other challenging task of IHRM that is
managing the performance of a firm’s various international facilities. While
recruitment, selection and training and development tend to focus on pre-
assignment issues, performance management looks at post-assignment
performance related issues.
An effective performance management system also has to deal with the
challenges of comparing subsidiary managers in different countries.
Example: It is difficult to compare the performance of a French

subsidiary manager with that of a Singapore subsidiary manager because each
manager works under different environmental conditions. However, emphasis
on goal setting and agreement on performance goals between managers and
employees may assist in overcoming some of these difficulties.
Performance management may be understood as a process that

enables an MNC to evaluate and facilitate continuous improvement of
individuals, subsidiary units, and corporate performance, against clearly
defined, pre-set goals, and targets. Obviously, performance management
is comprehensive in as much as it includes assessment of performance of
not only individuals, but the activities of the firm and its subsidiaries too.
The subsidiary’s performance needs to be assessed in terms of its fulfilment of

its headquarters’ expectations. However, while evaluating a subsidiary’s
performance, the constraints within which it functions in a host country need to
be taken note of. The data obtained from subsidiaries may be neither
interpretable nor reliable. Assessment of a subsidiary’s performance is also
complicated by the physical distance involved, time-zone differences, the
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Notes frequency of contacts between the corporate head-office staff and the
subsidiary management, and the cost of the reporting system. Developments in
sophisticated communications systems that have wired the globe such as the
Internet, fax machines, tele-conferencing systems, and e-mail do not fully
substitute for face-to-face contacts between subsidiary managers and corporate
staff.
INTERNATIONAL COMPENSATION
Now let’s learn something interesting pertaining to International compensation.
When developing international compensation policies, a firm seeks to satisfy
several objectives. First, the policy should be consistent with the overall
strategy, structure, and business needs of the multinational. Second, the policy
must work to attract and retain staff in the areas where the multinational has
the greatest needs and opportunities. Thus, the policy must be competitive and
recognize factors such as incentive for Foreign Service, tax equalization, and
reimbursement for reasonable costs. Third, the policy should facilitate the
transfer of international employees in the most cost-effective manner for the
firm. Fourth, the policy must give due consideration to equity and ease of
administration.
The international employee will also have a number of objectives that need to
be achieved from the firm’s compensation policy. First, the employee will
expect that the policy offers financial protection in terms of benefits, social
security, and living costs in the foreign location. Second, the employee will
expect the foreign assignment will offer opportunities for financial
advancement through income and/or savings. Third, the employee will expect
that issues such as housing, education of children, and recreation will be
addressed in the policy.
If we contrast the objectives of the multinational and the employee, we see the
potential for many complexities and possible problems since some of these
objectives cannot be maximized on both sides. The firms must rethink the
traditional view of international compensation and accept that local conditions
dominate compensation strategy.
Key Components of an International Compensation Programme

The area of international compensation is complex primarily because
multinationals must cater for three categories of employees: PCNs, TCNs, and
HCNs. The compensation includes base salary, Foreign Service
inducement/hardship programme, allowances and benefits.
Base Salary: The term base salary acquires a somewhat different meaning
when employees go abroad. In a domestic context, base salary denotes the
amount of cash compensation that serves as a benchmark for other
compensation elements (e.g. bonuses, DA, and benefits). For expatriates, it is
the primary component of a package of allowances, many of which are directly
182 ANNA UNIVERSITY

related to base salary (e.g. foreign service premium, cost-of-living allowance, Notes
housing allowance) as well as the basis for in-service benefits and pension
contributions. It may be paid to home or local-country currency. The base
salary is the foundation block for international compensation, whether the
employee is a PCN or TCN. Major differences can occur in the employee’s
package depending on whether the base salary is linked to the home country of
the PCN or TCN or whether an international rate is paid.
Foreign Service Inducement/Hardship Premium: Parent-country nationals
often receive a salary premium as an inducement to accept a foreign
assignment or as compensation for any hardship caused by the transfer. Under
such circumstances, the definition of hardship, eligibility for the premium, and
amount and timing of payment must be addressed. Foreign service
inducements, if used, are usually made in the form of a percentage of salary,
usually 5 to 40% of base pay. Such payments vary, depending upon the
assignment, actual hardship, tax consequences, and length of assignment. In
addition, differentials may be considered; for example, a host-country’s work
week may be longer than that of the home country, and a differential payment
may be made in lieu of overtime, which is not normally paid to PCNs or TCNs.
Allowances: Issues concerning allowances can be very challenging to a firm
establishing an overall compensation policy, partly because of the various
forms of allowances that exist.
Often this allowance is difficult to determine, so companies may use the
services of organization such as Organization Resource Counsellors, Inc.,
(a US-based firm) or Employment Conditions Abroad (based in Britain) who
specialize in providing regularly updated COLA information on a global basis
to their clients; the COLA may also include payments for housing and utilities,
personal income tax, or discretionary items.
The provision of a housing allowance implies that employees should be
entitled to maintain their home-country living standards) or, in some cases,
receive accommodations that are equivalent to that provided for similar foreign
employees and peers). Such allowances are often paid on either an assessed or
an actual basis. Other alternatives include company provided housing, either
mandatory or optional; a fixed housing allowance; or assessment of portion of
income, out of which actual housing costs are paid. Housing issues are often
addressed on a case-by-case basis, but as a firm internationalizes, formal
policies become more necessary and efficient. Financial assistance and/or
protection in connection with the sale or leasing of an expatriate’s former
residence are offered by many multinationals. Those in the banking and
finance industry tend to be the most generous, offering assistance in sale fees,
rent protection, and equity protection. Again, TCNs receive these benefits less
frequently than PCNs.
There is also a provision for home leave allowances. Many employers cover
the expense of one or more trips back to the home country each year. The
ANNA UNIVERSITY 183

Notes purpose of paying for such trips is to give expatriates the opportunity to renew
family and business ties, thereby helping them to avoid adjustment problems
when they are repatriated. Although firms traditionally have restricted the use
of leave allowances to travel home, some firms give expatriates the option of
applying the allowances to foreign travel rather than returning home. Firms
allowing use of home leave allowances for foreign travel need to be aware that
expatriate employees with limited international experience who opt for foreign
travel rather than returning home may become more homesick than other
expatriates who return home for a “reality check” with fellow employees and
friends.
Education allowances for expatriates’ children are also an integral part of any
international compensation policy. Allowances for education can cover items
such as tuition, language class tuition, enrolment fees, books and supplies,
transportation, room and board, and uniform (outside of United States, it is
quite common for high school students to wear uniforms). The level of
education provided for, the adequacy of local schools, and transportation of
dependents who are being educated in other locations may present problems
for multinationals. PCNs and TCNs usually receive the same treatment
concerning educational expenses. The employer typically covers the cost of
local or boarding school for dependent children, although there may be
restrictions, depending on the availability of good local schools and on their
fees. Attendance at a university may also be provided for when deemed
necessary.
Relocation allowances usually cover moving, shipping, and storage charges,
temporary living expenses, subsidies regarding appliance or car purchases (or
sales), and down payments or lease-related charges. Allowances regarding
perquisites (cars, club memberships, servants, etc.) may also need to be
considered (usually for more senior positions, but this varies according to
location). These allowances are often contingent upon tax-equalization policies
and practices in both the home and the host countries.
Increasingly, as indicated, many multinational firms are also offering spouse
assistance to help guard against or offset income lost by an expatriate’s spouse
as a result or relocating abroad. Although some firms may pay an allowance to
make up for a spouse’s lost income, US firms are bringing to focus on
providing spouses with employment opportunities abroad, either by offering
job-search assistance or employment in the firm’s foreign unit (subject to a
work visa being available).
To summarize, multinationals generally pay allowances in order to encourage
employees to take international assignments and to keep employees “whole”
relative to home standards. In terms of housing, companies usually pay a tax-
equalized housing allowance in order to discourage the purchase of housing
and/or to compensate for higher housing costs; this allowance is adjusted
periodically, based on estimates of both local and foreign housing costs.
184 ANNA UNIVERSITY

Benefits: The complexity inherent in international benefits often brings more Notes
difficulties than when dealing with compensation. Pension plans are very
difficult to deal with country to country because national practices vary
considerably. Transportability of pension plans, medical coverage, and social
security benefits are very difficult to normalize. Therefore, firms need to
address many issues when considering benefits, including:
 Whether to maintain expatriates in home-country programmes, particularly
if the firm does not receive a tax deduction for it.
 Whether firms have the option of enrolling expatriates in host-country
benefit programmes and/or making up any difference in coverage.
 Whether expatriates should receive home-country or host-country social
security benefits.
In addition to the already discussed benefits, multinationals also provide
vacations and special leave. Included as part of the employee’s regular
vacation, annual home leave usually provides airfares for families to return to
their home countries. Rest and rehabilitation leave, based on the conditions of
the host country, also provides the employee’s family with free airfares to a
more comfortable location near the host-country. In addition to reset and
rehabilitation leave, emergency provisions are available in case of a death or
illness in the family. Employees in hardship locations often receive additional
leave expense payments and rest and rehabilitation periods.
Approaches to International Compensation

There are two main options in the area of international compensation – the
Going Rate Approach (also referred to as the market rate approach) and the
Balance Sheet Approach (sometimes known as the build-up approach). Key
characteristics of both these approaches will be discussed below.
Going Rate Approach

Features
 Based on local Market rates
 Relies on survey comparisons
 Local Nationals (HCNs)
 Expatriates of same nationality
 Expatriates of all nationality
 Compensation based on the selected survey comparison
 Base pay and benefits may be supplemented by additional payments for
low pay countries.
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Notes Advantages
 Equality with local nationals
 Simplicity
 Identification with host country
 Equity among different nationalities
Disadvantages
 Variation between assignments for some employees
 Variation between expatriates of same nationality in different countries
 Potential re-entry problems
Balance Sheet Approach

Features
 Basic objectives is maintenance of home –country living standards, plus
financial inducement
 Home country pay and benefits are the foundation of this approach
 Adjustments to home package to balance additional expenditure in host
country
 Financial incentives ( Expatriate /hardship premium) added to make the
package attractive
 Most common system in usage by Multinational firms.
Advantages
 Equity
 Between assignments
 Between expatriates of the same nationality
 Facilitates expatriates re-entry
 Easy to communicate to employees.
Disadvantages
 Can result in great disparities
 Between expatriates of different nationalities
 Between expatriates and local nationals
 Can be quite complex to administer
186 ANNA UNIVERSITY

Notes
Learning Activity
Study more about Going Rate and The Balance Sheet Approach and
make a small report on the same.
Taxation: Probably taxation causes the most concern to HR practitioners and

expatriates (both PCNs and TCNs) since it generally evokes emotional
responses. No one enjoys paying taxes and this issue can be very time-
consuming for both the firm and the expatriate. To illustrate the potential
problems, for the Indian expatriate an assignment abroad can mean being
double-taxed – both in the country of assignment and in India. This tax cost,
combined with all the other expatriate costs, makes some Indian multinationals
think twice about making use of expatriates.
Multinationals generally select one of the following approaches to handle
international taxation:
 Tax equalization: firms withhold an amount equal to the home-country tax
obligation of the PCN, and pay all taxes in the host country.
 Tax protection: the employee pays up to the amount of taxes he or she
would pay on compensation in the home country. In such a situation, the
employee is entitled to any windfall received if total taxes are less in the
foreign country than in the home country.
In her review of global compensation, Stuart (1991) adds two

other approaches: ad hoc (each expatriate is handled differently,
depending on the individual package agreed to with the firm), and laissez-
faire (employees are “on their own” in conforming to host-country and
home-country taxation laws and practices). However, neither of these
approaches is recommended.
Tax equalization is by far the more common taxation policy used by
multinationals. Thus, for a PCN, tax payments equal to the liability of a home-
country taxpayer with the same income and family status are imposed on the
employee’s salary and bonus. The firm typically pays any additional premiums
or allowances, tax-free to the employee. As multinationals operate in more and
more countries, they are subject to widely discrepant income tax rates. It is
important to note that merely focusing on income tax can be misleading,
because the shares of both social security contributions and consumption taxes
are rising in some countries.
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Notes
Compensation Crises
By: Aneeta Madhok, Professor, Organisational Development,

Narsee Monjee Institute of Management Studies,
Business Today, April 7-21, 1997
F or the umpteenth time that day, Ajay Malhotra stared at the bulky
report on his table. And sighed deeply - much too deeply, in fact,
visibly startling his secretary who was sitting right: across the table.
Ever since the findings of Amam Consultants'' (Amam) compensation
benchmarking project had reached Malhotra, the 45 year-old vice-president
(human resources and organisational development) of the ` 300 crore Cooks
Industries (Cooks), he had studied it ad nauseam. Invariably, the report
generated contradictory feelings each time: clarity, on the one hand, and
confusion on the other.
A Pune-based automobile ancillary firm, Cooks produced key engine parts –
pistons, piston rings, engine valves, fuel pumps, carburettors, and bi-metal
bearings – for the majors in the automobile industry. Set up in 1985, the
company had been promoted by two technocrats, Ram Prakash, 45, and
Shantanu Kamble, 44, who had grown Cooks into a profitable entity that
had reported net profits of ` 35 crore in 1995-96 on sales of ` 275 crore. Its
success was partly due to a clear delineation of responsibilities between the
two promoters, who had first met as students at the Indian Institute of
Technology at Kanpur. While Prakash was the expert in metallurgy and
mechanical engineering operations, the cutting-edge was provided by
Kamble, who had also done his master's in' business administration from the
Indian Institute of Management at Ahmedabad.
Five years ago, from the proceeds of a ` 30-crore public issue, Cooks had
undertaken a major upgradation of its technology, modernising its plant and
machinery. And, at present, it employed 450 workmen, who operated in
three shifts, as well as 100 managers. In a market dominated by a number of
regional units, Cooks had become one of the few automobile ancillaries in
the country with a national presence. Of course, the company had been
helped by the resurgence in the automobile market, which had grown at an
average rate of more than 25 per cent in the last three years due to the entry
of a large number of transnationals leading to an upswing in the fortunes of
the ancillaries too. In fact, their growth, at about 33 per cent last year, had
outpaced that of the industry that had spawned them. The reason: in addition
to the Original Equipment Manufacturing segment, the ancillaries also
catered to the requirements of the replacement market, which accounted for
60 per cent of the demand for automobile parts.
Contd…
188 ANNA UNIVERSITY

Two additional factors had placed the automobile ancillary manufacturers Notes
on a sound footing. One, they were all driven by owner-technocrats, who
had once worked for automobile-making firms and possessed high degrees
of hands-on engineering skills. Secondly, many of their customers had
floated joint ventures with foreign manufacturers with well-structured
vendor development policies. So, they too actively supported firms like
Cooks with finance and technology, inviting them to tie up with their global
vendors. No wonder the subject of our case study had been riding the crest
of a wave of commercial success over the last three years.
But every lining had its clouds. In 1996, Cooks' employee turnover rate
crossed 15 per cent-shooting up from between 2 per cent and 3 per cent in
the early 1990s. In particular, the expertise required to manage the
production function was becoming rare. Most engineers were chucking their
jobs up to seek greener pastures abroad, particularly in West Asia and
Australia. Many were also setting up their own units within the country.
Both Prakash and Kamble were concerned at what they initially thought was
a blip, but had become a trend. More than 30 frontline engineers had left
Cooks since mid-1995, and even the service functions-like finance-had had
their share of departures.
That's when Malhotra – who, after an earlier stint as the head of personnel
for a Pharmaceuticals transnational, had joined Cooks as general manager
(human resources) five years ago – came into the picture. When Prakash
asked him to examine the issues involved, Malhotra had been quick to point
out that one of the reasons for Cooks' high employee turnover was low
managerial compensation. "The grade structure at Cooks, as it has evolved
over the years, is archaic and needs to be improved," he argued. Prakash
agreed: "If we have been out of touch with the trends in managerial
compensation, let us set the situation right."
Which is why Malhotra quickly commissioned Amam to undertake a salary
benchmarking study for Cooks in November, 1996. In all, the survey
covered 32 firms: 11 from the auto mobile ancillary sector, six from
automobiles, four each from consumer products and infotech, two from
Pharmaceuticals, three from financial services, and the other two were
multi-product companies in the engineering sector. Of these firms, nine
were transnational, four were family-managed, and the remaining 19 were
public limited companies in the private sector. Amam's survey provided
extensive data-no less than 600 pages-on compensation trends and salary
structures across various levels of the corporate hierarchy in all these firms.
And the analysis had, of course, been carried out both level-wise and
industry-wise.
Moreover, at each stage, there were comparisons high lighting Cook'
ranking vis-a-vis the other companies on parameters like total employee
cost to company, variable pay, and basic salary. Apart from competitive
benchmarking-comparisons with its direct competitors in the same industry-
Contd…
ANNA UNIVERSITY 189

Notes Malhotra had specifically asked, for generic benchmarking, or comparisons

with similar players in other industries. After all, Cooks had lost technical
talent to the heavy engineering sector too. And there had also been instances
in the past where Malhotra had tried to recruit professionals for the service
functions, but had been unable to attract any talent. The reason: Cooks'
inability to offer salaries at par with what they were already earning in these
sectors. As he flipped the pages of the report, Malhotra tried to cull the
highlights from the plethora of information in front of him.
Based on the total cost to company, the Amam Report placed Cooks at No.
29 at the lowest level of Grade 10, and 23rd at the highest level of Grade 1.
The basic issue was that Malhotra needed to upgrade the pay packages that
Cooks offered its managers at every level of its hierarchy. But this was the
easy part as the report was quite insightful at this level. It pointed out, in
unambiguous terms, where Cooks stood on each element of managerial
compensation in relation to its contemporaries. This data had enabled
Malhotra to understand, for the first time, Cooks' position both in terms of
competitive as well as generic benchmarking.
But, at another level, Malhotra was clueless since he could not find a handle
to start formulating an action plan. The more he analysed the report for
directions on his future course of action, the more complicated the issues
seemed to be. Even as he grappled for a common point of reference, he felt
that the survey confronted him with five fundamental dilemmas:
Designations: There were also some hard decisions to be taken regarding
designations, which had always been a tricky issue at Cooks. Malhotra
recalled how, six months ago, he had tried recruiting a manufacturing head
for a product group at the Pune plant. After an extensive head-hunting
exercise spanning six months, Cools had found the right candidate for the
job: Anjan Kumar Saxena. Employed with a heavy engineering firm in
Mumbai, Saxena was willing to make the move to Pune on a marginal
increase in salary because the city happened to be his hometown. The only
snag: he had already been designated general manager by the organisation
he worked for. Ideally, Cooks would only offer him the designation of
deputy general manager in Grade 2 which, of course, was quite
unacceptable to him.
Rather than lose a good man, Malhotra had taken an on the-spot decision to
by-pass company policy and offer Saxena the designation of general
manager. While this had clinched the deal, it had also resulted in upsetting
all of Cooks' other general managers. Such instances were fairly frequent in
the company, and Malhotra knew that he had to do something about
bringing Cooks' designations in line with those in the industry. However,
the very thought of doing so was quite distasteful to him. Because, together
with Prakash and Kamble, Malhotra firmly believed that a designation must
strictly represent the nature of a job. He was wary of those who viewed
designation as a matter of status. While the Amam Report showed that the
Contd…
190 ANNA UNIVERSITY

rest of the corporate world was liberal in designating any functional head as Notes
a vice-president, Malhotra thought that Cooks' conservative approach was
bound to make it unattractive to potential prospects.
Hierarchies: The Amam Report also revealed that Cooks had far too many
hierarchy levels. A 10-grade structure was unnecessary as the survey
showed that the industry norm had become four or five levels. For the last
one year or so, Malhotra had been toying with the idea of cutting down the
levels to a lesser number. However, he was only too aware of the fact that
this would create frustration and disgruntlement in managers as a flat
structure would, obviously, reduce their opportunities for quick promotions.
Malhotra recalled a number of companies – particularly Darshan India, a
consumer Products Company based in Mumbai which had squashed its
hierarchies five years ago, and had to then cope with a managerial exodus of
scary proportions – which were facing problems in retaining key managers
for want of growth avenues within the organisation. Privately, Malhotra did
not agree with the concept of a flat organisation. However, trends indicated
that there was a move to reduce organisational levels to five or six - the
average level benchmarked by the survey. Shouldn't Cooks too fall in line
by reducing its hierarchical levels?
Salaries: Whenever there was a need to recruit technical people, Cooks had,
traditionally, looked within the engineering industry. Of course, this was not
so in the case of non-technical personnel-maintenance, finance, and human
resources - for whom there were no barriers, for mobility across industries.
And this was one of the reasons why Malhotra had designed the survey to
cover a representative sample of sectors rather than sticking to the
engineering industry alone.
But this had generated another set of issues in terms of the internal parity of
salaries. For instance, in a number of companies covered by the survey,
professionals in staff functions received higher gross salaries than the
technocrats who were, after all, the life-line of an engineering business.
Malhotra did not miss out the unstated point of the survey: every technocrat
worth his salt viewed this as unfair. Wasn't there a way of creating internal
parity between the various functions within Cooks' organisational structure?
Taxation Policies: Cooks' salary structure incorporated a high level of cash
reimbursements, paying out cash against the vouchers submitted by its
employees under heads such as conveyance, education, and periodicals.
Employees found that attractive, and it was also a well-accepted practice in
corporate India. However, the Amam Report showed that there was a
discernible trend towards a lesser proportion of salaries being paid as cash
reimbursements.
Increasingly, it was becoming common for companies – particularly
transnationals – to resort to a consolidated salary rather than breaking it up
into various kinds of allowances. And the tax-burden would then be borne
Contd…
ANNA UNIVERSITY 191

Notes by individual employees themselves. However, how would Cooks'

employees react to a lower level of cash reimbursement-and a higher
incidence of taxation even though income tax rates were falling?
Leader-follower: Since the Amam Report indicated that the salaries at
Cooks ranked 29th at the lowest levels, and 23rd at the highest, there was no
doubt that Cooks had to undertake a complete and radical upgradation of
managerial remuneration. Which raised a new question: Should Cooks turn
into a leader in the remuneration game and offer the highest packages in the
industry? Or should it stay a follower?
Of course, the answer was linked to the capacity to pay-another issue that
merited scrutiny by its top managers. No doubt, Cooks had been generating
attractive margins, and would, hopefully, continue to do so in future. Being
a leader in the market for its products, it did make sense for Cooks to project
the image of a premium paymaster in the employment market as well. But
Malhotra was not sure where Cooks should position itself at the top.
Questions
1. Should cooks offer the highest pay packages in the industry and create a
high wage island so that people would find it difficult to leave the
company?
2. Or, should Malhotra continue to peg Cooks' salary structure as slightly
below average, attracting and retaining people on the basis of the
excellent business processes that the company was already known for?
1. An MNC has its own strategies and goals, and specific

expectations for each of its foreign affiliates in terms
of market performance and contribution to total profits
and competitiveness.
2. The cost-of-living allowance in short form is called as
COLA, which typically receives the most attention,
involves a payment to compensate for differences in
expenditures between the home country and the
foreign country (e.g. to account for inflation
differentials).
SUMMARY
 There are at least four approaches in building multinational companies,
namely ethnocentric, polycentric, geocentric and regiocentric.
 It depends on the top management to choose from these approaches
depending on the prevailing external and internal environment and the
government policies. Similarly four strategic choices are available for a
192 ANNA UNIVERSITY

company go multicultural – international strategy, global strategy, Notes

transnational strategy and multi-domestic strategy.
 There are some stages of internationalization exist, like exporting,
franchising, licensing, subcontracting, setting up subsidiaries for foreign
production and wholly owned up subsidiaries with or without networking
of subsidiaries.
 But not all companies need to tread all these steps. They can skip some
steps.
 Exogenous and endogenous aspects in leadership in multicultural
organization also have been explored.
 Expatriate's assignment life cycle is an important consideration for IHRM
as preparation for repatriation is. All these revolve around the building of
multicultural organizations.
 In the context of International HRM the performance management and
compensation also take complex proportion.
KEYWORDS
 Ethnocentric: Few foreign subsidiaries have any autonomy; strategic
decisions are made at headquarters. Headquarters’ management personnel
hold key positions at the domestic and foreign operations. In other words,
subsidiaries are managed by expatriates from the home country (PCNs).
 Polycentric: The MNC treats each subsidiary as a distinct national entity
with some decision-making autonomy. Subsidiaries are usually managed
by local nationals (HCNs) who are seldom promoted to positions at
headquarters. Likewise, PCNs are rarely transferred to foreign subsidiary
operations.
 Geocentric: Here, the MNC is taking a worldwide approach to its
operations, recognizing that each part (subsidiaries and headquarters)
makes a unique contribution with its unique competence.
 Regiocentric: It reflects the geographic strategy and structure of the
multinational. Like the geocentric approach, it utilizes a wider pool of
managers but in a limited way. Personnel may move outside their countries
but only within the particular geographic region.
 International Strategy: Companies adopting this strategy create value by
transferring valuable skills and products to foreign markets where local
competitors lack such skills, products and competencies.
 Multi-domestic Strategy: Maximum local responsiveness is aimed at by
companies adopting this strategy. They transfer skills and products
developed at home to overseas markets. They customize the product and
market strategies to suit different national conditions. Separate production
and R&D activities are established for each national market.
ANNA UNIVERSITY 193

Notes  Global Strategy: Companies, which adopt global strategy, follow a low
cost strategy. The cost reduction is mainly derived from expensive curve
effects and location economies. For such companies the production,
marketing and R&D activities are confined to a few favourable locations.
 Transnational Strategy: Companies following transnational strategy face
high pressure for cost reduction and high pressure for local responsiveness
and they try to achieve low cost and differentiation advantages.
 Wholly Owned Subsidiaries: The parent company owns 100% of the
shares. They may be established in two ways. A company sets up
completely new operations in the new country or acquires already
established host county company to promote its products.
1. What do you mean by Multinational Organisation?
2. List the different approaches in building Multinational Organisation.
3. List the different strategic choices a company has for internalization.
4. What do you mean by Performance Management with respect to Multi-
national Organisation?
5. What do you mean by International Compensation? Write down the key
components of an International Compensation programme.
6. Give any two advantages and disadvantages of Going Rate Approach of
International Compensation.
7. Name the two approaches to International Compensation.
8. Give any two advantages and disadvantages of the Balance Sheet
Approach.
9. What do you mean by Ethnocentric and Geocentric approach in building
Multinational Organisation?
10. What do you mean by strategy and strategic choice?
11. What do you mean by Regiocentric and Polycentric approach in building
Multinational Organisation?
12. Differentiate between Global and Transnational Strategy?
13. What is the meaning of Multi-domestic Strategy and International
strategy?
14. List out the factors to be kept in mind for the purpose selection of
Expatriate.
15. What are the components of expatriate assignment life cycle?
194 ANNA UNIVERSITY


1. Explain, in detail, the different approaches in building Multinational
Organisations.
2. What are the strategies that International companies adopt? Explain.
3. Explain with neat diagram the Stages on Internationalization.
4. Explain the expatriate assignment life cycle with a neat diagram.
5. Explain the different factors in expatriate selection.
6. What do you mean by International compensation? Explain the key
components of an International Compensation Programme.
7. Discuss on the different approaches to International Compensation.
8. Explain the advantages and disadvantages of the following:
(a) Going Rate Approach
(b) Balance Sheet Approach
9. Write a brief note on performance management with respect to
international human resource management.
10. Write a note on Leadership and Strategic HR Issues in International
Assignments.
FURTHER READINGS

Oxford, 2007.
2010.
ANNA UNIVERSITY 195

Notes
196 ANNA UNIVERSITY

Lesson 10 - Career Management
Notes
UNIT IV
LESSON 10 - CAREER MANAGEMENT
CONTENTS
Learning Objectives
Learning Outcomes
Overview
Career Concepts
Roles
Implications for HR Professional
Career Stages
Career Planning and Process
What do Employees Expect?
Career Development Model
Career Motivation and Enrichment
Career Plateau
Classification of Career Plateaus
Action Steps to Overcome Career Plateauing
Barriers to Being Valued Contributors
Designing Effective Career Development Systems
Summary
Keywords
Further Readings
LEARNING OBJECTIVES
 Explain the meaning of Career
 Describe concept of Career Plateau
 Illustrate steps to overcome Career Plateau
 Analyse Career Planning and Process
 Tell about Career Development System.
ANNA UNIVERSITY 197


understanding of:
 concepts of career and explain implications for HR professional
 recall career stages
 identifying career planning and process
 draw career development model and explain career motivation and
enrichment
 define career plateau and its classification
 determine action steps to overcome career plateauing
 how to design effective career development systems
OVERVIEW
In the previous lesson, we have studied about building multinational
organisations and stages of internationalisation. Also we have learnt about
Leadership and Strategic HR Issues in International Assignments. Thereafter,
we discussed about the Expatriate Problems and Performance Management. At
the end of the lesson, we studied about Key Components of an International
Compensation Programme and approaches to international compensation.
Nowadays, employees have started demanding a rewarding career in place of a
simple job. A secure job with time bound promotions would no longer satisfy
the aspiring, young recruits. They want jobs with stretch, pull and challenge.
They want excitement, psychic satisfaction, due recognition followed by
appropriate rewards. They are not willing to take everything as it comes;
instead they want to have a firm grip over their careers. They are willing to
change hats, shift gears and do whatever possible to get what they want.
Employee loyalty toward a particular organisation or a job seems to be a thing
of the past. If the organisation does not offer rewarding growth opportunities,
employees do not wish to spend their time just like that and become part of
history. They are willing to go that extra mile in seeking jobs that are in sync
with their competencies and skill sets. As a result, talented employees are
likely to work in many different organisations during the course of their careers
(unlike employees in yester years who used to work for only one organisation
during their entire work life).
In this lesson, you will learn about career, career planning and process, career
plateau and how to overcome career plateau.
198 ANNA UNIVERSITY

CAREER CONCEPTS Notes

Now let us try to get acquainted with some career concepts as we will deal with
those throughout this lesson.
 Career: A career is all the jobs that are held during one’s working life.
 Career goals: Future positions one tries to reach as part of a career.
 Career cycle: The stages through which a person’s career evolves.
 Career paths: These are flexible lines of progression through which
employees typically move.
 Career anchors: They are distinct patterns of self-perceived talents,
attitudes, motives and values that guide and stabilise a person’s career after
several years of real-world experience and feedback.
 Career progression: Making progress in one’s career through a series of
right moves.
 Career planning: The process by which one selects career goals and the
path to those goals. It is actually a deliberate process through which
someone becomes aware of his or her personal skills, interests, knowledge,
motivation and other characteristics, acquires information about
opportunities and choices; identifies career oriented goals, and establishes
action plan to attain specific goals.
 Career development: The personal actions one undertakes to achieve a
career plan.
 Career planning and development: Extending help to employees to form
realistic career goals and the opportunities to realise them.
 Career counselling: The process of advising employees on setting career
goals and assisting them find suitable career paths.
 Career management: It is the continuing process of setting career goals,
formulating and implementing strategies for reaching the goals and
monitoring the results.
Features of the term ‘Career’
 A career develops over time: It covers objective conditions (such as job,
duties, and responsibilities) and also includes subjective reactions (such as
enthusiasm, boredom, etc.)
 It is the individual who ultimately must judge the success of his career. He
must set his own criteria for success, and such criteria can be far ranging
(e.g., pay, adventure, working with new people in new environments,
helping others, etc.).
ANNA UNIVERSITY 199

Notes  The important element in one’s career is experiencing psychological

success which basically is feeling a sense of personal accomplishment and
fulfilment. Psychological success energizes our efforts and impels us to
undertake new challenges, and scale new heights, that foster our growth
over time.
 The typical career of a person today would probably include many different
positions, transitions and organisations more so than in the past, when
employees were less mobile and organisations more stable as employers.
Roles
Shakespeare in his play ‘Hamlet’ says, “All the world’s a stage and all the men
and women merely players.” Therefore, every human being has myriads of
roles in his/her life to play. However, what exactly is a Role? A role is the set
of obligations that accompany the office a person holds; office, in turn is a
relational or a power related concept and is concerned with the hierarchical
positions and privileges (Katz and Kahn 1996). A Role is a set of functions,
which an individual performs in response to the expectations of others and his
own expectations about the role (Pareek, 1994).
Every department has a number of activities and tasks that have to be
accomplished. These tasks are grouped into jobs or positions, which help in
achieving the mission and objective of the organization. The emphasis in the
technical system is on the job, and lines of authority and responsibility dictate
the relationships among jobs and positions. This is the most common view of
organizations.
There is difference between Jobs and Roles. The same is provided

in the below table.
Jobs Roles
Describe the tasks and activities of a position Describe the expected behaviour of a position
Focused on current performance Related to future potential
Tangible and observable Relatively intangible and can be inferred
Performance assessed through outputs Performance assessed through outcomes
Refers to “what is done” Refers to “how it is done”
Professional develop focus on skill professional development focus on acquiring
development life skills
Organizations can also be viewed as social systems comprising of individuals

and the relationships among individuals. Individuals are the elements of the
social system, and the interactions among individuals who are functioning
alone or in groups are the focus of attention. The relationship among
individuals is coordinated through “an expected pattern or set of behaviours”
200 ANNA UNIVERSITY

referred to as roles. Roles are defined by the expectations that significant others Notes
in the system have of the role holder and the perception of the role holder.
Implications for HR Professional

The challenges in the job role differentiation manifest itself strongly in the area
of human resource management systems. Five systems get directly impacted by
this classification – selection, performance management, job design, team work
and reward.
 Selection: It is well recognized that selection is a culture building process
in organizations. The right job-person fit and the organization-person fit is
critical for culture building. The organization person fit hinges around a set
of technical and personality related attributes that a prospective employee
brings in to the organization and the assessment of the same. The literature
on selection measurement is vast since we are looking at various measures
of assessing the role related behaviours.
 Performance Management: The goal setting and the performance
appraisal processes tend to focus on the job elements because they are
observable. Our emphasis is on setting goals for individuals that are
specific, measurable, achievable, realistic and tangible or time bound. In
reality, every job in an organization exists with a set of interdependencies.
The interdependencies require demonstration of role related behaviours
namely communication, assertiveness of the job elements. However, very
few performance management systems provide adequate opportunities for
recording for role related behaviours.
 As HR professionals, we must be aware that these two systems are
interrelated and constitute the two aspects of performance: the present and
the future. Any system that we strive to put in place needs to ensure that
current performance and future potential are both assessed. One can
accomplish this integration by setting goals at the beginning of the year in a
way that it allows you to observe performance on jobs and roles.
 Job Design: Job enrichment and enlargement are two opportunities
available to manage the job-role interface effectively. In job enlargement
we are expanding the scale of activities performed on the job by increasing
the variety of tasks performed, roughly at the same level of complexity. In
job enrichment, the job content is changed and the complexity increases
and with it the scope of responsibility. The purpose of both these
interventions is to increase motivation on the job.
 Team Work: Teams have been seen as the vehicles of organizational
change. Work groups and teams are structured in different ways in the
industry. Since every team has a common purpose and goal and yet
different tasks and responsibilities have to be allocated to different
members, it requires coordination across members, interdependent work
arrangement, but clear individual contribution for it to be successful. In this
ANNA UNIVERSITY 201

Notes context, the structuring of tasks and interactions among team members
becomes crucial. It is well known that a team with poorly defined goals
does not perform as well as the team with clear and specific goals. Many
authors mention that the success of a team lies in the aptitude and the
attitude.
 Reward: The reward structures in the organization are inextricably linked
to the job-role elements. If all rewards in the organization are based on job
related elements, we could breed a short-term orientation, but as an
organization if we expect people to perform role-related behaviours, there
should be a mechanism, which rewards this. Otherwise, this could result in
a conflict. Reward structures in an organization can breed individualistic,
cooperative or competitive behaviours. Therefore, job-role integration
allows for an integrated and systematic effective reward system.
However, suffice (be enough /sufficient) it is to say that a role is a translation
of matching individual aspiration with organization’s (others’) expectation.
Hence playing one’s role effectively will automatically will pave the right
career path as well.
CAREER STAGES
Now let us discuss on the Career Stages and what are the different stages in a
career. The most popular way for analysing and discussing careers is to look at
them as made up of stages. In this section, we will propose a five-stage model
that is generalizable to most people during their adult years, regardless of the
type of work they do.
We begin to form our careers during our elementary and secondary school
years. Our careers begin to wind down as we reach retirement age. We can
identify five career stages that most have gone through or will go through
during these years: exploration, establishment, mid-career, late career, and
decline.
Example: Someone who makes a dramatic change in a career to

undertake a completely different line of work at age forty-five will have many
of the same establishment-stage concerns as someone starting at age twenty-
five. On the other hand, if the forty-five year old first started working at age
twenty-five, he or she now has twenty years’ experience as well as interests
and expectation that differ from those of a peer who is just starting a career at
middle-age.
Stages of Career Planning are as follows:

 Exploration: Many of the critical choices individuals make about their
careers are made prior to ever entering the workforce on a paid basis Our
relatives, teachers, and friends, as well as what we see on television and in
films, very early in our lives begin to narrow our alternatives and lead us in
202 ANNA UNIVERSITY

certain directions. Certainly the careers of our parents, their interests, their Notes
aspirations for their children, and their financial resources will be heavy
factors in determining our perception of what careers are available or what
schools, colleges, or universities we might consider.
The exploration period ends for most of us in our mid-twenties as we make
the transition from school/college to work. From an organizational
standpoint, therefore, this stage has the least relevance, since it occurs prior
to employment. It is, of course, not irrelevant. The exploration period is a
time when a number of expectations about one’s career are developed,
many of which are unrealistic. Such expectations, of course, may lie
dormant for years and then pop up later to frustrate both the employee and
the employer.
 Establishment: The establishment period begins with the search for work
and includes getting your first job, being accepted by your peers, learning
the job, and gaining the first tangible evidence of success or failure in the
“real word.” It is a time that begins with uncertainties and anxieties.
Additionally, it is marked by the making of mistakes, the learning from
these mistakes. However, individuals in this stage have yet to reach their
peak productivity, and rarely are they given work assignments that carry
great power or high status.
 Mid-Career: Most people do not face their first severe career dilemmas
until they reach the mid-career stage. This is a time where individuals may
continue their prior improvements in performance, level off, or begin to
deteriorate. At this stage, the first dilemma is accepting that one is no
longer seen as a “learner”. Mistakes carry greater penalties. At this point in
a career, one is expected to have moved beyond apprenticeship to
journeyman status. To those who make the successful transition go on to
greater responsibilities and rewards. For others, it may be a time of
reassessment, job changes, adjustment of priorities, or the pursuit of
alternative lifestyles (such as making a major geographical move or going
back to college). At this stage, career plateaus are likely to occur.
 Late Career: For those who continue to grow through the mid-career stage,
the late career usually is a pleasant time when one is allowed the luxury to
relax a bit and enjoy playing the part of the elder statesman. It is a time
where one can rest on one’s laurels and bask in the respect given by
younger employees. During the late career, individuals are no longer
learning, nor is it expected that they should be trying to outdo their levels
of performance from previous years. Their value to the organizations rests
firmly and comfortably in their judgment, built up over many years and
through varied experiences, sharing with and teaching others based on the
knowledge they have gained.
For those who have stagnated or deteriorated during the previous stage, a
late career brings the reality that they will not have an everlasting impact or
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Notes change the world as they had once thought. It is a time when individuals
recognize that they have decreased work mobility and may be locked into
their current job. One begins to look forward to retirement and the
opportunities of doing something different. Life off the job is likely to carry
far greater importance than it did in earlier years.
 Decline: The final stage in one’s career is difficult for everyone but,
ironically, is probably hardest on those who have had continued successes
in the earlier stages. After several decades of continued achievements and
high level of performance, the time has come for retirement. These
individuals are forced to step out of the limelight and give up a major
component of their identity. For the modest performers or those who have
seen their performance deteriorate over the years, it may be a pleasant time.
The frustrations that have been associated with work will be left behind.
Learning Activity
Prepare plan of your own career aspiration as the stages discussed
above.
Adjustments, of course, will have to be made regardless of

whether one is leaving a sparkling career or a dismal career. The
regimentation that work provided will no longer be there. Responsibilities
will be fewer and life will be less structured. As a result, it is a difficult
stage for anyone to confront.
CAREER PLANNING AND PROCESS

In this section, we will study about the career planning and process. Employees
join organizations to fulfil their career goals and aspirations, on the one hand,
and organizations provide them opportunities available with them, on the other.
The difference between the employees’ aspirations and organizational
opportunities, if any, gives rise to a situation of conflict between the two. If the
conflict, or say, incongruence is allowed to persist, employees experience
dissatisfaction and, in turn, withdraw themselves from being actively engaged
in the productive pursuits. The same underlines the need for career planning, as
discussed earlier.
The career planning is a process to assist the employees to

achieve a better match or marriage between their career goals and the
opportunities available in the organization.
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The career planning as a process involves the following steps: Notes

1. Analysing Employee Needs and Aspirations: Sometimes, most of the
employees do not know their career anchors and aspirations. Organizations
also assume the career goals and aspirations of employees which need not
be in tune with the reality. Therefore, first of all, an analysis of the
employee career anchors, aspirations and goals must be done through
objective assessment. This assessment is based on personnel inventory.
Since most employees do not have a clear idea of their career anchors and
aspirations, they, need to be provided as much information about these
matters as possible informing what kind of work would suit the employee
most considering his/her skills, experience and aptitude into account.
Example: An MBA graduate enters the organization with a view

of becoming a HR manager.
2. Analysing Career Opportunities: Once career aspirations and goals of
employee are known there is a need to analyse various career opportunities
available to offer under the prevailing career paths in the organization.
Career paths indicate career progression. Here too, since many employees
may not be aware of their own career progression path, this needs to be
made known to them. Sometimes organizations may offer career
progression at a particular level for both young direct recruits and own
older employees through promotions. Recognizing varying kinds of career
anchors and aspirations of the two types of employees, organizations need
to outline career paths striking a balance between those of internal
employees with experience but without a professional degree and those
new recruits with excellent professional degrees but lacking experience.
Example: Analyses the opportunity of his growth for the position

of HR Manager with the organization.
3. Identifying Congruence and Incongruence: At this stage, a mechanism
for identifying congruence between employee career aspirations and
organizational career system is developed. This helps identify specific
areas where mismatch or incongruence prevails. This is done through
relating different jobs to different career opportunities. Such a mechanism
of match and mismatch between career aspirations and opportunities
enables the organization to develop realistic career goals, both long-term
and short-term.
Example: Analysing the congruence and incongruence of the

position with the organization system the organization works out on the
framework of the position.
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Notes 4. Action Plans and Periodic Review: Having identified the mismatch, it is
now necessary to formulate an alternative strategy to deal with the same.
Some of the strategies adopted by several organizations include the
following:
 Changes in career system by creating new career paths, new incentives,
new rewards by redesigning jobs for lateral movement.
 Change in the employee’s hopes and aspirations by creating new needs,
new goals and new aspirations.
 Seek new basis of integration through problem-solving, negotiations,
compromises, etc.
Example: After analysing the mismatch now the organization tries to

create a position of the employee career aim or it tries to change the career path
of the employee.
After initiating these strategies, it is also necessary to review the

same every now and then. Such a review will enable the organization to
know whether the plans are contributing to effective utilization of human
resources by matching employee aspirations to job needs. This will also help
the employee know in which direction he/she is moving and what kind of
skills he needs to face the emerging and challenging organizational
situations.
What do Employees Expect?

 Listen to employees’ ideas; never ridicule them.
 Offer performance feedback and praise good efforts and results.
 Implement organizational culture measurement tools like Adversity
Quotient (AQ).
 Recognize and celebrate their success.
 Staff adequately so overtime is minimized for those who don’t want it and
people don’t wear themselves out.
 Get them involved in social causes and fund drives like Tsunami Disaster
Relief. Provide a meaning or a cause to their lives.
 Nurture and celebrate organization traditions like Diwali, Holi, Christmas,
etc.
 Communicate goals, roles and responsibilities so that people know what is
expected of them and feel a part of the crowd.
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 In accordance with research by the Gallup organization, encourage Notes

employees to have good, even best, friends, at work.
 Encourage humour and laughter at the workplace to deal with stress which
will ensure that the employees are happy, which gets reflected in their
services. This is especially critical in voice based transaction.
 Feeling valued by their manager in the workplace is a key to high employee
motivation and morale.
 Reach out to the families of the potential candidates with sustained and
focused messages in the media about the excellent prospects in the
Industry.
CAREER DEVELOPMENT MODEL

Here in this section we will learn about the career development model.
Source: www.careerprocanade.ca
Figure 10.1
Figure 10.1 is self-explanatory and it is all concerned to know about yourself
before you plan the future such as you should know about your SWOT
(Strengths, Weaknesses, Opportunities and Threats) and based on that explore
your options of growth and thereby plan your actions accordingly and create
your future.
CAREER MOTIVATION AND ENRICHMENT

Here we shall learn about what is Career motivation and Career Enrichment.
Career Motivation is the internal and external factors or elements that stimulate
the zeal and desire and energy in employee or People to continue the interest
and commitment to a job or role or subject, or to make an effort to attain the
career goal.
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Notes
Motivation results from the interaction of both conscious and

Unconscious factors/elements such as Intensity of desire or need, incentive
or reward value of the goal and expectation of the individual and his or her
peers. These are the reasons one has for behaving a certain way.
Career enrichment is a process of helping people to become engaged in their

work. Career enrichment helps people to understand their “what-why-how”.
Without realizing it, people can easily lose sight of their vision and let go of
the need to sharpen talents. As a consequence, they contribute and achieve less.
As such, people feel less significant.
CAREER PLATEAU
This is a very important aspect of the career stage where a person’s career gets
stagnated. It usually occurs during mid-career Stage. Plateauing is a condition
of stagnating in one’s current job.
Plateauing has become standard career lingo, easily bantered about

by candidates and human resources professionals alike. However, most of
the time the concept is laden with negative connotations, because of its
manifestation in the following manner: loss of enthusiasm, tension,
boredom, frustration, lack of team effort, lack of commitment and
innovation. Career Plateauing is also known as career doldrums.
One should not get down with plateauing need to redress the issue
and plan a better career or resolve the existing career crisis.
Classification of Career Plateaus
Content (Contribution) and Structural (Position) Plateauing

Psychologist and author Judith Bardwick first articulated the two plateauing
concepts that relate to careers in her book, “The Plateauing Trap: How to
Avoid It in Your Career and In Your Life” (Amacon, 1986). Ms. Bardwick
used the term “structural” plateauing to describe the end of promotions and
“content” plateauing to depict the end of growth and learning.
Example: A better way to describe the shortage of rungs on your

promotional ladder might be “position” plateauing. This is the absence –
temporary or prolonged – of upward mobility.
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As such, this concept is akin to the geologist’s definition of a plateau. You are Notes
on an elevated tract of level land, with no apparent prospect for significant
increases in pay, status, title, formal power or corporate perks. In terms of your
position on the organization chart, you are plateaued. Therefore, a pyramidal
organizational structure is main cause for plateauing. The other type of
plateauing is more like a developmental psychologist’s use of the word. It is
stagnation in terms of personal growth and might be called “contribution”
plateauing. You are not learning or developing your competencies, and your
ability to add value cannot help but taper off.
The table below compares and contrasts the two types of Plateauing:
Structural /Position Plateauing Content/Contribution Plateauing
Happens to everyone, sooner or later Doesn’t have to happen to everyone
Individuals have little control over the forces Individual have almost total control over the
that create position plateauing forces that lead to contribution plateaus.
If this happens to you, you can still be a valued If you let this happen to you, your value will
employee. Accept it and move on decline rapidly. Avoid this at all costs
Learning Activity
Visit a HR of the firm and try to collect information pertaining to
Career plateau and how they deal with the same and prepare a small
report.
ACTION STEPS TO OVERCOME CAREER

PLATEAUING
Now we shall discuss on how to overcome the career plateauing what steps
need to be followed.
Five Action Steps

Not that this bothers everyone. On the contrary, some employees are not upset
by becoming position plateaued. However, those who define career success as
an unbroken series of increasingly more senior positions are understandably
frustrated. The arithmetic is stacked against them, especially as organizations
stay flat and lean.
Eventually, you may reach a level from which the odds of advancing are slim.
In this case, use the following tactics:
1. Get clear on your Career Goals: As indicated earlier, figure out how
important vertical advancement is to you. You may determine that being
plateaued is a non-issue and that the only reason you have been chasing
that carrot is that you thought you were supposed to. Not wanting to
advance does not mean you are a failure. In fact, organizations need
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Notes employees who want to stay put. However, if you conclude that you are not
ready to let go of your promotional aspirations.
2. Get the Facts: Assuming your motives are pure, the next step is to find out
where you stand. Ask your manager for his or her honest opinion of your
advancement prospects and whether you would be a strong candidate. This
may be more difficult than it sounds. Most managers do not like discussing
such matters (even though they are probably wondering about their own
advancement prospects and would love to have a candid conversation with
their manager).
Since your boss probably is worried about demoralizing you, make it easy
by taking a non-confrontational approach. You might say, “I’ve been
thinking about my development and my career goals, and I’d love to get
your perspective on possible next steps for me. I realize there are no
guarantees and that jobs and structures change all the time. But I’d still
appreciate your view.” If that does not work, find another manager who is
willing to talk.
3. Decide where your Limits are: How committed are you to finding a ladder
to climb? If the prospects are not good in your immediate area, are you
willing to transfer to a different department? How about relocating to
another site? Would you consider returning to studies for an additional
degree? Ultimately, are you prepared to leave the company to gain a
promotion elsewhere? It is OK to say “yes” to any of these questions. The
key is to determine how far you would be willing to go to avoid a position
plateau.
4. Don't Personalize it: Position plateauing happens to everyone. It is a fact –
like death and taxes. And in most cases, it’s not anyone’s fault. Stalling in
your career probably is not an indictment of your talents, energies or
commitment (unless you are also contribution plateaued). If you feel you
did something wrong, stop. You might as well blame yourself for not
buying a winning lottery ticket, because the demographic and
organizational forces that create this situation are beyond anyone’s ability
to control.
This “don’t worry, be happy” attitude is easier described than adopted. You
probably view advancement as a key indicator of success. As early as
primary school, we become conditioned to regular “promotions.” Letting
go of that expectation can be difficult, but it is necessary and can be
incredibly liberating.
5. Keep Contributing: Whether your goal is to move up or laterally or stay
put, heed this advice above all else: Be a top contributor. Countless
examples exist of people who reach mid-career and realize they cannot go
further. At first, it is a blow. Their natural reaction is to ask, “What did I do
wrong?” However, once they come to terms with the reality, they move on
to make valuable and satisfying contributions.
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Notes
Example: Consider this experience of a veteran employee of a large
firm, whose manager told him, “I appreciate the good work you’ve done,
but I can’t promote you. You’ve probably reached a point in your career
where you’ll likely only receive cost-of-living adjustments until you
retire.”
After the employee recovered from the disappointment, he saw a hidden
opportunity. “I can quit playing the political game and start following up on
interesting ideas of my own,” he realized. He had had an idea for an innovative
new product feature and started developing it. He discovered a healthy market
existed for the product and began lining up customers. Ultimately, he sold
company management on the idea. The experience energized him, but the icing
on the cake came when his manager called him into his office and said,
“Remember what I said about not being able to give you a raise? I lied.” He
then handed him a pay-check reflecting a substantial increase.
None of this would have happened if the employee had remained trapped in
self-pity and discouragement. The key was accepting the reality of being
position plateaued, then focusing his energy on contributing more.
Stuck in a Rut (Channel)

When discussing plateauing, all roads lead to contribution. Contribution
plateaus can be less visible but more damaging than stalling at a certain
level. As the previous example showed, you can stop advancing without
losing your ability to contribute. Not so in reverse: If an employee stops
being valuable, it is almost guaranteed that he or she will not rise much
further.
Barriers to Being Valued Contributors

Fortunately, contribution plateauing is avoidable. In fact, many employees
never reach this point. They find ways to keep learning and growing,
regardless of the jobs they hold.
Others are less fortunate. For the following reasons, they stop being valued
contributors:
 Lack of challenge: When you are in a job that does not stretch you, it is
easy to lose interest. We all differ in terms of how much challenge and
growth we want in a job, but once you lose interest, your motivation to stay
up-to-date in your field decreases. In a fast-changing world, your skills
quickly become outdated – hence, a contribution plateau.
 Too much repetition: Being overworked usually is not why most
employees stop contributing. Rather, the cause stems from doing the same
thing repeatedly. What may have been exciting at first can quickly become
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Notes routine and even boring. And if you are bored, your contribution is bound
to slip.
 Position plateauing: For some people, hitting the end of a promotional
ladder kills their motivation. With no chance to increase their job scope and
responsibility, they feel justified in withholding effort and energy. These
employees are sometimes described as people who “quit and stay.”
Regardless of the cause, contribution plateauing can be deadly. De-energized,
burned out, bored silly or just plain tired, people who have contribution
plateaued run the risk of being labelled “non-contributors.” This label is
difficult to shake. Most organizations are unforgiving. An ounce of prevention
is worth a pound of cure – but prevention is more difficult because the
phenomenon can be subtle. It can sneak up on you, growing quietly until you
wake up one morning and realize you have no desire to go to work.
DESIGNING EFFECTIVE CAREER DEVELOPMENT

SYSTEMS
We will now consider the methods or tools that managers can utilize to better
match the career needs of their subordinates with the requirements of their
organization. While these designs are not proposed to be all-encompassing,
they are solid representation of the better-known career development systems:
 Challenging Initial Jobs: There is an increasing body of evidence
indicating that employees who receive especially challenging job
assignments early in their careers do better in later jobs. More specifically,
the degree of stimulation and challenge in a person’s initial job assignment
tends to be significantly related to later career success and retention in the
organization. Apparently, initial challenges, particularly if they are
successfully met, stimulate a person to perform well in subsequent years.
 Dissemination of Career Option Information: Surprisingly, many
employees lack any substantive information about career options. What
they know is often a combination of myths and facts acquired through
friends, coworkers, relatives, and the popular media.
As managers identify career paths that successful employees follow within
the organization, they should make this information available. For example,
the organization prefers candidates for middle-management positions to
have had some job exposure in the manufacturing side of the business as
well as experience dealing with budgets and financial issues, this
information should be disseminated. Such valid and reliable data will be of
more help to the young, upwardly ambitious employee than, say, some
coworker’s offhand comment that “this company favours well-rounded
people for promotions.”
 Job Postings: To provide information to all employees about job openings,
managers can use job posting. Organizations that post jobs typically use
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bulletin board displays, or intranet, but they may also use company Notes
publications and similar vehicles. The posting lists the abilities, experience,
and seniority requirements to qualify for vacancies.
Consistent with the idea that full information on vacancies is a good human
resource practice, job posting provides a channel by which organization lets
employees know what jobs are available and, for future reference, what
requirements they will have to fulfil to achieve the promotions to which
they may aspire. Additionally, a job posting system is tangible evidence
that the organization is notifying women and minorities of the availability
of more desirable jobs.
 Assessment Centres: Though the assessment centre is used both as a
selection device as well as a management development device, it also has
relevance as a career development tool. By putting people through
assessment centres we obtain observable evidence of their ability to do a
certain job. Additionally, and often overlooked, is the fact that this
technique almost always uses internal supervisors and managers to do part
of the appraisal. In this role as assessor, individuals learn how to observe
behaviour carefully, to make inferences from observations, and to give
feedback to the assessee.
The process helps to build the important managerial skills

necessary for performance appraisal. Even more important, it makes
assessors more aware of what is involved in the process of development –
and this awareness can provide valuable insights into their own career
development. Weaknesses and external threats and opportunities should be
jotted down.
 Career Counselling: One of the most logical parts of a career development
programme is career counselling. This can appropriately be made part of an
individual’s annual performance review. What should take place in this
encounter? It has been proposed that the dialogue contain the following
four elements:
(a) The employee’s goals, aspirations, and expectations with regard to his
or her own career for the next five years or longer.
(b) The manager’s view of the opportunities available and the degree to
which the employee’s aspirations are realistic and match up with the
opportunities available.
(c) Indemnification of what the employee would have to do in the way of
further self-development to qualify for new opportunities.
(d) Identification of the actual next steps in the form of plans for new
development activities or new job assignments that would prepare the
employee for further career growth.
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Notes The career counselling process may not be easy and enjoyable for the
managers. However, the final outcome should be a mutual understanding
between the employee and the manager as to the realistic expectations the
employee should hold about a career within the organization. The result, to
the organization, will be employees with fewer false hopes and
expectations about career opportunities.
 Career Development Workshops: Management should consider the value
of group workshops to facilitate career development. By bringing together
groups of employees with their supervisors and managers, problems and
misperceptions can be identified and, it is hoped, resolved.
Entry workshops provide the opportunity for groups of new employees and
their supervisors to share their separate expectations. Discussion can then
focus on those areas where mismatches are identified. Where incongruities
are significant and not easily resolved, these entry workshops may be
extended to work out procedures for reducing the differences by changing
the employee’s expectations, organizational practices, or both.
Mid-career workshops can be offered to help individuals with similar
background and length of tenure in the organization to assess their career
development. These workshops frequently include self-diagnostic activities
for employees, diagnosis of the organization and alignment of the separate
diagnoses to identify potential mismatches. Where significant differences
are found that may create obstacles or frustrations for employees, solutions
may take the form of emphasizing the need for individuals to alter their
career aspirations, altering the organization’s career development practices,
or some combination action.
Finally, the organization may provide late-career workshops. These would
be particularly useful for employees preparing for retirement. However,
they can also be used to deal with frustrations over unfulfilled career goals,
the responsibilities and role expectations of mentors, developing new life
interests, or coping with young and ambitious co-workers.
 Continuing Education and Training: The training and educational
development we touched upon while discussing cross-cultural education
and training programmes in the sixth lesson are relevant always and
anywhere to reduce the possibilities that employees with obsolete skills
continue to be part of the organization. Additionally, when these
development activities are carefully aligned with an individual’s aspirations
and anticipated future organizational needs, they become an essential
element in an employee’s career growth.
The education and training in an effective career development programme
could include on-the-job training; educational or skill courses offered by
personnel within the organization; or outside courses provided by colleges,
universities, or specialized consultants.
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 Periodic Job Changes: The important element in a job change that offers Notes
career development opportunities is the diverse and expanded range of
experiences that new job tasks can provide. Varied experiences present new
tests to the individual; which if successfully surmounted, build confidence
and provide positive feedback that can encourage the undertaking of further
new challenges and greater responsibilities. Of course, periodic job changes
also provide management with more varied information as to the
employee’s potential to move higher in the organization.
 Sabbaticals: A final tool or system toward making career development
more effective is to make use of sabbaticals or extended leaves of absence.
For senior executives, the traditional two-to-four-week vacation may be
insufficient to offset the accumulated pressures from day-to-day work. An
extended leave can allow time for attending executive development
conferences, uninterrupted reading, accepting a visiting lectureship at a
university, or other such activities that may enhance one’s career
development. We have discussed this already while touching upon career
plateau.
Reward….?
S
undaram was a bright young man with his MSW degree and with
another degree in Labour Law. He easily got into a large scale
chemical organization as its personnel officer. His Head of the
Department (HOD) was a person from the ranks without much of
professional qualifications. Sundaram was happy to join here because the
company was doing very good business and very well off financially. The
company's various schemes of welfare measures and perks were quite
attractive. He was all the more happy to join here because he was the only
professionally qualified HR executive in the company and so he hoped to
occupy the chair of the HOD one day or the other in the future.
As the years rolled by he was very much sought after by his bosses, not only
in his department but also in other departments, to get his advice and
opinion on the behavioural aspects in dealing with the employees and also
in the matter of disciplinary proceedings against the erring employees.
Sundaram was all the more happy to be sought after like this and he put
forth his best in helping people out.
During the time of strike or any labour problem in the company it was
Sundaram who used to give valuable strategies to the company to steer clear
of the situation. This brought him in the limelight of outsiders – government
officials, union leaders, etc. Sundaram was meeting the demands from every
quarter, even to the extent of making personal sacrifices and foregoing
family comfort.
Contd…
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Notes Every time his HOD got superannuated or resigned and left, there used to be
another installed in the vacant place from some other department of the
organization. He was invariably not at all knowledgeable about HR
department's working, etc. Whenever a new incumbent to the post of HOD
showed his diffidence about how he would perform in his new portfolio, he
was always assured by the top management that Sundaram would take care
of the day to day aspects of the department and he was not to worry about
anything.
Sundaram tolerated his new bosses and cooperated with every one of them,
thinking that he was not perhaps old enough to occupy the chair of the HOD
and so he should bide his time. After all he was getting his promotions as a
flier all the time. But when Chandrashekhar was posted from Maintenance
department to head the HR department, Sundaram could not take it any
longer.
So he went to the head of the unit and told him, "I would like to know in
what way I am lacking in my ability to head my department in comparison
to Chandrashekhar who is of my rank only, though he may be elder to me,
because he has come from the ranks. All these years I have been waiting
that I would be recognized and rewarded for my merit. I had been
cooperating with all my previous bosses only with this hope."
"Don't make disparaging remarks about Chandrashekhar. It is customary for
the company to make only the chemical engineering graduate or diploma
holder as the heads of the departments. Nobody grudged your flier
promotions for your merit. Now why should you complain?"
Chandrashekhar came back to his cabin and sat without speaking to anyone
about this. When a union leader came to him with a worker to get his
grievance redressed, Sundaram told him, "Please go the HOD/HR and tell
him the problem."
"Sir, what happened? We know you only and we have been dealing with
you only all these years for all our problems."
"More knowledgeable people are there to solve your problems now. Now
will you leave me alone?" shouted Sundaram at the union fellow.
The union leader, being unaccustomed to be treated like this by Sundaram
took offence against him and publicly criticized the behaviour of Sundaram
as "Ruthless Ruler".
Sundaram got further cut up and withdrew himself from every other activity
of the company and became unapproachable to others due to his irritability.
At the end of the calendar year in which Chandrashekhar took over as the
HOD/HR, Sundaram also attended the customary New Year Eve
celebrations in the officers' club, though sitting in a corner. He wished all
and got wished "Happy New Year". On January 1, while he was having his
Contd…
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breakfast quietly with his family he suffered from fits which recurred many Notes
times during the day. He was admitted to the hospital for treatment where he
had been subjected to EGG and scanning. The doctors asked him and his
family members whether he had any tension. Neither he nor his family
members could recollect anything specific.
When Sundaram rejoined duty, he feigned sick and did not take up any
additional responsibility nor did he take any initiative or interest in the
working of the department. He started feeling that he was being side-lined
and so did not like to work in the organization any longer. Within three
months of his rejoining duty he tendered his resignation giving the required
period of notice. At that moment he did not know where he would be going
and what he would be doing for his earning.
Questions
1. Trace the process of burnout in this case.
2. What kind of career plateauing you can see here? How is it being
tackled?
1. In recent times, organizations are capturing role related

behaviours in competency mapping systems. Excessive
emphasis on the jobs results in a short term orientation
across the organizations.
2. Career plateau is the point in time in a professional's
career, where the possibility of a vertical promotion is
less. The position of the employee becomes stagnant
with same and repetitive work and responsibilities.
Because of the way organizations are shaped, the
hierarchy of organizations reduce the possibility of
employees to grow vertically after a point in time.
SUMMARY
 A career is a sequence of separate but related work activities that provide
continuity, order, and meaning in a person’s life. Employees prefer to carve
out a career path in a specific area/field which will synchronize with their
personality characteristics and preferences.
 Career Planning as a process involves the following: Analysing Employee
Needs and Aspirations, Analysing Career Opportunities, Identifying
Congruence and Incongruence, and Action Plans and Periodic Review.
 Role is a set of functions, which an individual performs in response to the
expectations of others and his own expectations about the role. Exploration,
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Notes Establishment, Mid-Career, Late Career and Decline are the five stages of a
career.
 There are eight different Competency Mapping models and they are:
Organizational Competency Based Competency Model, Commitment and
Competence Based Competency Model, 5–Level Competency Model , Job
Based Competency Model, Generic and Specific Competency Model,
Managerial, Behavioural and Functional Competency Based Model,
Organizational Goal Linked Competency Model, Technical and
Behavioural Competency Model (for non-managerial staff).
 Career Plateau is a doldrums in one's career growth. This is either due to
structure/position plateau which means that there is no further avenue to go
up the ladder of organizational hierarchy or due to contribution/content
plateau which occurs mainly because the individual stops contributing to
the organization.
 Remove all the barriers to contributing such as lack of challenge, too much
of repetition and position plateauing. Identify the career stage that you are
in and accordingly take action steps to beat the plateau. Going on
sabbaticals and designing effective career development system will also
help.
KEYWORDS
Career Progression: Making progress in one’s career through a series of right
moves.
Career Paths: These are flexible lines of progression through which
employees typically move.
Career Goals: Future positions one tries to reach as part of a career.
Career Cycle: The stages through which a person’s career evolves.
Career Planning: It is a process which involves the following: Analyzing
Employee Needs and Aspirations, Analyzing Career Opportunities, Identifying
Congruence and Incongruence, and Action Plans and Periodic Review.
Career Anchors: They are distinct patterns of self-perceived talents, attitudes,
motives and values that guide and stabilise a person’s career after several years
of real-world experience and feedback.
Career: A career is all the jobs that are held during one’s working life.
Career Enrichment: It is a process of helping people to become engaged in
their work. Career enrichment helps people to understand their “what-why-
how”. Without realizing it, people can easily lose sight of their vision and let
go of the need to sharpen talents.
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SELF-ASSESSMENT QUESTIONS Notes

1. What do you mean by Career? Explain its features.
2. What do you understand by the concept of Career Anchor?
3. What is a Role?
4. Name the different Career Stages.
5. Name the things in Career Development Model.
6. What do you mean by Career Plateauing?
7. What are the classifications of Career Plateau?
8. Explain the term ‘career planning and development’.
9. Differentiate between jobs and roles.
10. List the five systems which are impacted by the challenges in the job role
differentiation in HR department.
11. What do you understand by the term ‘exploration in career development
stages’?
12. When does the establishment period begin in the career development
cycle?
13. Which is the final stage in the career development cycle? Explain in brief.
14. Why is analysing career opportunities important for an employee?
15. List out the five action steps to overcome Career Plateau.
16. Name the steps in Career Planning.
17. What do you understand by Exploration in career development?
18. What do you mean by Contribution and Position Plateauing?
19. Name the barriers to being valued Contributors.
20. Name the different tools for designing effective Career development.
1. The challenges in the job role differentiation manifest itself strongly in the
area of human resource management systems. Explain the systems which
are impacted in brief.
2. Explain briefly the career stages.
3. What is Career Planning? Explain the process.
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Notes 4. Write a short note on Classification of Career Plateaus.

5. Explain the action steps to overcome Career Plateau.
6. Explain in detail the Designing of Effective Career Development Systems.
7. What do employees expect while planning their careers? Explain in brief.
8. Explain career development model with the help of a diagram.
9. What are the implications for HR professional in terms of Role?
10. Explain in detail the difference between Jobs and Roles with the help of
examples.
FURTHER READINGS

Cengage Learning , Southwestern, 3rd edition, 2010.
Management, Cengage Learning , Southwestern, 13th edition,
2010.
Oxford, 2007.
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Lesson 11 - Competency – Mapping, Assessment and Development
Notes
LESSON 11 - COMPETENCY – MAPPING,
ASSESSMENT AND DEVELOPMENT
CONTENTS
Learning Objectives
Learning Outcomes
Overview
Competency and Career Management
Characteristics of Competency
Implications of Competencies in Career Development CausalRelationship
Categorising Competencies
Competency Mapping
Competency Mapping Process
Aspects of Competency Mapping
Competency Mapping Models
Equity and Competency Based Compensation
Steps in Developing Competency Based CompensationSystems
Summary
Keywords
Further Readings
LEARNING OBJECTIVES
 Explain Competency and Career Management
 Learn about Competency Mapping Process
 Discuss Equity and Competency Based Compensation
 Draw Various Competency Mapping Models
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understanding of:
 basics of competency and career management
 explain implications of competencies in career development causal
relationship
 concept of categorising competencies and competency mapping
 determine competency mapping process
 identifying aspects of competency mapping
 explain competency mapping models
 analysing equity and competency based compensation
OVERVIEW
In the previous lesson, we have discussed about career concepts, career stages
and career planning process. We have also learnt about career development
model and career motivation and enrichment. Thereafter, we studied about
career plateaus and action steps to overcome career plateaus.
Competencies are the characteristics of an employee that lead to the
demonstration of skills and abilities, which result in effective performance
within an occupational area. It can be defined as “the combination of
knowledge, skills, attitude and personality of an individual as applied to a role
or job in the context of the present and future environment that accounts for
sustained success within the framework of organisational values.”
In this lesson, we will study about characteristics of competencies, implications
of competencies in career development causal relationship and competency
mapping. We will discuss in detail competency mapping process and
competency mapping models. At the end of the lesson, we will discuss about
equity and competency based compensation and steps in developing
competency based compensation Systems.
COMPETENCY AND CAREER MANAGEMENT

Now let us try to understand the term ‘Competency’. While we have already
defined career, it is necessary here to define competency. According to Lyle M
Spencer and Signe M Spencer (Spencer and Spencer), a competency is an
underlying characteristic of an individual that is causally related to criterion-
referenced effective and/or superior performance in a job or situation.
Underlying characteristic: It means the competency is a fairly deep and
enduring part of a person’s personality and can predict behaviour in a wide
variety of situations and job tasks.
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Causally related means that a competency causes or predicts behaviour and Notes
performance.
Criterion-referenced means that the competency actually predicts who does
something well or poorly, as measured on a specific criterion or standard.
Examples of criteria are the dollar volume of sales for salespeople or the
number of clients who stay “dry” for alcohol-abuse counsellors.
Underlying Characteristics: Competencies are underlying characteristics of
people and indicate “ways of behaving or thinking, generalizing across
situations, and enduring for a reasonably long period of time.”
Characteristics of Competency
1. Motives: The things a person consistently thinks about or wants that cause
action. Motives “drive, direct, and select” behaviour toward certain actions
or goals and away from others. For example, achievement-motivated
people consistently set challenging goals for themselves, take personal
responsibility for accomplishing the goal, and use feedback to do better.
2. Traits: Physical characteristics and consistent responses to situations or
information. For example, reaction time and good eyesight are physical
trait competencies of a combat pilot.
Emotional self-control and initiative are more complex “consistent
responses to situations.” Some people don’t “blow up” at others and do act
“above and beyond the call of duty” to solve problems under stress. These
trait competencies are characteristic of successful managers. Motives and
competencies are intrinsic operant or self-starting master traits that predict
what people will do on their jobs long-term, without close supervision.
3. Self-Concept: A person’s attitudes, values, or self-image, e.g., self-
confidence. A person’s belief that he or she can be effective in almost any
situation is part of that person’s concept of self.
A person’s values are respondent or reactive motives that predict what he
or she will do in the short term and in situations where others are in charge.
For example, someone who values being a leader is more likely to exhibit
leadership behaviour if he or she is told a task or job will be “a test of
leadership ability”. People who value being “in management” but do not
intrinsically like or spontaneously think about influencing others at the
motive level often attain management positions but then fail.
4. Knowledge: Information a person has in specific content areas, e.g., a
surgeon’s knowledge of nerves and muscles in the human body.
Knowledge is a complex competency. Scores on knowledge tests often fail
to predict work performance because they fail to measure knowledge and
skills in the ways they are actually used on the job. First, many knowledge
tests measure rote memory, when what is really important is knowing
which facts exist that are relevant to a specific problem, and where to find
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Notes them when needed. Second, knowledge tests are “respondent.” They
measure test takers’ ability to choose which of several options is the right
response, but not whether a person can act on the basis of knowledge. For
example, the ability to choose which of five items is an effective argument
is very different from the ability to stand up in a conflict situation and
argue persuasively. Finally, knowledge at best predicts what someone can
do, not what he or she will do.
5. Skill: The ability to perform a certain physical or mental task.
Example: A dentist’s ability to fill a tooth without damaging the

nerve; a computer programmer’s ability to organize 50,000 lines of code in
logical sequential order.
Implications of Competencies in Career Development Causal

Relationship
Motive, trait and self-concept competencies predict skill behaviour actions,
which in turn predict job performance outcomes.
Competencies always include an Intent, which is the motive or trait force that
causes action toward an outcome. For example, knowledge and skill
competencies invariably include a motive, trait, or self-concept competency,
which provides the drive or “push” for the knowledge or skill to be used.
Behaviour without intent doesn’t define a competency. An example is
‘management by walking around’. Without knowing why a manager is walking
around, you can’t know which, if any, competency is being demonstrated. The
manager’s intent could be boredom, leg cramps, the monitoring of work to see
if quality is high, or a desire “to be visible to the troops”.
Criterion Reference: Criterion Reference is critical to the definition of
competency in the context of career development. A characteristic is not a
competency unless it predicts something meaningful in the real world.
Psychologist William James said the first rule for scientists should be that “A
difference which makes no difference is no difference.” A characteristic or
credential that makes no difference in performance is not a competency and
should not be used to evaluate people.
The criteria most frequently used in competency studies are:
 Superior Performance: This is defined statistically as one standard
deviation above average performance, roughly the level achieved by the top
1 person out of 10 in a given working situation.
 Effective Performance: This usually really means a “minimally
acceptable” level of work, the lower cut-off point below which an
employee would not be considered competent to do the job.
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Categorising Competencies Notes

Competencies can be divided into two categories, “threshold” and
“differentiating” according to the job performance criterion they predict.
 Threshold Competencies: These are the essential characteristics (usually
knowledge or basic skills, such as the ability to read) that everyone in a job
needs to be minimally effective but that do not distinguish superior from
average performers. A threshold competency for a salesperson is
knowledge of the product or ability to fill out invoices.
 Differentiating Competencies: The factors distinguish superior from
average performers. For example, achievement orientation expressed in a
person’s setting goals higher than those required by the organization, is a
competency that differentiates superior from average salespeople.
Competency Mapping
Having defined elaborately the term competency, it is now time to understand
what competency mapping is and how competency models work in career
development. It is about identifying preferred behaviours and personal skills
which distinguish excellent and outstanding performance from the average.
A Competency is something that describes how a job might be done,
excellently; a Competence only describes what has to be done, not how.
When organizations recognize that people are truly their most valuable
resource, then one of the roles they accept is helping employees manage their
careers. Competency mapping is an important resource in this environment,
and is an adjunct to knowledge management and other organizational
initiatives.
An organization’s Competency Mapping process is designed to consistently
measure and assess individual and group performance as it relates to the
expectations of the organization and its customers. It is used to identify key
attributes (knowledge, skills, and behaviour attributes) that are required to
perform effectively in a job classification or an identified process.
Competency Mapping conveys two sets of data. One set is based on

organizational workflow and processes. The other is based on individual
and group performance capabilities.
Identifying Competencies required to meet or Exceed Customer
Requirements
Where the output from the organizational maps meet the individual and group
performance capabilities, an overall trend line is created that identifies where
in the process specific developmental opportunities exist, and with what
specific population.
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Notes Impact Analysis

Through the use of this field-tested competency mapping process, an
organization is able to map individual and team competencies to create
hypothetical impact analysis on process outcomes that can be measured
through automated simulations. By referring to forecasted outputs, decisions
can be made as to how to best manage, evaluate, and develop employee
performance; recruit and select individuals that possess the skills required; and
compensate individuals based on their demonstrated performance.
An organization’s Competency Mapping process can be the foundation for
aligning workflow and process outputs with critical customer requirements
with a foundation of required employee attributes and competencies.
COMPETENCY MAPPING PROCESS

Now let us try to understand the Competency Mapping Process and the steps
involved in it. Competency Mapping is the process, which involves the
following three steps:
 Developing Competency Models to facilitate competency profiling for each
job/role.
 Identification of Competencies required to perform successfully a given
job/role or a set of tasks at a given point of time.
 Assessing Competency to measure the extent to which a given individual or
a group of individuals possess these competencies required for a given role
or a set of roles.
The components of this definition can be shown through the following
Figure 11.1:
Step – 1
Developing Competency Model
Step – 2
Competency Identification
Step – 3
Competency Assessment
Figure 11.1
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In a nutshell, Competency Mapping is the process of designing a framework Notes

(Competency Model) to identify competencies, using that framework to
identify competencies required for a job/role (Competency Identification), and
to measure the competency deficiency of an individual or group of individuals
(Competency Assessment) in relation to existing or expected job requirements.
Some experts have merged the first two steps as one and they have given it the
name of Competency Models or Competency Profiling or Competency
Mapping. They have not included Competency Assessment in Competency
Mapping. But we feel that Competency Assessment must be an integral part of
the whole exercise.
The term, Competency Mapping, must include all the above three
major steps.
11.2.1 Aspects of Competency Mapping
Following are aspects of Competency Mapping:
 What does affect Competency Mapping?
 What does necessitate Competency Mapping?
 What are the tools for Competency Mapping? (Competency Identification
and Competency Assessments)
 What are the applications of Competency Mapping?
What affects Competency Mapping

 Management Philosophy
 Customer Requirements
 Business Needs
 Business Process
Why Competency Mapping

 Right Sizing
 Quality Manpower
 Higher Performance Organisational core Competence
Applications of Competency Mapping
 Recruitment
 Placement
 Development
 Performance Management
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Notes  Career Planning

 Succession Planning
 Reward
 Job Redesign
What are the tools of Competency Mapping
Table 11.1
Competency Identification Competency Assessment
Task force Self and Superior
By Self and Superior 360 degree feedback
By HR Specialist Assessment Centre
Job Experts Psychometric tests
Industrial Engineers Interviews
Interviews Leaderless Group Discussion (LGD)
Group Work In Basket Techniques
Critical Incident Technique Role Play
Repertory Grid Scenario Presentation
- Case Study
COMPETENCY MAPPING MODELS

Before we go for Competency Identification, we must have a broad framework
to be used to identify competencies for various roles/jobs.
Some of these Competency Models or Frameworks are given hereunder:
 Organizational Competency Based Competency Model
 Commitment and Competence Based Competency Model
 5–Level Competency Model
 Job Based Competency Model
 Generic and Specific Competency Model
 Managerial, Behavioural and Functional Competency Based Model
 Organizational Goal Linked Competency Model
 Technical and Behavioural Competency Model (for non-managerial staff)
Model 1: Organizational Competency Based Competency Model

This is the framework for Competency Profiling for a Job based on the core
competencies required for an organization for its business processes. This may
involve the following steps:
Step 1 : From the overall objective of the company, you need to arrive at
objectives for each Business Process (BP) of the organization.
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Step 2 : Based on the objectives of each BP, you arrive at competencies Notes
required.
Step 3 : You list these competencies against individual roles and
responsibilities.
Step 4 : Once this is done, you arrive at job descriptions.
Step 5 : Against which individual competency profiling is done.
Step 6 : The gap identified between competencies profile and possessed is
evaluated.
Example: An organization identified the following 8-core competencies

for all the people of its business processes to achieve organization objectives:
 Dedication for work
 Continuous competence development
 Speed in work
 Accuracy (zero defect) in work
 Creativity for continuous improvement
 Initiative (to be self-starter) on the job
 Cost consciousness
 Customer focus
This organization made these competencies applicable for all jobs of all
departments and everyone was assessed against the above core competencies
required for the business process as shown in Figure 11.2.
Figure 11.2
Model 2: Commitment and Competence Based Competency Model

This model is based on the basic premise that the competency is the sum total
of Commitment and Competence as shown in Figure 11.3.
Competency = Commitment + Competence
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Notes Commitment
Commitment is the deep attachment or devotion with passion and faith or
belief of a person on the process and objective of the job he is holding or a task
he is required to perform. Commitment is the outcome of attitudinal factors
namely one’s Perception, Traits and Motives discussed earlier.
Competence
Competence is the ability to do a job. It is the function of Knowledge and
Skills.
Competence = Knowledge × Skills
Competency
It is the demonstration of Competence Characteristics and Commitment
Characteristics of an individual for making superior contributions to the
organizations.
Figure11.3
Some of the Competence Characteristics are technical Knowledge,

Analytical Skills, Communication Skills, Planning Skills, etc. Commitment
Characteristic Self Confidence, Enthusiasm, Self-motivation, Honesty and
Integrity, etc.
A popular performance analysis tool that allows this approach is the Skill to
Do/Will to Do chart. ‘Skill to Do’ refers to the employee’s ability to do the job.
‘Will to Do’ refers to the employee’s motivation to perform.
 Skill to Do/Will to Do: This is the ideal situation. The employee is fully
qualified and is doing the job as designed. He is supposed to be the star
performer and asset to the organization.
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 No Skill to Do/Will to Do: Here, the employee is putting out the effort, but Notes
is not getting the results (skills problem). He will be just a passenger in
performance.
 Skill to Do/No Will to Do: Here the employee possesses the abilities to do
the work but does not complete work processes as designed (a motivational
problem). He will be in the category of Also Rans like a lazy horse.
 No Skill to Do/No Will to Do: This employee has deficiencies in both skills
and motivation. A decision has to be made regarding the
development/counselling resources required versus the expected success of
the effort. The result may well be a job – in jeopardy situation. He is
basically a deadwood and liability for the organization.
Model 3: 5-Level Competency Model

This is a framework to profile competencies considering five Components of
competency. Details of the five components are given in the following
Table 11.2.
Table 11.2
Measurable Performance
Demonstrated Behaviour and Actions
Skills Application of Knowledge Such as Technical/Functional Skills and

into job or ability to put Managerial Skills like Communication,
knowledge into practice Planning, Problem Solving and Decision
Making, Visioning and Conceptual
Skills, Behavioural Skills like
Interpersonal Relations, Team Building
and Leadership, etc., Self-Management
Skills like Time Management, Stress
Management etc.
Awareness and usable Such as Job Knowledge, Understanding
Knowledge Information, theories and of Organization Rules, Policies,
conceptual understanding of Procedures, Laws and Rules of State,
a job or activity or any other Business Environment, Global Scenario,
aspect incidental to or Information on Social, Economic and
connected therewith or Political Happenings/Events etc.
mental intelligence
A What one perceives or thinks Such as Self-Concept, Feelings, Views
T Perception about self and the world and Mental Image, one carries about
based on sensory information himself (like: viewing oneself as coach
T
received through 5 senses or mentor) or about others, external
I objects, organization, society, nation or
T any thing and everything he knows
U about or is exposed to.
D Personality Characteristics of Such as Team Player, Leadership,
E Traits a Person Obedient, Kind, Reverent, Timid,
Thrifty, Patience, Emotionally Stable,
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Notes Courteous, Sensitive, Extrovert or

Introvert etc.
Motives Core and Innate nature of a Such as his values and believes like
person which makes him personal integrity passion for anything,
unique his any perpetual, persistent desire he
keeps on thinking about constantly like
Self-Development, Achievement
Motivation etc.
Example: The availability of right quality and quantity of management

competence is the key factor in business success of organizations. This
realization struck many organizations during the current decade and efforts
made to tone up their managers. A common issue across all the organizations is
– managers should be equipped with what kind of competencies. It is also a
fact that managers must possess the competencies specific to their
organizational need and environment. According to Andrew May of London
Business School, there is a competency set combining all 5 components
(Knowledge, Skills, Perception, Traits and Motives) that is applicable to all
organizations and he illustrated them in his paper titled “Developing
Management Competencies for Fast Changing Organizations” published in
Career Development International in 1999. These combined competencies are:
 Operations Management
 Managing time effectively such as control of time scheduling and
project control
 Planning and decision-making consisting (i) control planning,
(ii) option evaluation and (iii) evaluation of plan performance
 Managing change consisting (i) identifying improvement opportunities,
(ii) formulating change objectives and (iii) monitoring and evaluating
change
 Quality management consisting (i) quality measurement, (ii) conditions
monitoring and diagnostics and (iii) systems control.
 People Management
 Team leadership indicating (i) leadership styles, (ii) structured teams,
(iii) delegation, (iv) counselling and (v) meeting participation
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 Performance management consisting of (i) assessing competencies, Notes

(ii) job design and review, (iii) target setting and review and
(iv) motivation of staff
 Influencing others like (i) planning process management and
(ii) negotiating
 Legal issues of employment that include (i) health and safety,
(ii) recruitment and employment conditions and (iii) industrial relations.
 Financial Management
 Financial control that includes (i) cost monitoring, (ii) financial
statement analysis, (iii) results presentation and (iv) financial systems
awareness.
 Financial planning including (i) investment appraisal, (ii) systems
development and (iii) managing outsourcing.
 Information Management
 Communications that include (i) presenting information, (ii) selling
ideas and behaviour interpretation
 Marketing consisting of marketing strategies
 Behavioural Competencies
This includes (i) Entrepreneurial, (ii) Creative thinking, (iii) Management
synergy, (iv) Logical thinking and (v) Analytical ability
 Attitudinal Competencies
This includes (i) Achievement Motivation, (ii) Passion for the Job,
(iii) Integrity and Honesty, (iv) Ethical Business Practices (v) Emotional
Balance (vi) Determination (vii) Winning Attitude.
Managerial Implication
The above framework of management competencies is useful to practicing
managers, particularly those involved in competence development. The
framework and its item wise description of competence can be used in building
competence development plan for your organization. This is a comprehensive
model since it has taken care of cross-functional needs and skills such as
operations, finance, HRM, change management and information technology.
In other words, it is important to note that 5 level competency

model can serve as a basis for designing a competence plan for managers.
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Notes Model 4: Job Based Competency Model

It’s a one plain list of competencies required to perform a particular job. There
are various functions or departments in every organization and each function or
a department may have various Jobs. Competencies may be identified
considering the requirements of each job. The list of competencies required for
each Job will be separate and specific to that particular job consisting of
various factors like mental and emotional characteristics, like Intelligence,
Natural talents, Knowledge, Skills and Attitudes. This model can be illustrated
through the following Figure 11.4.
This competency model describes the combination of Knowledge, Skills and
Characteristics needed to effectively perform a role or job. Skills can range
from highly concrete proficiencies like the ability to operate a particular
machine, or to write a sentence to far less tangible capabilities such as the
ability to think strategically or to influence others.
Figure 11.4: Job Based Competency Model

For each of the above jobs, one independent list of competencies will be
prepared. For example, competencies required for the job of Sales Associates
given below in Table 11.3:
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Table 11.3 Notes

I Personality
1. Assertiveness Ability to take command during face-to-face situations
while displaying appropriate tact and diplomacy
2. Competitiveness Desire to win and to achieve and surpass goals.
3. Self-sufficiency Ability to work independently and maintain one’s
motivation.
4. High Emotional Stamina Ability to maintain focus and effectiveness under stressful
and frustrating situations.
5. High Energy Level Ability to establish and maintain a fast pace and tempo.
II Ability
1. Mental Ability Ability to deal with multiple issues and details, alertness
and learning capacity.
2. Divergent Thinking Ability to see and think beyond the obvious and formulate
original solutions.
3. Quantitative Reasoning Ability to reason with, analyze and draw conclusions from
members.
III Knowledge
1. Financial Analysis Understanding the financial impact of decisions on the
customer, the customer’s satisfaction, and the company.
2. Product Knowledge Expertise related to company’s product and services, as
well as other crucial aspects of the business.
3. Competitive Environment Knowledge of competitive force and how the company
stacks up against competitors and their products.
IV Skills
1. Basic Selling Skills Establishing rapport, determining customer needs, relating
benefits to product features, handling objectives and
closing.
2. Computer Literacy Basic computer skills for application to marketing
programmes, including prospects list, computer contacts
and relevant economic data.
3. Problem-solving skills Anticipating problem-inviting ideas, distinguishing
symptoms from causes, modifying proposals and
implementing solutions.
4. Presentation Skills Ability to communicate to large and small groups,
establish rapport with the group, articulate delivery of
ideas, read group cues, effectively use vital aids and
maintain a commanding presence.
5. Coaching/Training Skills Assessing learning needs and closing knowledge gaps,
simplifying information, ensuring understanding,
reinforcing desired behaviour and motivating the learner.
Model 5: Generic and Specific Competency Model

There may be two sets of competencies:
 Generic Competencies: This will be set of general competencies for all
jobs having same level irrespective of the functions or departments.
 Specific Competencies: This will be set of competencies specific to
particular job or function based on its typical requirements.
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Notes
Example: There will be one set of generic competencies for all
departmental or functional heads, say Manager – HR, Manager Commercial,
Manager Marketing, and Manager Manufacturing and another set of
competencies would be job specific according to their functional requirements.
For example, hereunder, we give a set of Generic Competencies validated and
adopted by one organization:
Generic Competencies
1. Job Expertise: Has thorough knowledge of his jobs and related jobs
regardless of complexities? Is he constantly enlarging the knowledge
relevant to his job? Does he adequately apply this knowledge?
2. Mental Ability: Does he think logically? Is he analytical? Does he take
perspective? How well does he conceptualize and use common sense?
Does he grasp issues quickly?
3. Team Work: Does he willingly seek and give support, get along with
people, display consideration and respect for others and exhibit
commitment to group goals?
4. Initiative: Is he a self-starter? Does he take the lead in action? Is he
willing to act on his own accord? Does he volunteer for higher and more
responsibilities?
5. Innovativeness: Does he provide creative solutions to problems? Does he
generate and implement original value adding ideas, make creative
suggestions?
6. Emotional Maturity: How well does he cope with stress? Does he take an
objective viewpoint in all situations? Is he open minded, willing to receive
suggestions/feedback? Is he tactful and self-disciplined?
7. Communication: Does he express well orally and in writing, listen
effectively? Has he quick grasp and clarity of thoughts all the times? Does
he share information with all concerned (360°)? Is he transparent all the
time?
8. Leadership: Does he motivate and inspire his team? How much effort
does he make to develop subordinates, foster initiative and creativity? Is
his style of influencing others appropriate?
9. Quality of Work: How is his general excellence of output, methods and
systems? Are his jobs and assignments free from errors, misses and
delays?
10. Time Productivity: Does he utilize time optimally? Does he stick to time
schedules and deadlines? Does he plan his work and work his plans?
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11. Self-Discipline: Is he regular and punctual on his duty? Can he be Notes

considered as role model for his team in conduct and behaviour?
12. Foresight and Proactive: Does he foresee the problems and take
preventive actions before they occur? Does he anticipate work need and
match them with the plans of action?
13. Problem Analysis and Decision-making: Does he do deep analysis and
find the root cause of the problem? Does he develop alternative solutions?
Does he select the best solution/take timely counter measures based on
cost-benefit analysis?
14. Self-Motivation: Does he set and achieve challenging targets? Does he
take pride in his job? Does he align his and team members’ thinking with
company’s vision and policies?
15. Responsiveness to Change: Does he quickly interpret and adjust to new
situations? Is he open to new ideas? Does he implement company’s
change initiatives smoothly?
Specific Competencies
We take example of the same organization, which has validated a set of the
following specific competencies for the position of Manager – HR.
HR Knowledge
 Knowledge of HR philosophy, policies, practices and systems
 Knowledge of performance appraisal system practices
 Career planning and development system and practice
 Knowledge of organizational diagnoses, interventions
 Knowledge of learning theories
 Knowledge of training methods and systems
 Knowledge of organizational structures and how they function
 Knowledge of group dynamics and group function
 Knowledge of links between organizational goals, plans, policies,
strategies, structures, technology, system, people management system,
style, etc.
 Knowledge of job analysis, job enrichment, job redesign and job evaluation
HR Skills
 Influencing (communication, persuasive, assertive, inspirational and other
skills needed to influence) top management.
 Influencing skills needed to influence line manager
 Articulating HRD philosophy and values
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Notes  Designing skills for developing HRD system

 Skills to monitor the implementation of HR systems (designing
questionnaires, data gathering, feedback and persuasion).
 Interpersonal sensitivity
 Ability to give and receive feedback
 Counselling skills (listening, rapport building, probing and exploring)
 Conflict management skills
 System designing skills
Model 6: Managerial, Behavioural and Functional Competency Based

Model
The competencies for managers may be categorized in three areas (refer Figure
11.5) namely:
 Managerial
 Behavioural
 Functional
Figure 11.5
As per this model, the functional competencies will be different for different
functions like:
 Finance
 Marketing
 Production
 Materials
 Sales
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 Information system Notes

 Engineering
 Customer service
 Safety health and Environment
 HR
 Administration, etc.
Managerial and Behavioural Competencies will remain uniform for all
functions.
Model 7: Organizational Goal Linked Competency Model

The basic premise of this model is developing a framework to identify
competencies for each job by linking, its goal with the organization’s goal. It
simply means that goals of individual jobs are linked with organizational goals
and accordingly this model has been designed.
A Competency Mapping exercise can be undertaken in a very structured and
systematic way. In the following steps under this Model:
Step 1: Define the Mission of the Organization

This means spell out the spirit and the core objectives for which the
organization exists.
Example: For a Pharmaceutical Company, mission is “to serve the

mankind to help them to have better health”. For an Automobile Company,
mission is “to provide world class quality cars at affordable prices to the
society.”
Step 2: Develop Vision for the Organization

This means showing lights on where and how we are moving to realize the
vision of the organization.
Example: To become the worldwide player with manufacturing and

distribution of medicines.” (For the pharmaceutical company). To be one of the
top 3 manufacturers of cars in the next 10 years in terms of volume. (For the
automobile company).
Step 3: Set Goals for the Organization

This means giving a concrete shape of vision in terms of specific activity line,
making feasible targets and quantify them ensuring that our targets are in line
with the mission and the core objective of the organization and give a time
frame for achieving those targets. In brief, set SMART Goals.
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Notes (SMART = Specific + Measurable + Achievable + Relevant + Time Frame)
Step 4: Define Departmental and Sectional Goals

The organization goals should be broken into Departmental goals and Sectional
goals.
Organization may have various divisions/departments/sections/sub-sections
like marketing, finance, HR, materials, production, quality assurance,
maintenance/engineering and so on. These departments or functions may have
further sections and sub-sections.
Example: Finance department may have sections like costing,

accounting, billing, etc. Production department may have various sections
depending on the type of industry. HR department may have sections like
establishment functions, industrial relations, employees’ welfare, training and
development and so on. Each department or section should have SMART
goals. The goals of departments and sections are derived from organization
goals. In other words, if we combine all the departmental and sectional goals,
they become organization goals.
Step 5: Define Goals for Individual Jobs
The departmental/sectional goals can be further broken into goals for each
individual Jobholder of the department. The individual goals should also be
SMART. The individual goals may also be termed as Key Result Areas (KRA)
or Key Performance Areas (KPA) with quantifiable Performance Indicators
(PIs).
Example: Plant Maintenance Manager

 Reduce rate of breakdowns from existing 8% to 5%.
Marketing Manager
 Increase sales volume by 20%.
 Expand sales to 3 new territories of minimum `. 2 crores each.
 Conduct market survey for 3 new proposed products.
Training Manager
 Bridge skill gaps of operators in the plant through training.
Production Manager
 Increase workers’ productivity by 10%.
 Decrease rejections from 4% to 2.5%.
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Step 6: Define Role of each Individual Job Notes

Clarify how the Jobholder would achieve his individual goals. This becomes
his role.
Example: Plant Maintenance manager

 Goal: Reduce the rate of breakdown from 8 to 5 %
 Role: Apply Preventive Maintenance, Systematise planned maintenance
Step 7: Break the Role into Tasks

This is the list of key activities involved in discharge of his role to achieve his
goals of the job.
Example: Plant Maintenance manager

 Goal: Reduce the rate of breakdown from 8 to 5 %
 Role: Apply Preventive Maintenance, Systematise planned maintenance
 Tasks: Budgeting, training technicians on preventive maintenance tools
Step 8: Identify Competencies needed for each role considering the Tasks
Here in this step the competencies are identified which are needed for the role
considering the tasks.
Model 8: Technical and Behavioural Competency Model

This model is applicable for a job which is manual in nature and which doesn’t
involve any supervisory or Managerial functions like Support Office Staff,
Time Office Clerk, Accountant, and Receptionist, etc. There may be only
2 sets of Competencies for them:
 Technical Competencies
 Behavioural Competencies
Technical Competencies will be job specific and different for different jobs
where as behavioural competencies will be uniform for all such jobs or they
may be different also for different jobs.
Example: We will take an example of Time Office Clerk

Technical Competencies (Job Specific) Knowledge of Company’s Personnel
Rules and Procedures , Factory’s Act, ESI Act, PF Act, Contract Labour Act
etc.
Skills Computer (M.S. Office), Payroll Software, Maintenance of Leave and
Attendance System, Calculation of Leave and Salary.
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Notes Behavioural Competencies

 Interpersonal Communication
 Team Player
 Maintaining Confidentiality and Secrecy
 Sharing Information with Superiors and Team members
 People Service Spirit
 Mental Balance and Emotional Stability
 Sensitivity to employees
Learning Activity
Analyse each model a prepare a self-generated imaginary
competencies for each model as per the instructions in the model
EQUITY AND COMPETENCY BASED

COMPENSATION
After understanding different models of competency mapping now let us
understand the concept of Equity and competency based compensation.
Competency based pay is compensation for individual characteristics, for skills
or competencies over and above a job or organizational role itself commands.
Individual characteristics that merit higher pay may be demographic factors
(seniority, minority status) or competencies (experience, potential, creativity,
entrepreneurial initiative, loyalty, institutional memory, portability, fluency in
other language).
Many compensation experts are wary of pay for competence, believing, “As
soon as a firm begins paying for ‘nice to have’ characteristics divorced from
job accountabilities that measure value added to the firm, it loses control of its
compensation system…that way lies corruption.
Organisational Issues
The following issues may indicate the need for a competency-based
compensation system:
 Inability to attract “good” (i.e., more competent than average) employees.
 The perception that people with certain competencies add more value to the
firm than those without them in identical jobs (the person “worth as many
people as languages he/she speaks”).
 The perception that job-based systems are inappropriate when change is so
fast that the very concept of a (stable) “job” may have lost its meaning. In
these situations, a person either has many “jobs” or roles or the “person
242 ANNA UNIVERSITY

makes the job”; the value added to the firm is a function of the individual’s Notes
competencies rather than a hard-to-face position.
 The need for incentives to motivate employees to maintain and enhance
state-of-the-art skills (e.g., where an employee’s development and potential
future value are worth more than his or her present position or
performance).
Steps in Developing Competency Based Compensation Systems

1. Identify Key Factors: Identify job role requirements, person competencies
that predict performance and its results for each level in a job family.
Bases for compensation can be diagrammed on two axes, One axis is
“individual to organization” and the other is “input to output”. Traditional
compensation systems pay for an organizational job or role:
organizational input requirements such as technical knowledge, problem-
solving, and accountability (number of people and rupee value of assets
managed).
Performance-based pay systems supplement base salary determined by
organizational role with additional pay for organizational outputs: actual
performance results, economic benefits brought into the firm. Examples of
pure performance-based systems include piecework and full commission
sales: Employees get paid only when they perform and in direct proportion
to their productivity.
Competency-based pay systems pay for individual input characteristics,
for the ability to add economic value to the firm at some future point in
time. Note that this is essentially the definition of an asset.
Organizational job, performance, and individual competence pay decisions
are further subject to external market and internal equity variables.
Individual characteristic (e.g. an MBA from a premier business school)
may have higher external market prices. Internal equity (e.g., to MBAs
hired in previous years) may limit the price a firm is willing to pay.
2. Determine Relative Percentages: Decide the relative percentages of total
compensation the organization wants to pay for job roles, person
competence, and performance results. Competency-based pay systems
usually include all three basic factors: base pay based on organization job
or role, plus additional pay for person competencies, either brought to the
job or acquired or demonstrated in it, plus pay for individual, team, or
organization performance results, Fixed pay (salary) is set by base pay for
the job, plus additional pay based on the competencies a person brings to
the job that predict better than average performance. Variable pay can
include additional compensation for competencies demonstrated on the job
or acquired while in it (‘PAY FOR SKILL’), and for actual performance
by the person, his or her team, or profit-sharing based on the
organization’s economic results.
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Notes A general trend in compensation is to increase the variable components of

pay, for example, to put 20% of pay “at risk”, conditional on
demonstration of competence and results.
3. Team Performance (performance outputs): Based on hard measures of
team productivity and quality, such as the number of goods cars or car
parts produced by the team at standard cost.
4. Overall Organization Results (performance outputs): Whether or not the
firm made money selling automobiles, base pay is set at 80% of the market
rate (100%). The bonus pool is dependent on the overall organization’s
budgeted level of performance. If the firm meets its performance goals, a
worker can earn up to 120% of the market rate, or an additional 50% of
base salary, if his or her individual competencies are rated 100 of its
productivity and quality goals. At the firm’s expected level of
performance, 67% of pay is fixed or guaranteed and 33% is variable or at
risk, based on individual competence, team performance, and organization
profits. If the overall organization does better than expected, the bonus
pool and variable pay can be larger; if the firm does not meet its goals,
variable pay will be less. The test of this compensation system will come
when the firm does not meet its goals and worker compensation falls
below 100% of the market rate.
Learning Activity
Visit a pharmaceutical company and develop a competency based
compensation system over there. Prepare a short report on the same.
Competency Mapping in RXY Laboratories Ltd.
Every organization that wants to achieve its goals in terms of productivity,

quality, profitability, stability and growth and increase organizational
effectiveness, it must pay attention to the enhancement of competencies of
its human resources in a systematic and planned manner. Human
Resource Department is responsible for the development of the
employees’ competencies, dynamism, motivation and effectiveness in a
systematic and planned manner. The competency development is a process
which can be presented with the help of following diagram.
Contd…
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Notes
Figure 1: Competency Development Process

The study is based on the following “Competency Model” It is a
framework which defines a set of competencies for a specific position and
level in the organization, if possessed by incumbents, is likely to produce
desired results. The objective of Competency Model is to:
 Translate RXY’s Vision, Values and Goals into expected employee
behavior.
 Provide input for:
 Recruitment and Staffing
 Competency based Training Programs,
 Performance Evaluation and Developmental Plans.
 Talent Management and Succession Planning
 Improve Employee Engagement and Retention.
Figure 2: Competency Model

The competency in RXY Laboratories Ltd. is the underlying characteristic
of a person which enables them to deliver superior performance in a given
Contd…
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Notes job, role or situation. The various components of Competence Assessment

of the jobs have been explained with the help of following diagram:
Figure 3: Components of Competence Assessment

Various parts of the diagram are further explained as under:
A. Visioning, Groundwork, Planning & Awareness Creation
For the purposes of Competency Mapping of the employees, all the
employees of the company were explained the objectives of Competency
Mapping in their departments separately under the supervision of their
departmental heads. The Attributes, Skills and Knowledge variables were
studied and selected in consultation with the heads of departments and HR
Department. The various parameters for these variables have been taken
from the KRA (Key Result Areas) Reports, SOPs (Standard Operating
Procedures), Job Roles and Policy Statements of the Company.
B. Designing Competency Model & Data Gathering

The process of designing the competency model and collecting data has been
explained with the help of following flow chart:
Contd…
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Notes
Data Collection: To assess employee competencies, the data was collected.

Following steps were taken for this purpose.
1. Format of Job Description was finalized in consultation with the HR
Department.
2. Job Description of the employees was completed in consultation with
the employees in predetermined format.
3. The job descriptions of the employees were finalized after the following
process was undertaken
(a) The employee approved the Job Description
(b) The HODs approved the relevant information in the Job Description
to avoid exaggerations.
(c) The review of the HR Department was obtained to avoid biasness.
4. As indicated earlier, the assessment of the employees on three aspects
was taken up:
(a) Attributes
(b) Skills
(c) Knowledge
5. Various parameters on all the above three variables were selected. These
parameters were further elaborated by adding factors of each parameter
to bring in more clarity and precision.
6. The parameters have been derived from the Key Result Areas (KRA)
included in the Performance Appraisal System of RXY Laboratories
Ltd.
7. The scores on all the three variables viz. Attributes, Skills and
Knowledge were averaged to find the final score. Assessment was made
Contd…
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Notes on the basis of five point Scale in personal interaction with each of the
employees. The final score was used to analyze the ranking of each
employee on 5-point scale
In order to study the competency development skills among the employees
of RXY Laboratories, the following steps were undertaken:
1. Job Description
2. Assignment of Scores on attributes, Skills and Knowledge of the
employees
3. Assessment of Overall Competency of the employees
4. Evaluation of Overall Skills of the employees to ascertain the Level of
Managerial Competence in them.
Application of the Model Level of Managerial Competence on the Basis
of overall Skills of the Employees
In all, nine variables of Skills were considered for the present study which
has been mentioned above. For each variable, several behavioral indicators/
parameters have been selected. To analyze the competency of the
respondent with respect to managerial level of the organization, the scores
on various parameters of a skill were clubbed to ascertain the total score of
that skill. This score was averaged which indicated the score on that skill.
Similarly the scores of other skills were ascertained. The skills of the
employees were analyzed to rate the level of the various skills possessed by
them from very high to very low level. These skills were further grouped as
per the table below to identify his level of managerial competence. Besides
the skills, the scores on various attributes identified as values in action in the
said table were also studied. It is worth noting that these values in action are
mandatory for the employees. The scores on these values affect the
employees’ performance appraisal. Below moderate performance on these
values reduces the overall score of Performance Appraisal of an employee.
The various types of Managerial Competence have been explained as under
in relation to the Company.
1. Operator: An operator has been designated to a person who is in-charge
of operations or helps in operating or operates equipment. These include
the supervisory and the operational staff who are seen as individual
contributors performing a routine job/task or managing a defined area of
production. Operational staffs can be classified into skilled, semi-skilled
and unskilled person.
2. Executor: The executor is one who puts a plan into action. He sets and
monitors individual performance, possesses good execution and
monitoring skills. He has the capability of allocation of resources
(man/machine/material) efficiently. He keeps focus on meeting
Contd…
248 ANNA UNIVERSITY

timelines, good in interpersonal communication skills (have large Notes

influence sphere) and follows instructions and adhere to systems.
3. Implementer: A person who plans and ensures the implementation of
the activities which have been officially decided. He possesses good
planning abilities, team building abilities, decision making and eyes for
details and in depth understanding of the systems. Such person is
resourceful and pragmatic with very good people management skills.
Further, the person having good communication skills and ready to
assume leadership position is termed as Implementer.
4. Leader: A person is designated as LEADER who leads a group of
people (site/department) and firstly ensures maximum output with the
given resources and constraints; identifies and promotes talent and
innovation; possesses the ability to understand and communicates the
corporate vision and align the site or department towards it. He
continuously measures work performance and gives online updates. He
also develops and holds team members together and acts a good
facilitator.
5. Strategist: A strategist plans for the future of the enterprise He has a
global vision (be able to identify business opportunities) and skills of
designing policies and seeking strategic alliances for companys growth.
Such person can communicate the vision to the stakeholders and inspire
commitment and performance from the stakeholders. The following
table explains these managerial roles with regard to the various
competencies of the respondent under study:
Table 1: Managerial Competencies as Per the Role
Contd…
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Notes The various skills possessed by the respondent whose case has been taken
up in the present study have been analyzed on the basis of his competence in
each skill and put at appropriate place in the above mentioned managerial
grid. For this purpose, High and Moderate Level Skills of the respondent as
mentioned in Sub section II of the Part 3 of the report were taken up. On the
basis of the rating of various Skills, the following conclusion was drawn:
The total competencies of the respondent explain that he is an
‘IMPLIMENTOR’ with some qualities of Leadership. Similar analysis can
also be made for other respondents.
Questions
1. Explain the objectives of competency model in RXY Laboratories Ltd.
2. Discuss the various types of Managerial Competence that have been
explained in relation to the Company.
Source: International Journal of Emerging Research in Management & Technology ISSN: 2278-9359 (Volume-2,
Issue-10) , October 2013
1. Career management is more or less like the

organisational management; after all an organisation is
nothing but an assortment of individuals! The process
of career management begins with the formulation of
goals and objectives those that are short term or meant
to be achieved in the short run.
2. Organizations that don’t have the time or resources to
build to develop competencies can purchase
comprehensive competency libraries online. These
universal competencies are applicable to all
organizations across functions. Organizations can then
take these competencies and begin building a
competency model.
SUMMARY
 Spencer and Spencer define competency as an underlying characteristic of
an individual that is causally related to criterion-referenced effective and/or
superior performance in a job or situation.
 Motive, traits, self-concept, knowledge and skill are the five underlying
characteristics in competency. Motive, trait and self-concept competencies
predict skill behaviour actions, which in turn predict job performance
outcomes.
 Competency mapping process is designed to consistently measure and
assess individual and group performance as it relates to the expectations of
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the organization and its customers. It is used to identify key attributes Notes
(knowledge, skills, and behaviour attributes) that are required to perform
effectively in a job classification or an identified process.
 Competency based pay is compensation for individual characteristics, for
skills or competencies over and above a job or organizational role itself
commands. Problems with the pay for competence concept include internal
equity and the potential for misuse.
 Steps involved in developing competency-based compensation systems are:
Identifying key factors, Determining relative percentages, Team
performance and overall organizational results.
KEYWORDS
Skill: The ability to perform a certain physical or mental task.
Traits: Physical characteristics and consistent responses to situations or
information.
Competency Based Pay: It compensation for individual characteristics, for
skills or competencies over and above a job or organizational role itself
commands. Individual characteristics that merit higher pay may be
demographic factors (seniority, minority status) or competencies (experience,
potential, creativity, entrepreneurial initiative, loyalty, institutional memory,
portability, fluency in other language).
Competency: It is an underlying characteristic of an individual that is causally
related to criterion-referenced effective and/or superior performance in a job or
situation.
Underlying Characteristic: It means the competency is a fairly deep and
enduring part of a person’s personality and can predict behaviour in a wide
variety of situations and job tasks.
Generic Competencies: This will be set of general competencies for all jobs
having same level irrespective of the functions or departments.
Specific Competencies: This will be set of competencies specific to particular
job or function based on its typical requirements.
1. What do you mean by Competency?
2. List the characteristics of Competency.
3. What do you mean by Competency Mapping?
4. Give few Competency Assessment Tools.
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Notes 5. Give some Competency Identification Tools.

6. What do you mean by Threshhold Competencies and Differentiating
Competencies?
7. Name the steps involved in developing Competency based Compensation
System.
8. How are competency and career management related?
9. What is the criterion which is most frequently used in competency studies?
10. List the three steps of competency mapping process.
11. What do you mean by impact analysis?
12. What are the aspects of competency mapping?
13. What affects competency mapping?
14. Why competency mapping is required?
15. List some of the applications of competency mapping.
16. List some of the competency mapping models.
17. Draw the chart for 5 level competency model.
18. Discuss in brief Job based competency model.
19. Write a short note on Managerial, Behavioural and Functional Competency
based Model.
20. Why competency based compensation system is required in organisations?

1. List the different Competency Mapping Models and explain any three of
them with examples.
2. Explain the five types of Competency characteristics.
3. Explain the steps in developing Competency Based Compensation System.
4. Explain the implications of Competencies in Career Development in detail.
5. Explain the different categories of competency.
6. How will you Identify Competencies which are required to meet or exceed
customer requirements?
7. Explain the competency mapping process with the help of diagram.
8. Explain Organizational Competency Based Competency Model with the
help of diagram and examples.
9. Discuss about Commitment and Competence based Competency Model
with diagram and few examples.
10. Explain the generic and specific competency model with the help of
examples.
252 ANNA UNIVERSITY

FURTHER READINGS Notes

Oxford, 2007.
Management, Cengage Learning , Southwestern, 13 th edition,
2010.
Cengage Learning , Southwestern, 3rd edition, 2010.
McLeod, The Counsellor’s Workbook, Tata McGraw Hill, 2011
ANNA UNIVERSITY 253

Notes
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Lesson 12 - Employee Coaching and Counselling
Notes
UNIT V
LESSON 12 - EMPLOYEE COACHING AND
COUNSELLING
CONTENTS
Learning Objectives
Learning Outcomes
Overview
Coaching
Need for Coaching
Role of HR in Coaching
Coaching and Performance
Skills for Effective Coaching
Coaching Effectiveness
Mentoring
Counselling and Need for Counselling
Need for Counselling
Guidance Differentiated from Counselling
Implications of Counselling in Information Age
Stages in the Counselling Process
Role of HR in Counselling
Effectiveness of Counselling
Counselling Skills
Components of Counselling
Summary
Keywords
Further Readings
LEARNING OBJECTIVES
 Explain the Meaning of Coaching
 Analyse the Need for Coaching
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Notes  List the Skills of Coaching

 Discuss the Counselling and Stages of Counselling
 Describe the Components of Counselling
LEARNING OUTCOMES
understanding of:
 basics of coaching and its need for coaching
 explain role of HR in coaching
 identifying skills for effective coaching
 coaching effectiveness and explain mentoring
 counselling and need for counselling
 implications of counselling in information age
 analysing role of HR in counselling and explain effectiveness of
counselling
OVERVIEW
In previous lesson, we have studied about characteristics of competencies,
Implications of competencies in career development causal relationship and
competency mapping. We have also discussed about competency mapping
process and competency mapping models. At the end of the lesson, we learned
about Equity and competency based compensation and steps in developing
competency based compensation Systems.
Managing and developing human performance is increasingly recognized as a
key challenge in today’s organizations. Coaching and mentoring are the two
wonderful ways which ensure that employees perform effectively in a way that
benefits the organization. Implementation of an active coaching and mentoring
programme allows managers to enhance productivity, deliver better quality
work, develop better interpersonal relations and promote opportunities to
delegate. The IPD ‘Training & Development in Britain 1999’ survey of 800
Training Managers suggests that around 87% of business in the UK utilize
coaching and mentoring
In this lesson, you will learn about coaching and need for coaching, skills for
effective coaching and also on the topic of counselling and components of
counselling and effectiveness of counselling.
COACHING
Let us start this lesson by understanding the meaning of coaching. When a
manager takes an active role in guiding another manager, we refer to this
activity as coaching. Just as track coaches observe, analyse, and attempt to
improve the performance of their athletes, “coaches” on the job can do the
256 ANNA UNIVERSITY

same. The effective coach, whether on the track or in the corporate hierarchy, Notes
gives guidance through direction, advice, criticism, and suggestions in an
attempt to aid the growth of the employee.
By the way, the people at Telios share this quote by famed Dallas Cowboy
coach Tom Landry on their website,: “A coach is someone who tells you what
you don’t want to hear, who has you see what you don’t want to see, so you
can be who you have always known you could be.”
When informal learning involves a more-experienced employee, we might call
it “coaching” if task-related, or “mentoring” if it concerns the general increase
of skills valued in this particular company.
Example: Cricket team being coached by coacher. Here the task would
be cricket game
NEED FOR COACHING

Now after knowing the meaning of Coaching, let us try to understand the need
for coaching. To be successful as people manager, you must recognize three
very important basic facts about your role as a manager:
1. Management is the intervention of getting things done through others.
2. You need your employees more than they need you.
3. You get paid for what your employees do, not for what you do.
If you accept these three basics, you will come to some very important
conclusions about the most appropriate interventions necessary for you to
become a successful manager.
Effective managers play the role of a coach rather than a boss. Their job is to
help the employees (i) to set clear, challenging, yet attainable goals, (ii) careful
and attentive listening, (iii) creating a sustained, supportive work environment,
(iv) acknowledging the genuine feelings and needs of the employees as
relevant to learning and development, (v) enabling employees to analyze their
weaknesses and areas for development and (vi) encouraging them to design
detailed action and participate in the review process.
Coaches may play one or more of three roles: 1. Working one-on-

one with an employee, as when giving feedback; 2. Helping them find
experts and teaching them to obtain feedback from others; 3. Providing
resources such as mentors, courses, or job experiences.
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Notes ROLE OF HR IN COACHING

Now let us understand the role of HR in Coaching Analysis. In the context of
the high attrition rate in organization these days, it is important that managers
realize that they need the support of their subordinates more than the
subordinates need the managers. Since the performance of the managers
themselves is assessed based on the results, it is all the more important that the
managers get their acts together well orchestrated with the help of their
subordinates. HR professionals’ role lies in educating the managers how they
should become effective coaches in order to keep their own performance
soaring through the efforts of their subordinates. As it is obvious that all good
managers cannot be good coaches unless they are attuned to that kind of
approach, it is HR that should provide the necessary training and awareness
professionals to the managers.
Further, at the time of analysis of coaching as depicted above,

HR professional will have to assist the managers in the process. The
analysis throws up many issues either to support the manager or the
coached.
When ultimately the coaching becomes futile due to the failure in changing the
behaviour of the coached, transfer, demotion or termination is resorted to. Then
to it is the HR professional who has to show the right way. As far as possible,
he has to make maximum effort to retain the talent without frittering it away.
COACHING AND PERFORMANCE

Now let us understand the concept of Coaching and Performance. We,
generally, attribute good attitude for good performance. Because many times
we seem to gauge the attitude of employees (i) through what they do (their
actions, non-actions, reactions, achievements) or (ii) from what they tell us or
(iii) through a self yardstick (I did that and I know what my attitude was, so
they must feel the same way). Some managers even say that they know what
people’s attitudes are because other people tell them, but the only method the
other people actually have is one of the three preceding. None of these is the
right way to define attitude, because none is a mind-reader, neither whatever
others tell need to be hundred percent true nor a self-projection is the right
reflection of others’ state of mind. Finally what is then an attitude? “Attitude is
how people feel about themselves and the world around them and can include
quite specific feelings or values, such as likes and dislikes.”
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Therefore, from a practical management view point, the only alternative to the Notes
psychodynamic approach is the management of behaviour. Behaviour is the
only thing you can deal with. You can see it when it is bad, you can measure it,
and you can talk about it unemotionally. You can see it when it changes and
you can measure it after it changes. If you separate yourself from the
internalized reasons for behaviour, and start dealing with that behaviour itself,
you will be able to separate people from their behaviour. You will learn how
appropriate it is to be able to say, “I like you very much, but I dislike your
behaviour. It you would change your behaviour I would like it as much as I
like you.” And if you start trying to change behaviour rather than trying to
change people, you will no longer be faced with the resistance people naturally
present, because they don’t want to be changed.
The psychodynamic approach includes all the theories in

psychology that see human functioning based upon the interaction of
drives and forces within the person, particularly unconscious, and
between the different structures of the personality.
SKILLS FOR EFFECTIVE COACHING

Here in this section we will try to learn about what are the skills for effective
coaching. Now we will get down to the nitty gritty of what you can do when
people are not doing what they are supposed to be doing, or are doing
something they shouldn’t be doing. The process you can use is called coaching.
It is a four-step process which will guide you in using the simplest to the most
sophisticated interventions as needed to correct performance problems.
Step 1. Neutral feedback: Tell the employee about bad performance and ask
the employee to correct it. Follow up to check for improvement; reinforce any
improvement.
Step 2. Neutral follow-up on feedback: Performance has not improved, tell the
employee about bad performance; ask why performance is bad; ask for specific
behaviour change; give assistance if needed. Follow up to check for
improvement; reinforce any improvement.
Step 3. Coaching analysis: If performance does not improve, use coaching
analysis to understand why performance is unsatisfactory and take action to
eliminate what, if anything is influencing the poor performance.
Step 4. Coaching discussion: If poor performance is by employee choice, use
the coaching discussion to get employee to change his or her choices.
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Notes COACHING EFFECTIVENESS

Now let us try to understand the effectiveness of coaching. The technique of
managers coaching other managers has the advantages that go with learning by
doing, particularly the opportunities for high interaction and rapid feedback on
performance. Unfortunately, its two strongest disadvantages are (1) its
tendencies to perpetuate the current managerial styles and practices in the
organization and (2) its heavy reliance on the coach’s ability to be a good
teacher. In the same way that we recognize that all excellent sprinters do not
make outstanding coaches, we cannot expect that all excellent managers will
be effective coaches. An individual can become a good manager without
necessarily possessing the knack of creating a proper learning environment for
others to do the same. Thus, the effectiveness of this technique relies on the
ability of the “coach”.
Learning Activity
Visit a sports coaching centre and try to understand how the
coaching is carried out by the trainer and how effectively it is
imbibed by the participants.
MENTORING
Here the concept of mentoring is discussed below. Mentoring involves the use
of superior experience to guide, facilitate, motivate, encourage and thereby
enable the employee to utilize his personal qualities more effectively in order
to succeed on his job. It includes briefing and debriefing the employee before
and after each training and development event. Briefing helps to focus on the
employee’s learning agenda from a specific event and debriefing helps him to
crystallize his learning, achieved during the event, in the context of his present
and future role assignments, and help its internalization by providing for its
earliest use in the day-to-day work situation. Most mentoring relationships
develop informally as a result of interests or values shared by the mentor and
protégé (Dependent).
According to research, the employees most likely to seek and attract a mentor
have certain personality characteristics: emotional stability, ability to adapt
their behaviour to the situation, and high needs for power and achievement.
Developing mentoring relationships is successful when it is able

to bring participants together voluntarily and make them understand the
details of the programme. It is also important to reward managers for
employee development in order to prove that mentoring and other
development activities are worthwhile.
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Table 12.1: Characteristics of Coaching and Mentoring Notes

Coaching Mentoring
Managers Coach their staff as a required part of It occurs outside of a line manager-employees
the job relationship, at the mutual consent of a mentor
and mentored
Coaching takes place within the confines of a It is career –focused or focused on professional
formal manager-employee relationship development that may be outside a mentor’s area
of work
The focus is to develop individuals within their Relationship are personal – a mentor provides
current job. both professional and personal support
The interest of the relationship is functional, Relationship may be initiated by mentors or
arising out of the need for individuals to perform created through matches initiated by the
the tasks required to the best of their ability organization
Managers tend to initiate and drive the Relationship cross job boundaries
relationship
The relationship is finite, ending when an Relationship last for a specific period of time ( 9
individual has learned what the coach is teaching months to 1 year) in a formal program, at which
point the pair may continue in an informal
mentoring relationship
COUNSELLING AND NEED FOR COUNSELLING

Let us try to understand what actually is counselling all about. Counselling is a
word we hear more often in every walk of life. For students to get into
professional colleges counselling is resorted to; teachers in government service
go for counselling to get transfer to their desired locations; career counselling
is very much in vogue in some of the progressive educational institutions.
Performance Counselling in organizations has become part of the performance
management. Family Counselling is sought after by members of families to
maintain internal peace and harmony. In all these one common thread is there:
a solution is sought for a problem or the other.
Counselling is dyadic relationship between two persons; a manager who is
offering help (Counsellor) and an employee whom such help is given
(Counselee). It may be formal or informal.
Example: After the performance evaluation of the employee the

manger Counsels the employee for the performance given by him/her during
the specified time period.
Need for Counselling

Counselling helps a person overcome emotional problems and weaknesses
relating to performance. It aims at developing the Counselee fully. It involves
the following (Pareek and Rao):
 To help him realise his full potential
 To help him understand his strengths and weaknesses
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Notes  To gain insight into his behaviour and analyse the dynamics of such
behaviour
 To help him understand the work environment better
 To provide an empathic climate where he can discuss his tensions,
conflicts, concerns and problems
 To increase his personal and inter-personal effectiveness through prompt
feedback about his behaviour
 To prepare action plans for improving his behaviour and performance.
The evolution of work and career in the Western and Indian situations seem to
have moved along parallel pathways, within different social-cognitive
environments. While it may be anticipated that cultural norms could continue
to foster variations in social cognitions between the West and India, the
outcomes of consolidation and the more recent trends towards globalization
have initiated convergence in career requirements. Around the world workers
and young workers-to-be, face new horizons. In contemporary post-industrial
society, career and work have taken on new meanings. We have entered a new
period in the evolution of work – the Information Age.
Guidance Differentiated from Counselling

Counselling
Though several definitions exist, many counsellors consider the definition of
counselling given by Gustad (1953) very comprehensive statement indicating
both the scope as well as the function of counselling. According to him,
“Counselling is a learning oriented process, carried on in a simple, one-to-one
social environment, in which the counsellor, professionally competent in
relevant psychological skills and knowledge, seeks to assist the client, by
methods appropriate to the latter’s needs and within the context of the total
personnel programme, to learn how to put such understanding into effect in
relation to more clearly perceived, realistically defined goals to the end that the
client may become a happier and more productive member of society.”
There are quite a few serious misconceptions regarding counselling. It would
perhaps be useful to state what counselling is not, to help clarify our
conception of it. Counselling is not:
1. Giving information though information may be given.
2. Giving advice, making suggestions and recommendations.
3. Influencing the client’s values, attitudes, beliefs, interests, decisions, etc.,
with or without any threat or admonition.
4. Interviewing clients.
Counselling is concerned with bringing about a voluntary change in the client.
To this end, the counsellor provides facilities to help achieve the desired
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change or make the suitable choice. The client alone is responsible for the Notes
decisions or the choices he makes, though the counsellor may assist in this
process by his warmth and understanding relationship.
The synthesis of ideas for counselling as an aspect of guidance has been recent.
By broad and general consensus, counselling:
1. is primarily concerned with normal people.
2. emphasizes personality ‘strengths’ as assets of the Counselees.
3. emphasizes cognitive ability involved in choice and decision-making.
Counselling would mean problem-solving by aiding the

Counselee learn the skills of making choice and managing life’s roles. It
follows rational elements in the process rather than on the intensity of
affective areas. This does not deny the reality of emotional and irrational
forces.
Guidance
One should not get confused with counselling and guidance. Guidance
performs a complementary educational function, assisting normal development
and personal autonomy. This would mean the creation of personal autonomy
purposeful action and effective personal decision-making. From this point of
view, counselling can be understood as an aspect of guidance. Equating
individual counselling with guidance is to limit its scope. Guidance is an
applied behavioural science, of which counselling is one aspect. Defining and
differentiating between counselling and guidance is not easy. Besides, there
has been a lot of ambiguity regarding its definition, which reflects the
uncertainty with which views on guidance and counselling were elaborated and
presented. Lortie (1965) holds that the current position of counselling refers to
a diverse contradictory function. McCully could not find any consensus on the
nature of the essential and primary services offered by the counsellors.
Counselling may represent one of the services of the guidance function.
Implications of Counselling in Information Age
The Information Age represents a continuation of the earlier work ethic as well
as the need for redefinitions. Two important characteristics of this new phase in
the evolution of work that have brought changes into prevailing social-
cognitive environments are discussed below.
1. Changes in Conceptions of Time and Space: Information and
Communication Technologies (ICT) have transformed ideas of space and
time within the world of work. Today, communication across vast distances
can be almost instantaneous. Networks allow for the creation of virtual
workspaces that need not have specific geographical locations.
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Notes 2. Redefinition of Skill Requirement: Unemployment is a problem that has

always characterized the world of work. However, the nature of and the
reasons for unemployment have changed as work has evolved. During the
pre-industrial periods, unemployment quite often was linked to the vagaries
of economic cycles.
Stages in the Counselling Process

Now let us try to understand how the Counselling process is carried out.
Sometimes Counselling is a prolonged affair and sometimes people can be
helped in a relatively short space of time. When a counselling relationship
develops, it is not uncommon to see certain stages being worked through.
These may be identified as follows:
1. Getting started
2. Introductory talk
3. Identifying the issues
4. Coping with feelings
5. Identifying possible solutions
6. Agreeing a plan
7. Implementing the plan
This list of stages can be useful in thinking about how to structure the
Counselling process.
Getting Started
Here, the counsellor and client meet and get to know each other. Often, the
client will be nervous and will not know what to say. In this stage of the
relationship, it is usually helpful if the counsellor plays the dominant role and
helps the client to relax, settle down and focus on why they are there. This is as
true in careers counselling as it is in counselling for emotional problems. Few
people are able to ‘come right out with it’ in the early stages of the
relationship. In this stage, it is useful if the counsellor clarifies the following
issues with the client:
 The frequency with which they will meet;
 The times they will meet;
 When it is anticipated that the relationship will end;
 Whether or not the two can talk confidentially.
Also, it is helpful if the counsellor indicates that anything can be talked about.
This creates the opportunity for the client to talk about what he or she wants to
talk about.
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Introductory Talk Notes

Most people come to a counsellor with only a vague sense of what it is they
really want to talk about. Many start from a general conversation about their
lives and then work towards specifics. It seems likely that many people do not
know what is troubling them until they begin to talk. At this particular stage of
the relationship, there is a general, opening stage in which the client is
encouraged to give the counsellor a few personal details. Here, it is useful to
use broad, open questions such as:
 Can you tell me something about your work at the present time?
 Can you tell me a little about your background?
 How have you found the course so far?
 What have you been doing with the company up to now?
These allow the client to get talking and often prove the point that: “I don’t
know what I think and feel until I hear what I say.”
Identifying the Issues

At a point during this initial phase of talking, the ‘real’ issues begin to emerge.
Sometimes, such issues can be brought to the surface by the counsellor asking
‘facilitative’ questions that encourage the client to elaborate a little. Examples
of such interventions include:
 How did you feel about that?
 What was that like?
 How are you feeling at the moment?
 What did you do then?
 What happened when you did that?
This sort of question encourages the client to say more and helps to focus on
the ‘real’ issues. One important principle emerges out of this discussion. It is
important to note that the things that are ‘real issues’ for the client, may not be
‘real issues’ for the counsellor and vice versa (The things that worry me may
not worry you.) What is really important in all types of counselling is that the
counsellor does not anticipate or ‘best guess’ the important issues for the client.
In all cases, those issues should emerge out of, and be identified by, the client’s
discussion of his or her own life situation.
Coping with feelings

Counselling people often means coping with emotions. Once people in
counselling begin to identify the real issues, they often begin to experience
emotional release. A considerable part of the process of helping people in
counselling is concerned with the emotional or ‘feelings’ side of the person. In
the UK and North American cultures, a great premium is placed on the
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Notes individual being able to ‘control’ feelings, and thus overt expression of
emotion is often frowned upon. As a result, we learn to bottle up feelings,
sometimes from a very early age. This is not much different in Indian context
these days, though in the past Indians, especially in the joint family system had
access to venting out their feelings to their elders. Needless it will be to point
out what kinds of consequences such suppression of emotion will lead to.
Before going further, here is a word of caution. It is often noted

that people are individual in their responses. It is difficult to make general
statements about ‘how human beings work’. If we do make
generalizations, we are likely to find exceptions to them. It should be
noted, then, that while the points made here are true of many people, they
are not necessarily true of all people. Some people, for example, do not
particularly lie or want to express strong feelings. There is no need to
have an elaborate theory of ‘resistance’ or denial here but merely to note
that different people do things differently. There should be no hint from
the counsellor that people should release or face emotions. It is important
to pay close attention to the individual’s needs and wants. We are all
different.
It is possible to distinguish between at least four types of emotions that are

commonly suppressed or bottled up: anger, fear, grief and embarrassment. It is
suggested that there is a relationship between the feelings and certain
expressions of them. Thus, in counselling, anger may be expressed as loud
sound, fear as trembling, grief through tears and embarrassment by laughter. It
is suggested, too, that there is a relationship between those feelings and certain
basic human needs.
Identifying Possible Solutions

Once feelings have been relieved, the next stage involves helping the client to
identify ways to deal with or cope with the problem(s). Not everything can be
sorted out. Not everything has a solution. The point, here, is that the client has
now identified a situation that was unclear or, perhaps, unbearable before. The
next thing is to work out a plan to make the situation more liveable. Most
counselling theorists agree that it is the client who should identify solutions to
problems. This process can be encouraged by a ‘brainstorming’ session.
In brainstorming, the client is encouraged to think diversely about possible
ways of resolving his or her present situation. Nothing need be excluded at this
stage. The client is encouraged to be creative, irrational and spontaneous as
well as thoughtful, logical and sensible. The idea is to generate as many
solutions as possible. Out of this usually comes an ‘obvious’ solution. Obvious,
that is, to the client. Often, this stage of Counselling involves what has been
called an ‘ah-ha!’ experience. Suddenly, but often inevitably, the solution to
the problem under discussion dawns on the client.
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Agreeing a Plan Notes

Out of the process of reaching an idea about how things might be resolved
comes the need to identify a practical plan of action. It is one thing knowing
what you want to do or change; it is another thing to put those ideas into action.
During this stage of the Counselling relationship both Counsellor and the
Counsellee work together to draw up a practical plan of action. For some, it is
helpful if this plan is committed to paper. Other people prefer a more relaxed
approach to such planning. The point is that the plan should be both reasonable
and achievable.
Implementing the Plan

This stage of Counselling is carried out by the client almost independently of
the Counsellor. It is the putting into action of the plan that was discussed in the
previous stage. Usually, what the client needs here is support from the
Counsellor. Change is difficult for most people: it often brings with it a degree
of anxiety. Often, too, this stage of the relationship heralds its end, and both
client and Counsellor have to deal with the fact that they might not be meeting
for much longer.
It is tempting to think that this is only a problem for the client. In practice,
Counsellors usually get attached to the people they Counsell. It is necessary,
then, for both parties to think about – and if necessary talk about – the closing
of the relationship. Once it is decided that it will end, it is often best to set a
date and to make the break a clean one. Alternatively, they suggest that ‘one
more meeting’ might be useful.
These, then, are the stages that many Counselling relationships work through.
Not all relationships follow the stages in this order and sometimes one stage or
more is left out. The framework offered here is a way of thinking about the
Counselling process and can help to give some structure to the relationship.
ROLE OF HR IN COUNSELLING
Now let us try to understand what is the role of HR in Counselling. Every
manger has a responsibility to counsel his subordinates. When individual
managers are unable to deal with specific problems requiring the Counselling
services of a professional, organizations can either offer the services of a full-
time, in-house Counsellor or refer the employee to a community Counselling
service.
In some companies, the HR department trains some employees belonging to
various departments in Counselling skills and offers Counselling service
through them outside working hours for the benefit of employees as well as
their family members. Unless the individual volunteers to be Counselled,
benefit of Counselling is not reaped. These Counsellors, therefore, must be
persons whom the employees can trust. To create such a relationship will take
some time. Hence the management should abide its time in establishing and
gaining the trust of the employees and the society at large.
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Notes HR also should take active part in the performance Counselling, if not directly,
but as an enabler. It should give guidance to the line people in this respect.
There are many problems in coping with work situations explained earlier. All
these need to be addressed through the intervention of HR Department.
EFFECTIVENESS OF COUNSELLING
Now let us try to understand the effectiveness of Counselling. Lewis (1970)
arrived at the following conclusions after various studies on the effectiveness
of Counselling:
1. The effectiveness of Counselling stated in general and vague terms is not
researchable. It has not been and probably can never be firmly proved.
2. Motivated clients usually benefit from Counselling, no matter what
criterion is employed. It is likely that motivation plays an important role –
but then it is difficult to conceive of Counselling with an unmotivated
client anyway.
3. The effectiveness of Counselling can be more easily demonstrated with the
use of objective, but perhaps superficial, criteria. For example, Counselling
with college students clearly helps improve their grades and their
probability of graduation. These could of course have been influenced by
other factors outside the Counselling situation. No theoretical approach to
Counselling has been proved superior to others.
Learning Activity
Visit a Counselling centre near by your place and try to understand
the process of counselling, components of counselling and prepare
a small report on the working of the counselling centre.
Counselling Skills
It is obvious what Counselling skills a Counsellor should possess. They are
merely pointed out below without any elaboration, as it is self-explanatory in
the context of what has been said in the previous paragraphs:
 Listening: Listening to both verbal and non-verbal language correctly –
without assuming what the client means, but getting even the body
language clarified.
 Giving Information: It is fairly safe to say that it is more possible to give
information about concrete issues (like ‘expanding a business’ or
‘developing a career’, or ‘completing a college course’ or ‘buying a house’)
than it is about personal issues (like ‘continuing a relationship’ or ‘coping
with the death of a relative’ or ‘working through depression’).
 Making Suggestions: Suggestions are best kept in the ‘concrete’ domain.
Just as it is important to hold back on information in Counselling, so, too, is
it vital that the Counsellor does not too readily offer advice.
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 Drawing out: Some examples of counselling interventions that help to Notes

draw out the client include: open questions, closed questions and reflection
or mirroring.
 Challenging: Although challenging and confronting are not always
associated with Counselling, there are times when they are appropriate. The
following sample statements of a client can be challenged: “There is no one
in this organization that I can talk to at all”, or “I have never been any good
at anything. I have always been a failure, right from the word go”, or
“There’s nothing wrong….nothing at all ….I wonder why I am sitting here
talking to you really”.
 Supporting: The whole of the Counselling process should be an act of
support.
COMPONENTS OF COUNSELLING
Now let us try to understand the components in the Counselling. Two
researchers and Counselling theorists have attempted to identify the factors that
are essential to the process of Counselling. Fiedler asked a range of
Counsellors to say what they considered to be the ideal therapeutic
relationship. The list that they complied (Fiedler 1950) included:
 an empathic relationship;
 the counsellor and client relate well;
 the counsellor sticks closely to the client’s problems;
 the clients feel free to say what they like;
 an atmosphere of mutual trust and confidence exists;
 rapport is essential
Some years later Carl Rogers, father of client-centered Counselling, developed
that list and produced what Rogers was to call the ‘necessary and sufficient
conditions for therapeutic change’ (Rogers 1957). He hypothesized that the
following conditions had to be present if Counselling was to be effective:
 two persons are in psychological contact;
 the first, the client, is in a state of incongruence, vulnerable and anxious;
 the second, the Counsellor, is congruent or integrated in the relationship;
 the Counsellor experiences unconditional regard for the client;
 the Counsellor experiences an empathic understanding of the client’s
internal frame of reference and endeavours to communicate this experience
to the client;
 The communication to the client of the Counsellor's empathic
understanding and unconditional positive regard is to a minimal degree
achieved.
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Notes After so many years of the above findings, while the political, economic and
social climates of the world have changed, it seems likely that the human
element has stayed much the same even today. It is still important to meet
another person on intimate terms. It is still necessary to feel listened to and
understood and, most of all, it is important that people still have time for
relationships. This is as true in business and management as it is in the helping
professions and teaching – Counselling has a wide and diverse range of
applications.
The Wrong Job
A
mir Khan accepted a new promotion as manager with mixed
feelings. He was proud of having his work recognised, but he had
some doubts about how he would like the new work. His former job
as officer (pro) Delhi Development Authority (DDA) involved regular
contact with the general public, recoveries and processing their complaints,
meetings with the press and image building. It was a high profile job
involving lot of exposure to media and publicity. As the PRO, he could
build a good picture of DDA in the minds of the general public through
advertisements, press conferences and television coverage highlighting the
achievements of DDA in developing and constructing residential and
commercial properties in and around Delhi. His new job in the
Administrative Wing as manager was essentially a desk job, working with
files relating to the applicants registered for various housing projects
coming up in North Delhi Area, under the name ‘Rohini Scheme.’
Amir missed the routine of his old office and the people he had worked
with. He had a private office now fully carpeted and air-conditioned, but he
felt he really did not have the necessary background for the job. When he
submitted his first report on the Rohini Scheme to the Director of the
project, the Director was nice enough, suggesting some changes that in fact
meant that Amir had really got off the track. The Director said not to worry,
“We all have to learn a new job”. The more Amir thought about it, the more
he wanted to go back to the old job. But he hesitated for fear that he would
be branded ‘a misfit’ by management and thus disqualified for any future
promotions.
Questions
1. If you were Amir’s boss, what could you do to rectify this situation?
2. Could this situation have been avoided altogether?
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1. Coaching is providing feedback, usually to executives Notes

and managers, about how to reach their personal best
in their organizational leadership role.
2. The development and implementation of APEX
(Accelerated Performance for Executives) coaching
programme of Agilent Technologies have served over
one hundred leaders through a sixty-person, world-
wide coaching pool. Based on feedback from raters,
over 95% of the leaders have demonstrated positive
improvement in overall leadership effectiveness while
participating in the programme.
SUMMARY
 When informal learning involves a more-experienced employee, we might
call it “coaching” if task-related, or “mentoring” if it concerns the general
increase of skills valued in a particular company.
 The only reason for anyone to be a manager is to do everything in his/her
power to help his/her employees to be as successful as he/she needs them to
be. The manager succeeds only when they succeed.
 Both coaching and mentoring activities build commitment and create
willingness on the part of individuals to perform better and help the
organization reach its goals.
 Counselling is a learning oriented process, carried on in a simple, one-to-
one social environment, in which the Counsellor, professionally competent
in relevant psychological skills and knowledge, seeks to assist the client, by
methods appropriate to the latter’s needs and within the context of the total
personnel programme.
 The stages of Counselling are: Getting started, introductory talk,
identifying the issues, coping with feelings, identifying possible solutions,
agreeing a plan and implementing the plan.
 Effectiveness of Counselling can be measured only against objectives that
have been set before the Counselling had started and that too in a long-term
perspective.
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Notes KEYWORDS
Coach: A coach is someone who tells you what you don’t want to hear, who
has you see what you don’t want to see, so you can be who you have always
known you could be.
Mentoring: Mentoring involves the use of superior experience to guide,
facilitate, motivate, encourage and thereby enable the employee to utilize his
personal qualities more effectively in order to succeed on his job.
Counselling: Counselling is a learning oriented process, carried on in a simple,
one-to-one social environment, in which the Counsellor, professionally
competent in relevant psychological skills and knowledge, seeks to assist the
client, by methods appropriate to the latter’s needs and within the context of
the total personnel programme, to learn how to put such understanding into
effect in relation to more clearly perceived, realistically defined goals to the
end that the client may become a happier and more productive member of
society.
Guidance: It is performing complementary educational function, assisting
normal development and personal autonomy. This would mean the creation of
personal autonomy purposeful action and effective personal decision making.
Implementing plan: It is a stage of Counselling carried out by the client almost
independently of the Counsellor. It is the putting into action of the plan that
was discussed in the agreeing plan stage.
Coaching and Mentoring: When informal learning involves a more-
experienced employee, we might call it “coaching” if task-related, or
“mentoring” if it concerns the general increase of skills valued in this particular
company.
1. What do you understand by the term ‘Coaching’?
2. What do you mean by Mentoring?
3. What is the need for Coaching?
4. Write the role of HR in Coaching.
5. List out the stages of Counselling.
6. List out the components of Counselling programme.
7. Write the role of HR in Counselling.
8. What do you mean by Coaching and Performance?
9. Give some examples of Coaching.
10. What do you mean by Coaching Effectiveness?
11. What do you mean by Counselling effectiveness?
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12. Give some examples of counselling. Notes

13. Write the steps in Skills for Effective Coaching.
14. What is the need for Counselling?
15. Differentiate Counselling from Guidance.
16. What are the implications of Counselling in information age?
17. What do you mean by Counselling skills?
18. What is implementing plan in the process of Counselling stages?
19. What do you mean by listening in Counselling skills?
20. Give any two characteristic feature of Coaching.

1. Write a brief note on coaching.
2. What do you understand by Need for coaching? Elaborate.
3. Explain on coaching and performance.
4. Write briefly on skills for effective coaching.
5. Write a note on Role of HR in coaching analysis and coaching
effectiveness.
6. What do you mean by Counselling and need for Counselling?
7. Write a note on implications of Counselling in Information age.
8. Explain Stages of Counselling. Give example for each step.
9. Explain components of Counselling programme.
10. Write a note on effectiveness of Counselling and role of HR in
Counselling.
FURTHER READINGS

Oxford, 2007.
2010.
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Notes
LESSON 13 - EMPLOYEE HEALTH AND
WELFARE PROGRAMS
CONTENTS
Learning Objectives
Learning Outcomes
Overview
Health
Physical Health
Mental Health
Noise Control
Acquired Immune Deficiency Syndrome (AIDS)
Alcoholism and Drug Abuse
Violence at the Workplace
Welfare
Types of Welfare Activities
Non-statutory Welfare Measures
Approaches to Labour Welfare
Corporate Social Responsibility
Designing Welfare Plans
Assessment of Effectiveness
Stress
Causes of Physical Stress
Other Symptoms
Major Sources of Stress
Work Related Stress
Organisational Role Stress
Coping Strategies for Stress
Emotional Intelligence Defined
Emotional Literacy
Emotional Awareness Questionnaire
Emotional Intelligence and Work Situation
Contd…
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Lesson 13 - Employee Health and Welfare Programs
Notes
Summary
Keywords
Further Readings
LEARNING OBJECTIVES
 Explain the Health and Welfare Programs
 Define the Concept Stress
 Analyse the Sources and Measures of Coping with Stress
 List the Different Statutory and Non-statutory Welfare Programs
 Define the Emotional Intelligence
 Discuss the Emotional Intelligence and Work Situation
LEARNING OUTCOMES
understanding of:
 concept of physical and mental health
 define welfare and explain types of welfare activities
 determine approaches to labour welfare
 analysing major sources of stress
 basics of emotional literacy
OVERVIEW
In the previous lesson, we have learned about coaching and need for coaching,
skills for effective coaching. We have also discussed the topic of counselling
and components of counselling and effectiveness of counselling.
Human dignity is what is paramount in modern employer-employee
relationship these days. Though the world is filled with strife, war,
exploitation, violence and injustice, there is a loud clamour for human rights.
Therefore, more and more organizations worth their names would like to vie
with each other in providing a quality work life to their employees by way of
providing superb health and welfare facilities. The medium and small scale
industries too cannot afford to simply draw the line at the mandatory
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Notes requirements in these areas. Everyone is expected to look beyond the present
day’s requirement and work towards more healthy and satisfied workers.
Satisfaction is again a relative term. Everyone cannot be satisfied at one stroke.
Hence more and more flexible schemes have to be thought of by the employers
not only to retain their employees but also to manifest their genuine concern in
the health and welfare of the workers and their families.
In this lesson, you will learn about Health and Welfare programs and concept
of stress the sources of stress and topics related to Emotional intelligence and
work situation.
HEALTH
Now let us try to understand the concept of Health. The well-being of the
employee in an organization is affected by accidents and by ill health –
physical as well as mental. We have already discussed what prompts
counselling and we shall shortly discuss on job stress wherein we shall also see
how stress can affect physical, mental and emotional health. Here we shall
dwell briefly on health services to be provided by the management to ensure
the continuing good health of their employees.
It is proposed to examine employee health from the following

angles – physical health, mental health, noise control, AIDS, alcoholism, and
drug abuse, and violence at the workplace.
Physical Health
Ill health of employees results in reduced productivity, higher unsafe acts, and
increased absenteeism. A healthy worker, on the other hand, produces results
opposite to these. In other words, healthy employees are more productive,
more safety conscious, and are more regular at work. The worker who is
healthy is always cheerful, confident looking, and is an invaluable asset to the
organization.
But the physical health of an employee can be adversely affected by several
causes as shown below:
Table 13.1: Health Hazards
Health Hazards Causes
 Lung Cancer Coke oven emissions, asbestos, active or passive smoking
 White Lung disease Asbestos
 Black Lung disease Coal Dust
 Brown Lung disease Cotton Dust
 Leukemia Benzene, Radiation
 Cancer of other organs Asbestos, radiation, vinyl Chloride
 Hearing Impairment High Noise levels
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Notes
The protection of the health of the workers is a legal requirement

too. Section 11 to 20 of the Factories Act, 1948 deals with the health of
workers.
Health Services: A typical organization renders the following health services

to its employees. It may be stated that these services, at the best, offer first-aid
treatment to the victims. For any major ailment, employees are advised to go to
ESI hospital/dispensaries or authorized clinics/nursing homes.
 Pre-hiring medical check-up for all employees.
 Periodical physical, check-up of all employees. Regular medical check-up
of executives to detect early signs of tension, ulcers, diabetes and the like.
 First-aid treatment following an accident. Training in first-aid to all
employees.
 Treatment of minor complaints, such as cold, cough, fever and headaches.
 Rehabilitation and job placement of seriously injured workers who have
been cured but suffer from some disability.
 Control of occupational health hazards.
 Provision of healthy sanitary facilities, such as supply of clean potable
water, disposal of waste and effluents as per the norms prescribed Pollution
Control Board/environmental requirement; provision of healthy food;
elimination of insects and rodents; provision of personal services; good
housekeeping and the like.
 Special examination of eyes, teeth and ears, when needed.
 Cooperation with family physicians, local hospitals, clinics, as well as with
specialists.
 Special care of employees working in painting, welding, foundry sections,
chemical plants, boiler plants, etc. where the risk of their health is greater.
 Maternity and child welfare, including family planning.
 Adequate ventilation, good lighting, tree planting and good residential
quarters.
Mental Health
In recent years, the mental health of employees, particularly that of executives,
has engaged the attention of employers. Three reasons may be given for this
development. First, mental breakdowns are common in modern days because
of pressures and tensions. This can be been a little more in detail in the ensuing
section on stress. Second, mental disturbances of various types result in
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Notes reduced productivity and lower profits for the organization. Third, mental
illness takes its toll through alcoholism, high employee turnover, and poor
human relationship.
A mental health service is generally rendered in the following ways:
 Psychiatric counselling
 Co-operation and consultation with outside psychiatrists and specialists
 Education of company personnel in the nature and importance of mental
health
 Development and maintenance of an effective human relations programme
Noise Control
An age-old problem, and not effectively tackled till now, is the noise pollution
in industrial establishments. Noise made its appearance when man started on
working on metal. As civilization advanced, man discovered more and more
ways of having machines to do his work, and each new machine added to the
problem. For quite a number of years, noise was endured by all. But, in the
recent past, the increasing use of machines of great speed is telling upon the
health of the workers.
Control Methods: It is impossible to eliminate noise from industrial
establishments. It is there as long as machinery is used in manufacturing
operations. However, noise control can help minimize harmful effects on
employees. Noise control can be achieved (1) at source, (2) through enclosures
(3) by absorption, or (4) by ear protection such as ear muffs or plugs.
Controlling noise at its origin is the best method of reducing its harmful
effects. But it is difficult to plan for this control, because identical machines
may require different methods since production problems and economic
considerations are often different. However, noise can be controlled at its
source by quietening the noise-producing elements by repairing or redesigning
the machines; mounting machines to reduce vibration; or substituting noise-
producing elements with quieter ones.
‘Noise–induced hearing loss’ has been included as a notifiable

disease under the Factories Act, 1948. It is also compensable under the
Workmen’s Compensation Act, 1923. Constant exposure to high noise
levels can cause hormonal imbalance, changes in blood circulation,
dizziness, increase in respiratory rate, heartburn, sleep disturbances and
fatigue. Outwardly, workers may seem accustomed to the noise. But the
body suffers till it succumbs to persistent onslaughts.
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Acquired Immune Deficiency Syndrome (AIDS) Notes

Much of the problem relating to AIDS stems from the ignorance of people
about the disease. They believe that the disease is highly infectious and there is
no remedy for the victims. That was where organizations like BHEL took the
initiative to make their own doctors take lectures for the employees both for
prevention of the disease and for showing tolerance to the victims. The
following guidelines helped the education programme become successful:
 Employees must be made to understand how AIDS is contacted.
Understanding about the ways on contacting AIDS will ensure that the
activities do not occur at the workplace.
 Presentation to employees must be handled by professionals, preferably
from experts. This is necessary as the message presented is going to include
sexual references which, if not handled properly, are likely to have a
negative impact on employees.
 All employees must attend the sessions.
 Adult literacy programme undertaken by the organization in the
neighbourhood includes simple lessons on the AIDS prevention.
Alcoholism and Drug Abuse

Alcoholism is a serious and widespread disease. It does not strike any
particular group – alcoholism can strike employees from the junior to the
general manager.
The effects of alcoholism on the worker and on the work are serious. Both the
quality and quantity of work decline sharply. A form of “on-the-job
absenteeism” occurs as efficiency declines. An alcoholic worker is more
unlikely to observe safety precautions while on the job or off the job. The
morale of other workers is likely to suffer as they are required to do the work
of their alcoholic peer.
Drug abuse is a recent phenomenon and is a serious one. People in high places
backing and indulging in these causes it to spread like wild fire. A recent huge
haul of cocaine in Mumbai is an indication. Drug usage usually falls into one
of three categories: Marijuana abuse, prescription drug abuse and hard-drug
abuse. Drug abuse is more evident among young employees and is found
across all job levels. One of the company doctors, who was an anaesthetist took
to self-administered tranquilizer drug and got addicted. Employees who are
drug addicts are often much more difficult than alcoholics – liquor is easy to
smell, but not drugs. Besides, it is easy for an addict to pop a pill at lunch or on
a break, undetected.
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Notes Violence at the Workplace

In industries, union rivalries are one of the causes for workplace violence.
Militancy on the part of union or management is another reason. Apart from
this personal, ego leading to rage is one of the reasons for this. Many a time it
has been noticed that indebtedness of employees to co-employees, who extract
unreasonable interests for the loans they give, also leads to such workplace
violence. These causes are intrinsic to an organization and pertain to its own
employees as source of violence.
There is another aspect to workplace violence. This is due to the nature of
exposure the job entails.
Example: Cashiers in banks or petrol pumps, people who work alone or

at night. Violent incidents include fist fights, shooting, stabbing, sexual
assaults and even murder.
The following will help companies avoid falling victims of violence:
1. Hiring with caution. Pre-hire drug testing, detailed questions about
previous employment and criminal record checks through antecedent
verification can go a long way towards thwarting violence-prone
individuals gaining entry into the organization.
2. Develop a plan for preventing violence and for dealing with it when occurs
with an iron hand. Reporting requirements for both violence and threats of
violence should be an integral part of the plan. The plan should also be
drawn by employee participation and professionals who are experts in areas
of violence assessment, counselling and law enforcement.
3. Establish a crisis management team with the authority to decide and act
quickly. This group will evaluate problems, select intervention techniques,
and co-ordinate follow-up activities.
4. Maintain good industrial relations.
5. Train supervisors and managers in how to recognize aggressive behaviour,
identify the warning signs of violence, and resolve conflicts. Orient all
employees towards assuring a violence-free work environment.
6. Provide specific employee-assistance programmes designed to help
employees with personal problems.
7. Workplace violence can be prevented by employing security measures.
Learning Activity
Visit a company or factory at your locality and prepare a report on
different welfare and safety measures undertaken by the company
or firm
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WELFARE Notes
Here in this section we will learn about welfare and types of Welfare
Activities. Welfare means faring or doing well. It is a comprehensive term, and
refers to the physical, mental and emotional well-being of an individual.
Further, the term welfare is a relative concept, relative in time and space. It,
therefore, varies from time to time, from region to region and from country to
country.
According to the Report of the Royal Commission on Labour, 1931 ‘Labour
welfare’ is a term which must necessarily be elastic, bearing a somewhat
different interpretation in one country from another, according to the different
social customs, the different level of industrialization and education of
workers.
International Labour Organization (ILO) at its Asian Regional

Conference had defined ‘labour welfare’ as a term which is understood to
include such services, facilities and amenities as may be established in or
in the vicinity of undertakings to enable the persons employed in them to
perform their work in healthy, congenial surroundings and to provide
them with amenities conducive to good health and high morale.” (Report
of the ILO, Asian Regional Conference, 1950).
Types of Welfare Activities

M.V. Moorthy in his stupendous work ‘Principles of Labour Welfare’ (1968)
made clearer by listing the activities and facilities which are referred to as
welfare measures. He divides welfare measures into two broad groups, namely:
1. Welfare measures inside the work place; and
2. Welfare measures outside the workplace
Welfare Measures inside the workplace
Conditions of the Work Environment:
 Neighbourhood safety and cleanliness; attention to approaches.
 Housekeeping; up keeping of premises – compound wall, lawns, gardens,
and so forth, egress and ingress, passages and doors; white-washing of
walls and floor maintenance.
 Workshop (room) sanitation and cleanliness; temperature, humidity,
ventilation, lighting, elimination of dust, smoke, fumes, gases.
 Control of effluents.
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Notes  Convenience and comfort during work, that is, operatives’ posture, seating
arrangements.
 Distribution of work hours and provision for rest hours, meal times and
breaks, etc.
Conveniences:
 Urinals and lavatories, wash basins, bathrooms, provision for spittoons;
waste disposal.
 Provision of drinking water; water coolers.
 Canteen services; full meal, mobile canteen.
 Management of workers; cloak room, rest rooms, reading room and library.
Workers’ Health Services
Factory health centre (Occupational Health Centre); dispensary, ambulance,
emergency aid, medical examination for workers; health education, health
research; family planning services.
Women and Child Welfare
Antenatal and postnatal care, maternity aid, crèche and child care; women’s
general education; separate services for women workers, that is, lunch rooms,
urinals, rest rooms, women’s recreation (indoor); family planning services.
Women and Child Welfare
Antenatal and postnatal care, maternity aid, crèche and child care; women’s
general education; separate services for women workers, that is, lunch rooms,
urinals, rest rooms, women’s recreation (indoor); family planning services.
Workers’ Recreation
Indoor games; strenuous games to be avoided during intervals of work.
Employment Follow-up
Progress of the operative in his/her work; his/her adjustment problems with
regard to machines and workload, supervisors and colleagues; industrial
counselling.
Economic Services
Co-operatives, loans, financial grants; thrift and saving schemes; budget
knowledge, unemployment insurance, health insurance, employment bureau,
profit-sharing and bonus schemes, transport services; provident fund, gratuity
and pension; rewards and incentives; workmen’s compensation for injury;
family assistance in times of need.
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Labour Management Participation Notes

 Formation and working of various committees such as works committee,
safety committee, canteen committee; consultation in welfare area, in
production area, in the area of administration, in the area of public relations
 Workmen’s arbitration council
 Research bureau
Workers’ Education
Reading room, library, circulating library; visual education; literary classes,
adult education, social education; daily news review; factory news bulletin;
cooperation with workers in education services.
Welfare Measures outside the Workplace
 Housing: bachelors’ quarters; family residences according to types and
rooms
 Water, sanitation, waste disposal
 Roads, lighting, parks, recreation, playgrounds
 Schools: nursery, primary, secondary and high school
 Markets, cooperatives, consumer and credit societies
 Bank
 Transports
 Communication: post, telegraph, telephone, Internet
 Health and medical service: dispensary, emergency ward, outpatient and
inpatient care, family visiting; family planning
 Recreation: games, clubs, craft centres, cultural programmes such as
music, drama and cinema; interest and hobby circles; festival celebrations;
study circles; reading room and library; open air theatre; swimming pools;
athletics, gymnasia
 Watch and ward; security
 Community leadership development: council of elders; committee of
representatives; administration of community services and problems; child,
youth and women’s club.
The above welfare measures come under another broad classification of
statutory and non-statutory provisions. With a view to making it mandatory for
employers to provide welfare facilities for their employees, the Government of
India has enacted laws from time to time. These laws are the Factories Act,
1948; The Mines Act, 1952; Shipping Act, 1958; the Dock Workers (Safety,
Health and Welfare) Scheme, 1961 the Bidi and Cigar Workers (Conditions of
Employment) Act, 1966; the Contract Labour (Regulation and Abolition) Act,
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Notes 1970; the Payment of Bonus Act, 1965; the Payment of Gratuity Act, 1972;
The Industrial Disputes Act, 1947; the Provident Fund and Miscellaneous
Provisions Act, 1952; Workmen’s Compensation Act, 1923; Employees State
Insurance Act, 1948; the Maternity Benefit Act, 1961 and the Inter-State
Migrant Workmen (Regulation of Employment and Conditions of Service)
Act, 1979. It is not in the scope of this book to elaborate the provisions
contained in each of these Acts.
NON-STATUTORY WELFARE MEASURES

We shall now try to understand some of the non statutory welfare measures. As
far as the non-statutory welfare measures are concerned, organizations
nowadays are trying to vie with each other to provide better welfare facilities
merely to attract and retain the workforce. Imagination and innovation to meet
the ever changing modern workers’ expectations in this respect to keep them
satisfied at and away from their work place are very much in the realm of HR
professionals.
Example: When the Bangalore-based IT services and R&D Company

Mind Tree Consulting launched its IPO in early 2007, it inadvertently got a
feel of how employees regarded their company. The employee allocation of the
IPO was oversubscribed four times. But it is not just money that helps Mind
Tree in a market where MNVIT outfits usually offer better compensation
packages. Mind Tree goes beyond its employees and connects with their
support group: the family. When an employee joins, his parents or spouse get a
welcome letter. One employee’s father wrote that he was overwhelmed and
glad at the gesture and that he would advise his son to put ‘his wholehearted
effort towards the growth of Mind Tree.’ That is the critical buy-in earned.
As it grows at close to 50%, Mind Tree is sweating over maintaining the family
feel. Its mantra: to run a tight ship, keep your employees close, and the
extended family even closer.
In order to strategies even these welfare measures to the advantage of the
organization it is necessary to understand the approaches to Labour Welfare.
APPROACHES TO LABOUR WELFARE

Now let us try to understand different approaches to labour welfare. The
various approaches to labour welfare reflect the attitudes and beliefs of the
agencies which are engaged in welfare activities. Welfare facilities may be
provided on religious, philanthropic or some other grounds. In the past the
government had to compel the employers to provide welfare facilities, because
the employers were callous to the cries of employees for decent living and
conducive working conditions.
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For the general reader, a study of approaches is essential because his/her Notes
knowledge of the subject is incomplete without knowledge of these
approaches, and knowledge of approaches enables the manager and the worker
to have a better perspective on welfare work. The eight approaches enumerated
by M.V Moorthy are elaborated in the following paragraphs.
 Policing Theory: According to this view, the factory and other industrial
workplaces provide ample opportunities for owners and managers of
capital to exploit workers in an unfair manner. This could be done by
making the labour work for long hours, by paying workers low wages, by
keeping the workplaces in an unhygienic condition, by neglecting safety
and health provisions, and by ignoring the provisions of elementary human
amenities, such as drinking water, latrines, rest rooms and canteens.
 Religion Theory: The religion theory has two connotations, namely, the
investment and atonement aspects. The investment aspect of the religion
theory implies that the fruits of today’s deeds will be reaped tomorrow.
Any action good or bad is therefore treated as an investment. Inspired by
this belief, some employers plan and organize canteens and crèches.
 Philanthropic Theory: Philanthropy means love for mankind. The
philanthropic theory of labour welfare refers to the provision of good
working conditions, crèches and canteens out of pity on the part of the
employers who want to remove the disabilities of the workers. The
philanthropic theory is more common in social welfare. Student hostels,
drinking water facilities, the rehabilitation of crippled persons, donations to
religious and educational institutions, and so forth are examples of
philanthropic deeds.
 Paternalistic Theory: According to the paternalistic theory, also called the
trusteeship theory, of labour welfare, the industrialist or the employer holds
the total industrial estate, properties and the profits accruing from them, in
trust. The property, which he/she can use or abuse as he/she likes, is not
entirely his/her own. He/she holds it for his/her use, no doubt, but also for
the benefit of his/her workers, if not for the whole society.
 Placating Theory: This theory is based on the assumption that
appeasement pays when the workers are organized and are militant. Peace
can be bought by welfare measures. Workers are like children who are
intelligent, but not fully so. As crying children are pacified by sweets,
workers should be appeased by welfare activities.
 Public Relations Theory: According to this theory, welfare activities are
provided to create a good impression on the minds of the workers and the
public, particularly the latter. Clean and safe working conditions, a good
canteen, crèche and other amenities, make a good impression on the
workers, visitors and the public. Some employers proudly take their visitors
round the plant to show how well they have organized their welfare.
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Notes  Functional Theory: Also known as the efficiency theory of labour welfare,
the functional theory implies that welfare facilities are provided to make
the workers more efficient. If workers are fed properly, clothed adequately
and treated kindly, and if the conditions of their work are congenial, they
will work efficiently. Welfare work is a means of securing, preserving and
increasing the efficiency of labour.
Corporate Social Responsibility

Corporate Social Responsibility (CSR) comprises sustenance of depleting
environmental resources, emergence of effective workplace practices and
narrowing the gulf between the rich and the poor. There has been always an
ethical perspective to the business strategies practised all over. There are
several moral edicts organizations have been following for several decades.
One such ethical perspective is the desire to offer help, being conscious of the
fragility of the environment we are living in.
In reality, most companies have special departments to document the best
practices of corporate social responsibility and integrate them into the
organizational fabric. They are investing huge amounts in creating special
foundations for the implementation of these practices with a view to making a
huge difference to the people around them. They are also drafting special
policies to ensure better working conditions and promote the family welfare of
their workforce.
DESIGNING WELFARE PLANS

If an employer does not have any employee welfare benefit plans and wants to
know how to approach the task of designing the most appropriate plan or plans;
or if the employer has at least one employee welfare benefit plan and is not
sure if it is the right plan, then as HR professionals, how should we proceed in
helping to design an Employee Welfare Scheme? The following guidelines will
help:
Who is to benefit?
The first step in employee welfare benefit plan design is to determine who the
employer intends to benefit and why. The scope of coverage and the employees
who are to be covered by the plan will be the first limiting factor in the number
of alternatives available because of the non-discrimination rules in the Code.
Example: If the plan is to cover a select group of executives, it may not

be possible to provide the benefit on a tax-favoured basis. On the other hand, if
the plan is to be a broad-based plan covering executives and rank-and-file
employees, then many alternatives are available on a tax-favoured basis. This
has a bearing on the recent tax on fringe benefits.
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What benefits will be provided? Notes

The question of what benefits will be provided goes hand in hand with the
question of who is to benefit under the welfare benefit plans. If medical benefit
is one of the benefits thought of, then the following aspects therein have to be
detailed along with the limit:
 Prescription drugs
 Dental
 Vision
 Death
 Disability
 Dependent care
There can be some other benefits like Educational Assistance, Terminal

Benefits, etc.
How will the benefits be provided?

Employee welfare benefits can be provided from the employer’s general assets,
from a trust, through insurance, or through a combination. The approach used
may cut down on the non-discrimination rules and reporting requirements that
apply. For example, medical benefits that are provided through insurance are
not subject to any non-discrimination rules whereas self-insured medical
benefits are.
Who will administer the benefits?

Each employee welfare benefit that an employer provides requires some level
of administration. The employer must determine what is required and who is
going to handle it. Will it be handled internally or through an insurance broker
or by a third party administrator.
How much will the benefits cost?
The employer’s cost of the benefits to be provided will be a function of what
level of benefits are going to be provided, who is going to pay for the benefits
and how they are going to be provided. For example, an insured medical plan
with a ` 500 deductible is going to be more expensive than the same plan with
a ` 1,000 deductible. Or, a small employer may find that providing dental
benefits on a self-insured basis is more expensive than insuring such benefits,
while a large employer may find just the opposite to be true.
Who will pay for the benefits?

Employee welfare benefits can be provided by the employer paying all of the
costs, by the employees paying all of the costs, or through a combination of
employer and employee contributions.
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Notes
Example: A frequent plan design for medical benefits is for the
employer to pay for the employee’s coverage and the employee to pay for
coverage for the employee’s spouse and dependents.
If the employees are going to pay for any portion of the cost, are the employees
going to pay their share on a pre-tax basis or an after-tax basis? If they are to
pay their share on a pre-tax basis, then the employer will need to have a
cafeteria plan so that the employees can reduce their compensation in order to
purchase the desired benefits.
ASSESSMENT OF EFFECTIVENESS
Now let us try to understand about assessment of effectiveness of welfare. The
effectiveness of welfare must be assessed periodically. Feedback, thus
obtained, must act as the basis for imitating remedial actions where desired
results have not been obtained. Assessment of the effectiveness of welfare is
rather difficult because well-being of employees is abstract and is not possible
to quantify. However, two methods of assessment may be mentioned in this
context. They are:
 Trend Analysis: As was stated earlier, welfare is sought to be justified
because of its impact on efficiency, turnover, and social evils. HR experts
must assess the impact of each of these, before and after a particular
welfare activity is being introduced. If post-implementation shows a
substantial improvement, the welfare is worth continuing. The scheme
deserves to be discontinued if there is no improvement or if there is a fall in
any of the areas.
 Opinion Survey: The most effective assessment technique is to conduct a
survey and elicit opinion of employees on the welfare schemes. Employees
may be requested to express their views on the usefulness or futility of a
particular welfare scheme. Views thus obtained will help continue or
discontinue the activity.
STRESS
Now let us try to understand the meaning of stress. Stress is a positive force
that enables us to survive. When we are waiting to cross a busy road we need
to be temporarily stressed. Because we are alert, vigilant, and aware of danger,
we are more likely to cross safely. Like an electric current, stress increases
arousal, gives us energy, and improves our performance. However, if the
current is turned on too high, stress can produce unpleasant effects and cause
our performance to deteriorate (hyperstress). Conversely, too little stress can
cause us to feel listless and unstimulated, and we are likely to perform slowly
and inefficiently (hypostress).
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A definition of too much stress might be when we see our environment as Notes
taxing or exceeding our ability to cope, endangering our well-being. There are
basically three components:
 Sources: These are everyday demands or major changes in our life.
 Life Skills: These are the resources we have for coping with stressful
events.
 Signs or Symptoms: These are physical and emotional symptoms that
indicate that the demands outweigh our resources to cope.
Thus we arrive at a definition of stress: “Stress consists of any event in which
external demands, internal demands or both, tax or exceed the adaptive
resources of the individual, social system or tissue system”– Farmer, Monahan
and Hekeler, 1984.
Living with Stress

Stress is a positive, motivating force that affects us to some degree throughout
our life, whether we are a child at school, a university student, a parent,
company director, unemployed worker or retired (eustress). Only when
demands outweigh our ability to cope does stress begin to have negative effects
(distress).
Causes of Physical Stress

The essential ‘fight-or-flight’ response is Mother Nature’s way of protecting us
from danger. This innate and automatic response is characterized by the
following changes in our body:
 As soon as the brain registers the fact of the danger, adrenaline is released
into our body, bringing about several physical changes.
 The pupils of our eyes dilate to allow more light in and sharpen our vision.
In times of perceived danger we need to see as much as we can.
 Our mouth goes dry to avoid adding fluid to our stomach.
 Our neck and shoulder muscles tense up in order to prepare for action.
Tense muscles are more resilient to blows than relaxed muscles.
 Our breathing quickens to allow an increased flow of oxygen to our
muscles.
Other Symptoms
Apart from these physiological symptoms of stress, there are spiritual, social,
emotional and mental symptoms of stress. They are briefly enumerated below:
Spiritual
 Feeling of emptiness
 Lack of forgiveness
 Loss of meaning in life
ANNA UNIVERSITY 289

Notes  Loss of direction

 Persistent guilt feelings
 Hostility towards others
 Self-abuse in any form
 Feelings of hopelessness
 Other (add your own)
Social
 Isolation
 Bitterness or resentment
 Self-centeredness
 Loneliness
 Withdrawal
 Intolerance
 Lack of communication
 Irritability towards people
Emotional
When you are in under stress or have been tired for a long period, you may find
that you are less able to think clearly and rationally about problems. This can
lead to the following internal emotional ‘upsets’:
 Worry or anxiety
 Confusion, and an inability to concentrate or make decisions
 Feeling ill
 Feeling out of control or overwhelmed by events
 Mood changes:
 Depression
 Frustration
 Hostility
 Helplessness
 Impatience and irritability
 Restlessness
 Being more lethargic
 Difficulty in sleeping
290 ANNA UNIVERSITY

 Drinking more alcohol and smoking more Notes

 Changing eating habits
 Reduced sex drive
 Anger
 Apathy
 Frequent nightmares
 Feeling of despair
 Bursts of Tears
 Nervous Laughter
 Emotional numbness
 Relying more on medication
Mental
 Frequent lapses of memory
 Racing thoughts; poor concentration
 Difficulty in making decisions
 Boredom; constant negative self-talk
 Poor judgment; confusion; pessimism
 Phobias; suicidal thoughts, etc.
MAJOR SOURCES OF STRESS

Now let us try to understand what are the major sources of stress. Most people
realize that aspects of their work and lifestyle can cause stress. While this is
true, it is also important to note that your environment can cause it and by the
food and drink, you consume. There are several major sources of stress:
 Survival Stress: This may occur in cases where your survival or health is
threatened, where you are put under pressure, or where you experience
some unpleasant or challenging event. Here, adrenaline is released in your
body and you experience all the symptoms of your body preparing for
‘fight-or-flight’.
 Internally Generated Stress: This can come from anxious worrying about
events beyond your control, from a tense, hurried approach to life, or from
relationship problems caused by your own behaviour. It can also come
from an ‘addiction’ to and enjoyment of stress.
 Environmental and Nutritional Stress: Here, your living or working
environment causes the stress. It may come from noise, crowding,
pollution, untidiness, dirt or other distractions. Alternatively, stress can
come from events at work. Even the food that we eat may put us into
stressful situations.
ANNA UNIVERSITY 291

Notes  Fatigue and Overwork: Here stress builds up over a long period. This can
occur where you try to achieve too much in too little time, or where you are
not using effective time management strategies.
WORK RELATED STRESS

Now let us try to understand what is work stress. Just analyse this questions
and understand before we go into analysing work stress. How many of us say
these days, “I have more to do than anyone else; I can’t possibly do everything
during the day. I often end up taking work home with me.” Or “It is a stiff
target to meet and it is too hectic.”
Work stress is the single most important cause of stress throughout the
developed and the developing world. In a recent study of financial institutions,
64% of employers regarded excessive stress as the principal health threat
facing the company.
There are two ways of tackling work stress:
1. Identify sources of stress in your job and try to make appropriate changes.
People often blame themselves for their problems at work, rather than
questioning the job itself.
2. Examine your strategies for coping with work stress and see whether these
can be improved. When you are stressed, you may adopt unhelpful short-
term strategies, such as missing lunch, taking work home, putting off tasks,
working too late, or drinking too much. In the long run, these ways of
coping usually cause difficulties.
The effects of stress have been found to be fairly widespread, causing changes
in behaviour, moods, capacity to perform mental tasks (such as thinking,
logical reasoning, problem-solving and decision-making) and neuro-
physiological functioning.
ORGANISATIONAL ROLE STRESS

Now let us understand about the organisational role stress. In organizations as
well as in society, expectations of others from an individual set his/her role in
the organization or society as the case may be. This role or roles are the
sources of stress in work situation, as one is expected to perform various roles
simultaneously.
1. Role Space and Role Set are two role systems. Both have inbuilt conflict.
The Role Space System is the system of various roles played by the person.
The Role Set System is the system of various roles of which his role is a
part.
2. Role Space Conflict: Refers to conflicts between the self, a person’s role
and the other role occupied by him. Role stress may take various forms.
292 ANNA UNIVERSITY

3. Self-role distance: Points to the conflict between the self-concept and the Notes
expectations from the role. Roles that call for behaviour, which is not in
accordance with the value system of the person, result in self-role distance.
Suppose I who do not like to bribe and get things done am expected to get
some of the company’s work done by bribing the persons concerned, this
goes against my value system. I am put to this stress arising out of self-role
distance.
4. Role Stagnation: As a person occupies a role over a period, he grows into
that role and many behaviour patterns become habitual. In other words, he
has fallen into a rut, has stagnated with the role, and finds that he is unable
to change.
5. Inter-role Distance: Due to the simultaneous occupation of multiple roles,
there are likely to be conflicts between them. Life has become faster,
demands on time, energy and other resources have increased. A woman
may face inter-role distance due to conflicts between her role as an
executive and her role as a mother and a wife.
6. Role Set Conflicts: Denote incompatibilities among the varying
expectations that ‘significant others’ have from the role incumbent. In other
words, how do different people view a person’s role as manager? Among
the important role set conflicts are the following:
 Role Ambiguity: This results when a person is not clear about the
various expectations that people have from him. This is often the case
when a new role has been created in the organization, or even when a
person takes on a new job without sufficient orientation being provided
to him.
 Role Expectation Conflict: Due to the conflicting expectations of
different role senders, e.g. boss, colleague and clients.
 Role overload: It occurs when a person is pressed for time or feels that
he is unable to handle the total quantum of work expected from him.
 Role Erosion: Instead of feeling overloaded, a person may feel that
some of his duties are being taken away from him, or that he is
unemployed.
 Role Inadequacy: Stress experienced when a person is not supplied
with enough resources, e.g. information, labour, finances or facilities.
 Personal Inadequacy: This occurs when a person feels that he lacks the
expertise or skills necessary for efficient role performance.
 Role Isolation: In a role set, the role occupant may feel that while some
roles are closer to him, others are at a relatively greater distance.
Distance is measured by ease of interaction between linkages.
ANNA UNIVERSITY 293

Notes So in a work situation, stress definitely will arise out of the roles one plays
there.
Learning Activity
Imagine the role of HR Manager and prepare a report of all the
above roles mentioned with respect to HR Manager’s work.
COPING STRATEGIES FOR STRESS

After understanding what is stress and different sources of stress, now let us try
to understand what the strategies to cope up with stress are.
Coping with stress: The way we cope with stress often depends on rigid, deep-
seated beliefs, based on experience. We may feel angry in a traffic jam,
because we believe that the traffic ‘should’ move faster. To manage stress, we
often need to reassess the way we think and learn coping strategies.
Coping strategies may be categorized into:
 Individual strategies and
 Organizational strategies.
Individual Strategies
As an individual, one has several techniques available to reduce tension. More
prominent among them are time management, physical exercise, relaxation,
yoga, social support, situation control and unburdening oneself.
 Time Management: Most of us are poor in time management. The result is
feeling of work overload, skipped schedules and attendant tension. The
truth is if one can manage time effectively, he or she can accomplish twice
of what a person who is poorly organized. Some basic principle of time
management are:
 preparing daily, a list of activities to attend to;
 prioritizing activities by importance and urgency;
 scheduling activities according to the priorities set; and
 Handling the most demanding parts of a job when one is alert and
productive.
It is reported that effective time management results in:
 reduction in blood pressure,
 clarity in thinking,
 steep decrease in the consumption of tranquilizers, and
 Relaxed feeling while in action.
294 ANNA UNIVERSITY

 Physical Exercise: Exercise in any form helps people to cope with stress. It Notes
is for this reason that people of all ages are seen taking early morning walk,
or engaging themselves in jogging, swimming or playing games.
 Relaxation: One can have relaxation through mediation, hypnosis, or
biofeedback. Whatever be the method, the objective is that one must have
deep relaxation where he or she feels physically relaxed and detached from
body sensations. Fifteen to twenty minutes a day of deep relaxation
releases tension and provides a person with a pronounced sense of
peacefulness. Importantly, significant changes in heart rate, blood pressure,
and other physiological factors result from achieving the deep relaxation
condition.
 Yoga: Yoga is probably the most effective remedy for stress. Yoga has
been used in our country for centuries. Its utility has now been realized
with greater enthusiasm in our country and abroad.
Yoga practices are many but the following are said to be useful to cope
with stress:
 Annamaya Kosha Kriyas: Traditional voluntary internal cleansing
techniques, Yogasna and Shavasana.
 Praanamaya Kosha Praanayaama: Five types of systematic, regulated,
slow deep respiration with or without holding one’s breath.
 Manomaya Kosha: Meditation and devotional session.
 Vijnamaya Kosha: Analysis and understanding of the nature of one’s
problems.
 Anandamaya Kosha: Practising joy under all circumstances.
 Social Support: It is true that people need and benefit from social support.
Applied as a strategy to reduce job stress, this would entail forming close
associations (also called networks) with trusted, empathetic co-workers and
colleagues who are good listeners and confidence builders. These friends
are there when needed and provide necessary support when the person is
going through a stressful situation.
 Control the Situation: One must avoid unrealistic deadlines. He or she
must do his or her best and at the same time be aware of the limits – it is
impossible to please everyone.
 Open up to Others: One must give vent to one’s feelings, emotions, fears
and frustrations in the presence of others who care for him or her. This
process of unburdening oneself makes the individual feel relaxed and free
from stress.
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Notes Organisational Strategies

We have already seen that organizational factors like task and role demands
and organizational structures often cause stress. Now, these stressors can be
controlled by the management. Additionally, the management might want to
consider several strategies such as personnel selection and placement,
redesigning of jobs, participative decision-making, improved communication
and establishment of corporate well-being programmes.
 Personal Well-being: Personal well-being is a term used to describe the
pursuant of one’s physical and mental potential through a personal health-
promotion programme. A supervisor can make an impact on personal well-
being of his/her subordinates through positive example, encouragement,
and by practicing the basic concepts and techniques of HRM. When the
manager is successful in creating a healthy work climate and environment,
everyone should benefit from the increased capacity of people to handle
successfully the change and the stress that inevitably accompanies their
lives at work.
 Improve Communication: Improved communication with employees
reduces uncertainty by lessening role ambiguity and role conflict.
Misunderstanding and prejudices crop up leading to stress and tension
frequently due to lack of communication and clarification.
 Participative Decision-making: Role stress is detrimental to a large extent
because employees feel uncertain about the goals, expectations, how they
will be evaluated, and the like. By giving these employees a voice in those
decisions that directly affect their job performances, the management can
increase employee control and reduce the role stress. So, HRM must
consider increasing employee participation in decision-making.
 Job Redesign: Job redesign involves enriching jobs either by improving
job content factors (such as responsibility, recognition and opportunities for
achievement, advancement, growth, etc.) or by improving core job
characteristics (such as skill variety, task identity, autonomy, and
feedback). Enriched tasks will eliminate the stress found in more routine
and structured jobs.
 Selection and Placement: Certain jobs are more stressful than others.
Individuals, too, differ in their response to stress situations. Individuals
with little experience or an external locus of control, tend to be more stress-
prone. Selection and placement decisions should take these facts into
consideration. Obviously, while the management should not restrict hiring
to only experienced individuals with an internal locus, such individuals
may adapt better to high stress jobs, and perform those jobs more
effectively.
296 ANNA UNIVERSITY

Stress Management Techniques Western and Eastern Practices Notes

In India, many corporate houses attempt to manage physical and psychological
stress at the workplace. While some have set up meditation rooms or gyms in
their offices, a large number of companies encourage their employees to adopt
transcendental meditation as an effective stress reliever. Yet another self-
improvement therapy in vogue at companies is the Art of Living Yoga, another
alternative therapy to control both hypertension as well as the inner self. This is
equally popular and involves a series of breathing exercises has been found
quite effective in handling insomnia and psychosomatic problems. Periodic
stress audits are conducted to identify problems that employees face at the
workplace. Such audits, by using a combination of interviews and
questionnaires to unearth the real issues, can provide hard evidence of the
causes and effects of stress within an organization.
Another Eastern technique to reduce stress is Tai Chi. Based on Taoist
philosophy; Tai Chi entails a comprehensive series of gentle physical
movement and specialized breathing techniques that allow one to experience a
relaxed state of mind. The Mandarin term ‘tai chi’ literally means ‘supreme
ultimate boxing’ or ‘boundless fist’. The series of mind and body exercises that
Tai Chi includes help keep a number of illnesses, mostly related to ageing,
weight and stress, at bay. The art form of many romantic names, such as
“moving meditation” and “the dance of clouds,” has gained acceptance the
world over.
Unlike most martial art forms that cannot be taught to older people as their
pulse rate may increase while practicing aggressive body movements, Tai Chi
can be taught to all age groups. Also, there is no need for special attire or a
particular ambience. You can practice it anywhere.
It helps blood circulation and stimulates the muscles. The exercises make you
aware of every part of your body. You move a lot during a session. This warms
up the body through controlled breathing, thereby helping one conserve
energy.
EMOTIONAL INTELLIGENCE DEFINED

Now let us learn about emotional intelligence. In a sense, we have two
different kinds of intelligence: rational and emotional. How we do in life is
determined by both – it is not just IQ, but emotional intelligence that matters.
Indeed, intellect cannot work at its best without emotional intelligence.
Emotions are within the domain of intelligence, but they are not an inherent
contradiction in terms. For example, when Robert Sternberg, an Yale
psychologist, asked people to describe an “intelligent person,” practical people
skills were among the main traits listed.
ANNA UNIVERSITY 297

Notes Salovey assumes these personal intelligences in his basic definition of

emotional intelligence, expanding these abilities into five main domains:
 Knowing one’s emotions
 Managing emotions
 Motivating oneself
 Recognising emotions in others
 Handling relationships
A person may be intelligent, but may not have had the

opportunity to go to any educational institution to be considered literate.
Just because he is not literate he cannot be dumped as useless.
EMOTIONAL LITERACY
Here in this section we will learn about Emotional Literacy. Emotional literacy
is a skill that involves understanding our own and other people’s emotions as
well as knowing how our emotions are best expressed for maximum
enhancement of ethical and personal power.
Emotional literacy is made up of three abilities:
 The ability to understand one’s own emotions
 The ability to listen to others and empathize with their emotions
 The ability to express emotions productively.
Emotions are inborn – they are generated automatically in most primitive
limbic portion of our brain. But the emotions are changed and shaped by the
experiences that surround us throughout our lives. Most of us have little
awareness of how strong our emotions are or what triggers them. Without such
awareness, we cannot hope to develop the empathic and interactive skills that
are the highest achievement of emotional literacy.
Emotional Literacy
 enhances ability to handle own emotions leading to improved personal
power
 improves quality of life around YOU
 improves relations
 creates loving possibilities between people
 makes cooperation possible
 facilitates feeling of group and commitment.
Being Emotionally Intelligent means that you know what emotions you and
others have, how strong they are, and what causes them.
298 ANNA UNIVERSITY

Being Emotionally Literate means that you know how to manage your Notes
emotions because you are aware of them.
13.13.1 Emotional Awareness Questionnaire

In order to be either emotionally intelligent or literate you must be aware of the
emotions. Awareness in this realm is much more important than any other
field, because the subject matter of literacy itself is emotion. If one is not aware
of it, then he/she cannot feel its strength, root and subsequently one will not be
able to appreciate others emotions and manage one’s own emotions. Therefore,
the starting point of emotional literacy is emotional awareness.
Emotional awareness means knowing what you feel, knowing what others feel,
and finding out the cause of these feelings and knowing the likely effect of our
feeling on others. This awareness according to the findings based on the
emotional questionnaire give a scale ranging from low to high emotional
awareness.
EMOTIONAL INTELLIGENCE AND WORK

SITUATION
Having talked about emotional intelligence in general, let us turn our attention
to how it can be applied in work situations. The destructive effects of miserable
morale, intimated workers, or arrogant bosses – or any of the dozens of other
permutations of emotional deficiencies in the workplace – can go largely
unnoticed by those outside the immediate scene. But the costs can be read in
signs such as decreased productivity, an increase in missed deadlines, mistakes
and mishaps, and an exodus of employees to more congenial settings. There is,
inevitably, a cost to the bottom line from low levels of emotional intelligence
on the job. When it is rampant, companies can crash and burn.
A Question of Safety
M urali Vijay, safety engineer for SQL Manufacturing, was walking

through the plant when he spotted a situation that immediately
caught his attention. Some employees had backed out of a room
where several chemicals were used in a critical manufacturing process.
Murali inspected the room but could not determine that anything was wrong
or even different from any other day. He was puzzled as to why the workers
were reluctant to resume their tasks. As it turned out, the employees were
not only hesitant to return to work, they were adamant in maintaining that
conditions in the room were unhealthy. The room was full of hazardous
substances, placed all over in an untidy manner. The stores in charge went
on a long leave to complete the marriage of his only daughter. The person in
charge currently is not able to cope up with the challenge and is not able to
Contd…
ANNA UNIVERSITY 299

Notes meet the frequent demands of various departments, especially during rush
hours, and position the dangerous stuff in an appropriate manner. Apart
from causing irritation and breathlessness in the nearby areas, the
positioning of dangerous materials all around has become a topic of debate
and discussion among working class during their informal gatherings.
Sensing an opportunity to attack management, one of the representatives
from a minority union has been ranking up this issue again and again-during
the last two or three days-putting an accusing finger on the problem causing
trouble to workers in the chemicals department. Murali and the group's
supervisor, Rajiv Gupta, discussed the situation and wondered whether they
should order the people to resume work since the department was already
behind schedule.
Question
How should Murali and the group supervisory respond to this situation?
1. Long exposure to excessive noise impairs the hearing

of employees. The level and duration of noise and the
exposure that is likely to cause deafness varies from
person to person. It is agreed that long exposure (10
years) to noise in excess of the prescribed limits makes
one deaf.
2. With the introduction of new high-speed information
technology, increased global competitiveness, and
reduced staff levels, employees have lesser job
security. They are carrying heavier workloads and
working longer hours in an attempt to keep their jobs.
A marked increase in stress levels at work is being
experienced on a universal scale.
SUMMARY
 The concept of benevolent employer is catching up up these days when
employees are knowledgeable and the employers want to retain the talents
within them.
 Gone are the days of employers being goaded to provide health and welfare
measures by statutes. Nowadays they come forward to provide facilities for
the mental and physical health of their employees, more than what has been
envisaged from sections 11 to 20 of the Factories Act, 1948.
 Sections 42 to 50 of the Factories Act, 1948 lay down legal requirements
for the employer to provide welfare measures. Today, the organizations
come forward to provide more than these in order not only to placate the
workers but also fulfil certain norms laid down by international standards
to win orders for their products/services.
300 ANNA UNIVERSITY

 The health and welfare measures are not only inward-looking but also Notes
outward-looking due to corporate social responsibility either taken upon
themselves by organizations voluntarily, or thrust on them by international
customers.
 Stress is inevitable in life. When it has positive effects, it is non-stressful
and when it has negative effects, it is distressful.
 When there is too much pressure and we are stressed it is hyperstress and
when we have no pressure at all in life then we have hypostress – both are
not good for one’s health or career.
 Sources of stress are Survival Stress, Internally Generated Stress,
Environmental Stress, Fatigue and Overwork. Stress consists of any event
in which external demands, internal demands or both tax or exceed the
adaptive resources of the individual, social system or tissue system.
 Yoga, another alternative therapy to control both hypertension as well as
the inner self, is equally popular.
 Man has two minds – one rational and the other emotional – and so two
kinds of intelligence. A research concludes that social intelligence is both
distinct from academic abilities and a key part of what makes people do
well in the practicalities of life.
 There are five main domains in the definition of emotional intelligence:
knowing one’s emotions, managing emotions, motivating oneself,
recognizing emotions in others and handling relationships.
 Application of emotional intelligence makes the following differences in
the workplace: being able to air grievances as helpful critiques, creating an
atmosphere in which diversity is valued rather than such as a source of
friction, and networking effectively. In the ultimate analysis, through
emotional intelligence one is capable of turning one’s own emotions to the
advantage of business or work in accordance with the feelings of others,
keeping in mind these applications.
KEYWORDS
Welfare: It means faring or doing well. It is a comprehensive term, and refers
to the physical, mental and emotional well-being of an individual.
Corporate Social Responsibility: It comprises sustenance of depleting
environmental resources, emergence of effective workplace practices and
narrowing between the rich and the poor.
Stress: It is a positive, motivating force that affects us to some degree
throughout our life, whether we are a child at a school, a university student, a
parent, company director. Only when demands outweigh our ability to cope
does stress begin to have negative effects.
ANNA UNIVERSITY 301

Notes Role Space Conflict: It refers to conflicts between the self, a person’s role and
the other role occupied by him. Role stress may take various forms.
Emotional Literacy: It is a skill that involves understanding our own and other
people’s emotions as well as knowing how our emotions are best expressed for
maximum enhancement of ethical and personal power.
Emotional Awareness: It means knowing what you feel, knowing what others
feel, and finding out the cause of these feelings and knowing the likely effect
of our feelings on others. This awareness according to the findings based on
the emotional questionnaire give a scale ranging from low to high emotional
awareness.
1. What do you mean by health and welfare?
2. Describe some health hazards that may occur to a factory worker.
3. Explain some non-statutory welfare measures.
4. What do you understand by CSR?
5. What do you mean by Emotional Intelligence? What do you mean by
Emotional Awareness Questionnaire?
6. Describe the methods of Assessment of Effectiveness of Welfare.
7. What do you mean by Stress? Name some psychological symptoms of
stress.
8. State some spiritual, social, emotional and mental symptoms of stress.
9. What do you understand by work stress? What are major sources of stress?
10. What do you mean by role stagnation? What do you mean by Inter-Role
Distance?

1. What do you mean by Health? What, if you are HR Manager with what all
angles you propose to examine employee health?
2. What do you mean by Welfare and what are the types of welfare activities?
3. Explain the different approaches to labour welfare.
4. Explain Designing Welfare Plans.
5. Write a note on Assessment of Effectiveness.
6. What are the major sources of Stress?
7. Explain the different Organisational Role Stress in work situation.
302 ANNA UNIVERSITY

8. Explain the different Coping Strategies for Stress. Notes

9. Write a short note on the following:
(a) Emotional Intelligence
(b) Emotional Literacy
10. Write a note on work related Stress.
FURTHER READINGS

Oxford, 2007.
2010.
ANNA UNIVERSITY 303

Notes
304 ANNA UNIVERSITY

Model Question Paper
Model Question Paper

Reg. No.:
M.B.A. DEGREE EXAMINATION

Third Semester
DBA 7022 – STRATEGIC HRM AND DEVELOPMENT
(Common to all Branches)
(Regulations 2013)
Time: Three hours Maximum: 100 marks
Answer ALL questions.
PART A – (10 × 2 = 20 marks)

1. Define Strategic Human Resource Management.
2. What is the role of HRD professionals within the organization?
3. What is E-Selection and E-Recruitment?
4. What is the Abbreviation of HRIS? Define it.
5. Distinguish between domestic HRM and international HRM.
6. What does cultural assessment mean?
7. What is Career Planning?
8. What do you mean by competency-based compensation?
9. What is the role of HR in coaching?
10. What are the stages in Counselling process?
PART B – (5 × 13 = 65 marks)
11. (a) Explain the framework of Strategic HR Management Process.
Or
(b) In what ways does the HRD function relate to the organization’s strategy? Give contextual
examples.
12. (a) Explain the development and implementation of an HRIS?
Or
(b) What is the importance of training and why is training evaluated? How is training evaluated?
ANNA UNIVERSITY 305

Strategic HRM and Development
13. (a) What does ‘Outsourcing’ mean? What are the implications and advantages of outsourcing under
globalization conditions?
Or
(b) What are the factors affecting International human resource management? Discuss each
one of them.
14. (a) Explain any four models of career development with suitable examples.
Or
(b) Explain the concept of competency and how competency is related to compensation
and promotion.
15. (a) What are the skills required for effective coaching and how do you bring about coaching
effectiveness?
Or
(b) How to promote emotional intelligence in the work place?
PART C – (1 × 15 = 15 marks)
16. (a) What is management’s role in safety and health? Describe the various issues involved.
Or
(b) Discuss the relevance and effectiveness of various leadership models in present context.
306 ANNA UNIVERSITY

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DBA 7022

STRATEGIC HRM &

CENTRE FOR DISTANCE EDUCATION

Notes LEARNING OBJECTIVES

MEANING OF STRATEGIC HUMAN RESOURCE

approach to managing people which seeks to achieve competitive advantage Notes

Some authors describe SHRM as ‘the process by which

Evolution of Strategic Human Resources

From Traditional HRM to Strategic HRM

Notes Growth of Strategic Human Resources

STRATEGIC FRAMEWORK OF HRM

Dave Ulrich (1997) presented a framework for HR professionals in terms of Notes

Role of HRM in Strategic Management

Role in Strategy Formulation

Role in Strategy Implementation

Example: Many such stories of success abound in our country. Maruti

HRD Vision, Mission and Values

Example: Vision statement of HR department: Growth of the

Example: Mission statement of HR department: Continuous

Example: Values: Honesty, Passion, Diversity, quality.

It is important to note here that vision and mission statement are to

Notes 3. Whereas strategic HR recognizes HR’s partnership role in the strategizing

10. Strategic Human Resource Management (SHRM) involves a set of Notes

Source: Kazmi and Ahmed (2000)

However, after considering all the cases, it is unclear whether SHRM is an

Example: Buyers looking for dependable luxury almost reflexively

Example: The fact that leading IT organizations like Infosys,

Notes In addition, online education and certification put management within

Example: Levi Strauss goes to the extent of making the jeans

Example: Traditionally, Hindustan Lever's (now Hindustan

Example: An example of developmental marketing in rural areas is

Notes Strategic Role

BENCHMARKING AND HR AUDIT

According to Bogan and English (1994), benchmarking organizations Notes

Benefits of HRD Audit

Sometimes, HRD audit can also be used against the HRD

 It enhances focus on human resources and human competencies. Notes

Limitations of HRD Audit

Integrating Strategy and Human Resource Management

T he experiences of several organizations provide good examples of

A final example of the integration of strategy and human resources is Notes

1. Strategic HRM is seen as a partner in organizational

through a shared agenda on priorities. As strategic partners, HR Notes

Long Answer Questions

3. Explain, in brief, HRD vision, mission and values. Notes

Jeffrey A Mello, Strategic Human Resource Management,

LEARNING OUTCOMES Notes

Human resource development is a positive concept in human

Example: Helping out a MBA HR who has entered the organization

ROLE OF HRD PROFESSIONALS

Administrative Roles Notes

In some organizations, the above administrative functions are being

Strategic Roles Notes

Example: ONGC’s oil exploration capabilities and Dell’s ability to

HRD NEED ASSESSMENT

Notes 2.3.1 Need of HRD at Macro and Micro Level

 A more compressed distribution of salaries across and within levels Notes

Relationship between good HR practices and organizational

MEASURES OF HRD PERFORMANCE

Example: For a salesman the quality is measured in terms of

Example: In field service, the average customer’s downtime is a

Example: A customer-service representatives of marketing