Explain the following:-

• Employee engagement
• Knowledge Management
• Succession Planning
• HR’s new role orientation
• Human side of Mergers and Acquisitions.
• Investment in disabled employees
• HR outsourcing
• 360 degree appraisal
• Benchmarking
• Quality of work life
• Determinants of Integration
• Work-force Diversity

Work-force Diversity

In the past HRM was considerably simpler because our work force was strikingly homogeneous.
Today’s work force comprises of people of different gender, age, social class sexual orientation,
values, personality characteristics, ethnicity, religion, education, language, physical appearance,
martial status, lifestyle, beliefs, ideologies and background characteristics such as geographic
origin, tenure with the organization, and economic status and the list could go on. Diversity is
critically linked to the organization’s strategic direction. Where diversity flourishes, the potential
benefits from better creativity and decision making and greater innovation can be accrued to
help increase organization’s competitiveness. One means of achieving that is through the
organization’s benefits package. This includes HRM offerings that fall under the heading of the
family friendly organization. A family friendly organization is one that has flexible work
schedules and provides such employee benefits such as child care. In addition to the diversity
brought by gender and nationality, HRM must be aware of the age differences that exist in
today’s work force. HRM must train people of different age groups to effectively mange and to
deal with each other and to respect the diversity of views that each offers. In situations like
these a participative approach seems to work better.

Employee engagement
Engagement happens when people are committed towards their organization and work and
motivated to achieve high levels of performance.
The strategies for enhancing employee engagement are:
• work itself
• work environment
• leadership
• opportunities for personal growth
• opportunities to contribute
• organizational commitment and engagement strategy
• Job enlargement
• Job enrichment
• Employee grooming and development.

Knowledge Management
Knowledge Management involves transforming knowledge resources within organizations by
identifying relevant information and then disseminating it so that learning can take place.

The approaches to develop knowledge management strategies are:

• Codification strategy
✓ People to document approach
• Personalization strategy
✓ Person to person approach
✓ Workshops
✓ Brainstorming
✓ One to one sessions

The strategic knowledge management. issues are:

• The pace of change
• Relating knowledge maangemnent strategy to business strategy
• Technology and people
• The significance of process and social capital and culture

The components of knowledge management. strategy are:

• The organizational culture
• Facilitating knowledge sharing
• Linking rewards with knowledge sharing
• Organizing seminars and workshops

Succession Planning
Ans: Meaning: It involves identifying key management positions that the organization
cannot afford to have vacant. Usually deals with:
• Senior Management Positions
 • Positions which were filled with difficulty.
Importance of Succession Planning
Succession Planning is important for the organizations because it identifies the future leaders
of the organizations.
✓ It grooms the successor as per the need and necessity.

✓ It makes an assessment and creates a match between corporate goals and individual
aspirations.
✓ It prepares the organizations and the employees for future needs.

✓ It prepares an organization for unexpected event.

✓ It ensures an organization has the right people in place today, as well as in the future.

✓ Guides in development activities of employees.

✓ Brings HR systems into alignment.

✓ Assures new managers are prepared for their jobs.

✓ It focus on Organizational Effectiveness.

✓ Helps in preparing strategies to transfer corporate knowledge.

✓ Increases ability to achieve business goals by assuring continuity of key positions.

✓ Improves employee engagement.

✓ Better appreciation of employees.

Methods of Succession Planning
There is one tool which is traditionally used for Succession Planning called as Replacement
Chart Tools. Under this method following steps are performed:
➢ Identification of key positions
➢ Finding possible successor for each
➢ To check whether the potential successor is already ready to take up responsibilities
or not.
➢ To assess the expected amount of the time he will take to be ready.
Absence of succession planning leads to
➢ Key positions will not be filled in a timely manner.
➢ Key positions can only be filled by external candidates due to the lack of
development of internal candidates
➢ There are only a few people prepared for the key position
 ➢ Key positions face frequent and unpredictable turnover.
➢ The potential replacements lack the necessary skills
➢ The most qualified talent continues to leave and look elsewhere for advancement.

A succession plan should be customized to the needs, vision, and mission of the
particular organization and should form a part of its strategic goals. Additionally, a
succession plan must meet the needs of and be accepted by all members of the
organization.
To ensure that the plan is implemented successfully, the organization should :

1) Have commitment and support from top management

2) Be guided by Human Resources
3) Be embraced by line staff
4) Focus on shared responsibility for employee development
5) Include individual development plans for each employee focused on
development opportunities with the greatest impact.
6) Ensure that employees take ownership of their development, with strong
management support.

HR’s new role orientation

Ans: HRs role are transforming with the changing scenarios. Following are the roles
performed by HR:

1. Strategic Partner
a. Partner in strategy execution
b. Responsible for organizational architecture and structure
c. Conduct org audit to → identify those components that need to be changed
to facilitate strategy execution→ identify methods for renovating the parts
of the organizational architecture → take stock of its own work and set
priorities to ensure delivery of results
2. Administrative expert
i. Shed their image of rule making police while ensuring that
the required routine work still gets done effectively and
efficiently.
ii. Requires rethinking or improving traditional HR functions
3. Human Capital Steward
a. Creation of an environment and culture in which employees voluntarily
want to contribute
b. Human capital is not owned by the organization
 c. can be maintained when best employees are recruited, motivated and
retained
4. Knowledge Facilitator
i. Procurement of the necessary employee knowledge
ii. allow information to be acquired, developed, and disseminated,
providing a competitive advantage
iii. Sharing of knowledge is rewarded
1. Relationship Builder
i. Development of structure, work practices and organizational culture
ii. allow individuals to work together, across departments and functions
iii. Synergizes teamwork
2. Rapid deployment specialist
i. Creation of organization structure and HR systems that are fluid and
adaptable to rapid change in response to external Os & Ts
ii. Flexible culture

Human side of Mergers and Acquisitions.

A merger or acquisition is more than just the act of bringing different companies together,
like putting a small box inside a bigger box or joining entities at some interface or seam. In
most cases, a myopic focus on this aspect will result in a failed merger or acquisition.

The Human Side of Mergers and Acquisitions looks at the impact of mergers and
acquisitions on a corporation’s most important asset – its human resources. The focus during
a merger or acquisition is usually on costs and projected financial gains. But costs and
earnings are ultimately decided by the performance of employees. The success of a merger or
acquisition depends upon the ability of management to foresee key issues and problems that
arise when employees from different companies are required to work together. The challenge
facing those enacting a merger or acquisition is to bring the structures of two companies
together to create a stronger, more profitable single company, while also ensuring that the
inevitable friction does not prove ruinous.

Even the best plans for efficiency, cost takeout and improved results can be disrupted by the
unexpected departure of crucial resources. Change drives uncertainty, and human beings
don’t always behave like the plans created by management. In many businesses, people
represent 50% of operational costs. Recognizing this fact is vital to driving post-merger
success. People have an inherent fear of change. It doesn’t always matter that a merger might
be good for them in the long run, or that it could provide opportunities to grow skills or
capabilities in a larger organization. The unique personal skills that create organizational
diversity and strength necessitate a highly nuanced approach to successful people
management in merger and integration activities.
Specific risks around people can manifest themselves in many ways, and organizations need
a well-rounded plan to attack these issues from the outset. Taking a proactive stance on
people issues is crucial:
• Document essential processes and be honest about what is known and unknown.
Information sharing can be a significant problem. Whether based on an unconscious desire to
protect turf and make one indispensable, or rooted in an honest lack of knowledge and
existing documentation, getting information out of people can be difficult. It is even more
challenging in a merger of equal transaction, where both parties may be competing for
longer-term roles and therefore be less willing to engage. Similarly, in an acquisition
environment, the acquired entity may feel slighted, and the acquiring entity may be perceived
as acting imperiously or without regard to the full set of corporate needs. None of these
behaviors drives open and honest information exchange, so it is critical to build an
environment of collaboration. Document key processes to ensure clear descriptions exist that
anyone can follow. The integrated company should not find itself dependent upon resources
that “have it all in their heads.” Focusing on process documentation serves as an insurance
policy against unexpected transitions. A side benefit of these proactive efforts is uncovering
opportunities for efficiency gains through process improvement and comparative role
assessments as integration efforts progress.
• Map key personnel into the new organization, and develop an individual plan to
attract and retain those resources. Build different motivators into select integration work
streams, including job opportunities, visibility, involvement in integration activities, and
retention and performance bonuses. Share the fact that these incentives exist, and create a
culture of want instead of fear by making it clear that opportunities exist to become integral
to the organization’s future success. Develop and execute a communication plan that includes
multiple methods for conveying the opportunities and incentives to a broad audience within
both organizations involved in the merger or acquisition.
• Plan for the unexpected. Despite retention bonuses, engagement programs, and specific
focus on individuals considered to be indispensable, people WILL leave. Management’s
handling of such transition will say a great deal about the emotional maturity of the company,
and contribute to other resources’ decisions to stay or go. It is imperative to create succession
plans below the executive level. Often only the most senior people have well-developed
transition plans. In times of great change, it is particularly important that organizations have
these same succession plans in place for all critical roles across the organization to ensure
that key functions will not face risk.
• Train managers across the board on driving retention and employee
engagement. Tone is important not just from the top, but throughout the organization.
Demonstrate interest, care, and support of the transition at all levels. Remember that people
 management is, at its heart, a series of individual human relationships. Studies show that
individuals are more apt to stay at jobs longer if they like and trust the managers they directly
report to. Therefore, tone at the middle becomes a defining tactic for holding on to essential
employees.
• Pay attention to the little things. Years ago, a major software company bought another
major software company after an extended battle for control that created great fears on both
sides. The acquiring company announced plans to shutter a local office, but never provided
directions for the new office location. On day one, security at the new HQ (apparently also
not informed of the deal) was surprised to find approximately 100 new faces looking for their
cubes, expecting badges, and milling about the lobby. Nothing malicious was intended, and
all was worked out, but personnel wondered unnecessarily about whether this misstep was
the first shot in an unintended war.
People are the least predictable component when setting up an acquisition strategy. They can
make or break a well-matched merger. To succeed with the human dimension of integration,
it is imperative that organizations understand and plan for the people risks that are created
during the life cycle of mergers and acquisitions.

INVESTMENT IN DISABLED EMPLOYEES

Disability or being disabled means:

“Someone who is disabled has an illness, injury or condition that tends to restrict the way they
live their life, especially by making it difficult for them to move about.”

Thus, the employee, who is working for the organization, will be termed disabled if he/she is
suffering from an injury or illness, which affects or restricts them from performing their job
effectively. There can be two types of disabled employees

I. Disabled - while employed: i.e. the person was fit and sound during the start of
employment relationship, however, during the tenure of his/her service he turned disable,
which can be either:
a) On-the-job: This is during the work hours while working at premises.
b) Off-the-job: This is not at work premises, but surely after the start of employment
relationship.

II. Disabled - prior to employment: Here the employer is well aware of the disability yet
employ the person for the job.
I) Disabled – while employed: There can be short- and long-term disability (STD and LTD).
While dealing with such a case the employer must follow the following procedure.

The Interactive Process, whereby through an informal open discussion with the disabled
employee, the precise job related limitation imposed by the employee's disability are being
realized and how those limitations could be overcome with a reasonable accommodation. Even if
the department's ability to accommodate the employee's disability seems doubtful, the
department must still conduct a good-faith interactive process.

There are four levels of possible accommodation:

1. Job Accommodation: Modification of job duties, job environment and/or work

schedule.
2. Modified Work: Lateral transfer into an existing position for which employee is
qualified.
3. Transferable Skills: Transfer to "demoted" position or position of lesser
terms/conditions ("last resort accommodation.").
4. Alternate Work: However, consideration should be given to his present salary and the
distance of the new work place from his residence.

Consider the preference of the individual to be accommodated and select and implement the
accommodation that is most appropriate for both the employee and the employer. The employer
should not accommodate the employee in case:

1. The disabled employee cannot perform the essential functions of the job; and that no
reasonable accommodation exists.
2. The person would create an imminent and substantial danger to him/her self or to others
by performing the job; and there is no way to remove or reduce the danger.

In such a scenario employer may use medical separation and also appoint a rehabilitation
counselor for the disabled employee.

II) Disabled prior to employment: There could be any form of disability namely

i) Mental health
ii) Physical Disability
iii) Learning Disability

The trend of employing disabled as well as keeping provisions for employees disabled after
employment is gaining momentum, which can be due to:

i) Realization of social responsibility by employers.

ii) Government intervention
iii) Trade benefit schemes, tax benefits etc.
Cost to keep disabled employee (employed)

Employers experience multiple direct and indirect benefits such as retaining qualified employees,
considering

i) the cost of training the new employee

ii) productivity of retained employee is higher
iii) cost of accommodation is lower than inducting new employee
iv) Employers want to retain valued and qualified employees.

HR OUTSOURCING

Ans: The Human Resource (HR) department is critical for employee satisfaction in any firm.
Some businesses don’t have the staff, the budgets or the inclination, to deal with the nitty-gritty
of HR management, so they opt for outsourcing. Deciding which functions to offload and which
firm to outsource is also a major decision.

HR functions include Payroll administration (producing checks, handling taxes, dealing with sick
time and vacations), employee benefits (Health, Medical, Life insurance, cafeteria, etc), human
resource management (hiring and firing, background interviews, exit interviews and wage
reviews), risk management (workers’ compensation, dispute resolution, safety inspection, office
policies and handbooks) and others. HR outsourcing Services could fall into one of four
categories: PEOs, BPOs, ASPs, or e-services.

A Professional Employer Organization (PEO) takes legal responsibility for employees. The PEO
and business owner are partners, with the PEO handling HR aspects and the business handling all
other aspects. BPO refer to all fields, but specifically for HR, a BPO would ensure that a
company has access to latest technologies. Application Service Providers (ASPs) host HR
software, on the web and rent it to users. E-services are those HR services that are web-based.

360 DEGREE APPRAISAL

Where superiors, peers, subordinates and clients, make appraisal it is called the 360-degree
system of appraisal. First developed at General Electric, Us in 1992, the system has become
popular in our country too. Most of the companies like GB (India), reliance Industries, Crompton
Greaves, Godrej soaps, Wipro, Infosys, Thurman and Thomas Cook etc are using the method
with greater benefits.
Many employers use rating committees to evaluate employees. These committees are often
composed of the employee’s immediate supervisor and three or four other supervisors who come
in contact with the employee. This choice is welcome when an employee, in the course of his or
her job, perform a variety of tasks in different environments.
In self-appraisal, the employee himself for herself evaluates his or her own performance. Indian
Telephone industries (ITI), has been following the self-appraisal system for executives. Texas
Instruments too ask their employees to prepare their own appraisals. On the positive side, it may
be stated that in self-appraisal there is and opportunity to participate in evaluation, particularly if
Objectives or MBO combines it) about this should improve the managers motivation.
Performance appraisal could be done by self ( self appraisal) or by peers ( peer appraisal) or by
superiors or by multiple assessors ( known as 360 Degree feedback). Each type of appraisal has
its own advantages and disadvantages.

360° appraisal – also known as 360° assessment or 360° feedback - is a proven

way of helping individuals to review their performance through a process of assessment by their
work colleagues.

The individual first assesses their own performance by rating themselves against specific
behaviours. They then select a number of work colleagues who are peers, managers and people
they supervise, and each person selected uses a simple rating scale to assess the individual for
their current performance against the same set of behaviours. The feedback collected from the
360° appraisal is collated and summarised for the individual as a series of reports. Each report is
designed to emphasise a different aspect of the feedback, for example strengths, areas needing
development, and differences of opinion.

How does 360° appraisal help to improve employee performance?

Once the individual has read the report, they can identify which behaviours are seen as needing
improvement, and can plan appropriate development actions. Managers often use the 360°
appraisal to support their requirement for management development training. The 360°
appraisal report shows them which areas of a management development training course to
focus on.360° appraisal is also highly effective as a self-development tool because it
provides managers with key information which they would otherwise find hard to obtain.
BENCHMARKING

Benchmarking is the process of comparing an organization's operations and internal processes

against those of other organizations within or outside its industry. The other organizations
against which the comparisons are made, known as 'benchmark partners’ are usually those that
are perceived to be the best performers in their class. The purpose of benchmarking is to identify
and adopt best known practices that can lead to superior performance. It was a buzzword in the
80's and 90's, but continues to be strongly practiced in various industries today. Benchmarking is
a systematic process - it must have a framework and use a standard set of attributes that are
measurable to compare multiple organizations objectively. Benchmarking must be performed on
a specific area or activity only, such as operational best practices, information technology,
staffing, compensation packages, distribution systems, budgeting, and the like. Limiting the
scope of the benchmarking activity allows the formulation of a more focused agenda that
provides more useful information from better-targeted benchmark partners.

Benchmarking with internal partners is usually the best starting point for a benchmarking
program. However, many companies or organizations are not big enough for internal
benchmarking, and have to resort to external benchmark partners to get the information they
need. Identifying suitable external benchmarking partners depends on the purpose of the
benchmarking activity as well as the nature of the benchmarking organization.

Benchmarking consists of five (5) basic steps: 1) decide on what process or area to benchmark,
considering which would give the most leverage or improvement potential; 2) understand the
internal processes or operations involved in the area being benchmarked and collect data on their
key performance metrics; a good understanding of how an internal system works would facilitate
understanding of those of the benchmark partners; 3) identify organizations who are best in class
in the area to be benchmarked and arrange mutually-beneficial benchmarking activities with
them; 4) conduct the benchmarking activities arranged with the partners; and 5) analyze the
benchmark data and adopt practices that will produce the greatest benefits to the organization.

There are many ways by which the benchmarking proper may be conducted with the
benchmarking partner, but one of the most popular ones is by exchanging information through a
questionnaire, possibly on a visit to the partner. This may consist of the following steps: 1)
develop a questionnaire that covers all the information that need to be obtained; 2) answer the
questionnaire internally to test it and so that the same information may be provided reciprocally
if the partner asks for it; 3) provide a reason for every question so that its necessity may be
rationalized to the partner if necessary; 4) discuss the questionnaire to clarify its objectives, areas
of interest, and areas of confidentiality and sensitivity with the partner; and 5) arrange a visit
with the partner.
If the visit to the benchmarking partner materializes, the following guidelines would be useful: 1)
prepare for the visit thoroughly; 2) define the purpose and objectives well; 3) commit the
questionnaire to memory and leave the hard copy behind; 4) be open and honest during the visit;
5) avoid being seen by the partner taking down notes, but take down notes nonetheless; 6)
reciprocate information requests; 7) thank the partner again and again.

QUALITY OF WORKING LIFE (QWL)

Concept of Quality of Working Life

Quality of work life is a generic phrase that covers a person's feelings about every dimension of
work including economic rewards and benefits, security, working conditions, organizational and
interpersonal relationships and its intrinsic meaning in a person's life. It is a process by which an
organization attempts to unleash the creative potential of its personnel by involving them in
decisions affecting their work lives.

Quality of Working Life is the degree to which members of a work organization are able to
satisfy their personal needs through their experience in the organization Its focus is on creating a
human work environment where employees work cooperatively and contribute to organizational
objectives. The major indicators of QWL are job involvement, job satisfaction and productivity.

The Quality of Work Life attempts to satisfy the following needs of the workers:

(i) Equitable and Fair Pay: QWL is basically built around the concept of equitable pay. The
employees must be paid their due share in the progress and prosperity of the firm. Compensation
has got twin objectives. Firstly, it should create a favorable environment whereby the
organization utilizes the human resources to the maximum extent. Secondly, the compensation
should help the employee to maintain himself and his family with a standard in the society. :

(ii) Safer Working Environments: According to Walton, the QWL is deeply concerned with
provision of a work environment absolutely free from various hazards arising out of natural and
unnatural things. He further emphasizes the need for reasonable hours of work, favorable
physical conditions of work age restrictions, etc. to be followed by the organizations. In India,
we have the Factories Act, 1948 and several other labor laws, which provide the various rules
and regulations of protecting the workers from the health hazards at the working site.

(iii) Job Security: Employees want stability of employment. They do not like to be the victims of
whimsical personnel policies of employers. The workplace should offer security of employment
Layoffs and retrenchment are opposed tooth and nail by all categories of employees these days.

(iv) Job Satisfaction: The workers are living beings. They want to work on the jobs that will
utilize their talents and them. The management must enrich the jobs and redesign the jobs in
such a manner that workers feel satisfied.
(v) Provision of Autonomy as well as Control to Workers: As the nature of work has become
highly monotonous today, the worker becomes more mechanical towards the machines and
lacks controls on them. According to Wanton, when sufficient autonomy as well as control is
given to workers, who in turn will use their innate skill and abilities for developing the
organization, it will lead to improvement of QWL in the organization.

(vi) Better Career Opportunities: Now a days, workers are not only concerned with their pay
prospects, but also with the scope for improving ' technical skills. Therefore, it becomes
imperative on the part of the management to provide facilities for improving such skills. The
management should always think of utilizing the existing human resources for expansion and
develop of the organization.

(vii) Social Integration in the Work Organization: One of the objectives quality of working
life is to generate satisfying identity with the organization and develop a feeling of self-
esteem. The factors which inculcate these fee' are openness and trust, opportunity for upward
mobility, a sense of community

DETERMINANATS OF INTEGRATION:
Ans: Integration is the process of reconciling the goals of organization with those of its
members. Integration involves motivating employees through various financial and non-financial
incentives, providing job satisfaction, handling employee grievances through formal grievance
procedures, collective bargaining, worker’s participation in management, conflict resolution,
developing sound human relations, employee counseling, improving quality of work life.

Employee Motivation: Motivation is the key to organizational effectiveness and is a predictor for
performance and job satisfaction. Motivation at work is a significant factor in organizational
settings, which is responsible for the initiation, regulation and sustenance of the efforts towards
the accomplishment of the work.

Job Satisfaction: Job Satisfaction is of great relevance in the field of human resource
management. There is a vast literature of understanding how job satisfaction is linked to
performance.

Collective Bargaining: It is an important method of regulating relations between employers and

employees. It also includes the process of resolving labor-management disputes.

Participation of Employee: Participation means sharing, in an appropriate manner, the decision

making power with the lower ranks of the organization. The general assumption is that by using
such a process workers would be able to contribute to the overall effectiveness of the
organization.
Quality of work Life: QWL is the degree to which members of work organizations are able to
satisfy their personal needs through their experience in the organization. Its focus is on creating a
human work environment where employees work competitively, cooperatively and contribute to
organizational effectiveness.

Employee Counseling: Counseling of employees is an important technique of development

employees. Supervisors and managers hold counseling for the purposes of handling grievances;
dealing with disciplinary matters; improving performance; disseminating information about
benefits, policies, and procedures; and helping employees in career development and retirement
planning.

What are the advantages and disadvantages of on-the-job, off-the-

job and online training.
How are training programmes designed
ON-THE-JOB TRAINING

On-the-job training is considered to be the most effective method of training the operative
personnel. Under this method, the worker is given training at the work place by his immediate
supervisor. In other words, the worker learns in the actual work environment. It is based on the
principle of 'learning by doing'. On-the-job training is suitable for imparting skills that can be
learnt in a relatively short period of time. It has the chief advantage of strongly motivating the
trainee to learn. It is not located in an artificial situation. It' permits the trainee to learn on the
equipment and in the work-environment. On-the-job training methods are relatively cheaper and
less time consuming. Another important factor about on-the-job training is that supervisors play
an important part in training the subordinates.

There are four methods of on-the-job training described below:

(i) Coaching: Under this method, the supervisor imparts job knowledge and skills to his
subordinate. The emphasis in coaching or instructing the subordinate is on learning by doing.
This method is very effective if the superior has sufficient time to provide coaching to his
subordinates.
(ii) Understudy: The superior gives training to a subordinate as his understudy or assistant. The
subordinate learns through experience and observation. It prepares the subordinate to assume the
responsibilities of the superior's job in case the superior leaves the organization. The subordinate
chosen for under-study is designated as the heir-apparent and his future depends upon what
happens to his boss. The purpose of under study is to prepare someone to fill the vacancy caused
by death, retirement, promotion, or transfer of the superior.

(iii) Job Rotation: The purpose of position rotation is to broaden the background of the trainee in
various positions. The trainee is periodically rotated from job to job instead of sticking to one job
so that he acquires a general background of different jobs. Job rotation is used by many
organizations to develop all-round-worker. The employees learn new skills and gain experience
in handling different kinds of jobs. They also come to know the interrelationship between
different jobs. Job rotation is also used to place workers on the right jobs and prepare them to
handle other jobs in case of need.

Significance of On-the-Job Training

On-the-job training techniques are most appropriate for imparting knowledge and skills that can
be learnt in a relatively short time and where only one or a few employees are to be trained at the
same time for the same job. But the success of the training depends almost entirely on the trainer.
If he understands training principles and methods and if he takes an interest in proper training of
new employees, chances are that it will be done properly.

On-the-job training has the chief advantage of strongly motivating the trainee to learn. It is not
located in an artificial situation, either physically or psychologically. It permits the trainee to
learn at the actual equipment and in the environment of the job. On-the-job training methods are
relatively cheaper and less time consuming. If only a few persons are to be trained at one time, it
is cheaper for the employer to resort to on-the-job training. It will take less time to learn on the
job itself and, moreover, production does not suffer. Another important factor about on-the-job
training is that line supervisors take an important part in training their subordinates.

Advantages

• Tailor-made course content with use of REAL company situations/examples.

• It is usually less expensive than off-job training
• Learning will take place using the equipment, which will be actually used
• Trainees acclimatize more rapidly

Disadvantages

• Possibility of poor instruction and insufficient time.

• Trainee may be exposed to bad work practices.
• A large amount of spoiled work and scrap material may be produced.
• Valuable equipment may be damaged.
• Training takes place under production conditions that are stressful, i.e. noisy, busy,
confusing and exposing the trainee to comments by other workers.

OFF-THE-JOB TRAINING
It requires the worker to undergo training for a specific period away from the work-place. Off-
the-job methods are concerned with both knowledge and skills in doing certain jobs. The
workers are free of tension of work when they are learning.

There are several off-the-job methods of training and development as described below:

(i) Special Lecture cum Discussion: Training through special lectures is also known as 'class-
room training'. It is more associated with imparting knowledge than with skills. The special
lectures may be delivered by some executives of the organization or specialists from vocational
and professional institutes. Many firms also follow the practice of inviting experts for special
lectures for the staff on matters like health, safety, productivity, quality, etc.

There are certain aspects of nearly all jobs that can be learnt better in the classroom than on the
job. Orientation about organization and safety training can be accomplished more' effectively in
the classroom. The standard instructional method suitable for operative employees is a formal
lecture' by an instructor to the trainees. The lecturer possesses a considerable depth of knowledge
of the subject at hand. He seeks to communicate his thoughts in such a manner as to interest the
class and cause the trainees to retain what he has said. The trainees generally take notes as an aid
to learning.

The lecture method can be used for providing instructions to large groups. Thus, the cost per
trainee is low. However, it has certain limitations also. The learners may be passive. It violates
the principle of learning by doing and constitutes one-way communication. But if the learners are
permitted to ask questions, they will provide feedback to the instructor. Lectures can easily be
combined with other techniques. Thus, a teacher may conduct a class by the combined lecture-
cum-discussion method. He may lecture only to add new information that the group does not
possess. Formal reading assignment may be given, demonstration may be presented and video
films may be shown along with the lecture.

(ii) Conference Training: A conference is a group meeting conducted according to an organized

plan in which the members seek to develop knowledge and understanding by oral participation.
It is an effective training device for persons in the positions of both conference member and
conference leader. As a member, a person can learn from others by comparing his opinions with
those of others. He learns to respect the viewpoints of others and also realizes that there is more
than one workable approach to any problem.

(iii) Case Study: The case method is a means of simulating experience iii the Classroom. Under
this method, the trainees are given a problem or case, which is more or less related to the
concepts and principles already taught. They analyze the problem and suggest solutions, which
are discussed in the class. The instructor helps them reach a common solution to the problem.
This method gives the trainee an opportunity to apply his knowledge to the solution of realistic
problems.
Cases may be used in either of the two ways. Firstly, they can be used subsequent to the
expansion of formal theory under which the trainees apply their knowledge of theory to specific
situations. Secondly, the trainees may be assigned the cases for written analysis and oral
discussion in the class without any prior explanation of pertinent concepts and theory. The case
study places heavy demands upon the trainees and requires that they should have a good deal of
maturity in the subject-matter concerned.

Off-the-job methods are more relevant for the development of higher-level employees and
executives. In addition to the above methods, sensitivity training, seminars, special projects and
committee assignments may also be used for training and development of employees. These
methods have been discussed in the next chapter.

Advantages

• A specialist instructor enables delivery of high quality training.

• Wider range of facilities and equipment are available.
• The trainee can learn the job in planned stages.
• It is free from the pressures and distractions of company life.
• It is easier to calculate the cost of off-job training because it is more self-contained
• Cross-fertilization of ideas between different companies.

Disadvantages

• Can result in transfer of learning difficulties when a trainee changes from training
equipment to production equipment.
• No training can be entirely off-job as some aspects of the task can only be learned by
doing them in the normal production setting, with its own customs and network of
personal relationships.
• Can be more expensive.
• Carrying out the training
• Everyone involved in the training should be informed well in advance of the training
session(s). It is equally important that the person(s) delivering the training – whether in-
job or off-job training - are well versed in what has to be achieved and the most suitable
techniques to adopt.

ONLINE TRAINING

Online Training or Computer aided instruction, or computer based learning is concerned with the
use of computers to mediate in the flow of information in the process of learning. The main
strength of the computer as learning medium is its ability to process information very quickly
and accurately. It is learning with aid of computers rather than learning about computers. CAI
provides for accountability as tests are taken on the computer so that the management can
monitor each trainee’s progress and needs. CAI training program can also be modified easily to
reflect technological innovations in the equipment for which the employee is being trained. This
training also tends to be more flexible in that trainees can usually use the computer almost any
time they want, thus get training when they prefer.

Advantages

• It is self-paced allowing different individuals to learn and absorb material at their own
level of comfort and understanding.
• It is adaptive to different needs and can be customized for different employees.
• It is also easy to deliver: All an employee has to do is turn on a computer at a workstation
or at home.
• There’s no need to leave one’s desk or coordinate schedules with trainers or trainees.
• CBT is usually less expensive to administer when different units in the organization are
geographically dispersed.
• Training can be conducted whenever it is convenient for the employee.
• The training can be undertaken without any advanced scheduling.

Disadvantages

• Learners must be self-motivated and take both initiative and responsibility for their
learning.
• The cost of producing online, interactive materials can be quite high.
• The content of learning can become outdated quickly and require revision and possible
redesign of the entire online learning environment.
• The lack of both interaction with others and two-way communication may work against
the needs and preferred learning styles of many employees, particularly adult learners.

DESIGNING A TRAINING PROGRAMME: The training programme is an integral part of

human resource management. It consists of the following inter-related steps:

1. Identification of training needs.

2. Setting training objectives.
3. Organization of training.

4. Evaluation of training outcomes or results.

1. Identification of Training Needs

The technological changes taking place is the main cause of identification of the training
needs in an organization. Earlier the people were acquiring training through apprenticeship and
vocational courses, which are not sufficient in the modern era of industrialization. It is necessary
to identify the training needs because of the following reasons:

Fig 1: Design of a Training Programme

Identification of Training Needs

• Organizational Analysis
• Task Analysis
• Human Resource Analysis
 Setting Training Objectives

Organization of Training Programme

• Trainee and Instructor

• Period of Training
• Training Methods and Material

Evaluation of Training Results

(a) Adoption of new techniques in an organization and introduction of modern working
methods. For example, computerization of the office as has been done in Railway
bookings or Airlines bookings.

(b) Poor performance by the workers as reflected by low output, lack of initiative,
incompetence, and bad decisions. This requires systematic training of the work force.

(c) Wide gaps between what workers should be doing and what they are doing.

(d) Analysis of the strengths and weaknesses of an organization may reveal the areas of
weaknesses, which need to be handled seriously.

More information could be obtained from the organization's human resource plan. While
preparing plans, the current skills with expected needs for future should be kept in mind and the
deficiencies be highlighted. Some organizations prepare 'skills-inventories' classifying
employees according to their qualifications, technical knowledge, experience and various skills.
The gaps between the existing and required levels of knowledge, skills, performance and
attitudes should be specified. The problem areas that can be resolved through training should
also be identified.

Training needs can be identified through the following types of analysis:

(i) Organizational analysis

(ii) Task analysis

(iii) Manpower or Human Resource Analysis.

(i) Organizational Analysis. It is a systematic study of the organization in terms of its objectives,
its resources, resource allocation and utilization, growth potential and its environment. Its
purpose is to determine where training emphasis should be placed in the organization for
increasing organizational effectiveness. Organizational analysis involves the following elements:
(a) Analysis of Objectives: The long-term and short-term objective; and their relative priorities
should be properly analyzed. Specific goals for various departments should be stated which will
serve as means for achieving the overall organizational objectives. The management would have
to examine what are the specific training inputs that would contribute towards the achievements
of these objectives.

(b) Resource Utilization Analysis: The allocation of human and physical resources and their
efficient utilization in meeting the operational targets should be analyzed. In order to examine
the need for training, the following questions need to be answered:

Whether adequate number of personnel is available to ensure the fulfillment of the goals?

Whether the personnel performance is upto the required standards?

(c) Climate Analysis: Organizational climate reflects the attitudes of organizational members as
regards trust, loyalty, openness, and commitment to organizational goals. Analysis of
organizational climate should aim at determining whether the environment in different
departments is conducive to fulfillment of their goals. This will help in knowing areas where
training is needed to improve the climate of the organization.
(ii) Task Analysis. It is a systematic analysis of jobs to identify job contents, knowledge, skills
and aptitudes required to perform the job. Particular attention should be paid to the tasks to be
performed; the methods to be used, and the way employees learn these methods and the
performance standards required of employees. Questionnaires, interviews, personnel records,
observation and other methods can be used to collect information about jobs in the organization.

In task analysis, the main focus is on the job or task. Task analysis requires the study of various
types of skills and training required to perform the job effectively.

(iii) Manpower Analysis. The quality of manpower required by the organization has to be
carefully analyzed. It has to be done in the light of both internal and external environment of the
organization. The economic, social, technological and political environment of the organization
should be properly scanned to determine the quality of human resources desired. To achieve
these quality standards, specific training needs should be determined on the following lines:

(a) Specific areas where individuals need training,

(b) The capability of present workforce to learn new skills and behaviors,

(c) The time frame within which training must be imparted, and
(d) Job designing and redesigning, introduction of new work methods

2. Setting Training Objectives

Once the training needs are identified, the next step is to set training objectives in concrete terms
and to decide the methods to be adopted to achieve these objectives. The overall aim of any
training programme is to increase organizational effectiveness. However, each training
programme must also have specific objectives such as increased productivity, improved quality,
better human resource planning, better health and safety, prevention of obsolescence and
enhanced personal growth. These objectives contribute to organizational effectiveness as
explained in the beginning of the chapter.

3. Organization of Training Programme

Every training programme includes trainees, trainers, a training period and training material.
These constituents of training are discussed below:

(a) Selection of the Trainees. The proper selection of trainees is of major importance if
permanent and gainful results are to be obtained. A trainee should be trained for the kind of job
he likes and is fitted to perform. In this respect, training is closely related to the selection of
personnel. Careful screening of candidates for training will raise the effectiveness of the training
programme.

(b) Preparation of the Instructor. The instructor or trainer is a key figure in an effective training
programme. He can contribute immeasurably to its Success. Qualified instructor may be obtained
from inside or outside the organization. However, many insiders are not good instructors because
they may not possess the ability to teach the skill. Trainee needs many qualifications besides
knowing how to do the work. He must be able to divide the job into logical parts so that he may
take up one part at a time without losing his perspective of the whole.

(c) Determination of Training Period: The length of the training period depends upon the skill to
be acquired, the trainee's learning capacity and the training methodology used. For instance, a
simple indoctrination programme for clerks may require an hour a day over a period of one
week, while a course in computer programming may be given two hours a week for 15 weeks.

(d) Training Methods and Material: There are several on-the-job and Off-the-job methods of
training as discussed earlier in this chapter. The choice of any method would depend upon the
specific objectives of the training programme.

To increase the effectiveness of training, some written material is usually desirable as a basis for
instruction, review and reference. The training section may prepare the training material with the
help of line supervisors to be used for different jobs. A complete outline of the whole course
should be made.
4. Evaluation of Training

Evaluation of training would provide useful information about the effectiveness of training as
well as about the design of future training programmes. It will enable an organization to monitor
the training programme and also to modify its future programmes of training. The evaluation of
training also provides useful data on the basis of which relevance of training and its integration
with other functions of human resource management can be examined.

What is compensation? What are the basic components of

compensation system? What innovations organization have
introduced in each of these components because of an increasingly
competitive business environment?
Compensation is a systematic approach to providing monetary value to employees in exchange
for work performed. Compensation may achieve several purposes assisting in recruitment, job
performance, and job satisfaction. The fair compensation system will help in the following:

• An ideal compensation system will have positive impact on the efficiency and results
produced by employees. It will encourage the employees to perform better and
achieve the standards fixed.
• It will enhance the process of job evaluation. It will also help in setting up an ideal
job evaluation and the set standards would be more realistic and achievable.
• Such a system should be well defined and uniform. It will be apply to all the levels of
the organization as a general system.
• The system should be simple and flexible so that every employee would be able to
compute his own compensation receivable.
• It should be easy to implement, should not result in exploitation of workers.
• It will raise the morale, efficiency and cooperation among the workers. It, being just
and fair would provide satisfaction to the workers.
• Such system would help management in complying with the various labor acts.
• Such system should also solve disputes between the employee union and
management.
• The system should follow the management principle of equal pay.
• It should motivate and encouragement those who perform better and should provide
opportunities for those who wish to excel.
• Sound Compensation/Reward System brings peace in the relationship of employer
and employees.
• It aims at creating a healthy competition among them and encourages employees to
work hard and efficiently.
• The system provides growth and advancement opportunities to the deserving
employees.
• The perfect compensation system provides platform for happy and satisfied
workforce. This minimizes the labour turnover. The organization enjoys the stability.
 • The organization is able to retain the best talent by providing them adequate
compensation thereby stopping them from switching over to another job.
• The business organization can think of expansion and growth if it has the support of
skillful, talented and happy workforce.
• The sound compensation system is hallmark of organization’s success and prosperity.
The success and stability of organization is measured with pay-package it provides to
its employees.

Compensation is a tool used by management for a variety of purposes further the existence of the
company. Compensation may be adjusted according to the business needs, goals, and available
resources.

Compensation may be used to:

• Recruit and retain qualified employees.

• Increase or maintain morale/satisfaction.
• Reward and encourage peak performance.
• Achieve internal and external equity.
• Reduce turnover and encourage company loyalty.
• Modify (through negotiations) practices of unions.

Recruitment and retention of qualified employees is a common goal shared by many employers.
To some extent, the availability and cost of qualified applicants for open positions is determined
by market factors beyond the control of the employer. While an employer may set compensation
levels for new hires and advertise those salary ranges, it does so in the context of other
employers seeking to hire from the same applicant pool.

Morale and job satisfaction are affected by compensation. Often there is a balance (equity) that
must be reached between the monetary value the employer is willing to pay and the sentiments of
worth felt be the employee. In an attempt to save money, employers may opt to freeze salaries or
salary levels at the expense of satisfaction and morale. Conversely, an employer wishing to
reduce employee turnover may seek to increase salaries and salary levels.

Compensation may also be used as a reward for exceptional job performance. Examples of such
plans include: bonuses, commissions, stock, profit sharing, gain sharing.

Compensation will be perceived by employees as fair if based on systematic components.

Various compensation systems have developed to determine the value of positions. These
systems utilize many similar components including job descriptions, salary ranges/structures, and
written procedures.

The components of a compensation system include:

 • Job Descriptions A critical component of both compensation and selection systems, job
descriptions define in writing the responsibilities, requirements, functions, duties,
location, environment, conditions, and other aspects of jobs. Descriptions may be
developed for jobs individually or for entire job families.
• Job Analysis The process of analyzing jobs from which job descriptions are developed.
Job analysis techniques include the use of interviews, questionnaires, and observation.
• Job Evaluation A system for comparing jobs for the purpose of determining appropriate
compensation levels for individual jobs or job elements. There are four main techniques:
Ranking, Classification, Factor Comparison, and Point Method.
• Pay Structures Useful for standardizing compensation practices. Most pay structures
include several grades with each grade containing a minimum salary/wage and either step
increments or grade range. Step increments are common with union positions where the
pay for each job is pre-determined through collective bargaining.
• Salary Surveys Collections of salary and market data. May include average salaries,
inflation indicators, cost of living indicators, salary budget averages. Companies may
purchase results of surveys conducted by survey vendors or may conduct their own salary
surveys. When purchasing the results of salary surveys conducted by other vendors, note
that surveys may be conducted within a specific industry or across industries as well as
within one geographical region or across different geographical regions. Know which
industry or geographic location the salary results pertain to before comparing the results
to your company.

Different types of compensation include:

• Base Pay
• Commissions
• Overtime Pay
• Bonuses, Profit Sharing, Merit Pay
• Stock Options
• Travel/Meal/Housing Allowance
• Benefits including: dental, insurance, medical, vacation, leaves, retirement, taxes.

Write short notes on:

a) Integration of Strategy and HR Planning

Ans: Strategic planning is a key tool for HR. Tony Grundy defines HR strategy as ‘the plans,
programmes and intentions to develop the human capability of an organization to meet the
future needs of its external and internal environment’. HR strategy may be planned, emergent
or some combination of these. Research by Tyson and Witcher as well as Grundy suggests
that emergent HR strategy may be damaging by organizational effectiveness. Other research
projects also suggest that the more planned and timely the implementation of HR strategies,
the more value is perceived to be added to the business.
There are many reasons why many HR teams do not take a planned approach. Some HR
teams may prefer working in an emergent way and would rather wait until there is a clear
business strategy on which to model the HR strategy. This may be a long wait and
opportunities for adding value may be missed. Some teams fear criticism of being seen to
create their own policy in the absence of business strategy, on the one hand, or being seen to
drive business strategy, on the other. The sheer complexity of the links which need to be
managed between HR strategy and organizational effectiveness may mean that the overall
focus of the delivery is diffuse and therefore not appreciated. Similarly, periods of ongoing
change and active organizational politics can cause the links to be undermined. This may be a
question of ownership of the HR’s strategy and where it sits in the organization structure.

However, Lam and Schaubroeck’s research suggests that leaders in firms with relatively
highly formalized HR planning are more likely to perceive its usefulness compared with
those firms where the Hr strategic objectives are less clear. In strategic HRM, planning needs
to go beyond being focused on operations and control. Whether a formal or informal
approach is used, the important thing is to keep the plan simple. As Hr teams move towards a
strategic HRM approach, the need for integration among the different HR practices increases.
These clear objectives are than likely to be useful in strategic planning activities, helping the
organization, to enhance organizational performance, rather than simply being a means of
making the case for more resources.

HR planning is critical to the effective development of strategy since it should identify gaps
and surpluses in capabilities as well as issues of utilization of talent. Indeed so central is this
identification of organizational capability considered by some researchers that they argue for
an enhanced role for HR planning in overall strategic planning. Various researchers have
suggested that the most effective links are made when HR strategy as such disappears and is
more fully integrated into other resource strategies supporting the operational management
process.

This would mean that the role of HR would be to facilitate the development of an
organizational strategy, which is owned and developed by line managers. This would
probably be issue based and directly linked to the business strategy. Indeed, Grundy argues
that the key role of a strategic HRM function is to facilitate Organization and people strategy,
together through joint coordination with line management of strategic programmes such as
management development and succession planning.The effectiveness of HR planning very
much depends on the organizational context. HR planning objectives are likely to be
contingent upon different competitive strategies and different organizations will therefore be
unlikely to use identical approaches to similar issues. However, unless the objectives are
clear, building commitment to the strategy among line managers and employees is difficult.
(b) Leadership competencies in strategic HR/ role of strategic
HR leader

A leadership competency model should serve as the foundation for any organization’s
leadership development system. An effective model allows an organization to clearly define
what leadership competencies are required in order for an organization to be successful, both
now and in the future. Leadership development systems (selection, assessment, development,
performance management, succession planning) can then be aligned to support the
development of these competencies.

While the idea has been around for at least 20 years, a recent Right Management survey says
that half of all corporations today have no model for identifying and developing the
leadership competencies needed to drive change in their organizations.

Option 1: Hire a top-notch consultant that specializes in leadership competency modeling:

There are some great companies out there, like Hay, Hewitt, Right, and many other that will
come in and work with you to understand your business strategy, interview top performers
and key stakeholders, develop, test, and validate a model with behaviorally anchored rating
scales (BARS), and develop an implementation strategy. Actually, with an unlimited budget,
this is probably the best approach. You know you’re getting a valid and reliable model. The
disadvantages of this approach are money and time. I’ve never worked in an organization
with an unlimited budget (maybe, someday), and CEOs usually have little patience when you
tell them something like this is going to take 14 months – and cost $100,000.

Option 2: Read a book, go to a seminar, and try to do option 1 yourself:

Not a bad option if you’re a do-it-yourselfer with a limited budget. However, it may actually
take you more time because you’ve never done it before, you’ll make a lot of mistakes, and
you may end up with an invalid model that’s worthless. I’ve witnessed this approach – it’s a
long and lengthy process (if you follow what the book or guru says to do), and by the time
the model is finished, there’s no time, patience, or interest left in actually doing something
with the model.

Option 3: Buy a model: The argument for this approach is “why re-invent the wheel”? There
are already research-based, proven, tested and validated leadership models out there, like
PDI, CCL, Lominger, and DDI. They’re all good; I’d recommend any of them. By buying an
existing model, you also save time that would be wasted developing the model and can re-
direct that time to assessment, selection, and development. There would be some cost
involved – for a license to use the model (no, you can’t use them without paying for them,
please) – but not as much as the build option.

The only disadvantage of this approach is stakeholder buy-in. That may sound like a flimsy
reason, and perhaps even weak HR leadership. After all, we wouldn’t ask for “buy-in” to the
periodic table of elements, right? If it’s right, it’s right, no questions asked. However, I’ve
tried it, and so far I have yet to find a CEO or management team that’s willing to take a
“generic” model and apply it to their organization. These are big, strong egos, and that’s a
powerful force to overcome.

Option 4: Hybrid (my recommendation): This is a practical, cost-effective, yet effective

version of options 1-3 combined.

1. Obtain all of the business strategy documentation you can get your hands on. Conduct
executive interviews to learn about business challenges and leadership requirements to
address those challenges. Start with the CEO and work you way down a couple layers.

2. Review existing competency models (from option 3). Learn the language and terminology.
In a way, they’re all saying the same thing in slightly different ways. Line them all up and
look for the common themes, combining or changing terms so that they make sense to your
organization. Avoid “HR-speak”, and stick to common sense, business language.

3. Pick out the key competencies that would really make the biggest difference in the success
of your business. Go back to your interview notes and highlight the phases that you heard
over and over. Use that same language (for buy-in), but cross-reference the phrase to ensure
they are part of at least two research-based models. 8-12 competencies is probably a good
number, if only for focus. (a good test one year later is to ask managers if they can name
them all).

4. Review the competency model with your senior team for refinement and buy-in. Repeat
the process with the next level of management and other key stakeholders, each time
tweaking the model less but allowing ample time for discussion and understanding.
 Finally, create a strategic leadership development model – to show the connection between
the business strategy, the competency model, and the alignment of the leadership system.

Define strategic HRM. What are the main points of difference

between SHRM and human resource strategies? How can HR
strategies help an organization to create competitive advantage?
Strategic Human Resource Management is an approach to making decisions on the intentions of
the organization concerning people-essential components of the organization`s business strategy.
It is about the relationship between HRM and Strategic management in the organization.
Strategic HRM refers to the overall direction the organization wishes to pursue in achieving its
objectives through people. Strategic HRM can be regarded as an approach to dealing with
longer-term people issues as part of the strategic management thrust of the business. It covers
macro-organizational concerns relating to structure and culture, organizational effectiveness and
performance, matching resources to future business requirements, and the management of
change.

Strategic Human Resource Management encompasses those decisions and actions which concern
the management of employees at all levels in the business and which are directed towards
creating and sustaining competitive advantage.

HRM is Human Resources Management which is a strategic approach to the management of

employees. HRM involves the process of employing people, developing their skills/capacities,
and utilizing their services. But today, HRM has come across many changes, and the latest one is
the Strategic HRM which is the most powerful idea currently. Strategic HRM can be termed as a
branch of HRM.

In HRM, traditional methods are followed. Traditional methods mean the selection or
recruitment process and imparting training. This HRM process did not have any specific rules for
different areas like recruitment, training, and utilizing the services. This is what makes the
Strategic HRM different from HRM. In Strategic HRM, there are specific rules specified for
specialized fields.

In HRM, there are no separate people for different areas whereas in Strategic HRM there are
different people who are skilled in specific areas. It is not that the same persons will handle
recruitment, training, and employee appraisal.As the term itself denotes, Strategic HRM deals
with strategic aspects of HRM. Unlike HRM, Strategic HRM mainly focuses on the programs
with long-term objectives. Though HRM and Strategic HRM focus on increasing employee
productivity, Strategic HRM uses many strategic methods.
Unlike the traditional HRM, Strategic HRM uses more sophisticated methods for improving
overall employee motivation and productivity. Unlike the traditional HRM, Strategic HRM uses
more systematic tools.While the traditional HRM focuses mainly on employee relations,
Strategic HRM focuses on partnerships with internal and external customers. When HRM has
only short-term goals, Strategic HRM has long-term goals.

When considering job design, there is a tight division of labor and independence specialization in
HRM. On the other hand, the job division in Strategic HRM is flexible. When HRM has staff
specialists, Strategic HRM has line managers.

Summary of differences between HRM and SHRM:

1. HRM involves the process of employing people, developing their skills/capacities, and
utilizing their services. Strategic HRM can be termed as a branch of HRM.
2. While traditional HRM focuses mainly on employee relations, Strategic HRM focuses
on partnerships with internal and external customers.
3. When HRM has only short-term goals, Strategic HRM is for long-term goals.
4. When HRM has staff specialists, Strategic HRM has line managers.
5. When considering job design, there is a tight division of labor and independence
specialization in HRM. On the other hand, job division in Strategic HRM is flexible.

HR strategies help an organization to create competitive advantage by focusing on the following

aspects of human resource management:

VALUE
HR executives must address a primary question “How can HR aid in either decreasing costs or
increasing revenues?” In today’s time when everyone is talking numbers; the HR department has
to prove its worth and show that it creates value for the organizations. HR can help a firm
achieve sustainable competitive advantage by creating value.
Example: FedEx, which are the market leaders in the courier business, believe people are the
primary link in the value chain, and thus, value is created by focusing on employees first. HR
practices should be related to employee attitudes which would be consequently related to
customer satisfaction.
RARENESS
Only value alone cannot help the HR department to achieve sustainable competitive advantage
for organizations. HR executives must examine how to develop and exploit rare characteristics of
the firm’s human resources to gain competitive advantage. If the same characteristic of human
resources is found in many competing firms, then that characteristic cannot be a source of
competitive advantage for any one of them. In order to drive the strategic decisions, HR
executives should being the ‘rare’ factor in the talent they recruit.
Example: Nordstrom is one of the most reputed brands in the retail sector. The recruiting
process, compensation practices and culture at Nordstrom’s have helped the organization to
maintain the highest sales per square foot of any retailer in the nation.

IMITABILITY
If the competitors in the business can easily imitate what you offer, then you are at loss! The HR
executives must attempt to develop and nurture characteristics of the firm’s human resources that
cannot easily be imitated by competitors. This essentially means leveraging on organization’s
unique history or culture that helps in gaining competitive advantage. In any organization, the
culture is nurtured and developed via the HR Department. Hence, by restricting and developing
unique culture, executives can help firms in gaining competitive advantage.
Example: Even after purchasing the safety training programs, DuPont’s competitors are simply
unable to match DuPont’s safety record. DuPont’s superior safety performance stems at least
partly from its unique history that competitors find impossible to imitate.

ORGANIZATION
In order for any characteristic of a firm’s human resources to provide a source of sustained
competitive advantage, the firm must be organized to exploit the resource. Organization requires
developing the systems and practices that allow human resources characteristics to bear the fruit
of their potential advantages.
Example: Both General Motors and Ford recruit assembly line workers from the same basic
labor market. But, Ford has been more successful at developing a cooperative, team-based
culture than General Motors. Clearly the HR function, through either directly controlling or
strongly influencing the characteristics of human resources in organizations plays an important
role in developing and maintaining a firm’s competitive advantage.

Explain the concept of SHRM as presented by various authors.

Ans: Hendry and Pettigrew says HRM is concerned with seeing the people of the organization
as a strategic resource for the achievement of competitive advantage.

The concept of SHRM can be studies as follows:

Resource Based View: It is the range of resources in an organization including its

HR, that produces its unique character and creates competitive advantage. Competitive
Advantage arises first when firms within an industry are heterogeneous with respect to
the strategic resources they control and second when these resources are not perfectly
mobile across firms and thus heterogeneity can be long lasting.
 Competitive advantage through human resources arises because:

✓ There is heterogeneity in their availability in the sense of the differences

that exist between them across firms in an industry and
✓ They are immobile in the sense that competing firms may be unable to
recruit them.
Criteria governing resource's ability to provide competitive advantage: -

✓ The resource must add positive value to the firm

✓ The resource must be unique or rare amongst current and potential
competitors
✓ The resource must be imperfectly imitable
✓ The resource cannot be substituted with another resource by competing
firms

Perspectives of SHRM

A. The universalistic perspective: says some HR practices are better than the others and all
organizations should adopt these best practices. There is universal relationship between
individual ‘best’ practices and firm performance.

B. The contingency perspective: says that organization’s HR policies must be consistent

with other aspects of the organization.

C. The configurational perspective: It is a Holistic approach having independent variables

such as HR practices and Dependent variable as Organizational Performance. It
establishes the relationship between indfependent and dependent variable.
Explanations:

A. Best Practice Approach (Universalistic): There is a set of best HRM practices adopting
them will inevitably lead to superior organizational performance. Various authors have
given their opinions about the best HR strategies.
List of best practices given by Pfeffer are:
• Employment and security
• Selective hiring
• Self-managed teams
• High compensation contingent to performance
• Training to provide a skilled and motivated workforce
• Reduction of status differentials
• Sharing information

Also, Delery and Doty have given seven Strategic HR practices:

 1. Internal career ladders
2. Formal training systems
3. Results-oriented appraisal
4. Performance based compensation
5. Employment security
6. Employee voice
7. Broadly defined jobs

B. Best Fit Approach (Contingency Approach): HR strategies should be contingent on the

context, circumstances of the organization and its type. It involves vertical integration.
Following are the models under this approach:

i. Life cycle Model: This model says that development of a firm takes place in four
stages – Startup, growth, maturity and decline and therefore, HR strategies also
transform according to the stages. HR‘s effectiveness depends on its fit with the
organization’s stage of development. As the organization grows and develops, HRM
programmes, practices and procedures must change to meet its needs. Consistent with
growth and development models it can be suggested that human resource
management develops through a series of stages as the organization becomes more
complex.

ii. Competitive strategy-Porter’s Model: effectiveness can be increased by

systematically moulding human resource practices with the selected competitive
strategy. It includes following strategies:
1. Innovation Strategy

2. Quality Strategy

3. Cost leadership

iii. Strategic configuration: Miles and snow identified four types or organizations
depending on these types the organizations design their HR policies. These type of
organizations are:

1.Prospectors
2.Defenders
3.Analyzers
4.Reactors
 C. Configurational Approach (Bundling): It includes development and implementation of
several HR practices together so that they are interrelated and therefore complement and
reinforce each other. Practices within bundles are interrelated and internally consistent
and ‘more is better’ with respect to the impact on performance, because of the
overlapping and mutually reinforcing effect of multiple practices. The aim is to achieve
high performance through coherence

Why is it important for the HR Manager to be a strategic business

partner? “Strategic HRM is largely about integration or strategic fit
between HR Strategy and Business Strategy” Elaborate.
The “business” partner role: As “business” partners HR specialists share responsibility with
their line management colleagues for the success of the enterprise and get involved in
implementing the organizations´ strategy.

The strategic role:

a) To formulate and implement forward looking HR strategies that are aligned to objectives and
integrated with one another
b) Contribute to the development of strategies
c) Work alongside their line management colleagues to provide on an everyday basis continuous
support to the implementation of the strategy of the organization, function or unit.
d) A strategic partner plays multiple roles like business expert, change agent, knowledge
manager, and consultant and therefore it is important for an HR manger to integrate HRM
policies with the strategies of the business.

Importance of HR Manager as a strategic business partner:

Profitability: Profitability is one of the primary reasons why human resources management
should be a strategic business partner. As a strategic business partner, human resources
management gains support for enhancing employee skills and training employees to meet
business demands. These are two of the most effective ways to improve productivity and
employee engagement, which in turn prepare the workforce for challenges associated with
production and business demands.

Funding: Funds are required by the HR manager for various HR activities like training,
employee development, giving competitive salaries and benefits packages. All these activities
strengthens the company’s position and competitiveness in attracting and retaining valuable
talent and expertise. Without employees’ talent and expertise, the business risks losing
production capabilities – the inability to achieve maximum production levels directly affects
revenue, profitability and company standing in relationship to its competitors.
Perception: Human resources departments have traditionally been viewed by employees and
leadership as merely operational areas with limited input in employment functions beyond hiring
and firing. Since the 1980s version of personnel administration, human resources management
has transformed into a department with greater influence on employee satisfaction, engagement
and retention. As a strategic business partner, human resources management can continue to
carve out its rightful position as an integral component of the business. Inclusion of HR
management in strategic business planning improves employees’ and leadership’s perception of
human resources.

Balance: Human resources management, therefore, brings a broader perspective to the policies
framed by the top management by including human resources management as a strategic
business partner and enabling better decision making. The involvement of Human Resource will
help in balancing the activities of all the departments of the organizations.

Value: Implementing strategic plan is nearly impossible without the input of human resources
and employee involvement. Recognizing the value of HR management is a critical step in
developing business strategy, and it takes human resources management’s proactive-thinking to
put those plans into action.

Integration between HR Strategy and Business Strategy.

An important issue for top decision-makers is how to evaluate the extent to which both strategic
integration and devolvement are practised in their organisations. The level of integration of HRM
into the corporate strategy can be evaluated by a number of criteria: these include representation
of specialist people managers on the board; the presence of a written people management
strategy (in the form of mission statement, guideline or rolling plans, emphasising the
importance and priorities of human resources in all parts of the business); consultation with
people management specialists from the outset in the development of corporate strategy;
translation of the people management strategy into a clear set of work programmes; the growing
proactive nature of people management departments through the creation of rolling strategic
plans (emphasising the importance of human resources in all parts of the business); through
mission statements; by aligning HR policies with business needs through business planning
processes; by use of participative management processes and committee meetings; and via HR
audits.

The level of devolvement of HRM to line managers in an organisation can be evaluated on the
basis of measures such as: the extent to which primary responsibility for decision-making
regarding HRM (regarding pay and benefits, recruitment and selection, training and
development, industrial relations, health and safety, and workforce expansion and reduction) lies
with line managers; the change in the responsibility of line managers for HRM functions; the
percentage of line managers trained in people management in an organisation; the feedback
given to managers/line managers regarding HR related strategies; through consultations and
discussions; the extent to which line managers are involved in decision- making; by giving the
line managers ownership of HRM; and by ensuring that they have accepted it by getting their
acknowledgement.
STAGES OF THE EVOLUTION OF STRATEGY AND HRM INTEGRATION

1. Greer (1995) talks about four possible types of linkages between business strategy
and the HRM function / department of an organization:
• ‘Administrative linkage’ represents the scenario where there is no HR department and
some other figurehead (such as the Finance or Accounts executive) looks after the HR
function of the firm. The HR unit is relegated here to a paper-processing role. In such
conditions there is no real linkage between business strategy and HRM.
• Next is the ‘one-way linkage’ where HRM comes into play only at the implementation
stage of the strategy.
• ‘Two-way linkage’ is more of a reciprocal situation where HRM is not only involved at
the implementation stage but also at the corporate strategy formation stage.
• The last kind of association is that of ‘integrative linkage’, where HRM has equal
involvement with other organizational functional areas for business development.

2. Purcell (1989) presents a two-level integration of HRM into the business strategy –
‘upstream or first-order decisions’ and ‘downstream or second-order decisions’:
• First-order decisions, as the name suggests, mainly address issues at the organizational
mission level and vision statement; these emphasize where the business is going, what
sort of actions are needed to guide a future course, and broad HR-oriented issues that will
have an impact in the long term.
• Second-order decisions deal with scenario planning at both strategic and divisional levels
for the next 3–5 years. These are also related to hardcore HR policies linked to each core
HR function (such as recruitment, selection, development, communication).

3. Guest (1987) proposes integration at three levels:

• First he emphasizes a ‘fit’ between HR policies and business strategy.
• Second, he talks about the principle of ‘complementary’ (mutuality) of employment
practices aimed at generating employee commitment, flexibility, improved quality and
internal coherence between HR functions.
• Third, he propagates ‘internalization’ of the importance of integration of HRM and
business strategies by the line managers.

LINKING ORGANIZATIONAL STRATEGY AND HRM STRATEGY: THEORETICAL

DEVELOPMENTS

The literature contains many theoretical models that highlight the nature of linkage between
HRM strategies and organizational strategies.

1. The strategic fit or the hard variant of HRM

Fombrun et al.’s (1984) ‘matching model’ highlights the ‘resource’ aspect of HRM and
emphasises the efficient utilisation of human resources to meet organisational objectives. This
means that, like other resources of organisation, human resources have to be obtained cheaply,
used sparingly and developed and exploited as fully as possible. The matching model is mainly
based on Chandler’s (1962) argument that an organisation’s structure is an outcome of its
strategy. The main aim of the matching model is therefore to develop an appropriate ‘human
resource system’ that will characterise those HRM strategies that contribute to the most efficient
implementation of business strategies.

The matching model of HRM has been criticised for a number of reasons. It is thought to be too
prescriptive by nature, mainly because its assumptions are strongly unitarist. As the model
emphasises a ‘tight fit’ between organisational strategy and HR strategies, it completely ignores
the interest of employees, and hence considers HRM as a passive, reactive and implementations
function. However, the opposite trend is also highlighted by research. It is asserted that this
model fails to perceive the potential for a reciprocal relationship between HR strategy and
organisational strategy. Indeed, for some, the very idea of ‘tight fit’ makes the organisation
inflexible, incapable of adapting to required changes and hence ‘misfit’ to today’s dynamic
business environment. The matching model also misses the ‘human’ aspect of human resources
and has been called a ‘hard’ model of HRM seems non pragmatic in the present world.

Despite the many criticisms, however, the matching model deserves credit for providing an
initial framework for subsequent theory development in the field of strategic HRM.

2. The soft variant of HRM

The ‘Harvard model’ of strategic HRM is another analytical framework, which is premised on
the view that if general managers develop a viewpoint of ‘how they wish to see employees
involved in and developed by the enterprise’ then some of the criticisms of historical personnel
management can be overcome.

Compared to the matching model, this model is termed ‘soft’ HRM It stresses the ‘human’
aspect of HRM and is more concerned with the employer–employee relationship. The model
highlights the interests of different stakeholders in the organisation (such as shareholders,
management, employee groups, government, community and unions) and how their interests are
related to the objectives of management. This aspect of the model provides some awareness of
the European context and other business systems that emphasise ‘co-determination’.
The actual content of HRM, according to this model, is described in relation to four policy areas,
namely, human resource flows, reward systems, employee influence, and works systems. Each of
the four policy areas is characterised by a series of tasks to which managers must attend.

Describe the interaction between strategic planning and human

resource planning. Is merger/acquisition a strategy for human
resource planning? Why/ Why not?
Ans: Strategic role of HRP

• Developmental Planning for Strategic Leadership

• Assessment of strategic alternatives
• Adding value
• Contribution to SHRM
o Avoiding personnel shortages
o To obtain information for decisions
o Affirmative action efforts
o Budgeting
o Career planning
• Strategic salary planning

Integration of strategy and HRP:

• Evolution of strategy and human resource planning integration
o Administrative linkage
o One way linkage
o Two way linkage
o Integrative linkage

Benefits of integrating HRP with strategic planning:

• Generates more diverse solutions to complex organizational problems
• Ensures consideration of human resources in organizational goal setting processes
• Ensures consideration of human resources in assessment of organizational abilities to
accomplish goals and implement strategies
• Reciprocal integration prevents strategy formulation based on personnel
rigidities/preferences
• Facilitates concurrent consideration of strategic plans and managerial succession

Yes, Merger/Acquisition is a strategy for HRP:

Merger is a combination of two or more corporations which form a new corporation.
Acquisition takes place when one company acquires the assets and liabilities of the other smaller
company.

The process involves the following;

1. The Pre-Merger Stage

Strategic Planning and Organization

The first step is strategic planning in which the acquiring firm develops its mission statement and
determines the type of merger or acquisition that will be sought and how it will achieve corporate
objectives. In the next stage the firm is primarily concerned with organization—creating a
specific team to manage the M&A activity.

Searching
Searching for potential acquisitions and thoroughly investigating the merits of each is the third
step of the merger process.
Analysis and Offer
The next stage of the merger process is analysis and offer, in which a primary objective is to
evaluate the ‘fit’ of the two firms. There are three types of fit- financial, business and
organisational fit- that must all be present if the merger or acquisition is to be successful.
Organizational fit includes human resources and the two organizational cultures.

2. The Post-Merger Integration

Changes that are designed to capture synergies are implemented in the integration stage. This
phase is most often poorly managed.

Procedural Integration
Procedural integration is designed to standardize work procedures and improve productivity.
Since each firm has its own systems and procedures, combining the two requires that some of the
old ways are abandoned.

Physical Integration
Physical integration is intended to use the mutually exclusive assets of the two firms as the basis
for capturing synergies. Some common assets will become redundant and workforce reductions
may take place.

Socio cultural Integration

Socio cultural integration is the final and most difficult task in a merger or acquisition. Because
the organizational culture is part of the employee’s identity, a failure to address culture issues
may lead to a loss of commitment among employees and may result in lost opportunities to retain
qualified personnel and motivate individuals.

The Post-Merger Transition

The last two stages in a merger or acquisition are the transition and integration. These two stages
are the most complicated and are surrounded by the highest level of uncertainty. The transition
stage is in fact the most poorly managed of all, and consequently it is the stage where most
failures occur. It can be managed by following ways:

A Delicate Balance

Management of the transition stage requires a delicate balance between providing a stabilizing
influence and creating a climate for change. Uncertainty and anxiety, anger, frustration,
psychological withdrawal and family disruptions are pervasive during M&A activity. Those who
voluntarily leave their company indicate that uncertainty leads them to do so early in the
acquisition process. The importance of transition management shows that negative employee
reactions and behaviours are more common in failed acquisitions than in successes.
Insecurity and Anxiety

Negative employee feelings and behavior are typical responses to threatening situations. The
magnitude of the response will be determined by the employee’s perception of the severity of the
threat and the degree of powerlessness to counteract it, which will in turn be a function of his or
her confusion concerning the expectations of the new firm. For example, if employees are
unaware of how they will be evaluated for the retention decision, feelings of powerlessness will
be high. Since information is generally scarce in the transition stage, the employee’s perceptions
will be influenced predominately by rumor and speculation.

Unanticipated Turnover

The predominance of negative attitudes caused by uncertainty often leads employees to act on
the worst scenario and begin updating résumés.

Several authors have suggested how to reduce the incidence of counterproductive behaviors.
Preliminary interventions target emotional support, and may begin while negotiations are still
underway. Activities in this phase are focused on providing stability. Other techniques are
intended to create a positive environment for change by decreasing the level of uncertainty and
fostering realistic expectations for the future. Feelings of powerlessness on the part of employees
are reduced by providing information to determine how (or if) the threat to job security can be
counteracted. Commitment to the new organization may be fostered if the employees are
encouraged to see career opportunities are available and continued success is possible in the new
organization.

M&A has following impact because of which HRP is required:

Workforce Reductions: There are reductions in the workforce undertaken shortly after the M&A.
Unplanned Turnover: There are higher levels of unplanned turnover among employees
Restructuring: The restructuring activities are taken soon after the M&A event.

Explain competency based approach to selection. Why had this

approach gained importance in the current business environment?
Describe the linkage between business strategy and the effectiveness
of the recruitment and selection process.
A The Competency-Based Approach is a research-supported approach based on the primary goal
of defining the critical behaviors needed for effective and superior individual and organizational
performance. Simply defined, a competency is a set of related behaviors that
(1) Impact job performance;
(2) Can be measured against established standards; and
(3) Can be improved through training and development.
COMPETENCY BASED APPROACH TO SELECTION:
Competency-based selection is a process of selecting a candidate based on the ability of
candidates to produce anecdotes about their professional experience which can be used as
evidence that the candidate has a given competency.
The process is intended to be fairer than other selection processes by clearly laying down the
required competencies and then testing them in such a way that the recruiter has little discretion
to favor one candidate over another; the process assumes high recruiter discretion is undesirable.
Competency-based selection is highly focused on the candidates' story-telling abilities as an
indication of competency, and disfavors other indications of a candidate's skills and potential,
such as references.
Having established the competency profiles for groups and roles, organizations use the
competencies as the standards for assessing candidates throughout the screening and selection
process as well as advertising and communicating the organization’s requirements to potential
applicants.
Competencies support recruitment and selection by:

• Providing bona fide, validated, fair and unbiased standards against which to assess applicant
competencies to perform in the targeted role / job.
• Improving the transparency of the selection process by clearly communicating the behaviors
employees must display for success in the role / job.
• Contributing to the design of a well-articulated, efficient and effective recruitment and
selection processes.
• Creating efficiencies by providing re-usable selection tools and processes (e.g., question
banks for interviews and reference-checking organized by competency; template interview
and reference checking guides for roles / jobs within the organization; targeted role plays,
work simulations, in-basket assessments; etc.)
• Providing explicit, clear and transparent criteria on which to give candidates feedback on
their performance in the selection process (e.g., input for future learning and development;
etc.)
• Providing standards for evaluating the success of the selection process - e.g., correlating the
results of the selection process with competency-based on-the-job performance.

The Competency-Based Approach supports the integration of various workforce performance

management activities — selection, training, performance management, career development —
because all are derived from a common competency model. It serves two complementary
objectives: it is directed to the accomplishment of the organization’s goals; and to the
individual’s development. Implementing this strategically driven initiative helps organizations
reach their goals by getting the right people in the right jobs that possess the right competencies;
and creates a more committed workforce by providing developmental opportunities aligned with
these goals.
• To highlight the major benefits using practical terms — using a Competency-Based
Approach has:
• Selection benefits — by defining one candidate as more effective and superior to another
thus creating a better fit;
• Provides performance benefits — by clarifying and raising the bar on what is expected;
and
• Provides developmental benefits — by setting individual goals that employees can strive
to reach that are aligned with the business strategy. Given that you can make the basic
assumption that people generally have the desire to do well in their jobs, and be a part of
a successful, reputable organization —using this approach will work for you and to your
organization’s advantage.

For the effective functioning of an organization with an aim of achieving its goals and objectives,
it’s very important to get the effective workforce in an organization. So linking business strategy
with effective recruitment and selection process is very important. In order to do this, the
organization must take the time to determine which major themes of behavior or competencies
— e.g., innovation, customer engagement, action orientation — needs to be demonstrated across
your organization in order for your business strategy to work.

Every organization will have its own ‘competency model’ that includes the critical behaviors
necessary for success in that culture.

The business strategy of a company involves employing selective and specific processes across
all aspects of the business, including the recruitment and selection process, to help the business
achieve optimal profit and success. For every business, the recruitment and selection of the right
employee for each position can lead to reduced costs, thus leading to an improved bottom line.

Human resource planning and business strategy

Business strategy begins with identifying the needs of your organization as they relate to current
and future labor demands. Accomplishing this task requires the ability to identify the various
jobs and roles needed within organization to meet current and future goals related to production
and growth. Once identified, clear and concise job descriptions and duties can help ensure that
recruitment remains streamlined and aimed at efficient recruitment and hiring.

Recruitment Activities and business strategy

Hiring managers should focus on recruiting activities aimed at attracting the right candidates for
the job. Recruiting activities include internal efforts, college hiring fairs, technical and vocational
events, and traditional newspaper advertisements. Based on the needs of current openings and
forecasts for future needs, a hiring manager need to direct efforts toward the best option for
recruiting the right candidates. For instance, focusing on college hiring fairs and traditional
newspaper advertisements is appropriate for entry-level positions with your company. The
recruitment practice must support the overall objective of an organizations existence.

Selection Process and business strategy

Selecting the right candidate requires identifying the specific skills, knowledge and qualities any
organization seek and desire in an employee. This can pertain to the necessary skills and
knowledge for the position itself, such as a specific degree or certification, and the desired
personal qualities, such as a preference to hire employees with good moral and ethical standards.
Other important parts of the selection process include conducting any necessary aptitude tests
and conducting a thorough background check to ensure the employee meets the basic
qualifications of both the position and the company. The job specifications should very well
overlap the qualifications and attitude of the candidate.

Considerations
Business strategy also takes into account various ways to reduce costs while ensuring enough
staff is in place to complete all necessary job duties and responsibilities. For instance, one can
eliminate the duplication of job duties and reduce costs by consolidating job duties and
restructuring internal workforce. Other concerns include those related to replacing an aging
workforce. This requires the need to plan ahead for the loss of essential employees to retirement.

Explain how the performance management system can be aligned

with the business strategy of the organization. Describe the
assessment centre approach to performance management?
An organizations performance is directly related to the performance of its employees. The
performance management system ensures that the required skills for establishment of
organizations goal and strategies matches the actual skills of its workforce. It eliminates the
performance discrepancies of its employees and develops them for future perspectives. To
achieve sustained business success in a demanding world marketplace, organizations must link
their business strategy to highly aligned performance measures in order to communicate and
execute strategy successfully. Successful alignment means you will be nurturing and motivating
your talent whilst also achieving your goals. The organization must follow following practices to
align performance management with strategic goal of the organization:

• Clear definition of roles and responsibilities.

• Clear definition of goals and objectives.
• Give frequent performance reviews to seek performance alignment with the corporate
strategy.
• Effective communication will make the job easier.
• Well defined performance standards and criterion should be developed
 • Performance deficiencies should be addressed in a timely manner through employee
development programs.
• Employee behaviors must be channeled in the appropriate direction toward performance
of specific objectives.
• Employees must be provided with appropriate and specific feedback to assist with their
career development.

Assessment centre method of performance management:

Assessment Centers: An assessment center is a central location where managers may come
together to have their participation in job related exercises evaluated by trained observers. It is
more focused on observation of behaviors across a series of select exercises or work samples.
The method involves multiple evaluation techniques, including various types of job-related simulations,
and sometimes interviews and psychological tests. Common job simulations used in assessment centers
are:

• in-basket exercises
• group discussions
• simulations of interviews with "subordinates" or "clients"
• fact-finding exercises
• analysis/decision-making problems
• oral presentation exercises
• written communication exercises

Simulations are designed to bring out behavior relevant to the most important aspects of the position or
level for which the assessees are being considered. Known as "dimensions" (or competencies), these
aspects of the job are identified prior to the assessment center by analyzing the target position. A job
analysis procedure identifies the behaviors, motivations, and types of knowledge that are critical for
success in the target position. During assessment, the job simulations bring out assessees’ behavior or
knowledge in the target dimensions. The characteristics assessed in assessment center can be
assertiveness, persuasive ability, communicating ability, planning and organizational ability, self
confidence, resistance to stress, energy level, decision making, sensitivity to feelings,
administrative ability, creativity and mental alertness etc. The most important feature of the
assessment center method is that it relates not to current job performance, but to future
performance. By observing how a participant handles the problems and challenges of the target
job or job level (as simulated in the exercises), assessors get a valid picture of how that person
would perform in the target position.
Features:
The following are the common features of all assessment centers:
1) The final results is based on the pass/fail criteria
2) All the activities are carried out to fill the targeted job.
3) Each session lasts from 1 to 5 days.
4) The results are based on the assessment of the assessors with less emphasis on self-
assessment
5) Immediate review or feedback is not provided to the employees.

Advantages:
1) Well-conducted assessment center can achieve better forecasts of future performance and
progress than other methods of appraisals.
2) Also reliability, content validity and predictive ability are said to be high in assessment
centers.
3) The tests also make sure that the wrong people are not hired or promoted.
4) Finally it clearly defines the criteria for selection and promotion.

Disadvantages –
1) Costs of employees traveling and lodging, psychologists, ratings strongly influenced by
assessee’s inter-personal skills.
2) Solid performers may feel suffocated in simulated situations.
3) Those who are not selected for this also may get affected.
ACQUISITION AND RETENTION STRATEGIES

A starting point in the development of a human resource strategy is often the identification of
the long-term human resource requirements of the organization. These provide the basis for
more detailed human resource planning processes. The aim of these strategies should be to
ensure, On the one hand, that the achievement of corporate objectives will not be inhibited
by human resource shortages or inefficiencies and, or other, that impending surpluses can
be dealt with in good time with the minimum individual hardship and disruption to employee
relations.

At this stage broad questions need to be answered concerning:

Human resource requirements:

- How many employees are needed? – Over what period? – What kind of abilities and skills
will be required?

Availability:

- What is available now inside the company?

- What would be made available from inside and outside the company?

Retention

- What is the company’s experience in retaining staff?

- What are the problems and how can they be overcome?

Human resource utilization:

- How well are human resources used in the company?

- What is the scope for increasing productivity?
MOTIVATION STRATEGY

Motivation strategy should aim to increase the effective contribution of members of the
organization in achieving its objectives. Motivation strategy will refer to the performance
management and reward systems, and in particular to the type and scale of financial
incentives which are to be provided. But it will also be considered with other processes
which should yield favorable attitudes, including job design, participation, joint objective
setting, career development, and nay other processes relating to the individual’s need to
achieve and maintain a sense of personal worth and importance. Motivation is also affected
by the quality of leadership in an organization: therefore the selection, training, and
development of effective leaders should be part of the strategy.

HUMAN RESOURCE DEVELOPMENT AND TRAINING STRATEGIES

A human resource development strategy is concerned with the longer-term programmes

needed by an organization to improve operational performance at all levels, in accordance
with the additional demands which the business strategy will place on people in future. The
strategy will provide continuous development processes linked closely with the programmes
designed for the organization as a whole to implement its product, technology and market
development strategies.

The associated training strategy will be concerned particularly with the development of new
or existing competencies and with multi-skilling. For example, it will take account of the
introduction of new technology and of increased demands for `knowledge workers’ and for
`systems technicians` on production lines. The training strategy may be linked to the reward
strategy by the development of skills or competency- based payment systems.
 ORGANIZATION DEVELOPMENT STRATEGY

The aim of on organization should be to ensure that an effective organization is maintained

which will respond appropriately to changes in its internal and external environment and
make the best use of the individual and collective capacities of its members. The main
strategic areas in which organization development takes place are:

• The implications of change and the actions required to ensure that the organization
will continue to function effectively when subjected to pressures resulting from
change
• Changes in organization structure as well as values and culture development
programmes, and changes in organization climate and management style
• The proper integration of increasingly diversified activities which are likely to result
from change
• Team development
• The management of conflict
• Work on planning and objective-setting processes for individuals and teams

How can HR strategies be fully aligned?

In setting business strategies, line managers need to be fully in tune with what their customers
say they want from the organization. The same is true of HR strategies, except that such
strategies may have to be attuned to the needs of each organizational unit. HR and line
managers need to think through the kind of culture needed in each unit if the people in that unit
are able to deliver the business strategy.

What makes a difference to the delivery of business strategy is people’s behaviors. So, for
instance, all the ‘customer focus’ training in the world is of no use if clients perceive that the
company’s representative is rude to them over the phone. HR needs to think through the
behavioral character desired of employees. This: includes both behaviors, which the company
wants to encourage, and dysfunctional behaviors, which the company wishes to stop. HR also
needs to think through the HR processes, which are aligned to that behavior. This will include
issues such as recruitment, training, resources, location, working environment etc.

Working through these issues with line managers in a systematic way helps line managers to se
the link between managing the cultural aspects of the organization and achieving business
goals.

Major action plans can establish what the HR team needs to do next to make the change
happen. These plans need to be developed with the management team and can be both short
and long term. Changing the structure, for instance, can be a short-term measure while
changing the culture can take several years and may need to be phased.
Empowerment

Empowerment has become a cliché and a discredited one at that in some quarters. The main
reason according to Barbara Ettore is the myths surrounding it. If empowerment is supposed to
be defined as an employee’s ability to solve problems, take decisions based on those decisions,
management has encouraged the tint two but has failed to allow the third. Often the real
dilemma for executives is whether to trust employees. The management assumption is that
workers cannot fully understand the impact of their actions on the organization’s bottom line.
This assumption is based on the relative lack of information received by workers which would
give them a clear insight into how their actions affect the whole operation, stretching from the
business strategy and work processes to customers, shareholders, suppliers, etc.

This is where empowerment without alignment with strategy and information is likely to backfire.
Yet the benefits of empowerment can outweigh the risks. Empowered orgainsation are more
likely than others to respond quickly to ideas and suggestions, enable managers to make their
own decisions without having to rely on headquarters and put customers’ needs first.
Empowerment needs to be aligned to the strategic aims of the organization so that employees
can direct their solutions to real business issues. Typically, employees need to be clear about
what the customer wants, the part their own role plays and what shareholders are looking for.
Characteristically, in empowered organizations, good ideas are rewarded effectively and
authority is appropriately delegated as far down the organization as possible. Systems are a
supportive framework rather than a set of constraints and employees work to broad principles
rather than rules. Companies like Levi-Strauss, Hewlett-Packard and Nordstorm are among
high-performing orgainsation which practice aligned and informed empowerment. But, as Ettore
points out, ‘as with all initiatives, if management is not committed and if HR is not a strategic
function, it will fail’.

.
STRATEGIC PERFORMANCE MANAGEMENT AND COMPENSATION SYSTEMS

Traditionally, performance appraisal has been used as the guide for employee performance.
Performance appraisal also known as ‘performance evaluation’, ‘merit rating’, and ‘performance
assessment’ is a process of recording assessment of employees’ performance, potential and
development needs. According to Wayne F Cascio (1995) performance appraisal is defined as
“the systematic description of job related strengths and weaknesses of an individual or a group”.
Performance appraisal is a system of review and evaluation of an individual’s (or team’s)
performance. Lately it has been supplanted in more and more companies with performance
management (PM), a more comprehensive human resource management process.

Within the recent past there has been a shift from traditional annual performance appraisal to
continuous performance management . The obvious reasons behind this have been the
inadequacy of Performance appraisal in serving as a performance enhancement tool.
Performance appraisal is known to be a contentious and unpopular activity of Human Resource
Management. It is contentious because employees do not readily accept their manager’s
assessment about their performance, and managers feel uncomfortable when they have to
defend their judgment. It is unpopular because managers do not want to play the role of a judge;
besides they have feelings of guilt if their evaluation is critical of their employees’ performance.

There could be other reasons for performance appraisal being unpopular:

• Many a times appraisal is based on hunches, opinions and reflects what
appraiser can readily recall since real performance measurement takes time and
follow up.
• Employees are often less certain about where they stand after the appraisal than
before it.
• Employees don’t know what constitutes performance or what precisely is
expected out of them.
• Many a times employees don’t take appraisals seriously because they feel it is
an annual or six monthly ritual undertaken by the organization.
With these problems with the conventional performance appraisal, there was a transition in the
approach, organizations started moving towards developmental performance appraisal. This led
to additions in the definition of performance appraisal also. Fletcher has defined performance
appraisal more broadly as activities through which organizations seek to assess employees and
develop their competence, enhance performance and distribute rewards. Fletcher holds that as
a set of practices (and as a part of performance management), performance appraisal has now
become part of a more strategic approach to integrating HR activities and business policies.
Later on, a new field of study has emerged in the form of performance management, which is a
holistic approach towards management of employee and organizational performance.

Performance management is a means of getting better results from the organization,

teams and individuals by understanding and managing performance within an agreed
framework of planned goals, standards and competence requirements. It is a process
for establishing shared understanding about what is to be achieved and an approach to
managing and developing people in a way that increases the probability that it will be
achieved in the short and longer term (Armstrong, 1998).
Performance Management becomes essential because most of the contemporary
organizations possess some or the other of the following features:
• A diversity of locations, units, programs, projects and specialized disciplines.
• Complex cultural interactions and varied tasks and problems.
• Interdependence and dynamism – what one segment of the organization does, affects
the total organization.
• Decentralization and empowerment.
Some of the benefits of an effective Performance Management system are as follows:

• It creates a culture of excellence in the organization that inspires every

employee;
• aligns organizational objectives to individual aspirations;
• equips people with the skills and the infrastructure necessary to perform their
duties and imbibes teamwork;
• clears growth paths for specially talented individuals;
 • provides new challenges to rejuvenate plateauing careers;

Performance management systems are widely recognized as a key business strategy for driving
strong business results. Through goal setting, performance appraisal and feedback, continuous
training and development efforts, and performance related pay, Performance Management can
help companies incorporate strategy into individual employee efforts and turn their potential into
desired results.

Performance Management can assist in motivating employees for good performance

and can strengthen their commitment to the organization. Furthermore, it can assist in
organizational processes that are important to organization’s long term success such as
organizational learning, knowledge management, change management and succession
management.
Performance management is necessary to develop a ‘performance consciousness’ and it can
be used as a powerful employee development tool. Effective performance management makes
people aware of where they stand and also helps in retention of star performers. The thrust of
an effective Performance Management System (PMS) has been identified as the ability to
understand and reinforce the desired work behavior by all employees.

The performance management process links individual job performance to the

attainment of organization’s vision, mission and goals. Performance management is a
continuous process that involves supervisors and employees in the identification and
evaluation of key job performance objectives and competencies that contribute to the
achievement of organizational goals. Employees who understand what they are trying to
accomplish and how their work fits into the work of the organization as a whole are
more likely to perform at a higher level. With this in mind, the performance management
process is designed to:
• Provide supervisors and employees with a method to identify individual job performance
objectives and discuss their alignment with organization objectives;

• Provide supervisors and employees with a forum for ongoing communication and feedback on
the attainment of individual objectives and performance in core competency areas;

• Facilitate the identification of areas for improvement needed by employees to perform more
effectively on the job;
• Provide employees with the opportunity to collaborate with their supervisor to develop a
personal job performance development plan.

The goal of performance management is to help employees improve their performance and their
effectiveness. Performance is the results accomplished by an employee in meeting specific
objectives or the development of competencies necessary for effectively doing a job.
Performance management is a continuous process of supervisors and employees working
together to:

• Set performance expectations linked to organizational objectives;

• Establish criteria against which individual and unit performance can be measured;

• Identify areas for competency improvement;

• Provide performance feedback;

• Continually enhance performance.

STRATEGY ORIENTED COMPENSATION SYSTEMS

Workforce alignment, the concept of aligning the contributions of individual employees with
corporate goals, is one of today’s hottest business topics, on the mind of every business
manager from the CEO to the HR director. Yet for all of the urgency associated with workforce
alignment, many organizations are stymied in their attempts to achieve it.

Pay for performance plays an essential role in achieving workforce alignment. Many leading
companies practice this compensation management discipline with varying degrees of success.
Typically they rate their managers on a bell curve annually, assigning an overall performance
rating from “Exceeds objectives” to “Does not meet objectives.” At many companies, the “Does
not meet objectives” generally have to go, while others are awarded bonuses, raises and stock-
option grants commensurate with their rating.

Unfortunately, although most organizations profess to subscribe to pay-for-performance

philosophies, many simply cannot execute. There is a broken link between senior executives’
desire to differentiate pay based on performance and line managers’ ability to do so. Relating
compensation to individual performance for tens or hundreds of thousands of employees across
large global companies is nearly an impossible task today. Complexity in compensation
processes creates apathy among managers who do not see themselves as compensation
experts and instead take the path of least resistance.

Hence, the companies use the “peanut butter” approach to compensation distribution, spreading
merit increases, bonuses and stock options equally across the employee population. Top
performers are not given rewards commensurate with their contributions, and under-performers
are over-compensated.

Shockingly, the peanut-butter approach is used in company after company, where employee-
related compensation spending consumes up to 80 percent of each operating expense dollar,
according to industry research. This reality practically screams for a pay-for-performance
solution that keeps compensation expenditures in line with the allocated budget — a system
that makes managers compensation experts and, above all, makes them believe in the pay-for-
performance process and take ownership of it.

ROLE OF STRATEGIC HR LEADERS, FUTURE ROLES AND LEADERSHIP

COMPETENCIES

Businesses can recapture the innovative spirit that initially launched their success. It
has been done in companies old and new, big and small, and in just about every
industry you can imagine. Each case is different, but there are three common threads.
First, corporate leaders recognized the intellectual capital and potential that resided
within their own employees. Second, they turned to the Human Resources Department
to find the key to unlocking that potential and putting that capital to work. Third, the
company reaped tremendous rewards in terms of productivity and profitability as a
result. What is common to each strand of this process is the importance of HR
departments to the process of strategic innovation.

Ideas are the lifeblood of business success. Most of today's corporate giants began with
little more than a great idea and an entrepreneurial gleam in their eye. They leveraged
their intellectual capital to build financial strength. Yet, along the way, many
corporations lose the ability to innovate and take risks. Entrepreneurship gives way to
entropy, and new ideas are relegated to the suggestion box in the employee cafeteria.
It does not have to be that way.

Businesses can recapture the innovative spirit that initially launched their success. It
has been done in companies old and new, big and small, and in just about every
industry you can imagine. Each case is different, but there are three common threads.

* First, corporate leaders recognized the intellectual capital and potential that resided
within their own employees.

* Second, they turned to the Human Resources Department to find the key to unlocking
that potential and putting that capital to work.

* Third, the company reaped tremendous rewards in terms of productivity and

profitability as a result.

What is common to each strand of this process is the importance of HR departments to

the process of strategic innovation.

Rarely are the terms "strategic innovation" and "human resources" uttered in the same
breath. HR departments in many corporations have come to be little more than service
providers-offering basic training and rewarding performance based on formulas created
out of a cookie-cutter process. Ask yourself: How often does an HR department see its
role as building corporate-wide capabilities, as opposed to increasing the general
competence of the workforce? Look at where the innovation movements usually take
their lead: In most companies, the push to make quality a priority starts with
manufacturing. Customer service efforts got their start in marketing. How much has HR
contributed?

The real question should be: How much more can HR contribute? Look closely, and it
becomes clear that the HR function has a distinctive ability to create wealth. After all,
HR departments have at their disposal the means and the tools to have a more strategic
impact. Their product is people, and it is people who are indispensable to the innovation
process. Moreover, it is people who can carry the innovation message and the
innovation approach to all corners of an organization. When HR professionals put their
focus on developing employee innovation and pushing it deep within the organization,
they can drive change and growth company-wide.