IJMRR/ Jan 2014/ Volume 4/Issue 1/Article No-6/50-61 ISSN: 2249-7196

INTERNATIONAL JOURNAL OF MANAGEMENT RESEARCH

AND REVIEW

HUMAN CAPITAL MANAGEMENT: GLOBAL STRATEGIES AND

CHALLENGES
Aarti Arora*1
1
Research Scholar, JJT University, Rajasthan, India.
ABSTRACT
Recent discussions among HR practitioners in higher education have focused on Human
Capital management; specifically, the concept of developing a college or university Human
Capital management approach balanced between planning and action. Human Capital
management as a planning tool looks very similar to workforce planning, but where HR will
experience a real opportunity for contribution to the organization is in the quality of
implementation supporting the plan. This paper emphasizes global HCM strategic initiatives
and challenges that can help realize an institution’s Human Capital goals and contribute to
performance that will build future institutional capacity. In this paper the author has tried to
carve out the strategies to attract and retain the best Human Capital of the organization. With
this paper the author has also tried to establish the relation between the Human Capital
management and global challenges in the organization.
INTRODUCTION
HCM
Human Capital Management global strategy recognizes that global organizations must
achieve a dynamic balance between scale and local responsiveness. Whilst an organization
may operate in many countries it is still a single business entity and as such certain values
will reside at its core and require central control. Certain factors will be critical in achieving
competitive advantage, as will certain key individuals. Maintaining a consistent brand and
reputation will typically be crucial to continued success. As a result an organization operating
in many countries potentially may need to act in a manner that runs counter to the cultural
values of a particular locale in order to remain profitable and adhere to its core values.
Multinationals enjoy benefits of scale and scope in all functional areas and can optimize
business processes based on worldwide availability of resources. Modifying HR practices on
a country by country basis increases design, implementation and maintenance costs. If each
country functions with different management practices then costs will be higher than if
practices are standardized. Standardization is also critical to enable control and monitoring of
performance against common metrics.
LITERATURE REVIEW
The concept of Human Capital management was derived from World War II (Cappelli,
2008), however its strategic importance has been realized when McKinsey consultants group
claimed the human resource as “War for Human Capital” in late 1990’s (Scullion and
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Collings, 2010). This war for Human Capital was prompted by the realization that Human
Capital shortages were increasingly becoming one of the biggest human resource concerns
for multinational corporations (Makela et al., 2010). Thus, the organizations interested in
maximizing productivity and effectiveness adopted systematic and rigorous approaches for
attracting, selection, development and retention of Human Capital key employees (Huselid et
al., 2005).
Broadly defined, Human Capital management encompasses the instrumentation of unifying
strategies or processes in order to enhance the output of a wok place by deploying ameliorate
systems and processes for attracting, development, retention and utilization of required skills
and abilities of work force and their aptitude matched with the current and upcoming business
needs. Human Capital management strategies centralize around five basic areas such as
attracting, selecting, engaging, developing and retaining employees (Perrin, 2003). It is
generally concerned with practices associated with developing strategy, identifying Human
Capital gaps, succession planning, and recruiting, selecting, educating, motivating and
retaining Human Capital employees human resource though a variety of initiatives (Ringo et
al., 2010). Many authors regard Human Capital management as a managerial strategic
priority of the 21st century (Farndale et al., 2010). Employees’ knowledge, skills and
competencies are an important competitive weapon, hence Human Capital needs to be
maximized and recognized as one of the discrete source of organizational competitive
advantage (Collings and Mellahi, 2009).
OBJECTIVES OF THE RESEARCH
1. To understand the concept of global Human Capital management.
2. To develop HR initiatives that contribute to organizational intelligence
3. To develop the strategies for the retention of the Human Capital in the organization
4. To understand global challenges in HCM.
HR INITIATIVES THAT CONTRIBUTE TO ORGANIZATIONAL INTELLIGENCE
The seven initiatives listed below are illustrative of where HR can move beyond traditional
functional boundaries to contribute value on the action side of Human Capital
management.The intended outcome from such investments would be evidence and
measurement of the degree to which the organization is resilient, dynamic and flexible, and
that it is optimistic about its fitness for the future.
Retention strategy: HR can assist the organization in identifying its high-achieving strategic
and core performers. It can coach local academic and operational leadership in the conduct of
retention interviews, which include one-on-one meetings with high performers to assure that
the individual understands that his or her performance is highly valued and to discover how
the organization can best support the performer’s continuing future engagement and success.
Succession planning: Higher education is historically an egalitarian culture resistant to
formal identification of heirs apparent. On the other hand, it is clear that organizational
succession does occur less formally. HR can consult with decanal leadership to identify
performers with potential for advancement. Organizational charts that pictorially reflect
performance, loss risk(including retirement eligibility) and promo ability will enable planned

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developmental and experiential investments necessary to enable internal advancement. Roles

are critical to driving the organization’s long-term competitive advantage. Performances in
these roles require specialized skills or knowledge such as teaching, research, fundraising or
investment.
Knowledge transfers: HR can assist the organization in identifying orderly means of
transferring knowledge (Tacit and Explicit) to new and advancing faculty and staff. Position
overlap, particularly in staff positions, is quite effective in knowledge transfer and often not
provided for in higher education. When succession or career path advancement has been
planned, multiyear experiences and cross-training can be provided prior to promotion. Career
communities based on job families with similar education and experience requirements allow
for self-organized knowledge transfer and should be aided by HR in the identification and
facilitation at the start-up phase.
Internally driven performance: As institutions of higher education grow in size, interest in
and ability to micromanage individual performance diminishes. HR can contribute greater
value in attraction and selection processes by identifying candidate characteristics that
contribute independently to the academy. One of these characteristics that could be specified
as “additional qualifications” is a sense of personal satisfaction coming from within rather
than reliance on outside direction and praise of others. What other personal characteristics
might be defined that predict individual success within the academy?
Higher performance teams: HR is often asked to assist in populating task-based committees
or to facilitate the performance of such groups. Traditionally, these teams have been
appointed on a representative basis so all interests have a voice. HR can encourage and
enable appointment to task forces, committees or teams based on competencies required by
the task (e.g., knowledge experts, statisticians, writers, researchers, meeting management,
nay-sayers and so on). Research has shown that diversity yields high-quality outcomes,
therefore contributing to high-performing teams.
Self organizing success: Every organization experiences moments of brilliance. When these
moments occur, the people involved share in a sense of success. HR can help the organization
repeat these occurrences and create a culture of self-organizing successes. To accomplish
repetition, HR could use techniques from Cooper rider’s “Appreciative Inquiry” and assist
successful teams in understanding what circumstances enabled high performance so they
another teams can replicate the circumstances. The questions are these: What did people do
individually that contributed to success? What was unique about the team’s performance that
ensured the result? What about the organization and its policies or culture enables such
success? Can what is learned be put in place to increase the likelihood of future successes?
Most importantly, when the organization experiences success, can the same or similar groups
be empowered to work further and independently on their own?
Leadership investment, on boarding and transition support: HR can analyze task-based
competencies that create success in leadership positions, including personal characteristics
that contribute achievement in academe. It can build these into advancement coaching,
interview questions, performance feedback and coaching support for members of the
academy who are in or destined for leadership roles. HR can assure that on boarding plans

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include not only introduction to roles and key institutional players, but also to culture and
climate.
A work culture creates a Compelling Platform for Action that includes
HR leadership is accountable for helping the organization interpret long-term needs for
Human Capital that will assure achievement of the institutionally planned future. Work
Culture building is an approach to envisioning the desired future in which we have to search
answers of following questions about Human Capital management challenges;
What if we do nothing? What will happen if future needs for Human Capital and current
Human Capital gaps remain unaddressed? How will this affect the university’s success? To
what degree can planned strategies be achieved? What units and initiatives will be most
negatively impacted?
What if we were able to exceed our greatest expectations? What would result from
substantial over-achievement? What could be expected in relationships with competitors, in
rank, in enrollment, in research and in teaching success? What is the cost benefit?
What is realistic? Given institutional plans, what realistic investments in Human Capital
management are advisable? What priorities can be set so the organization’s plans for the
future are assured and related Human Capital management goals are met?
CREATE AND EVALUATING HUMAN CAPITAL MANAGEMENT SUCCESS
In order to set and evaluate Human Capital management priorities, we have to incorporate the
following
Plan
• Set goals that result in closing gaps in current competencies.
• Set specific targets based on adaptive competencies that must be acquired.
• Determine metrics that will demonstrate “bench” strength needed.
• Provide measureable (cost benefit analysis) business plan proposals that demonstrate the
value HR proposes as initiatives to supply and support the performance chain.
• Clarify executive endorsement among the possible HR initiatives.
Set SMART Goals
• Identify specific, measurable goals that will predict success in real time.
• Demonstrate the line of sight established between needed organizational outcomes and HR
initiatives.
Invest
• Clarify how HR will re-align generalists’ and specialists’ efforts to serve these Initiatives.
• Realign HR’s budget to serve Human Capital management initiatives.
• Take responsibility for growth by substitution and seek initiative-based funding.

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Perform
• Integrate HR’s initiatives and budget to achieve intended organizational performance.
• Deliver on initiatives as planned, on time and within budget.
• Report progress in annual HR reports and in the human capital plan.
Measure
Compare outcomes to predictions like:
• Core skill areas are experiencing higher retention than the rest of the organization.
• Core skill areas are compensated at or above the target relationship to market.
• Performance in core skill areas excels.
• High performers in core skill areas report higher than average employee commitment.
• Internal promotion rates in key performance areas are higher than average.
• Strong career communities have been established in core competency areas.
STRATEGIES FOR RETENTION OF FUNCTIONAL PRODUCTIVE HUMAN
CAPITAL
A Clear Sense of Mission: Everyone wants to be paid for what they do, but good employees
want to be part of an organization that stands for something and gives them personal
fulfillment and meaning. When an organization has a clear sense of direction and purpose,
people are willing to give more. Many organizations are now allowing their employees to
donate time to non-profit organizations, or spend their off-work hours building houses for
Habitat for Humanity.
Shield Management: Interpersonal skills are an essential element of the high-retention
culture. People want to feel management cares and is concerned for them as individuals. Yet,
poor “soft skills” are one of the biggest factors that drive people away.
Flex Working Hours and Schedules adaption as per needs of individual: In today’s
workplace, flexibility rules. One-size-fits-all approaches to benefits have long since lost their
effectiveness. Workers will migrate to a company whose benefit packages and schedules help
them meet the demands of their lives, whether they are single parents, adults who care for
aging parents, older workers, younger workers, part-time workers, or telecommuters.
Open Communication System: People have a large appetite for information, and they want
it instantly. High retention workplaces place high priority on delivering the right information
to the right people at the right time using the right methodology. In Companies, that leaves
employees in the dark risk damaging morale and motivation—not to mention compromising
their ability to make a quick course change in the marketplace.
A Conventional Work Environment: People want to enjoy their work. That is why high-
performance workplaces do not bother with the traditional ways of doing things. They find
new ways to make work mentally engaging and physically energizing. They also ask for,
listen to, and implement the ideas and suggestions of those who work for them.

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Performance Management: It is becoming increasingly more difficult to find competent,

motivated workers who have good attitudes and work ethics. Because of this, knowing how-
to manage performance is important. Performance management includes a new set of skills,
tools, techniques, and processes to align an individual and his or her behavior with the goals
of the business enterprise.
Reward and Recognition: All humans need to feel appreciated. Reward and recognition
programs help meet that need. A workplace that rewards and recognizes people builds higher
productivity and loyalty, and can create consequences for desired behavior that leads to
organizational success.
Personal Growth: Many workers just want a paycheck, but the best workers want
opportunity. They want to develop their skills and potential and enhance their ability to
contribute and succeed. Training and development gives people greater control and
ownership over their jobs, making them capable of taking care of customers and creating
better management-employee relationships.
GLOBAL CHALLENGES
Challenge 1: Corporate workforces are becoming global, but talent management is
not keeping pace
Among our survey respondents, just 9% say that their workforce is based entirely in the
country of their corporate headquarters. In three years’ time, this proportion will fall to 4%.
Yet those organizations with an overseas workforce of more than 60% score lowest on:
• Adapting talent management to changes in the business environment
• Understanding the relationship between talent and company performance
• Investing in talent management
• This gap will have fundamental implications for the way companies manage talent.
Companies will need to create career paths that give high-potential managers and executives
exposure to different markets to broaden their knowledge and make them more appreciative
of different cultures.
• The old hub-and-spoke model of a strong headquarters and a weak subsidiary that must
look to the center for all decisions will no longer be suitable.
• Our survey results show a link between decentralized decision-making and stronger
financial performance. High performers are much more likely to have granted greater
decision-making freedom to direct reports and to have redefined their roles in a more open-
ended and flexible way.
• It is essential for organizations to prepare their managers for future leadership positions
by giving them exposure to different business and cultural environments. Yet companies
struggle with this.
• Even among high performers, only 53% create opportunities for employees to work in
different countries. This could be because of logistical difficulties such as tax barriers or

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stringent immigration laws; cost pressures; or post-assignment attrition rates, a common

challenge.
• According to a survey by Brookfield GRS, an executive relocation consultancy, 38% of
overseas assignees leave the company within a year of completing their assignment and 61%
leave within two years 1. In an EY survey of more than 520 companies, 27% of international
assignees returned to their old jobs and 11% resigned within two years of completing their
assignments 2.
• “Overseas assignments are very often value-destroying – not because companies don’t
select the right people but because they don’t know how to bring them back,” says Boris
Groysberg, Professor of Business
Administration at Harvard Business School

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It is essential for organizations to prepare their managers for future leadership positions by
giving them exposure to different business and cultural environments. Yet companies
struggle with this.
Even among high performers, only 53% create opportunities for employees to work in
different countries. This could be because of logistical difficulties such as tax barriers or
stringent immigration laws; cost pressures; or post-assignment attrition rates, a common
challenge.
According to a survey by Brookfield GRS, an executive relocation consultancy, 38% of
overseas assignees leave the company within a year of completing their assignment and 61%
leave within two years 1. In an EY survey of more than 520 companies, 27% of international
assignees returned to their old jobs and 11% resigned within two years of completing their
assignments 2.
“Overseas assignments are very often value-destroying – not because companies don’t select
the right people but because they don’t know how to bring them back,” says Boris Groysberg,
Professor of Business Administration at Harvard Business School.
Challenge 2: Companies struggle to invest strategically in talent management
Achieving superior financial results on a sustainable basis depends on making the right
investments in talent.
Yet it is clear that companies remain reluctant to make this commitment.
Even among high performers, just 45% say their company is effective at investing adequately
in talent management to meet financial targets; among low performers, this proportion falls to
36%.
This goes to the very heart of the expectations gap: companies still find it difficult to make an
explicit link between their strategic objectives and the talent required to meet those goals.
Jeff Joerres, CEO of the HR consultancy Manpower Group, says, “When everyone is
competing for the same kind of talent, you need a much clearer way of explaining how you
will attract those people to your organization.”

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Challenge 3: Measuring the effectiveness of talent management remains a challenge

Many business leaders struggle to articulate a clear link between people and broader
corporate performance.
Part of the problem is that the metrics that matter are the most difficult for companies to
capture. Our survey respondents mainly point to easily quantifiable outputs, such as
employee satisfaction and retention rates.
Tammy Erickson, an expert on organizations and the changing workforce, argues that metrics
such as retention rates do little to explain whether a talent management approach is effective.
“The fact that you were able to coax some mediocre person to stay with you for 20 years,
even though they were never qualified for any of the jobs you asked them to do during that
period, is a pretty useless statistic when you think about it,” she says.
“What you want to know is whether there is a gap between the person who filled the job and
the ideal qualifications that the Position requires.

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Yet few companies focus on skills gaps. Even among the high performers in our survey, just
26% think the extent of skills gaps is an important determinant of effective talent
management, and among the low performers, this drops to 18% (see Figure 6).
“The identification of skills gaps is a crucial part of workforce planning, but there are few
companies that are able to capture this information effectively,” says Bill Leisy, Global
Talent Management Markets Leader at EY.
“If companies had a better sense of the looming skills gaps, where and when they need those
skills, then their senior management team would quickly understand that they should think
more strategically about what they need.”
Challenge 4: The skills and competencies required by future business leaders are
changing
High performers are much more likely to consider softer attributes important for C-level
leaders. High performers place greater emphasis on leading effectively in an international
business environment. They have the ability to articulate and embody the values and culture
of the organization.
By contrast, the lower performers place greater emphasis on the more traditional, “hard”
leadership skills, such as industry and technical expertise and grasp of the financials.
“The idea of simply having a very strong subject-matter expert in the senior ranks of the
company just isn’t a viable model anymore,” says Leisy.
“Subject-matter expertise is a given. Companies need to adapt their talent management
approach so that they can better identify and nurture the ‘softer’ skills that have now become
so critical to business leadership.”

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Challenge 5: Companies lack robust succession plans to identify the next generation
of leaders
Companies lack robust succession plans to identify the next generation of leaders. For now,
most companies in our survey seem broadly satisfied with their current leadership, with 78%
of the high performers and 70% of the low performers agreeing that they have the right
attributes and experience in place.
However, when it comes to the next generation of leaders, the gap between these two groups
widens significantly. Even among the high-performing companies, there is a real lack of
confidence about the next generation of leaders.
Only 54% agree that they have a strong pipeline of future leadership talent, compared with
43% of the low-performing companies. Companies are even less optimistic that they will be
able to find leaders with sufficiently diverse experience and backgrounds.
Just 45% of the high performers and 36% of the low performers agree that their organization
has addressed these aspects of leadership development.
Groysberg of the Harvard Business School finds a similar gap between current and future
leaders in his own surveys, with a significant discrepancy between executives’ views of their
top management team today and their views of the next group of leaders.
“Companies are simply not doing what it takes to build the next generation of leaders,” he
explains. “They have a capable CEO and executive team, but when you look at the leadership
bench, it doesn’t exist.”
There are clear weaknesses in the processes by which companies identify the next generation
of leaders, even among companies with the strongest performance. Less than half of our high-
performing respondents report that they have robust succession plans in place for leadership
roles but, among the low performers, this falls to 33% (see Figure 8).
Companies also struggle with determining the right process for choosing a new leader.
Among our respondents, just 43% of high performers and 38% of low performers agree that
their organization has a clear set of qualification indicators for leadership candidates.

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