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Technological Factors
Economic Challenges
Political Factors
Social Factors
Local and Governmental Issues
Unions
Employers’ Demands
Workforce Diversity
Internal Factors influencing the Personnel Function
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Mission
Policies
Organizational Culture
Organization Structure
HR System
Each of the external factors separately or in combination can influence the HR function of
any organization. The job of a HR manager is to balance the demands and expectations of the
external groups with the internal requirements and achieve the assigned goals in an efficient
and effective manner. Likewise, the internal environment also affects the job of a HR
manager. The functional areas, structural changes, specific cultural issues peculiar to a unit,
HR systems, corporate policies and a lot of other factors influence the way the HR function is
carried out. The HR manager has to work closely with these constituent parts, understand the
internal dynamics properly and devise ways and means to survive and progress. In addition
to these, the personnel man has to grapple with the problem of workforce diversity.
Environmental Challenges refer to forces external to the firm that are largely beyond
management’s control but influence organizational performance.
Rapid Change Many organizations face a volatile environment in which change is nearly
constant. If they are to survive and prosper, they need to adapt to change quickly and
effectively. Human resources are almost always at the heart of an effective response system.
Here are a few examples of how HR policies can help or hinder a firm grappling with
external change
Work Force Diversity All these trends present both a significant challenge and a real
opportunity for managers. Firms that formulate and implement HR strategies that capitalize
on employee diversity are more likely to survive and prosper.
Globalization One of the most dramatic challenges facing as they enter the twenty-first
century is how to compete against foreign firms, both domestically and abroad. Many
companies are already being compelled to think globally, something that doesn't come easily
to firms long accustomed to doing business in a large and expanding domestic market with
minimal foreign competition. Weak response to international competition may be resulting in
upwards layoffs in every year. Human resources can play a critical role in a business's ability
to compete head-to-head with foreign producers
Legislation Much of the growth in the HR function over the past three decades may be
attributed to its crucial role in keeping the company out of trouble with the law. Most firms
are deeply concerned with potential liability resulting from personnel decisions that may
violate laws enacted by the state legislatures, and/or local governments. These laws are
constantly interpreted in thousands of cases brought before government agencies, federal
courts, state courts, and Supreme Court. How successfully a firm manages its human
resources depends to a large extent on its ability to deal effectively with government
regulations. Operating within the legal framework requires keeping track of the external legal
environment and developing internal systems to ensure compliance and minimize
complaints. Many firms are now developing formal policies on sexual harassment and
establishing internal administrative channels to deal with alleged incidents before employees
feel the need to file a lawsuit.
Legislation often has a differential impact on public- and private sector organizations. (Public
sector is another term for governmental agencies private sector refers to all other types of
organizations.) Some legislation applies only to public-sector organizations. For instance,
affirmative action requirements are typically limited to public organizations and to
organizations that do contract work for them. However, much legislation applies to both
public- and private sector organizations. In fact, it's difficult to think of any HR practices that
are not influenced by government regulations.
Technology The world has never before seen such rapid technological changes as are
presently occurring in the computer and telecommunications industries. One estimate is that
technological change is occurring so rapidly that individuals may have to change their entire
skills three or four times in their career. The advances being made, affect every area of a
business including human resource management.
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Evolving Work and Family Roles The proportion of dual-career families, in which both
wife and husband (or both members of a couple) work, is increasing every year.
Unfortunately, women face the double burden of working at home and on the job, devoting
42 hours per week on average to the office and an additional 30 hours at home to children.
This compares to 43 hours spent working in the office and only 12 hours at home for men.
More and more companies are introducing "family-friendly" programs that give them a
competitive advantage in the labor market. These programs are HR tactics that companies
use to hire and retain the best-qualified employees, male or female, and they are very likely
to payoff. For instance, among the well
Known organizations / firms, half of all recruits are women, but only 5% of partners are
women. Major talent is being wasted as many women drop out after lengthy training because
they have decided that the demanding 10- to 12-year partner track requires a total sacrifice of
family life. These firms have started to change their policies and are already seeing gains as a
result. Different companies have recently begun offering child-care and eldercare referral
services as well to facilitate women workers as well as are introducing alternative scheduling
to allow employees some flexibility in their work hours.
Skill Shortages and the Rise of the Service Sector Expansion of service-sector
employment is linked to a number of factors, including changes in consumer tastes and
preferences, legal and regulatory changes, advances in science and technology that have
eliminated many manufacturing jobs, and changes in the way businesses are organized and
managed. Service, technical, and managerial positions that require college degrees will make
up half of all manufacturing and service jobs by 2000. Unfortunately, most available workers
will be too unskilled to fill those jobs. Even now, many companies complain that the supply
of skilled labor is dwindling and that they must provide their employees with basic training
to make up for the shortcomings of the public education system. To rectify these
shortcomings, companies currently spend large amount year on a wide variety of training
programs.
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Technological Changes and Challenges, Challenging
The second trend is the rate of change in technology. More organizations are now
evaluating their human resources and labor costs in the context of available
technologies, based on the theory that products and services can be delivered more
effectively (and efficiently) through an optimal combination of people, software, and
equipment, increasing productivity. Instead of speaking to a customer service
representative at Bank of America to discuss your account, you can interact with an
automated system via the Internet or an automated teller machine (ATM) or through
an 800 number.
The program is designed to handle almost any problem about which you might
inquire. With the automated system, BOA is able to shed customer service
representatives, thereby reducing labor costs. As more people use their automated
services and ATMs, there is less need for supervision. Customers, as a result, pay less
in service charges and may earn more interest on their money. As these automated
systems evolve, customers ultimately could be more satisfied with the service, even
though they are not dealing with an actual person. HRM specialists participate in the
development and execution of user testing programs to assess the design of the
automated interface.
Today, with the assistance of HR, more companies are evaluating the role of
organizational structure, technology, and human resources with the goal of providing
more and higher-quality products and services to the customer at a lower price. This
pricing reduction is at least partially achieved by controlling the cost of labor while
not losing the focus on meeting customer definitions of quality. Of course, the
ultimate goal of for-profit organizations is to maximize profit margins while
sustaining (or improving) perceived customer value. HR has a great deal to offer in
this endeavor.
While the potential is there, HR specialists are often ignored. Technological advances
and off shoring are of course related. A recent survey found that only 35 percent of
respondents reported that HR was involved in the off shoring process from an early
stage, although HR does typically play a major role in restructuring the organization’s
workforce as a result of off shoring.
Technology is revolutionizing many HRM activities. Most organizations now use
software packages to aid all HR domains. Many HR activities and outcome data are
tracked electronically, such as recruitment, turnover, performance appraisals, and
training. Managers from different departments, states, or even countries can readily
access the HR system and update employment files. Software packages are easily
customized to fit a specific organization’s HR activities.
Technology has also changed the speed with which HR communicates with
employees. HR can draft and e-mail a companywide memo to all employees within a
single hour. In addition, employees can instantly communicate with Human
Resources. Many companies have created intranet sites. These Web sites provide
employees with a variety of information, such as health care benefits, personnel
policies, and proposed changes.
The advent of new technology has created a variety of concerns for management.
Employee privacy and intellectual property rights are increasingly cited as major
concerns. With computer attacks occurring worldwide, ensuring confidentiality of
employee data is a growing concern, and the liability of an organization in the event
of security breaches is still unclear.
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Protecting intellectual property is vital for all organizations, especially emerging
technology and research and development organizations. As a result, organizations
are developing electronic communication policies that clearly outline permitted
electronic activities, uses of employer systems, and monitoring of employees’ files
such as e-mail. Many companies have banned cellular cameras and instant messaging
because of the increased risk of intellectual property theft.
The job analysis information could also be used to construct or retrieve job-related
tests or questions for an employment interview. The manager might even have a Web
camera and could conduct the testing and “face-to-face” interviewing of the
candidates as soon as the contact is made (assuming the candidate also has access to a
camera-based computer). This process of going from describing the job to actually
interviewing candidates could take less than a day. HR is playing a key role in getting
these systems up and running.
Need To Be Flexible In Response to Changing Business Environments
Being innovative and responsive to changing business environments require great flexibility.
The trend toward the “elastic” company is affecting the HR function, too. These so-called
modular companies such as Nike and Dell Computers can be highly successful if they have
reliable vendors and suppliers and, of course, a hot product. HR consultants have been
instrumental in helping companies discover their core competencies and then developing
optimal work design and HR strategies.
1. Flexi time
A system of work which allows employees to start and finish work between flexible ranges
of agreed hours, so long as they work a set amount of hours each day or week. For example,
an employee may be required to work eight hours a day, but may start work at any time
between 7 am and 9 am and finish work eight hours later, between 3 pm and 7 PM.
2. Hr outsourcing
Human resources outsourcing is when a company gets an outside party to perform some or
all of their HR functions. Outsourcing can be used for a number of different HR related
activities. According to an August 2008 study conducted by the Society of Human Resources
Management (SHRM), the most commonly outsourced HR functions are background checks,
employee assistance programs, and flexible spending accounts that allow employees to use
pre-tax dollars to cover medical expenses. HR outsourcing is on the rise. In the same SHRM
study, 33 percent of HR professionals who participated believe their company will increase
their use of outsourcing within the next five years.
3. Telecommuting
Employees can work from their own home using computers and telephone or other
electronic and networking equipment.
Increase In Limitation Related To HRM
Recent Origin
Lack of Top Management Support
Improper Implementation
Inadequate Development Programmers
Inadequate Information
Recent Origin
HRM is of recent origin, so it lacks universally approved academic base. Different
people try to define the term differently. Some thinkers consider it as a new name of
personnel management. Some organizations have named their traditional personnel
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management department as human resource management department. With the passage
of time an acceptable approach will be developed.
Improper Implementation
Human resource management should be implemented by assessing the training and
development needs of employees the needs and aspirations of people should be taken
into account while framing human resource policies. HRM is implemented half-
heartedly. The organizing of some training programmers is considered as the
implementation of HRM Management’s productivity and profitability approach remains
undisturbed in many organizations.
Inadequate Information
Some organizations do not have requisite information about their employees. In the
absence of adequate information and data base this system cannot be properly
implemented. There is a need to collect; store and retrieval of information before
implementing human resource management. The liberalization of economy, entry of
multinationals in Indian markets, rising of quality standards of Indian goods, growing
competition will put pressure on human resources of every organization. Managements
will be required to constantly assess and reassess competence levels of their employees.
Training and development programmers will be needed to motivate personnel to cope
with the new requirements. Human resource management will have a pivotal role in
managing the business in near future.
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UNIT II
Role of globalization in HR policy and practices
The statement is too general to be any use. A Policy statement on the other hand is more
specific and commits the management to a definite course of action. The following is a
policy: ‘our policy is to institute every practical method for engineering safety into our
processes and equipment, to provide protective clothing where necessary, to train employees
in safe operating procedures, and to vigorously enforce established safety rules. Our policy is
to provide a healthy plant by giving adequate attention to cleanliness, temperature,
ventilation, light and sanitation'.
A policy does not spell out the detailed procedure by which it has to be implemented. That is
the role of a procedure. A procedure is in reality a method for carrying out a policy. A policy
should be stated in terms broad enough for it to be applicable in varying situations. Lower-
level managers who apply a policy must be allowed some discretion in carrying out the
policy. The circumstances between two departments or sections or nations vary. Before we
are going to discuss about the HR policies at global level, it is necessary to discuss the
concept of globalization and its impact on human resource management.
Nature of globalization
It refers to the process of integrating world economies. However much governments desire to
retain economic identities, the powerful trend to integrate national economies is sweeping
across the global and counties are falling in line and embracing rapid globalization.
Whenever it is the communist China or the communist party governed West Bengal in India,
the anxiety to join world economies is the most emerging concept today. Evidence of
globalization can be seen in the increased level of trade, investment glows and mobility of
people across the globe. Also called internationalization, the momentum of globalization has
been driven by several developments as explained below:
Drivers of Globalization
Companies seek to take advantage, by expanding their operations into foreign markets, in a
number of ways. First, rapidly developing economies have huge markets. For companies,
mostly in developed countries, which have been operating below capacities, the emerging
markets offer immense opportunities to increase their sales and profits. Second, many
multinational companies (MNCs) are locating their subsidiaries in low wage and low cost
countries to reduce their cost of production.
Regional trading blocs
Are adding to the pace of globalization. WTO, EU, NAFTA, MERCOSUR and FTAA are
few of the major alliances among countries. Trading blocs seek to promote international
business by minimizing trade and investment barriers. Fifth, the declining trade and
investment barriers have vastly contributed to globalization. Sixth, the most powerful
instrument that triggered globalization is Technology. Revolution is probably the right word
which can best describe the pace at which technology has changed in the recent past and is
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continuing to change. Significant developments have been witnessed in communication,
transportation and information processing, including the emergence of the Internet.
The Global Picture
When it comes to business, the world is indeed becoming a smaller place. More and more
companies are operating across geographic and cultural boundaries. While most have adapted
to the global reality in their operations, many are lagging behind in developing the human
resource policies, structures, and services that support globalization. The human resource
function faces many challenges during the globalization process, including creating a global
mind-set within the HR group, creating practices that will be consistently applied in different
locations/offices while also maintaining the various local cultures and practices, and
communicating a consistent corporate culture across the entire organization. To meet these
challenges, organizations need to consider the HR function not as just an administrative
service but as a strategic business partner.
The process of globalizing resources, both human and otherwise, is challenging for any
company. Organizations should realize that their global HR function can help them utilize
their existing human talent from across multiple geographic and cultural boundaries.
International organizations need to assist and incorporate their HR function to meet the
challenges they face if they want to create a truly global workforce.
Globalization and management
A significant yet subtle shift has occurred in the area of management practice. While
management is well researched and documented in the western countries as also in the EU
countries, it is not the same with the APAC group of countries. The skill or the cost
advantages that drive globalization efforts also impact the way people are managed in
corporate. The older ‘personnel management' (Theory X) approach has given way to the
‘human resource management' (Theory Y) approach. The autocratic style that fed by
‘hierarchical position conscious systems' is being swiftly replaced by flat organization
structures, driven by competency and a highly decentralized decision-making and problem-
solving organizational hierarchies.
The individual in a position of power, driving policies and processes have swiftly evolved
into team-based collaborative management methods. Another landmark change in
management methods initiated by globalization happened in the area of organizational
leadership. A new generation of leadership skills, styles and methods have evolved. The
straight-jacketed approach to certain defined ‘good and bad' leadership styles has been
replaced with multiple theories supporting a variety of leadership styles. Leadership today is
associated with the particular phase in the life-cycle of an organization, it is industry specific
and increasingly, leaders are hired to achieve a very specific objective for an MNC.
Functions such as operations, sales, and marketing have generally made great progress in
adapting to the global reality. However, the HR function has typically lagged behind in
developing policies and structures that support globalization.
Coordination of activities in many different locations.
Understanding the continual change of the globally competitive environment.
Building a global awareness in all HR departments/divisions.
Creating a multicultural HR team
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International Business Strategies
DHRM versus IHRM Definitions
Human resource management refers to all activities undertaken by an organization to
effectively utilize its human resources. These activities include, amongst others, HR
planning, staffing, performance management, development, compensation and
managing employee relations The trend over the past few years has been to identify the
linkage of HRM with organizational strategy in order to develop a strategic approach to
HRM (SHRM) and to offer an understanding of how single country or domestic human
resource management practices can contribute to organizational performance by
leveraging people’s capabilities.
In order to understand which activities change when HRM goes international, In other
words, the purpose of IHRM is to enable the multinational enterprise (MNE) to be
successful on a global level. Strategic international human resource management
(SIHRM) focuses on strategic HRM in MNEs and recognizes the importance of linking
HRM with organizational strategies in order to achieve sustainable competitive
advantage
Morgan developed a model that presents IHRM on three dimensions.
All human resource activities that are undertaken (such as planning and staffing),
The national or country categories involved (e.g. various host countries where
subsidiaries are located) and
the three categories of employees of an international firm (host-country
nationals, parent-country nationals and third country nationals):
Similarities
With regard to the similarities between DHRM and IHRM, Aswathappa & Dash (2007:
66) argue that the HR activities that are performed in an international context are very
similar to those performed in a domestic context. “The HR manager needs to plan for
the human resources, hire the right people in right numbers, train and develop,
compensate, maintain and motivate employees, whether his or her domain is domestic
or global”.
Another similarity relates to environmental forces that impact on both, HR departments
in global and domestic businesses. These forces include political, legal, cultural and
economic constraints. In an international context, however, there are multiple country-
specific forces to be considered (Shen 2005). Bamber, et al. (2004)
Perspectives
economic - global convergence and ‘race to the bottom’,
institutionalism - differing national regulations,
integration - both, global economic trends and national peculiarities affect HRM
in domestic and in international business
Global Leadership and Global Mindsets
What Is Global Leadership
In order to grow in key markets around the world, there is nothing more important than
getting top talent in place through recruiting, developing, and retaining the right people. Two
vital questions must be answered in order to effectively target high priority global leadership
development efforts:
What exactly is global leadership, and how is it different from leadership in general?
How can global leadership competencies be disseminated as rapidly and effectively as
possible throughout the organization?
Global Leadership Development
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In order to develop leaders who can effectively lead global operations, it is important to
understand what makes leaders effective across cultures. Culture shapes how we think about
what is good leadership, and the definitions of an "effective leader" vary from one culture to
another. In fact, effective leadership behavior in one culture could (and will) be completely
ineffective in others.
ITAP designs and staffs virtual assessment centers specifically to support the development of
global talent. ITAP can help
Identify the development needs within organizations
Establish a development protocol, the first step of which is gathering data through
assessments
Define how to use existing assessment information, cultural assessments and standard
assessment processes and tool.
Design individual reports for those being assessed
Design institutional reports that retain the confidentiality of those in the development
process while providing a summary of development needs to the organization
Provide executive coaching using the ITAP Alliance network of globally experienced
coaches. International coaches are not enough.
Executive Coaching
Executive coaching is designed for senior managers, directors, VP's and high potentials.
Coaching assists these individuals to acquire higher level management skills and to refine
leadership competencies. Executives can learn how to:
Lead teams effectively
Communicate clearly and decisively
Use their authority with more confidence, accountability and integrity
Enhance cross-cultural awareness and global business skills.
Coaching prepares leaders for succession and helps them achieve more personal satisfaction.
To develop global leaders, coaches need to have work experience in their home country as
well as out of their home country. The ITAP Alliance can provide global coaching covering a
wide range of capabilities, in many languages and across many functional areas of expertise.
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Equal Employment Opportunity (EEO) means fair treatment in employment,
promotion, training, and other personnel actions without regard to the previously
mentioned factors. The main misconception about the EEO is that it applies is only to
selected groups, but the EEO applies to everyone because it is the law. However, the
EEO program is not a guarantee of employment for anyone. Under the EEO law, only
job -related factors can be used to determine whether an individual is qualified for a
particular job.
The development of the EEO policies and laws can be dated back to the Civil Rights
Act of 1883, which prohibited political favoritism in federal employment.
In 1940, Executive Order 0948 prohibited discrimination in federal agencies based on
race, creed, or color. In 1961, Executive Order 10955 required that positive steps be
taken to eliminate workplace discrimination in agencies.
The next landmark influencing equal employment opportunity was the Equal Pay Act
of 1963, which prohibited the payment of different wage rates to workers for
substantially similar work on the basis of sex. Title VII of the Civil Rights Act of
1964, which prohibited discrimination based on race, color, sex, religion, or national
origin and established the Equal Employment Opportunity Commission (EEOC), was
another very influential piece of legislation for the EEO movement.
Executive Order 11246 in 1965 was also influential because it named the process for
achieving equal employment opportunity—affirmative action.
Other important milestones were Executive Order 11375 in 1967, which prohibited
discrimination, based on sex and required affirmative action employment to help
women, and the Age Discrimination in Employment Act of 1967, which prohibited
discrimination against persons between the ages of 40 and 70.
The final piece of legislation that influenced the Equal Employment Opportunity Act
of 1972 was Executive Order 11478 of 1969, which mandated that equal employment
opportunities be a part of every aspect of human resources policy and practice in the
employment, development, advancement, and treatment of civilian employees of the
federal government.
In addition to the Equal Employment Opportunity Act of 1972, two other pieces of
legislation dealing with equal employment opportunities have been passed.
The Equal Employment Opportunity Act of 1995 is one of these more recent laws.
This act prohibits discrimination on fourteen grounds:
1. Impairment
2. Marital status,
3. Political belief or activity,
4. Race,
5. Religion,
6. Sex,
7. Societal status as a person,
8. Age,
9. Role in business dealings,
10. Lawful sexual activity,
11. Physical features,
12. Pregnancy,
13. Position or past positions held as employment,
14. Association with a person who is identified by reference to any of the thirteen
other listed grounds.
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The act also prohibits sexual harassment, which applies to both employers and
employees. The other piece of legislation dealing with equal employment opportunity
is the Further Amendment to Executive Order 11478, Equal Employment Opportunity
in the Federal Government.
The order provides a uniform policy for the federal government to use in prohibiting
discrimination based on sexual orientation in the federal civilian work force, in
addition to race, color, religion, sex, national origin, physical disabilities, or age for
which discrimination is prohibited in Executive Order 11478.
The Age Discrimination in Employment Act
The Age Discrimination in Employment Act (ADEA) prohibits any employer from refusing
to hire, discharge, or otherwise discriminate against any individual because of age. The act
covers compensation, terms, conditions and other privileges of employment including health
care benefits. This act specifically prohibits age-based discrimination against employees who
are at least 40 years of age. The purpose of the act is to promote the employment of older
persons and to prohibit any arbitrary age discrimination in employment
The roots of the ADEA can be traced back to 1964, when the U.S. government enacted Title
VII of the 1964 Civil Rights Act. This act radically changed working life in the United States.
The core of Title VII was to prohibit discrimination in employment based on race, color, sex,
national origin, or religion. This statute provided a way for women and minorities, in
particular, to challenge barriers that limited equal opportunities in organizations. States
adopted similar legislation as well. One variable noticeably missing from Title VII was age
discrimination. Three years later, the U.S. Senate and the House of Representatives enacted
the 1967 Age Discrimination in Employment Act (ADEA).
Scope of Coverage
Under the act, employers are forbidden to refuse to hire, to discharge, or to
discriminate against anyone with respect to the terms, conditions, or privileges of
employment because of a person's age.
The act also forbids employees from limiting, segregating, or classifying an
individual in a way that adversely affects their employment because of age.
The act states that all job requirements must be truly job-related and forbids
employers to reduce the wage rate of an employee to comply with the Act. It forbids
seniority systems or benefits plans that call for involuntary requirements due to age
and also makes it illegal for employees to indicate any issue related to age in
advertisements for job opportunities
The ADEA was enacted to promote the employment of older persons based on ability
rather than age and to help employers and employees find ways to meeting problems
arising from the impact of age on employment.
As a result, the Act authorizes the Secretary of Labor to performs studies and provide
information to labor unions, management, and the public about the abilities and needs
of older workers and their employment potential and varied contributions to the
economy
END OF UNIT II
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UNIT III
Strategic responses of organizations to change environment
The impact created by changing environment of organizations, fuelled by globalization,
liberalization, technological changes and market changes forces the organizations to make
various strategic responses. These responses largely revolve around and are based on
changing the portfolios, modifying organizational processes, or altering the organizational
structures.
1. Portfolio related strategic responses,
2. Process related strategic responses, and
3. Structure related strategic responses.
Portfolio Related Strategic Response
• Mergers, Acquisition & Takeovers
• Demergers
• Diversification
• Share Buyback
• Divestiture/Disinvestments
• Joint Venture
• Strategic Alliances/collaborations
Merger The combining of two or more companies, generally by offering the stockholders of
one company securities in the acquiring company in exchange for the surrender of their
stock.
Acquisition A corporate action in which a company buys most, if not all, of the target
company's ownership stakes in order to assume control of the target firm. Acquisitions are
often made as part of a company's growth strategy whereby it is more beneficial to take over
an existing firm's operations and niche compared to expanding on its own. Acquisitions are
often paid in cash, the acquiring company's stock or a combination of both.
Takeover A corporate action where an acquiring company makes a bid for an acquiree. If the
target company is publicly traded, the acquiring company will make an offer for the
outstanding shares.
Demerger The act of splitting off a part of an existing company to become a new company,
which operates completely separate from the original company. Shareholders of the original
company are usually given an equivalent stake of ownership in the new company. A
demerger is often done to help each of the segments operate more smoothly, as they can now
focus on a more specific task. Opposite of merge
Diversification A risk management technique that mixes a wide variety of investments
within a portfolio. The rationale behind this technique contends that a portfolio of different
kinds of investments will, on average, yield higher returns and pose a lower risk than any
individual investment found within the portfolio.
Diversification strives to smooth out unsystematic risk events in a portfolio so that the
positive performance of some investments will neutralize the negative performance of others.
Therefore, the benefits of diversification will hold only if the securities in the portfolio are
not perfectly correlated.
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Buyback The repurchase of outstanding shares (repurchase) by a company in order to reduce
the number of shares on the market. Companies will buy back shares either to increase
the value of shares still available (reducing supply), or to eliminate any threats by
shareholders who may be looking for a controlling stake.
Share buy-back
It is when a company makes an offer to buy-back some of its own shares. There are several
types of buy-backs.
Types
1. An equal access scheme - when the company offers to buy back the same proportion
of each shareholders share.
2. A selective buy-back - when the company offers to buy back shares from only one or
some of its shareholders
3. The company may buy the shares on the exchange where the shares are traded.
Disinvestment The action of an organization or government selling or liquidating an asset or
subsidiary. Also known as "divestiture". A reduction in capital expenditure, or the
decision of a company not to replenish depleted capital goods
Strategic Alliance Any agreement where two or more companies agree to cooperate with
each other to achieve a certain, mutually beneficial goal. However, a strategic alliance is not
a merger, and the involved companies remain separate. A common strategic alliance is a joint
venture, where the involved companies partner together to conduct a certain project. Other
strategic alliances include management contracts and licensing agreements.
Structure Related strategic Response
• Strategic Business Units
• Matrix Structure
• Delayering/ Flat Organisation Structure
Strategic Business Units An autonomous division or organizational unit, small enough to be
flexible and large enough to exercise control over most of the factors affecting its long-
term performance. Because strategic business units are more agile (and usually
have independent missions and objectives), they allow the owning conglomerate to respond
quickly to changing economic or market situations.
Definition of matrix structure Firm’s organization with both horizontal and vertical
relationships a form of organizational structure based on horizontal and vertical relationships.
The matrix structure is linked closely to matrix management, and is related to project
management. It emerged on an improvised rather than a planned basis as a way of showing
how people work with or report to others in their organization, project, geographic region,
process, or team.
Flat organization structure An organizational structure in which most middle-
management levels and their functions have been eliminated, thus bringing the top
management in direct contact with the frontline salespeople, shop floor employees,
and customers. Despite their breadth, flat organizations can benefit from most of
the advantages enjoyed by small companies, such as faster response time to
changing conditions and customer preferences.
De-layering involves removing one or more levels of hierarchy from the organizational
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structure. Frequently, the layers removed are those containing middle managers. For
example, many high-street banks no longer have a manager in each of their branches,
preferring to appoint a manager to oversee a number of branches. Some schools adopt this
policy too – with a director of studies looking after several schools in a local area.
Process Related Strategic Responses
• Quality Strategies
• International Quality
• Certification Programmes
• Just-in-time (JIT) Inventory
• Benchmarking
• Building Core Competence
• Setting Vision & Mission
• Cost & Asset Utilisa
Definition of Just In Time An inventory strategy companies employ to increase efficiency
and decrease waste by receiving goods only as they are needed in the production
process, thereby reducing inventory costs. This method requires that producers are able
to accurately forecast demand.
Benchmarking
A measurement of the quality of an organization's policies, products, programs, strategies,
etc., and their comparison with standard measurements, or similar measurements of its peers.
Objectives
To determine what and where improvements are called for,
To analyze how other organizations achieve their high performance levels,
To use this information to improve performance.
A strategic perspective
In business, your strategic perspective determines how your company views and solves
important issues. Say your business discusses withdrawing from a certain market. Your staff
discusses the possibilities. But, if you discuss a market withdrawal from a strategic
perspective, you will consider the possibilities in light of your predetermined business
objectives. You exercise an enlightened process, exploring how the withdrawal affects your
business's priorities.
Strategic perspective
In business, your strategic perspective determines how your company views and solves
important issues. Putting the word "strategic" before the word "perspective" indicates a
tactical, carefully formulated approach. Say your business discusses withdrawing from a
certain market. Your staff discusses the possibilities. But, if you discuss a market withdrawal
from a strategic perspective, you will consider the possibilities in light of your predetermined
business objectives. You exercise an enlightened process, exploring how the withdrawal
affects your business's priorities.
Why a Stronger Strategic Perspective Is Needed
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developing a branding strategy, generating growth and other key issues. All decisions are
viewed within the perspective of your most important goals.
The Strategic Thinking Process
A strategic perspective, formulated by strategic thinkers, puts information into its proper
context so it resonates with insight that is relevant to the business's objectives. With the
proper perspectives, business analysis results in sometimes-powerful conclusions. Because a
business often has many goals and objectives, thinking from a strategic perspective takes all
the goals into account, meaning the strategic thinker must consider multiple perspectives. He
must juggle objectives of all sorts not just a single, overriding objective.
In the world of business, a useful perspective requires good information. Since the 1950s, it
has been a commonly held strategy to gather information about your own business and about
your competitors. As the Business Centre website states, the way we gather information
about our business and its competitors today has moved to digitally interactive, customer-
driven sources such as social media. Business Centre predicts that with customer input from
social media, the business's customers will increasingly drive business decision making. A
wise business today will not ignore customers with such a public platform. Therefore, one
strategic perspective for many businesses is the digital intelligence perspective.
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one's business. It involves making use of the resources to their greatest potential, and
minimizing as many errors as possible.
Although there is nothing inherently wrong about utilizing the strategies being used
by the competitors, this can be a reason for a quick downfall. Just because the said
strategy has brought success for another company, it does not necessarily mean it can
work for each company within the same industry. In fact, it can back fire big time.
This is because there are certain elements in a business that are unique to that
business; this causes a specific strategy to be effective.
An effective strategy in any industry incorporates the use of one's potential. It should
not, in any way, focus on destroying the competition. Healthy competition brings
about a healthy norm within an industry, giving each player ample motivation to be
resourceful and creative in coming up with strategies that work.
For a business strategy to work at its best, it should be uniquely created for one's
business. It is developed with one business and its unique characteristics in mind. It
has taken into consideration the business' strengths and weaknesses, and works to
juggle both in the most efficient manner.
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The culture is informal, promotes innovation and risk-taking, the decision making
is centralized and mostly lies with the founder, long working hours are expected.
The specialization and growth are limited to the core functionalities like R&D,
manufacturing or service. The staff is usually highly skilled with relevant
experience in the core functions and the supporting staff is minimal
Individual effectiveness is most important at this stage.
Expansion The organization emerges from entrepreneurial stage if it succeeds in its initial
goal of product creation and had secured finance and perhaps few customers. It then enters
the commercialization stage where it has to build the product in larger quantities, reach
wider customers and become a profitable venture.
Leadership focus is on making the product work well and to increase the sales and
revenue.
The organization size needs to grow since it needs more resources for larger
production and sales. While a consistent growth in core functionality continues,
additional growth occurs in sales and marketing.
The culture gets inclined towards market culture since external environment is for the
time being stable, the entrepreneurial success provides some buffer time before
competition emerges on the horizon.
Organization structure starts its initial shift towards being more hierarchical; the
founder is incapable for managing everything and starts delegating tasks to his
subordinates creating management hierarchies. Since the expansion is particularly in
R&D and sales, the supporting staff is still minimal; the organization adopts a
functional structure.
The organizational growth brings in more specialist and subordinates through hiring,
it inadvertently creates a leadership crisis at the top level since the changed
organization demands delegation of responsibility. All the initial founders and the
individual technical leads need to part with their autonomous powers that they
enjoyed during the entrepreneurial phase and learn to deled legate decision making
and perform the new task of coordination and team building. Middle management
evolves and is responsible for operations while the top management focuses on
business strategies.
The management processes began to emerge in the activities related to production and
control, though they are still not very well defined and are still flexible.
Consolidation The expansion phase results in an expanded operation related to production
like purchasing, inventory control, etc and also diversely deployed sales staff. The
organization was geared towards maximizing its production and sales capacity. In
consolidation stage, the focus shifts towards cost control, productivity and profit.
The leadership focus is on achieving the organizational effectiveness.
The organization size is almost stable, the expansion stage might have lead to some
redundancies in core functions, but consolidation stage might include additional
manpower in supporting functions. The growth can occur in additional staff related
to quality control, customer support, administrative functions and marketing. Unlike
grow stage when the size increases linearly, the consolidation stage involves both
downsizing and hiring.
There is an increase in number of products, even though they might be still related to
the core competencies; as a consequence, the organizational structure becomes
divisional with more departments.
The organization’s culture becomes bureaucratic due to high degree of formalization
and processes that are deemed necessary as a way to better control the operations.
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The leadership challenge is to establish seamless communication protocol between
different departments, look for signs of external environmental changes and make
necessary corrective actions.
Decline An organization enters the decline phase when it experiences continuous reduction
in resources and revenue over a substantial period of time. Ironically, the decline can be
recognized with certainty only when it is too late to recover from it, early signs are often
mistaken to be temporary. The decline can occur after any growth stage, not necessarily after
consolidation stage; also growth does not always lead to decline, there is also possibility of
long period of stagnation. Stagnation can be defined as a state with no growth, fewer but
dedicated customers, few competitors, a niche market or availability of abundant resources.
Stagnation does not usually result in loss of revenues or downsizing.
Reasons for decline
There are several causes of decline, some are quantitative and are easier to detect while other
are qualitative and are hard to comprehend. The decline can be due to adverse changes in the
external environment or inefficiencies pertaining to internal operations of the organization.
Quantitative reasons of decline
Qualitative reasons of decline
Quantitative reasons of decline The quantitative analysis can be found in the organization’s
financial statements, its internal operation reports and by using other mathematically
measurable parameters.
Reduced workforce A cutback in size of the organization reflects a reduced total
market, reduced need of products; lack of capability to deliver the product, hence the
underlying reasons implies a decline. However, there are times when cutback is a
temporary measure to realign and revitalize the organization for another phase of
growth.
Reduced market share The reduction in the market share of the company implies
several issues, growing competition if the total market is indeed growing or is stable,
or contraction of overall market due to obsolete products or technologies.
Reduced profit or share price It provides the investor’s assessment of the
companies operating margin and its prospects of growth in future.
Qualitative reasons of decline
Fierce competition During the entrepreneurial stage, the big players might try all
tools in their arsenal to counter the threat of a newcomer. It includes practices of
aggressive pricing, luring their established client base with bonus deals, acquisition of
competitive technologies and developing parallel products etc. Many times, the
hostile takeover by large and established company is for the purpose of quick
termination of a competitor.
Lack of Customers It happens due to unexpected decline in the niche market, a
change in consumer’s choice for a different product or simply because the
organization fails to find proper market for the product. It can happen at any stage of
life-cycle, the quarterly sales and revenue over a period of time are good indicators of
change in customer base.
Obsolete technology Older organizations are very much vulnerable to newer
technologies that can adversely impact its core business and competencies. Economic
downfall: Harsh economic environment reduces the customer spending; multiple
vendors compete for the reduced market share. It also gets hard to obtain fresh credit
and finances for new ventures or existing operations.
Organizational atrophy It usually occurs in older organizations that have
experienced healthy growth & long period of stability; the hierarchical structure & the
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bureaucratic culture of such large organization cause its slow degeneration. The
organization size is large with excessive personnel, middle management is incumbent
that tolerates incompetence, management processes are excessive and
counterproductive; finally there is a leadership crisis. Employees loose trust in the
leadership and its vision; the employee satisfaction level starts to dip consistently and
so does its operational efficiency.
A Model of decline stages
Decline of an organization occurs in a series of observable and distinct stages, each
exhibiting a reduced capability to counteract. The most acknowledged model of decline
proposes that the organization goes through five stages of decline, before its final
termination.
Stages
Blinded Stage
Inaction Stage
Faulty Action Stage
Crisis Stage
Dissolution Stage
Blinded Stage In this stage, the organization fails to recognize any of the internal or external
changes that may threaten its survival. Usually, causes for the decline are present but are not
evident; the leadership tends be insensitive and simply fails to make a connection between
the observed changes and a possible decline. Most organizations lack a unit that performs
the task of scanning both internal & external boundaries, partly due to additional cost and
uncertain advantage. The mere concept of a stable environment is a myth and exists only as a
theoretical concept; environment is stable only for short duration. Similarly the need for
internal surveillance cannot be ignored; it includes regular performance reviews, employee
satisfaction surveys, training and skill development, and most importantly an open
communication mechanism to aid in vertical flow of information. The initial signs of decline
are usually very much visible and known to the bottom of the organizational pyramid, but the
information fails to propagate upwards to its leaders.
Inaction Stage Unlike in blinded stage, the signs of deteriorating performance are clearly
evident in this stage, but the leadership still fails to take any action. Leaders often view them
as temporary changes and instead of interpreting them as a threat, they choose to take `wait
and see’ approach, perhaps because this approach has worked in the past. The past successful
approaches fail when the current situations are very different, however the leaders always
have tendency to follow the planned course and suppress any dissident opinions. Finally, the
aging leadership might simply lack the knowledge and insight to comprehend the influence
of the changing conditions.
Faulty Action Stage In this stage, the organization is clearly on its downfall and pressure to
take corrective action is very high. The vertical and horizontal information from within the
organization and the external environment increases manifolds along with its complexity. The
overload of conflicting information & suggestive actions, combined with time pressure,
compels the leadership to centralized decision making and they tend to create a biased task
force. However, due to high pressure, the decision makers tends to make quick, risky and
often fault decisions, that further accelerates the decline. This further reduces the confidence
in leadership and many talented employees might end up leaving the organization in
anticipation of its fall. Some of the prescribed cure include introduction of new leadership,
Diversification of core business either though self development or acquisitions and
disinvestment in failing product lines.
Crisis Stage The organization reaches a crisis stage when all prior actions have failed and it
becomes obvious that without any major change, its survival is questionable. All the
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stakeholders, including customers, investors, suppliers and employees begin to distance
themselves from the organization and have lost faith in it. At this stage, the organization
requires a massive structural change, a new strategy to deal with the external environment
and a new ideology to revitalize the ailing organization.
Dissolution Stage This is the last stage of its demise and is irreversible; it is marked by
depletion of its finance, diminished market for its products and exodus of its talented
employees. The new leadership and the strategy had failed to revive the business and now
their responsibility lies in proper dissolution of the organization and its resources.
HRD and Organization performance
Comprises the actual output or results of an organization as measured against its intended
outputs (or goals and objectives).
According to Richard et al. (2009) organizational performance encompasses three specific
areas of firm outcomes
1. Financial performance (profits, return on assets, return on investment, etc.)
2. Product market performance (sales, market share, etc.)
3. Shareholder return (total shareholder return, economic value added, etc.).
Specialists in many fields are concerned with organizational performance including strategic
planners, operations, finance, legal, and organizational development. In recent years, many
organizations have attempted to manage organizational performance using the balanced
scorecard methodology where performance is tracked and measured in multiple dimensions
such as
Financial performance (e.g. shareholder return)
Customer service
Social responsibility (e.g. corporate citizenship, community outreach)
Employee stewardship
Performance improvement is the concept of measuring the output of a
particular process or procedure, then modifying the process or procedure to increase
the output, increase efficiency, or increase the effectiveness of the process or procedure. The
concept of performance improvement can be applied to either individual performance such as
an athlete or organizational performance such as a racing team or a commercial enterprise.
In Organizational development, performance improvement is the concept of organizational
change in which the managers and governing body of an organization put into place and
manage a program which measures the current level of performance of the organization and
then generates ideas for modifying organizational behavior and infrastructure which are put
into place to achieve higher output. The primary goals of organizational improvement are to
increase organizational effectiveness and efficiency to improve the ability of the organization
to deliver goods and or services. A third area sometimes targeted for improvement
is organizational efficacy, which involves the process of setting organizational goals and
objectives.
Performance improvement at the operational or individual employee level usually involves
processes such as statistical quality control. At the organizational level, performance
improvement usually involves softer forms of measurement such as customer
satisfaction surveys which are used to obtain qualitative information about performance from
the viewpoint of customers.
Organizational Engineering (OE)
Is a form of Organizational Development. It was created by Dr. Gary Salton of Professional
Communications, Inc. It has been developing continuously since 1994 on both theoretical
and applied levels. The core premise of OE is that humans are information-processing
organisms. It posits that individual behavior can be understood and predicted using
engineering’s basic model of
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INPUT>PROCESS>OUTPUT
This offers advantages over the more typical psychological approaches. Primary among these
is that it requires only simple logic. There is no need to rely on unseen forces or “inherent”
mental characteristics.
OE calls the strategies people regularly use Strategic Styles. Styles are different combinations
of the Input>Process>Output. Each mix produces a different but predictable pattern of
behavior. OE applies the same kind of logic to define the range of possible behaviors. These
relationships have been codified under the name of “I Opt.” This is an acronym for “Input
Output Processing Template.” It is the basic measuring tool of Organizational Engineering.
END OF UNIT III
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UNIT IV
Managing strategic organizational renewal
1. Know the role of HR in achieving organizational change.
2. Describe the 10-step basic process for achieving organizational change.
3. Know the methods for identifying the need for change and implementing change.
4. Understand the nature of self-directed teams and worker empowerment.
5. Know the role of HR in Basic Process Reengineering.
6. List the pros and cons of flexible work arrangements.
Organizational renewal requires that top managers make adaptive changes to the
environment. Manager must analyze the organization, its departmental system
interrelationships, and the possible effects on the internal environment
Key challenges
Defining a meaningful
Inspiring organizational purpose
Enabling a bottom-up flow of creativity
Creating a culture of trust rather than control.
Managing change and OD
Beckhard defines Organization Development (OD) as "an effort, planned, organization-
wide, and managed from the top, to increase organization effectiveness and health
through planned interventions in the organization's processes, using behavioral-
science knowledge." In essence, OD is a planned system of change.
Planned OD takes a long-range approach to improving organizational performance
and efficiency. It avoids the (usual) "quick-fix".
Organization-wide OD focuses on the total system.
Managed from the top to be effective, OD must have the support of top-management.
They have to model it, not just espouse it. The OD process also needs the buy-in and
ownership of workers throughout the organization.
Increase organization effectiveness and health. OD is tied to the bottom-line. Its
goal is to improve the organization, to make it more efficient and more competitive
by aligning the organization's systems with its people.
Planned interventions after proper preparation, OD uses activities called
interventions to make system wide, permanent changes in the organization.
Using behavioral-science knowledge OD is a discipline that combines research and
experience to understanding people, business systems, and their interactions.
TQM Programmes
Globalization in the business theater is driving companies toward a new view of
quality as a necessary tool to compete successfully in worldwide markets. A direct
outcome of this new emphasis is the philosophy of total quality management (TQM).
In essence, TQM is a company-wide perspective that strives for customer satisfaction
by seeking zero defects in products and services. Making quality improvements was
once thought to be the sole responsibility of specialists (quality engineers, product
designers, and process engineers).
Developing quality across the entire firm can be an important function of the human
resource management (HRM) department. A failure on HRM's part to recognize this
opportunity and act on it may result in the loss of TQM implementation
responsibilities to other departments with less expertise in training and development.
The ultimate consequence of this loss is an ineffective piece mealing of the TQM
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strategy. Thus, HRM should act as the pivotal change agent necessary for the
successful implementation of TQM.
HRM can act as senior management's tool in implementing TQM in two fundamental
ways. First, by modeling the TQM philosophy and principles within its departmental
operations, the HR department can serve as a beachhead for the TQM process
throughout the company. Second, the HR department, with senior management's
support, can take the TQM process company-wide by developing and delivering the
long-term training and development necessary for the major organizational culture
shift required by TQM. The HR department also has major strengths in terms of
recruitment, selection, appraisal, and reward system development to institutionalize a
quality-first orientation. An appreciation of the capabilities of HRM to model and
institutionalize
Implementing a total quality management system has become the preferred approach for
improving quality and productivity in organizations. TQM, which has been adopted by
leading industrial companies, is a participative system empowering all employees to take
responsibility for improving quality within the organization. Instead of using traditional
bureaucratic rule enforcement
Characteristics
An open, problem-solving atmosphere
Participatory design making
Trust among all employees (staff, line, workers, managers)
A sense of ownership and responsibility for goal achievement and problems solving
Self-motivation and self-control by all employees.
In cultivating the TQM philosophy, strategy implementation must involve a focused effort on
the part of every employee within the organization. It cannot be applied successfully on a
piecemeal basis. TQM requires that management, and eventually every member of the
organization, commit to the need for continual improvement in the way work is
accomplished. Business plans, strategies, and management actions require continual
rethinking in order to develop a culture that reinforces the TQM perspective. The challenge is
to develop a robust culture where the idea of quality improvement is not only widely
understood across departments, but becomes a fundamental, deep-seated value within each
function area as well.
HRM can jumpstart the TQM process by becoming a role model. This means that HRM has
two specific tasks: "Serving our customers, and making a significant contribution to running
the business." This emphasis on customer oriented service means that the HR department
must see other departments in the firm as their customer groups for whom making continuing
improvements in service becomes a way of life.
In their efforts to achieve total quality management, HRM can demonstrate commitment to
TQM principles by soliciting feedback from its internal customer groups on current HR
services. HRM should include suggestions from its customers in setting objective
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performance standards and measures. In other words, there are a number of specific TQM
principles that the HR department can model.
Creating a Team based organization
Team-based organizations vary from traditionally hierarchical, directive organizations.
Instead of having a supervisor or manager focus on facilitation, teams focus on achieving
objectives together. This allows true collaboration in the workplace. Major characteristics of
team-based organization include trust, empowerment, goal setting, autonomy, team
accountability and shared leadership.
Benefits of team-based
Organizations include creating and implementing solutions that stem from collaboration.
Unlike the traditional format that relies on one director, team members focus on the
organizational goals. This leads to open communication and innovation, usually resulting in
better solutions and business strategies.
Development
Training facilitators and team members is of the utmost importance. Team members must feel
valued as well as empowered to make the necessary decisions. Organizations should reward
employees for process gains as well as primary business indicator results. Open
communication and support systems are paramount. Team leader selection should be based
more on skill set and personality than on management or supervisory experience, as team-
based organizations employ not the authoritative but the collaborative approach. Supporting-
member selection is also important; team members' values can strengthen your team. Those
who value creativity will drive innovation. Those who value independence will work for long
stretches without needing external motivation. Team members who value structure will
provide a dependable cornerstone for the group. Recognize and utilize these strengths to your
organization's advantage.
Time Frame
The team-based organization approach is not about instant gratification. It's a process that
takes time. Initial implementation may take 12 months, while complete implementation,
resulting in a more routine-based event, could take two years to achieve. During this time
frame, ensure that team objectives are clear and pertinent. Evaluate the team's effectiveness.
Plan and change as necessary.
The six stages of TBW (Team base working)
1. Deciding on TBW understanding the value and benefits of TBW and conducting an
organizational review. Before introducing TBW it is important to understand the
existing structure, culture and extent of team working in the organization. This stage
also involves developing a plan for the implementation of TBW.
2. Developing support systems this stage requires an examination of support systems
relevant to TBW such as training, reward systems, communication, and interterm
relations, and making plans to adapt or develop them for TBW.
3. Team leader and team member selection establishing criteria for team leader and team
member selection and implementing appropriate recruitment and selection processes.
Team leader training is important leading teams is very different from other kinds of
leadership so team leaders need to be equipped with the necessary knowledge skills
and attitudes.
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4. Developing effective teams understanding and enabling the team development
process, which includes clarifying objectives, roles, communication processes and
decision-making processes.
5. Reviewing and sustaining team effectiveness in this stage, teams must be coached to
set criteria for the evaluation of team performance and to identify required changes to
improve performance.
6. Reviewing TBW The final stage involves evaluating the contribution of TBW to the
organization’s effectiveness and making any necessary changes to ensure the
continued and optimal contribution of TBW to the organization.
Team Based Organization Implementing a team-based approach to organizational structure
can empower employees and increase cooperation among different skills and disciplines.
Based on the belief that organizational goals will be achieved not by individuals working
together separately, but by groups of people who share responsibility for outcomes and who
work efficiently and effectively in team? These processes require highly developed
communication competencies from all team members.
Team skills usually are divided into two categories
Task roles
Maintenance roles
Characteristics of Traditional Vs Team-based Organizations
Traditional Team-based
1. Individual command structures Collective structures
2. Manager controls Team monitors
3. Vertical hierarchy Horizontal integration
4. Stability and uniformity Change and flexibility
5. One best way to organize Organization-specific
6. Managers manage Self-managing teams
Efficient Process
Flexible Response to change
Improve Effectiveness
Reduce Cost
Increase Innovation
Customer Involvement
Employee commitment
Skill utilization
Main Issues
Focus on process Reengineering involves looking at the whole of a process;
customers, competitors, environment, human resources.
Radical change Reengineering means radical and often painful change.
Commitment and leadership Reengineering must come from the top. The leaders
must inspire a commitment to change throughout the organization.
Focus on the customers Reengineering is not just about changing internal processes;
it means focusing externally on the customer.
Human resources Human resources are the most vital aspects of reengineering.
HR & BPR
Preparedness and commitment of the leadership.
Preparedness and involvement of all the people.
Create awareness: lot of training.
Communication: intense and extensive.
HRD in new technology and skills.
HRD in change management skills
HR Implications of BPR
Managing resistance to change.
Restructuring and reorganization.
Delaying; flat organization.
Downsizing; redeploying people.
New technologies
New skills
Non-value adding areas exposed.
Power shifts.
Methodology
Envision new processes: reengineering opportunities, management support, enabling
technologies, alignment with company strategies.
Initiate change: form reengineering team, decide performance goals.
Study existing process: to uncover and diagnose problems.
Redesign the process: think of alternative processes, select the most appropriate one,
develop it, select technologies (including IT), consider HR issues, and get feedback.
Reconstruct the process: Finalize the process design and associated IT solution.
Implement: Before implementation get an explicit buy-in from all the concerned.
Monitor the process: keep a tract of performance of the process against its performance
goals and integrate a built-in continuous improvement mechanism.
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Flexible work arrangements
Flexible working relates to an organization’s working arrangements in terms of working
time, working location and the pattern of working. We have resources covering all aspects of
working flexibly and atypical working. You’ll find information on flexible working hours,
part time working, job sharing, temporary working, agency workers and casual employment,
term time and seasonal working, remote and home working and virtual organizations.
Working time
Working time is any period during which an individual is working, is at the employer's
disposal and is carrying out the employer's activities or duties. You’ll find here information
on hours of work, working time regulations, overtime and shift working, holidays and annual
leave, other time off, bank and public holidays, work life balance and reservists.
Terms and conditions / Dismissal of employment
Terms and conditions of employment are the elements of a contract which help to define the
relation between an employer and an employee. You’ll find here information on conditions of
employment, contracts of employment including fixed term, short term and temporary
contracts, contractual change, probationary periods, notice periods and restrictive covenants.
Dismissal It occurs when a contract is terminated with or without notice, a fixed term
contract ends and is not renewed or an employee leaves, with or without notice, when they
are entitled to do so because of the employer’s conduct. You’ll find here information on
termination of contract, unfair dismissal, wrongful dismissal and constructive dismissal.
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Managers: How to Initiate a Flexible Work Arrangement
When operational needs require a staffing review, managers may want to consider FWAs as
an option for their business planning. Manager-initiated FWAs should not be used as a
method for changing individuals’ hours or salary. Managers should base flexible work
decisions on business needs and operational goals. Managers are required to consult with
their HR client manager when considering implementing FWAs as part of business needs and
operational goals.
Managers: How to Review a Flexible Work Arrangement Proposal
Managers should understand that people want to work flexibly for diverse and compelling
personal reasons; managers should not be in the business of judging those reasons.
Managerial focus must be on how a change affects the organization, and on the value that
might be added by working differently.
1. Review the proposal. Consult with your department’s HR representative, HR Client
Manager, and/or the Office of Work/Life to prepare for your meeting with the staff
member.
2. Meet with the staff member to discuss proposal.
3. Evaluate the proposal and consult with your department’s HR representative, HR
Client Manager, and/or the Office of Work/Life if you would like additional help in
evaluating the proposal, especially if you are considering denying the FWA request.
4. Accept or deny the proposal and inform the staff member of the decision as soon as
possible.
If you accept the proposal, schedule a meeting with the staff member to
develop an implementation plan and discuss timekeeping issues.
Review and confirm expectations and deliverables.
If you deny the proposal, schedule a meeting with the staff member to
explain the business rationale.
5. Communicate the change to the department and any necessary business partners.
6. Monitor the staff member’s progress and remain supportive.
Business-based decisions
Managers make decisions about FWAs based on whether business and operational goals can
be met under the proposed arrangement. People want to work flexibly for diverse and
compelling personal reasons. Managerial focus must be on how a change affects the
organization, and on the value that might be added by working differently. Managers work
from the proposal, conversations with the staff member, and consultations with CUHR to
make sound, value-based organizational decisions.
Business and department needs
Job requirements
The employee’s skills and performance history
Change models
David Ulrich’s defined the most common HR Roles model, which commonly used on the
market. The model is well known for introducing mainly the aspects of Human Resources
with the highest value added. The main contribution of the David Ulrich’s HR Model was the
start of the movement from the functional HR orientation to the more partnership
organization in HRM Function. Business Partnering is not possible to implement without a
major shift in the HR Organization. The benefit was a more responsible and flexible
organization of Human Resources, which allowed too many HR Professionals to become real
respected business partners. All the HR Roles defined by Ulrich are essential for the success
of the whole HRM Function.
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The 4 HR Roles defined by Ulrich
1. Strategic partner
2. Change agent
3. Employee champion
4. Administrative expert
Strategic Partner is about alignment of HR activities and initiatives with the global business
strategy and it is the task of the HR Management and HR Business Partners. Sometimes, it
sounds easy to implement Strategic Partnership, but it needs a lot of effort from Human
Resources.
Change Agent is a very important area of the Ulrich’s HR Model. Change agent is about
supporting the change and transition of the business in the area of the human capital in the
organization. The role of Human Resources is the support for change activities in the change
effort area and ensuring the capacity for the changes.
Administrative Expert changes over the period of time. In the beginning, it was just about
ensuring the maximum possible quality of delivered services, but nowadays the stress is put
on the possibility to provide quality service at the lowest possible costs to the organization.
Employee Champion is a very important role of Human Resources. The employee advocate
knows what employees need and HRM should know it. The employee advocate is able to
take care about the interest of employees and to protect them during the process of the
change in the organization.
Pitfalls in 4 HR Roles
The stress must be put to all the areas; there is no chance to select one and to excel in
this one concrete area.
Many HRM Managers forget to balance the approach and they decide to be a real star
in one of the needed components and they forget about the danger not meeting the
basic requests and expectations in the rest.
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Personnel and development professionals are expected to play their part alongside line
managers in maximizing the contribution of people to the achievement of current and
evolving business objectives. In partnership with their colleagues they need to understand the
business context and the importance of taking a strategic viewpoint when meeting business
needs and managing change.
Employee relations management in context
Operational indicators Contribute to setting the strategic direction for an organization’s
employee relations policy and practice.
Knowledge indicators
The various means and methods available for effective workplace decision-making
and management policies and approaches to gain the commitment, co-operation and
empowerment of the workforce.
The organizational, regional, national and international context and their potential
impact on current employee relations policies, issues and practices.
The implications of European Union membership and the internationalization of
employee relations policies, issues and practices.
Indicative content
The changing economic, social, political and technological environment of employee
The social dimension of the European Union and
The Commission
The Council of Ministers
The Parliament
The Court of Justice
The European Trades Union Confederation (ETUC)
UNICE, CEEP, framework agreements and directives.
The role of the Government as an economic manager, through its fiscal and monetary
policies etc and its implications for employer/employee interests.
The role of the Government as legislator and
Employment protection legislation
Maternity and parental leave
Equal opportunities legislation
Individual rights in relation to trade union membership (statutory
recognition for collective bargaining Purposes)
The law relating to industrial conflict
The health and safety legal framework
The role of employment tribunals and the Labor Court (Ireland).
The role of state agencies, including
The Advisory, Conciliation and Arbitration Service (ACAS)
The Central Arbitration Committee (CAC)
The Labor Relations Commission (Ireland)
The Certification Officer
The Health and Safety Commission.
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3. Participate as a key team member in the consultation and communication process.
4. Monitor and evaluate the effectiveness of the organization’s strategies, policies,
procedures and processes to develop and maintain employee commitment.
5. Facilitate the resolution of differences with management colleagues within and
between the management functions, as well as employees individually and/or
collectively.
6. Draft policies and procedures dealing with employee grievances, discipline, and
redundancy, job grading, harassment and bullying, and ensure their effective
implementation and management.
Knowledge indicators
1. The impact of organizational change on relationships within an organization
2. The mechanisms in both nonunion and unionized enterprises designed to reconcile
the different interests of employers and employees for mutual gain.
Indicative content
The range of techniques for practicing employee involvement in organizations,
including:
Communication strategies and policies
Problem-solving
Task-based involvement
Quality circles
Team briefing
Representative participation
Financial involvement.
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HRD systems
1. Career system
2. Work system
3. Development system
4. Self-renewal system
5. Culture system
6. Reinforcement System
Career system Career system ensures attraction and retention of human resources through
the following sub-systems.
Manpower planning
Recruitment
Career planning
Succession planning
Retention
Work system Work-planning system ensures that the attracted and retained human resources
are utilized in the best possible way to obtain organizational objectives. Following are the
sub systems of the work planning system.
Role analysis
Performance plan
Performance feedback and guidance
Performance appraisal
Promotion
Job rotation
Reward
Development system The human resources within the organization have to rise up to the
occasion and change accordingly if the organization wants to be in business.
Induction
Training
Job enrichment
Self-learning mechanisms
Potential appraisal
Succession Development
Counseling
Mentor system
Self-renewal system it is not enough to develop individuals and teams in the organizations
but occasionally there is a need to renew the organization itself. Following are some of the
sub systems that can be utilized to renew the organization.
Survey
Action research
Organizational Development interventions
Organizational Retreats
Culture system It is the culture that will give a sense of direction, purpose, togetherness, and
teamwork.
Vision, Mission and Goal
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Values
Communication
Get-togethers and celebrations
Task forces
Small Groups
Reinforcement System Important motivating factor for people joining and continuing in an
organization in the work they get.
Reward
High performance
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UNIT V
Change
Is a structured approach to shifting/transitioning individuals, teams, and organizations from a
current state to a desired future state. It is an organizational process aimed at helping
employees to accept and embrace changes in their current business environment. In project
management, change management refers to a project management process where changes to
a project are formally introduced and approved
Kotter defines change management as the utilization of basic structures and tools to control
any organizational change effort. Change management's goal is to minimize the change
impacts on workers and avoid distractions.
Successful change management is more likely to occur if the following are included
1. Benefits management and realization to define measurable stakeholder aims, create a
business case for their achievement (which should be continuously updated), and
monitor assumptions, risks, dependencies, costs, return on investment, benefits and
cultural issues affecting the progress of the associated work.
2. Effective Communications that informs various stakeholders of the reasons for the
change, the benefits of successful implementation as well as the details of the change
3. Devise an effective education, training and/or skills upgrading scheme for the
organization.
4. Counter resistance from the employees of companies and align them to overall
strategic direction of the organization.
5. Provide personal counseling (if required) to alleviate any change-related fears.
6. Monitoring of the implementation and fine-tuning as required.
Restructuring
Is the corporate management term for the act of reorganizing the legal, ownership,
operational, or other structures of a company for the purpose of making it more profitable, or
better organized for its present needs. Other reasons for restructuring include a change of
ownership or ownership structure, demerger, or a response to a crisis or major change in the
business such as bankruptcy, repositioning, or buyout. Restructuring may also be described
as corporate restructuring, debt restructuring and financial restructuring.
Executives involved in restructuring often hire financial and legal advisors to assist in the
transaction details and negotiation. It may also be done by a new CEO hired specifically to
make the difficult and controversial decisions required to save or reposition the company. It
generally involves financing debt, selling portions of the company to investors, and
reorganizing or reducing operations.
The basic nature of restructuring is a zero sum game. Strategic restructuring reduces financial
losses, simultaneously reducing tensions between debt and equity holders to facilitate a
prompt resolution of a distressed situation.
Corporate debt restructuring is the reorganization of companies’ outstanding liabilities. It
generally a mechanism used by companies which are facing difficulties in repaying their
debts. In the process of restructuring, the credit obligations are spread out over longer
duration with smaller payments. This allows company’s ability to meet debt obligations.
Also, as part of process, some creditors may agree to exchange debt for some portion of
equity. It is based on the principle that restructuring facilities available to companies in a
timely and transparent matter goes a long way in ensuring their viability which is sometimes
threatened by internal and external factors. This process tries to resolve the difficulties faced
by the corporate sector and enables them to become viable again.
Steps
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ensure the company has enough liquidity to operate during implementation of a
complete restructuring
produce accurate working capital forecasts
provide open and clear lines of communication with creditors who mostly control the
company's ability to raise financing
update detailed business plan and considerations
Organizational restructuring
Organizations are human systems and their system structure includes the worldview, beliefs,
and mental models of their leaders and members. Changing organizational behavior requires
changing the belief system of its personnel. This process of changing beliefs is called
learning. Effective learning requires clear, open communications throughout the
organization.
Organizational performance ultimately rests on human behavior and improving performance
requires changing behavior. Therefore organizational restructuring should have as a
fundamental goal the facilitation of clear, open communication that can enable organizational
learning and clarify accountability for results.
Since the world is continually changing, continuous organizational learning is necessary to
stay up to date. Organizations that cannot or will not learn will become obsolete. Leaders
should periodically examine the organizational structure of their enterprise to assure that it
continues to provide an environment for organizational learning. A non threatening,
development focused performance appraisal process can be an effective organizational
learning tool.
The points of leverage in organizations are the beliefs and worldview of their leaders and
decision makers. The sense of purpose, vision and commitment of an organization's
leadership play a critical role in the results it can accomplish.
Symptoms indicating the need for organizational restructuring.
New skills and capabilities are needed to meet current or expected operational
requirements.
Accountability for results are not clearly communicated and measurable resulting
in subjective and biased performance appraisals.
Parts of the organization are significantly over or under staffed.
Organizational communications are inconsistent, fragmented, and inefficient.
Technology and/or innovation are creating changes in workflow and production
processes.
Significant staffing increases or decreases are contemplated.
Personnel retention and turnover is a significant problem.
Workforce productivity is stagnant or deteriorating.
Morale is deteriorating.
Performance management
Performance management involves thinking through various facets of performance,
identifying critical dimensions of performance, planning, reviewing, and developing and
enhancing performance and related competencies.”
Performance management is an interlocking set of policies and practices which focus to
enhance achievement of organizational objectives through a concentration of individual
performance.
Objectives
To improve employees work performance by helping them to realize and use their
full potential in carrying out their organizations goals and objectives.
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To provide information to employees and managers for use in making work/HR
related decisions.
Scope of performance management strategy
Provide employees with a better understanding of their role and responsibilities
Increase confidence through recognizing strengths while identifying training needs to
improve weaknesses
Improve working relationships and communication between supervisors and
subordinates
Increase commitment to organizational goals
Develop employees into future supervisors
Assist in personnel decisions such as promotions or allocating rewards
Allow time for self-reflection, self-appraisal and personal goal setting.
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Judgment and evidence Neuroscientists say that purely fact based decision making is a
myth - in fact we are always using emotion and judgment, often backed up with evidence. In
reality we employ experienced people and give them information with which to make
decisions, establish whether it made a difference, and improve their judgment. Judgment and
evidence work together, when we manage performance, despite what the sellers of analytical
software believe.
The Culture and the Discipline of performance: Measures and scorecards and targets are
not the whole picture. Consider the messages that managers give out, the permission they
give, and the subtle communication of what is important and what they pay attention to.
Consider how performance is discussed, the latitude people have, what limits they have on
their behaviors. Consider the autonomous units and the ones under tight control. Consider the
conversations that occur and those that do not. These cultural elements exert far more
influence over behaviors than mere measures or targets. The scorecards, measures and
reports that represent the discipline of performance. In reality, it is this culture of
performance that makes the real difference to performance.
Managing, and managing performance, costs money I want to be really clear here. We
spend ages looking at the costs of our operations, products and services. Yet, how we manage
also costs the organization money. Excessive strategic management and performance
management, especially if we are doing it, costs excessive amounts. We work with clients to
introduce ways where the whole organization can be managed better, but that
does not increase the amount of management, and therefore the cost of management.
Process of Performance Management (PMP)
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3. Organizations can create systematic realities to identify, create and measure the
contributions of the human resources value in financial terms and profitability
benchmarks.
4. Measurement could involve a combination of the qualitative and quantitative
benchmarks relevant in evaluation of a departmental/functional strength.
5. Defining and measuring ratios and standards that integrate the business goals,
functions and corporate strategy.
Point of impact of decisions.
Service parameters- both internal and external.
Return on intellectual capital employed.
Return on intellectual net worth.
END OF UNIT V
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