The document outlines the concept of strategic human resource management (SHRM) which links human resources with strategic goals to enhance business performance and foster organizational culture. It emphasizes the integration of HR functions with other departments, focusing on recruiting, training, and retaining employees while aligning with the organization's long-term objectives. Additionally, it discusses the importance of strategic planning, forecasting HR needs, and developing policies that support both employee welfare and organizational success.

1. UNIT - 1
INTRODUCTION
TO
STRATEGIC HRM
PROF. SYED BILAL IRFAN

2. INTRODUCTION
Human resource management is based on the statement that employees are
individuals with varying goals and needs. Practicing good human resource
management enables managers of an enterprise to express their goals with
specificity, increasing worker comprehension of goals and provide the
necessary resources to promote successfully accomplishment of said goals.
Before understanding what is strategic human resource management we need
to have a clear picture on few aspects –
 WHAT IS “STRATEGY”?
STRATEGY is a unified course of action to achieve the organizational goal.
 WHAT IS “STRATEGIC MANAGEMENT”?
The set of decisions and subsequent actions used to formulate and implement
strategies that will optimize the fit between the organization and its
environment in an effort to achieve organizational objectives.
– John & Richard
 WHAT IS “STRATEGIC HUMAN RESOURCE MANAGEMENT”?
STRATEGIC HUMAN RESOURCE MANAGEMENT can be defined as the linking
of human resources with strategic goals and objectives in order to improve
business performance and develop organizational culture that foster
innovation, flexibility and competitive advantage.
Strategic Human Resource Management is the practice of attracting,
developing, rewarding, and retaining employees for the benefit of both the
employees as individuals and the organization as a whole.
HR departments that practice strategic human resource management do not
work independently within a silo; they interact with other departments within
an organization in order to understand their goals and then create strategies
that align with those objectives, as well as those of the organization.

3. Strategic human resource management can be defined as the linking of human
resources with strategic goals and objectives in order to improve business
performance and develop organizational culture that foster innovation,
flexibility and competitive advantage. In an organization SHRM means
accepting and involving the HR function as a strategic partner in the
formulation and implementation of the company’s strategies through HR
activities such as recruiting, selecting, training and rewarding personnel.
Why Strategic HRM is Important?
 Strategic human resource management is the practice of attracting,
developing, rewarding, and retaining employees for the benefit of both
the employees as individuals and the organization as a whole.
 Strategic HRM is seen as a partner in organizational success, as opposed
to a necessity for legal compliance or compensation.
 Strategic HRM utilizes the talent and opportunity within the human
resources department to make other departments stronger and more
effective.
 Strategic HRM gives direction on how to build the foundation for strategic
advantage by creating an effective organizational structure and design,
culture, employee value proposition, systems thinking, an appropriate
communication strategy and preparing an organization for a changing
landscape, which includes downturns and mergers & acquisitions.
 Strategic HRM emphasizes organizational codes of ethics, managing the
societal impact of business decisions, philanthropy and the role of the
human resource professional in improving the quality of life of
employees, their families and the community at large.
 Strategic human resource management includes typical human resource
components such as hiring, discipline, and payroll, and also involves
working with employees in a collaborative manner to boost retention,
improve the quality of the work experience, and maximize the mutual
benefit of employment for both the employee and the employer.
As a result, the goals of a human resource department reflect and support the
goals of the rest of the organization.

4. Let us understand how and why SHRM is important with examples from two
top companies.
GOOGLE
 This company is well known for its innovation and strength when it
comes to Strategic HRM.
 They know their people are what makes them great. The company
boasts tons of employee perks and amazing facilities. This includes a
seven-acre sports complex, multiple wellness centers, roller hockey
rinks, horseshoe pits, and subsidized massages for all.
 Google understands that if employees have the right incentives and are
given optimal positions, the company gets and retains top talent.
 Knowing that HR can make or break a company means that senior
management ensures it is tightly integrated so it not only protects its
employees as a high-end investment but does everything possible to
make sure they have happy employees that are productive for the
company.
CADBURY
 Cadbury knows what it’s doing when it comes to HR. They believe not
only in the importance of their employees but their families, too, putting
their people above all else.
 This is reflected by their success as the second-largest confectioner in
the world.
 Cadbury was founded in 1824 and created a worker village along with
R&D factories. The village is perfect in offering staff and their families a
place to not only work but to live. Their people are their main priority
and they have built a positive work atmosphere that allows for life and
work balance. They support their employees to the fullest and in return,
they have a loyal and dedicated workforce.
 HR has integrated its policies and plans perfectly with the company’s
strategic plans. They go hand in hand to meet the company’s long term
goals.

5. STRATEGIC ROLE OF HRM
Strategic Human Resource Management (SHRM) idea is that human resources
management is used to gain competitive advantage. SHRM practice is coupled
with business strategy. SHRM elevates human resources management from
micro level (individual personal level) to the macro level (business strategy
level). SHRM includes analysis of business and socio-political environment. HR
professionals must be aware of global business and social trends and should
be able to perform environmental scanning. SHRM also includes internal
human resource analysis. HR professionals must analyze human resources
against current and future business strategies and identify the gaps between
them.
The following are few important strategic roles that is to be played HR
manager.
STRATEGIC ROLE
 HR Participates in business decisions
 HR translates corporate strategy into human resource strategy
 HR helps managers create value
 HR helps employees satisfy customers’ needs
INFORMATIONAL AND PROBLEM SOLVING ROLE
 HR provides information and expertise on best practices in other
companies
 HR collects, disseminates, and otherwise makes available important
information to aid in strategic planning and daily work activities and
decisions
 HR diagnoses and recommends solutions to problems arising in
employment relations
STRATEGIC FUNCTIONAL ROLE
 HR helps select employees to fit both strategy and culture
 HR assists in designing and implementing performance planning and
appraisal systems
 HR assists in designing and implementing motivation and reward
systems
 HR assists in designing benefits to complement strategy

6.  HR assists in designing and implementing development and career
management systems
 HR helps enable all executives to perform critical, strategic HR functions
ADMINISTRATIVE ROLE
 HR assists in designing and improving personnel administrative systems.
 HR does much of the necessary administrative work involved in
employment, legal compliance and record keeping.
STRATEGY FORMULATION
Strategies are formulated at three levels:
 Corporate level
 Business unit level
 Functional level
CORPORATE LEVEL
 This is formulated by the TOP MANAGEMENT of an organization.
 The corporate-level strategy is to continuously innovate in all its
businesses with the right technology, relentlessly cut costs and focus on
the overseas markets.
 The major questions that need to be answered at this stage are- What
kinds of business should the company be engaged in? What are the goals
and expectations for each business? How should resources be allocated
to reach these goals?
 In formulating corporate-level strategies, the company should decide
where it wants to be-in 10 or 15 years hence in at least eight areas-
market standing, innovation, productivity, physical and financial
resources, profitability, managerial performance and development,
worker performance and attitudes, and social responsibility.

7. BUSINESS UNIT LEVEL
 While the major question at the corporate-level is, “In what industries
or businesses should we be operating?” the appropriate question at the
business unit level is, “How should we compete in the chosen industry
or business?”
 A business unit is an organizational subsystem that has a market, a set
of competitors, and a goal distinct from those of the other subsystems
in the group.
 The concept of the strategic business unit (SBO) was pioneered by
General Electric (GE). At GE, there are over 200 strategic business
units, each having its own strategies consistent with the organization’s
corporate-level strategy.
FUNCTIONAL LEVEL
 Each business unit will consist of several departments, such as
manufacturing, sales, finance, and HRD. Functional-level strategies
identify the basic courses of action that each of the departments must
pursue in order to help the business unit to attain its goals.
 In formulating functional level strategies, managers must be aware that
the different functions are interrelated. A change in one department
will invariably affect the way other departments operate.
 Hence, the strategy of one functional area cannot be viewed in
isolation. Rather, the extent to which all functional strategies are
integrated determines the effectiveness of the unit’s business strategy.

8. PLANNING AND IMPLEMENTING STRATEGIC HR
POLICIES
Human resource strategy is an elaborate and systematic plan of action
developed by a human resource department. This definition tells us that an HR
strategy includes detailed pathways to implement HRM strategic plans and HR
plans. The various Planning and Implementing Strategic HR policies are:
1. Staffing
Staffing includes the development of a strategic plan to determine how many
people you might need to hire. Based on the strategic plan, HRM then performs
the hiring process to recruit and select the right people for the right jobs.
2. Basic workplace policies
Development of policies to help reach the strategic plan's goals is the job of
HRM. After the policies have been developed, communication of these policies
on safety, security, scheduling, Vacation times, and flextime schedules should
be developed by the HR department. Of course, the HR managers work closely
with supervisors in organizations to develop these policies, Workplace policies
will be addressed throughout the book.
3. Compensation and benefits
In addition to paychecks, 401(k) plans, health benefits, and other perks are
usually the responsibility of an HR manager.
4. Retention
Assessment of employees and strategists on how to retain the best employees
is a task that HR managers oversee, but other managers in the organization will
also provide input.
5. Training and development
Helping new employees develop skills needed for their jobs and helping current
employees grow their skills are also tasks for which the HRM department is
responsible. Determination of training needs and development and
implementation of training programs are important tasks in any organization.

9. 6. Regulatory issues and worker safety
Keeping up to date on new regulations relating to employment, health care, and
other issues generally a responsibility that falls on the HRM department.
THE STRATEGIC HR PLANNING PROCESS
The strategic HR planning process has four steps:
1. Assessing the current HR capacity
2. Forecasting HR requirements
3. Gap analysis
4. Developing HR strategies to support organizational strategies
1. Assessing current HR capacity
Based on the organization's strategic plan, the first step in the strategic HR
planning process is to assess the current HR capacity of the organization. The
knowledge, skills and abilities of your current staff need to be identified. This
can be done by developing a skills inventory for each employee.
The skills inventory should go beyond the skills needed for the particular
position. List all skills each employee has demonstrated. For example,
recreational or volunteer activities may involve special skills that could be
relevant to the organization. Education levels and certificates or additional
training should also be included.
An employee's performance assessment form can be reviewed to determine if
the person is ready and willing to take on more responsibility and to look at
the employee's current development plans.
2. Forecasting HR requirements
The next step is to forecast HR needs for the future based on the strategic
goals of the organization. Realistic forecasting of human resources involves
estimating both demand and supply. Questions to be answered include:
 How many staff will be required to achieve the strategic goals of the
organization?
 What jobs will need to be filled?

10.  What skill sets will people need?
When forecasting demands for HR, we must also assess the challenges that
you will have in meeting your staffing need based on the external
environment.
 How will the external environment impact on our HR needs?
3. Gap analysis
The next step is to determine the gap between where your organization wants
to be in the future and where you are now. The gap analysis includes
identifying the number of staff and the skills and abilities required in the
future in comparison to the current situation. One should also look at all your
organization's HR management practices to identify practices that could be
improved or new practices needed to support the organization's capacity to
move forward. Questions to be answered include:
 What new jobs will we need?
 What new skills will be required?
 Do our present employees have the required skills?
 Are employees currently in positions that use their strengths?
 Do we have enough managers/supervisors?
 Are current HR management practices adequate for future needs?
4. Developing HR strategies to support organizational strategies
There are five HR strategies for meeting your organization's needs in the
future:
a) Restructuring strategies
b) Training and development strategies
c) Recruitment strategies
d) Outsourcing strategies
e) Collaboration strategies

11. a) Restructuring strategies
This strategy includes:
 Reducing staff either by termination or attrition
 Regrouping tasks to create well designed jobs
 Reorganizing work units to be more efficient
Attrition - Not replacing employees when they leave - is another way to
reduce staff. The viability of this option depends on how urgently you need to
reduce staff. It will mean that jobs performed in the organization will have to
be reorganized so that essential work of the departing employee is covered.
Careful assessment of the reorganized workloads of remaining employees
should include an analysis of whether or not their new workloads will result
in improved outcomes.
It is important to consider current labour market trends (e.g., the looming
skills shortage as baby boomers begin to retire) because there may be longer-
term consequences if you let staff go.
Sometimes existing workers may be willing to voluntarily reduce their hours,
especially if the situation is temporary. Job sharing may be another option.
The key to success is to ensure that employees are satisfied with the
arrangement, that they confirm agreement to the new arrangement in writing,
and that it meets the needs of the employer. Excellent communication is a
prerequisite for success.
b) Training and development strategies
This strategy includes:
 Providing staff with training to take on new roles
 Providing current staff with development opportunities to prepare
them for future jobs in your organization

12. c) Recruitment strategies
This strategy includes:
 Recruiting new staff with the skill and abilities that your organization
will need in the future
 Considering all the available options for strategically promoting job
openings and encouraging suitable candidates to apply
For strategic HR planning, each time you recruit you should be looking at the
requirements from a strategic perspective. Perhaps your organization has a
need for a new fundraiser right now to plan special events as part of your fund
raising plan. However, if your organization is considering moving from fund
raising through special events to planned giving, your recruitment strategy
should be to find someone who can do both to align with the change that you
plan for the future.
d) Outsourcing strategies
This strategy includes:
 Using external individuals or organizations to do some tasks
Many organizations look outside their own staff pool and contract for certain
skills. This is particularly helpful for accomplishing specific, specialized tasks
that don't require ongoing full-time work.
Some organizations outsource HR activities, project work or bookkeeping. For
example, payroll may be done by an external organization rather than a staff
person, a short term project may be done using a consultant, or specific
expertise such as legal advice may be purchase from an outside source.
Each outsourcing decision has implications for meeting the organization's
goals and should therefore be carefully assessed.
e) Collaboration strategies
Finally, the strategic HR planning process may lead to indirect strategies that
go beyond your organization. By collaborating with other organizations you
may have better success at dealing with a shortage of certain skills.
Types of collaboration could include:

13.  Working together to influence the types of courses offered by
educational institutions
 Working with other organizations to prepare future leaders by sharing
in the development of promising individuals
 Sharing the costs of training for groups of employees
 Allowing employees to visit other organizations to gain skills and
insight.
HR STRATEGIES TO IMPROVE FIRM’S PERFORMANCE
1. Make Clear Goals and Expectations
Are your team members aware of what their goals and expectations are? Do
they know when you expect goals to be met? How do you know?
Involve individual employees in their own goal-setting process to give them
autonomy over their goals. A work environment that actively involves
employees in goal-setting can also improve employee engagement and
motivation.
If you are dealing with performance issues with a particular team member,
make sure to be specific. For example, if you discover a direct report is
frequently taking two-hour lunches, don't tell them to take 'shorter lunches.'
Tell him or her to keep their lunch break to an hour and consider making
them document their lunch breaks or clock in and out of work.
2. Empower Employees to Do Their Best Work
People do their best work when they are engaged and motivated. Invest in
your employees’ long-term career in the organization. Develop a plan for
moving up within the company and provide the resources and training that
will develop staff into talented leaders in the long run.
Your team members will need new skills and habits as they advance. Help
employees secure those skills by allocating budget dollars towards
workshops, professional development courses, conferences and certifications
so they can reach their full potential.

14. 3. Hold Team Members Accountable to Goals
Imagine someone asks a direct report to do something — even if it's a clear
goal with a set deadline — and they don't do it, but receive no consequence.
What happens next?
Over time, the employee will learn it doesn't matter if they slack off or have to
be reminded. Performance is likely to suffer.
Team members require crystal clear communication about their
responsibilities and need to be held accountable. Be sure to communicate with
your employees and don't be afraid to dole out warnings and consequences
when they are earned. If certain employees fail to deliver, consider
implementing a performance improvement plan. If they don't improve, it may
be time to show them the door.
4. Reward High Performance
A common problem in many organizations is that leaders spend their time
trying to get low-performing team members to improve and recruiting new
talent, ignoring high performers because they don't cause problems. This is a
dangerous oversight!
Over time, high performers will become disengaged and less motivated if they
don't feel like their efforts are appreciated. Furthermore, high performers are
in high demand! You could lose them to competitors if you don't recognize
their hard work.
There's no shortage of ways to reward an employee and thank them for a job
well done. Gifts, bonuses, promotions, extra time off, public praise and extra
benefits are all effective ways to reward high performers and keep them
motivated.
5. Foster a Fun, Positive Work Environment
It's no secret that happy employees are more engaged, productive and
motivated team members. Be sure employees get to let loose occasionally and
have some fun. Sponsor a monthly potluck, host 'get to know you' activities
outside of the office or plan a trivia event at work to let team members
develop a rapport and relationship with one another.

15. Encourage an organizational culture where employees feel safe to speak up
and voice their opinions, regardless of their rank or position in the company.
When people feel their ideas and opinions are valued, they are more likely to
participate and be engaged with the mission of the organization.
6. Increase Job Satisfaction
Does a market analysis to see how your organization stacks up to your
competitors? Do you offer competitive benefits and perks? Are your salaries
higher or lower than other businesses in your industry? What kind of office
environment do you have?
The best way to find out if your benefits and perks are affecting employee
performance and motivation is to ask your teams. Have employees complete
an anonymous survey to determine what is most important to them.
7. Consider Remote Working Options
In today's society, flexible schedules matter more than ever for busy business
professionals. Contrary to popular belief, giving team members the ability to
work from home won't make them less productive.
Research shows that employees who work remotely are 13 percent more
productive than their office-working counterparts, and they spend the time
would they spend commuting focusing on work.
For example, if one of your team members doesn't feel well enough to come to
the office (and doesn't care to spread their germs) but they can still get work
done, let them work from home rather than take a sick day and accomplish
nothing. If someone has a home delivery or repair they need to be home for,
let them work remotely so they can stay productive and not use all of their
paid time off.
8. Use the Right Technologies
A big part of employee performance is measuring performance. While many
companies still rely on annual performance reviews and performance
management systems to assess performance, new technologies are available
that help measure performance more accurately on an ongoing basis.

16. TOTAL QUALITY MANAGEMENT
Total Quality Management (TQM) is a management technique based on the idea
that all “employees continuously improve their ability to provide on-demand
products and services that customers will find of particular value.”
The concept of Total Quality Management can be found right in its name: The
word “total” implies that all employees in the organization, from development
to production to fulfillment, are obligated to improve operations. And
“management” insinuates that this methodology should be a focused effort.
8 principles of Total Quality Management
As with most management methods and techniques, implementation and
success will vary from one company to another. While there is not a single
agreed-upon approach, the most common TQM definition includes the
following eight principles.
1. Customer focus
The first of the Total Quality Management principles puts the focus back on the
people buying your product or service. Your customers determine the quality
of your product. If your product fulfills a need and lasts as long or longer than
expected, customers know that they have spent their money on a quality
product.
When you understand what your customer wants or needs, you have a better
chance of figuring out how to get the right materials, people, and processes in
place to meet and exceed their expectations.
To implement this TQM principle:
 Research and understand your customers’ needs and expectations.
 Align your organization’s objectives with customer needs.
 Communicate with customers, measure satisfaction, and use the results
to find ways to improve processes.
 Manage customer relationships.
 Find a balance for satisfying customers and other interested parties (such
as owners, employees, suppliers, and investors).

17. The benefits of being customer-focused include:
 More sales, increased revenue, market share, and mindshare
 Strong customer loyalty leading to repeat business
 Increased possibility that satisfied customers will tell others about your
products and services.
2. Total employee commitment
You can’t increase productivity, processes, or sales without the total
commitment of all employees. They need to understand the vision and goals
that have been communicated. They must be sufficiently trained and given the
proper resources to complete tasks in order to be committed to reaching goals
on time.
To implement this TQM principle:
 Clearly communicate and acknowledge the importance of each individual
contribution to the completed product.
 Stress that each team or individual accepts ownership and give them the
responsibility and opportunity to solve problems when they arise.
 Encourage employees to self-evaluate performance against personal
goals and objectives, and make modifications as necessary to improve
workflow.
 Acknowledge successes and optimized performance to build confidence
in your employees and your stakeholders.
 Make responsibilities clear, provide adequate training, and make sure
your resources are used as efficiently as possible.
 Encourage people to continually seek opportunities to learn and move
into other roles to increase their knowledge, competence, and
experience.
 Create an environment where employees can openly discuss problems
and suggest ways to solve them.
The key benefits of total employee commitment include:
 Increased employee retention because employees are motivated,
committed, and actively involved in working toward customer
satisfaction

18.  Individual and team innovation and creativity in problem-solving and
process improvement
 Employees who take pride and accountability for their own work
 Enthusiasm for active participation and contribution to continual
improvement
3. Process approach
Adhering to processes is critical in quality management. Processes ensure that
the proper steps are taken at the right time to ensure consistency and speed up
production.
To implement this TQM principle:
 Use Total Quality Management tools such as process flowcharts to define
and delineate clear roles and responsibilities so everybody knows who
does what at certain times.
 Create a visual action plan so everybody can easily see the specific
activities that need to be completed to achieve the desired result.
 Analyze and measure current activities to see where improvements can
be made or where steps in the process are creating bottlenecks.
 Evaluate the impact your processes and activities may have on your
customers, suppliers, and all stakeholders.
Benefits of a process approach include:
 Faster development and production cycles, lower costs, and increased
revenue
 More consistency and predictable outcomes
 Focus on continued improvements and success.
4. Integrated system
Typically, a business has many different departments, each with their own
specific functions and purposes. These departments and functions should be
interconnected with horizontal processes that should be the focus of Total
Quality Management. But sometimes these departments and functions operate
in isolated silos.

19. In an integrated system, everybody in every department should have a
thorough understanding of policies, standards, objectives, and processes.
Integrated systems help the company to look for continual improvement in
order to achieve an edge over the competition.
To implement this TQM principle:
 Promote a work culture focused on quality.
 Use flowcharts and other visual aids to help employees understand how
their functions fit in with the rest of the company.
 Use as-is process analysis to see where improvements can be made.
 Make training available for employees who need to learn new processes
and who want to explore opportunities for advancement.
Benefits include:
 Focus on quality that will help your business achieve excellence and meet
or exceed customer expectations
5. Strategic and systematic approach
The International Organization for Standardization (ISO) describes this
principle as:
“Identifying, understanding and managing interrelated processes as a system
contributes to the organization’s effectiveness and efficiency in achieving its
objectives.”
Multiple processes within a development or production cycle are managed as a
system of processes in an effort to increase efficiency.
To implement this TQM principle:
 Provide your people with the proper training and resources that will help
them complete their individual steps in the process.
 Continually improve processes and products, and upgrade equipment as
necessary to reach goals.
 Make continual improvement a measurable objective for all employees.
 Recognize, acknowledge, and reward innovations and process
improvements.

20. Benefits include:
 An ability to quickly identify, react, and fix process bottlenecks or
breakdowns
 Overall improved organizational capabilities and improved performance.
6. Continual improvement
Optimal efficiency and complete customer satisfaction doesn’t happen in a
day—your business should continually find ways to improve processes and
adapt your products and services as customer needs shift. As previously stated,
the other Total Quality Management principles should help your business keep
an eye toward continual improvement.
To implement this TQM principle:
 Implement policies to establish product, process, and system
improvements as measurable goals for individuals, teams, and
departments.
 Recognize, acknowledge, and encourage innovation to improve
processes and development.
 Encourage employees to participate in available training sessions to
learn and take on new and additional roles.
Benefits include:
 Improved knowledge and capabilities to increase performance
 Improvement goals strategically aligned with organizational capabilities
and goals
 Quick reaction times to recognize and fix bottlenecks and broken
processes.

21. 7. Fact-based decision-making
Analysis and data gathering lead to better decisions based on the available
information. Making informed decisions leads to a better understanding of
customers and your market.
 To implement this TQM principle:
 Analyze and check data to ensure that it is reliable and accurate.
 Make relevant data available to stakeholders.
 Use valid methods to gather and analyze data.
 Make decisions based on the facts learned from the data in addition to
your experience and intuition.
Benefits include:
 Ability to make informed decisions
 Ability to analyze and defend past decisions by referencing factual
records
 Ability to change past decisions based on data review
8. Communications
Everybody in your organization needs to be aware of plans, strategies, and
methods that will be used to achieve goals. There is a greater risk of failure if
you don’t have a good communication plan.
To implement this TQM principle:
 Establish an official line of communication so that all employees know
about updates, policy changes, and new processes.
 Where possible, involve employees in decision-making.
 Make sure everybody in every department understands their roles and
how they fit in with the rest of the company.
Benefits include:
 Boost in morale and motivation when employees understand how their
contributions help the company achieve its goals
 Interdepartmental coordination and cooperation
 Elimination of silos

22.  Ability to more accurately measure the effectiveness of current policies
and procedures
 Higher motivation from employees to achieve goals because they are part
of the decision-making process
 Successful implementation of these Total Quality Management concepts
will not come overnight. Because TQM often represents a large cultural
shift, you may want to implement these changes in phases to lessen the
impact.

23. UNIT - 2
INVESTMENT
PERSPECTIVES OF
HR
PROF. SYED BILAL IRFAN

24. INTRODUCTION
Human Resource is one of the most important resources in an organization. The
success or failure of an organization largely depends on how human resource
is used to utilize other resources available to the organization.
As a result, the focus of human resource management has shifted towards
increasing the return on investment by maximizing the productivity of human
resources. Therefore, evaluating the quality, costs and benefits of HR are very
crucial to organizations much like any other capital investment.
Adopting a strategic view of HR involves considering employees as “human
assets,” and developing appropriate policies and procedures to manage them
as valuable investments.
Hence, organizations should invest in human resources in order to prepare the
human resources to be competent to achieve strategies.
Need for Investing in Human Resources
1. To improve the technical knowledge and skills of the employees.
2. To create ability to learn and grow among employees.
3. To bring out effective decision-making abilities among the employees.
4. To motivate and bring out commitment towards the work.
5. To improve the leadership qualities and team-building spirit among
employees.
Factors relevant to Human Resource Investment Decisions
1. Management Values
 Management may or may not have appreciation of the value of it
Human assets relative to other capital assets such as Brand names,
Distribution Channels etc.
 Senior management values and action determine the organizational
investments in the human assets.
 When senior managers formulate and implement strategies, their
values and philosophies should be communicated to members of the
organization through human resource policies and practices.
2. Risk and Return on investment in HR
 Although there are a number of important benefits to investments in
human resources, such investments contain an element of risk.

25.  Investing in human resources is inherently more risky than investing
in physical capital because the employer does not own the resource.
 Employees are free to leave, although contractual arrangements may
limit their mobility.
 In order for investments in human resources to be attractive, the
returns must be great enough to overcome the risks.
3. The economic rationale for investments in training
 The human resource investments frequently involve training, it is
instructive to consider the difference between specific and general
training.
 It is very important to understand when and what type of training is
needed like if any specialized skills or techniques are to be imparted
among employees then investment in specific training would be more
worth and vice versa for a general training where training on usual
and general aspects of organization will be provided.
4. Utilitarianism/Cost benefit analysis
 In considering investments in human resources in terms of hiring or
development of current employees in order to pursue given strategies,
there must be a method for evaluating the financial attractiveness of
such investments.
 The financial attractiveness is nothing but financial profitability and
less cost involved in a particular HR investment.
JOB ROTATION
Job Rotation is a management approach where employees are shifted between
two or more assignments or jobs at regular intervals of time in order to expose
them to all verticals of an organization. It is a pre-planned approach with an
objective to test the employee skills and competencies in order to place him or
her at the right place.
Job rotation is a well-planned practice to reduce the boredom of doing same
type of job every day and explore the hidden potential of an employee. The
process serves the purpose of both the management and the employees. It helps
management in discovering the talent of employees and determining what he
or she is best at.
On the other hand, it gives an individual a chance to explore his or her own
interests and gain experience in different fields or operations.

26. Advantages of Job Rotation
Many employers choose to create a job rotation policy as a benefit to
employees. But, employees aren’t the only ones who benefit from the program.
 Eliminates boredom.
Only 32% of employees are actually engaged at their jobs. That means 68% of
employees are doing the bare minimum, plugging away at their computers or
robotically talking to customers. Disengaged employees can be lured away by
promises of a better, more challenging job.
Giving employees new responsibilities won’t solve all your problems. But, it
could help employees become engaged and prevent boredom. For the most
part, employees becoming disengaged at their jobs is a gradual thing. By mixing
up responsibilities, you could help break up the monotony of an employee’s day
to day.
 Encourages development.
Having a job rotation strategy helps employees develop their skills. By learning
more skills, employees will feel more valuable to your business.
Employees who work at a company that encourages their development might
not feel the need to change jobs. Instead of leaving your business for a new job
that helps an employee develop, they can rotate jobs.
 Gives employees a break from strenuous job duties.
Many industries that require heavy-duty labor use job rotation strategies.
Overworked employees who are constantly doing manual labor benefit from
getting a break. By rotating their jobs, you help offset the risk of fatigue.
For example, you could have a warehouse employee who lifts heavy packages
for deliveries rotate to a job that handles the paperwork for shipping.
 Helps you identify where employees work best.
A job rotation strategy can point out an employee’s strengths and weaknesses.
You might find that an employee can better handle a different job at your
business. For the most effective business, you need to have all your employees
in the right positions.

27.  Gives you a backup plan if an employee leaves the job.
Although employee turnover can be expensive, it does not have to be
devastating. By having a job rotation plan, you have multiple employees who
know how to do each job.
If an employee leaves, you will not need to scramble to hire the first person you
see. Instead, you have other employees capable of covering the separated
employee’s tasks. If you do need to hire a replacement, you can take your time
to find the right fit.
Disadvantages of Job Rotation
Before implementing a job rotation program, consider the following
disadvantages.
 Can be costly and time consuming
When you move an employee into a new position, there is a learning curve.
Employees might need training in order to do their new job. The cost of training
employees can be thousands of dollars and take hours.
 Could end up with disgruntled employees
Some employees might not want to rotate jobs. An employee who is
comfortable and successful in their current position may worry another
employee would mess up their process.
You might have some employees who excel at their job but are not willing to
learn new things.
 It won’t fix all your problems
Job rotation programs are not guaranteed to increase employee engagement,
so do not put all your eggs in one basket. If your employees are disengaged at
your business, it could be because of other factors.
Rotating an employee’s job will not fix issues like lack of positive reinforcement
and disconnect with company culture. Do not use a job rotation program for the
sole purpose of making employees happy before getting to the root of their
problems first.

28.  Might not be feasible for some industries
For some industries and positions, job rotation is not realistic. This is especially
true in highly skilled positions where employees need years of training to do
their jobs.
If you want to implement a job rotation program at your business, make sure
that it is possible. Do not waste effort on something that will not work.
 Your business could suffer
One of the most devastating disadvantages of job rotation is that your business
could take a hit. Because employees are learning new skills, there could be some
errors. Confused employees who make mistakes could frustrate customers. If
operations do not run smoothly, your bottom line could suffer.
You need to consider how job rotation could help your business. You do not
want slow operations, confused employees, and angry customers in the
process.
JOB ENRICHMENT
Job enrichment is a common motivational technique used by organizations to
give an employee greater satisfaction in his work. Job Enrichment is the
addition to a job of tasks that increase the amount of employee control or
responsibility. The employee will be given additional responsibilities
previously reserved for his manager or other higher-ranking positions, which
in turn motivates the employee to work efficiently and responsibly.
Advantages of Job Enrichment
 Job enrichment is the most widely used method of job design as it
provides a meaningful work experience and learning to employees.
 It makes the work interesting.
 It helps in reducing the rate of labour turnover and absenteeism.
 It increases skills of the employees.
 Workers get higher job satisfaction as redesigned jobs provide intrinsic
motivation to the employees.
 Organization gets improvement in output, both qualitative and
quantitative.

29. Disadvantages of Job Enrichment
 Enriched jobs may fail to motivate employees who are alienated and who
prefer job security, shorter work, bonus, and good pay to autonomy and
responsibility. For such employees, job enrichment may lead to feelings
of inadequacy, failure and dependence. They may consider it an
additional burden without appropriate compensation.
 Job enrichment may make work more difficult and therefore proper
training should be provided to the employee to handle the enriched jobs.
In certain cases, job enrichment proves to be a costly process as the
expenditure involved is higher than the gain in productivity.
 It may not be possible to enrich all the jobs especially the technical jobs
with specialised machinery. It may not be possible to make the jobs more
meaningful.
 Job enrichment does not necessarily mean job satisfaction. Jobs of highly
skilled professionals are very challenging in nature but it does not mean
that they are always satisfied with their jobs.
FORMS OF INVESTMENT IN HR
 INVESTMENT IN TRADITIONAL INVESTMENT APPROACHES
 Investment in Training
 Investment in Management and Organizational Development
 Investment for Improved Retention Management
 Investment in Job Secure Work Forces
 INVESTMENT IN NON-TRADITIONAL INVESTMENT APPROACHES
 Investment in disabled employees
 Investments in employee health
 Countercyclical hiring

30.  INVESTMENT IN TRADITIONAL INVESTMENT APPROACHES
Before understanding all investment in detail, let us understand the difference
between Training, Management Development & Organizational Development.
Area Management
Development
Training Organization
Development
Content Managerial skills and
knowledge
Technical skills and
knowledge
Behavioral skills
and knowledge
Purpose Conceptual , decision
making, interpersonal
Specific job Related Inter-personal
relations
Duration Medium-term and
long–term
Short-term Long-term
For Whom? For Managers:
Detailed programs.
For Non-Managers:
Basic managerial
Knowledge.
For Technical and Non-
Managerial Employees:
Detailed programs.
For managers:
Basic Technical
knowledge
All employees
 Investment in Training
After an employee is selected, placed and introduced he or she must be
provided with training facilities. Training is the act of increasing the knowledge
and skill of an employee for doing particular job.
According to H. John Bernardin “Training is any attempt to improve employee
performance on a currently held job or one related to it”.
Training is an educational process. It provides information to the people and
increases knowledge and skills and can help them improve their effectiveness
at work.
Objectives of Training
 To provide new employees the basic knowledge and skill they need for
performing their work.
 To ensure that each employee has capabilities to perform their duties.

31.  To assist employees to function more effectively in their present
positions by providing them updated information and techniques and
developing the skills that they will need to do their job.
 To help the employee develop as an individual so that the organization
can utilize the maximum potential of its employees.
 To prepare employees for high-level responsibility.
 To reduce supervision wastage and accidents.
 To develop inter-personal relation.
 To reduce employee turnover and absenteeism.
 To increase motivation and morale of employees.
Methods of Training
On the Job Methods
This is the most common method of training in which a trainee is placed on a
specific job and taught the skills and knowledge necessary to perform it.
The advantages of OJT are as follows:
1. On the job method is a flexible method.
2. It is a less expensive method.
3. The trainee is highly motivated and encouraged to learn.
4. Much arrangement for the training is not required.
On the Job Methods Off the Job Methods
 Job Rotation
 Coaching
 Job Instruction
 Committee Assignments
 Internship Training
 Vestibule Training
 Role Playing
 Lecture Method
 Conferences/Discussion &
Workshops
 Audio-Visual Methods

32. Methods in OJT -
1) Job rotation:
This type of training involves the movement of the trainee from one job to
another. The trainee receives job knowledge and gains experience from
his supervisor or trainer in each of the different job assignments. Though
this method of training is common in training managers for general
management positions, trainees can also be rotated from job to job in
workshop jobs. This method gives an opportunity to the trainee to
understand the problems of employees on other jobs and respect them.
2) Coaching:
The trainee is placed under a particular supervisor who functions as a
coach in training the individual. The supervisor provides feedback to the
trainee on his performance and offers him some suggestions for
improvement. Often the trainec shares some of the duties and
responsibilities of the coach and relieves him of his burden. A limitation
of this method of training is that the trainee may not have the freedom or
opportunity to express his own ideas.
3) Job instructions:
Also known as step-by-step training in which the trainer explains the way
of doing the jobs to the trainee and in case of mistakes, corrects the
trainee.
4) Committee assignments:
A group of trainees are asked to solve a given organizational problem by
discussing the problem. This helps to improve team work.
5) Internship training:
Under this method, instructions through theoretical and practical aspects
are provided to the trainees. Usually, students from the engineering and
commerce colleges receive this type of training for a small stipend.

33. Off the Job Methods
On the job training methods have their own limitations, and in order to have
the overall development of employee’s off-the-job training can also be
imparted. The methods of training which are adopted for the development of
employees away from the field of the job are known as off-the-job methods.
Methods in Off the Job Methods -
1) Vestibule training:
In this method, actual work conditions are simulated in a class room,
Material, files and equipment those are used in actual job performance
are also used in training. This type of training is commonly used for
training personnel for clerical and semiskilled jobs. The duration of this
training ranges from days to a few weeks. Theory can be related to
practice in this method.
2) Role playing:
It is defined as a method of human interaction that involves realistic
behaviour in imaginary situations. This method of training involves
action loing and practice. The participants play the role of certain
characters. such as the production manager, mechanical engineer,
superintendents, maintenance engineers, quality control inspectors,
foreman, workers and the like. This method is mostly used for developing
interpersonal interactions and relations.
3) Lecture method:
The lecture is a traditional and direct method of instruction. The
instructor organises the material and gives it to a group of trainees in the
form of a talk. To be effective, the lecture must motivate and create
interest among the trainees. An advantage of lecture method is that it is
direct and can be used for a large group of trainees. Thus, costs and time
involved are reduced. The mejor limitation of the lecture method is that
it does not provide for transfer of training effectively.
4) Conference or discussion:
It is a method in training the clerical, professional and supervisory
personnel. This method involves a group of people who pose ideas,

34. examine and share facts, ideas and data, test assumptions, and draw
conclusions, all of which contribute to the improvement of job
performance. Discussion has the distinct advantage over the lecture
method in that the discussion involves two-way communication and
hence feedback is provided. The participants feel free to speak in small
groups. The success of this method depends on the leadership qualities
of the person who leads the group.
5) Audio-Visual Methods:
Providing training by way of using Films, Televisions, Video, and
Presentations etc. This method of training has been using successfully in
education institutions to train their students in subjects to understand
and assimilate easily and help them to remember forever. New
companies have come up for providing audio-visual material for students
in their concern subjects. In the corporate sector, mainly in customer care
centres employers are giving training to their employees by using audio
visuals material to teach how to receive, talk and behaviour with the
customer.
 Investment in Management & Organizational Development
Management development is a systematic process of growth and development
by which the managers develop their abilities to manage. So it is the result of
not only participation in formal courses of instruction but also of actual job
experience. It is concerned with improving the performance of the managers
by giving them opportunities for growth and development.
But, whereas Organizational Development is a process where the managers
develops behavioral skills and provide knowledge to the employees. The main
purpose of Organizational Development is to provide good interpersonal skills
among the employees.
Objectives of Management Development:
 Increase the productivity and effectiveness of managers.
 Assist the organization to identify its future leaders and accelerate their
upward mobility.

35.  Enable organization to produce the number of competent manger to
anticipate growth needs.
 Encourage self-development and increases ability of managers to take
greater responsibility.
 Enhancing managerial job satisfaction.
 Encourages the climate of participative management where individual
and the organization can mutually set performance goals and
measurement techniques.
Methods of Management & Organizational Development
On the Job Methods
1) Job rotation:
It means moving management trainees from department to department
to broaden their understanding of all parts of the business and to test
their abilities. The advantages of this method are: It develops the links
between departments, develops employee’s flexibility to undertake
different types of activities.
2) Coaching:
Under this method, the trainee is guided actively by senior managers. The
coach gives guidance through direction, advice criticism and suggestion
in an attempt to aid the growth of an employee (trainee).The
On the Job Methods Off the Job Methods
 The coaching method
 Understudy method
 Job rotation
 Special projects
 Committee assignments
 Selective Readings
 Case studies
 Role playing
 In-basket methods
 Business games
 Sensitivity training
 Simulation

36. disadvantages of this method are there is a possibility of continuing the
current management style and practices in an organization, heavy
reliance on coach’s ability etc.
3) Under study Method:
Under this technique, the potential managers are given opportunity to
relieve (ease) an experienced manager of his/her job and act as his/her
substitute during the period. Through this method, an individual get
opportunity to see the job in total in short period.
4) Committee learning/action learning:
Under this technique, a group of people or team is assigned and gives an
opportunity share in managerial decision making, to learn by watching
other and to investigate specific organizational problems. This is
temporary in nature, however, it increases trainees’ exposure to other
members, broadens his /her understanding and provides an opportunity
to grow and make recommendation under the scrutiny of other
committee members.
5) Special projects:
Under this method, a trainee executive is assigned a special project
involving heavy responsibility. The trainee is supposed to study the
project, understand the problem issues and prescribe appropriate
solutions, and make a recommendation on the viability of the project.
6) Selective readings:
Some organizations maintain huge libraries involving a large collection
of useful material on the subjects of interest to the enterprise. The
executives go through the books, journals, articles, notes, and magazines
and assimilate knowledge. The executives, during their leisure hours, try
to exchange their views with others and in this process learn new ways
to looking at things.

37. Off the Job Methods
1) Case study:
The case study method involves diagnostic and problem solving study of
usually a written description of some event or set of circumstances on
organizational problems providing relevant details.
The method is appropriate for developing analytical and problem solving
orientation and skill, providing practice in applying management
concepts, tools and techniques and enhancing awareness of the
management concepts and processes. The method is relevant for
developing o- generational, conceptual and functional skills among top
and senior level executives.
2) Role playing:
Role playing is used in helping trainees to diagnose human relations
problems, to develop insight through in-depth analysis of problems
relating to human interaction and to acquire skills in interpersonal
communication with particular emphasis on empathy and listening.
A simulated situation is created in which trainees act out the thoughts
and behaviour of persons in particular roles in the organization. Roles are
often played spontaneously and unrehearsed.
3) In-basket method:
In-Basket on In-Tray technique involves simulation of a series of
decisions a trainee might have to make in real life. The trainee is
presented with pack of papers and files in a tray containing
administrative problems and is asked to take decisions within specified
time limit.
The decisions taken by several trainees are recorded and compared with
one another. Learning occurs as trainees reflect and evaluate the
decisions taken on priorities, customer’s complaint, superior’s demand,
irrelevant information and the like.
4) Business Games:
Business games are classroom simulation exercises in which teams of
individuals compete against one another or against an environment in

38. order to achieve a given objective. These games are designed to be
representative of real-life conditions. Under these, an atmosphere is
created in which the participants play a dynamic role, and enrich their
skills through involvement and simulated experience.
5) Sensitivity training:
Under this method, members are brought together in a free and open
environment in which participants discuss themselves. They express
their ideas, beliefs and attitudes. The objective of sensitivity training is to
provide manger s with increased awareness of their own behaviors and
of how others perceive them greater sensitivity to the behavior of others
and increased of group process.(It helps to increase the ability to
understand other’s behaviors, improved listening skills, greater
openness, increase tolerance for individual differences and improved
conflict resolution skills.)
6) Simulation:
Simulation is a special training technique conducted one a duplicate
environment which is a mock up of a real life environment. Under the
simulation method a single hour may be equated for a month, or a quarter
of a month in real life. Like this, several events may be experienced in a
relatively short span of time.
 Investment in Improved Retention Management
Employee retention is defined as the steps or processes taken by HR
professionals and managers to ensure the organization retains employees.
Employees leaving an organization affect the organization’s productivity,
morale, and engagement.
Managing for employee retention involves strategic actions to keep employees
motivated and focused so they elect to remain employed and fully productive
for the benefit of the organization.
A comprehensive employee retention program can play a vital role in both
attracting and retaining key employees, as well as in reducing turnover and its

39. related costs. All of these contribute to an organization's productivity and
overall business performance.
Retention of productive employees is a major concern of HR professionals and
business executives. It is more efficient to retain a quality employee than to
recruit, train and orient a replacement employee of the same quality.
Eight employee retention strategies that organization can implement
1) Ensure the right people are hired:
It is said that supervisors spend a whole day in a week in managing poor-
performing employees, and 11% of financial supervisors suggested that
if they hire the wrong employees, they lose out on productivity.
Every organization would want to hire the right people to make sure it
does not take a toll on the finances of the company. Many companies have
aptitude tests or pre-placement tests to understand the caliber of to-be-
hired employees. Some organizations also conduct personality tests to
make sure no stone is left unturned in evaluating candidates.
2) Allot responsibilities as per employee’s interests and specializations:
An employee looks forward to attending a day’s work when the assigned
duties match their interest. Designing milestones by incorporating
employee interests and likings will go a long way, as it will be a
motivational factor for employees to come to work. They will appreciate
the efforts the organization is putting in to make sure the employees are
happy to be working with the company.
3) Avoid hierarchical structure and create an accessible work environment:
A lot of organizations assume that high-pressure can get the best out of
the employees but sadly, that isn’t the truth. Around 80% of doctor visits
happen due to stress and 80% of accidents at work also happen at high-
pressure jobs.
In case there’s a hierarchical structure, most employees feel that they can
easily trust their peers but not their bosses. An “open-door” policy
company, where employees feel free to talk to the highest authority
without any hesitation is where these losses are minimized and the

40. output delivered is maximum. Companies, where the managers don’t put
blame on the team members for things that go wrong have a positive
culture which leads to some path-breaking work.
4) Appreciate good work to encourage them to stay for longer:
It is noted in the recent times that 69% of employees say that they would
work harder if their work were appreciated.
Employees come every day and contribute towards business and that is
the reason why they need to be constantly motivated and appreciated.
Managers who value their team members have much better performance
results than those who do not.
A “thank you” for a simple task finished brilliantly can boost the morale
of the employees. Offering fair incentives, appraisals according to the
caliber of the employee makes it clear to them that they are valued. This
reflects in their performance and in turn, improves the performance of
the company.
5) Performance appraisals and other perks are key to happy employees:
The employees are always eager to know whether they are delivering
according to their manager’s expectations. For them to be assured of their
work, the managers need to have regular performance review meetings,
constant coaching and feedback sessions.
Create realistic goals for the employee during appraisal and strengthen
the bond shared with the employees so that they work harder to achieve
their goals. Having an appraisal once a year is not enough to keep the
employees motivated, keep all factors in mind and try to conduct
appraisals more than once a year.
6) Ease employees’ work-life balance:
Due to the constant challenges that employees face day in and day out, it
seems impossible for them to not think about work after leaving office.
Most overworked and exhausted employees talk about work-life balance.
Employers are not responsible for the employee’s work-life balance. But,
they can mend their policies to make sure they support it. Offering
employees flexible working hours, some paid time off (PTO) apart from
the usual leaves can be exactly what the employees need.

41. 7) Come up with appropriate training programs for employee growth:
Hiring the right candidates is just work half done, it is what comes after
hiring that matters. Training the employees constantly according to the
new developments in the company is what will keep them from leaving.
This is one of the most challenging employee retention strategies that
would require continuous effort from employers for arranging training
at regular intervals.
If the right candidates feel they are not in a workplace that is exploring
their true potential, they will quit and leave you in a position where you
would have to look for a replacement. By having training modules in
place, one can encourage new employees to work better and deliver
better.
8) Cultivate Team Spirit:
Introduce the employees to a culture where they can share their thoughts
about topics under discussion without hesitation. This will bring out
different work cultures to the table and encourage them to be true to
their work styles. Create transparency about team goals, roles, and
responsibilities and promote the employees to share their thoughts in
every small and big decision. Keep these pointers under check every year
so that you do not overlook parameters like salary, appraisals and other
benefits.
 Investment in Job Secure Workforce
For businesses facing tough economic times, layoffs might seem like the only
answer to monetary challenges. However, layoffs can thin the number of
workers on the payrolls in unexpected and undesired ways. The more people
that were laid off, the more people quit, researchers said.
Of the employees who stay, many report less productivity and more stress on
the job. They say customer service has declined, they see more errors, and they
think their organizations’ prospects have worsened.

42. Companies can avoid layoffs and reduce payroll by investing in some innovative
methods.
1) Put Promotions and Raises on Hold:
Unless critical to your business, halt all promotions. If they are necessary
from an operational continuity perspective, communicate to the
promoted employee that they will experience a change of title and
responsibilities, but they will not receive a salary increase until financial
conditions improve.
2) Reduce Employee Hours:
During economic instability, many employees need flexibility.
Organizations can give employees the option to reduce their working
hours to four days a week or go part-time for the duration of the crisis,
and adjust their pay accordingly or the recent trend during COVID19
Pandemic giving an option to work from home. This way, a company can
save on its payroll spend while still keeping workers employed.
3) Furlough Employees/Send on temporary leave:
The theory behind unpaid leaves, or furloughs, is that by sharing the pain
of the downturn more broadly among the workforce, organizations will
keep talented employees, win additional loyalty and position themselves
better for recovery. By furloughing employees or taking salary cuts, you
buy yourself more time to make smart decisions.
4) Pay Cuts:
Pay cuts are an alternative way for companies to avoid layoffs while
reducing their labor costs, thereby preserving jobs. The danger with pay
cuts is that they can create deep emotional scars and damage morale. Low
morale can lead to lower productivity, with the net effect that labor costs
rise. But the ultimate aim of avoiding lay-offs can be achieved.
5) Transfer Idle Employees:
If certain employees are being paid to work in areas of the business with
little activity, employers should consider transferring or redeploying

43. them to perform another function that will provide the company with
more equitable returns.
 INVESTMENT IN NON-TRADITIONAL INVESTMENT APPROACHES
 Investment in Disabled Employees
Investment in non-traditional area of human resource investment
involves providing support for programs that return disabled employees
back to the workforce. Such approaches include raising the height of
desks to provide wheelchair access, providing appropriate handrails,
lowering elevator controls, and removing structural barriers such as
revolving doors.
This HR investment involves providing support programs that help
disabled employees work smoothly in an organization.
 Investment in Disabled Employees
Improving employee's health is a type of non-traditional investment.
Such investments can increase the productivity of employees. The
different methods in which companies invest in employee health are as
follows:
1) Increasing the quality of nutrition and providing basic medical care.
2) Providing meals and high quality food service to the employee
3) Awareness programs relating to the ill effects of smoking and introducing
policies that prohibit smoking in the office premises.
4) Investing in fitness centers and other physical conditioning programs.
5) Programs that reduce incidence of employee burn-out.
6) Support and close monitoring of the self-esteem of employees working in
jobs having high potential for burnout.
7) Establishing on-site health clinic.
All of the above programs have resulted in better mental health, stress
resistance, increased commitment, increased productivity, lower
absenteeism, and lower turnover.

44.  Investment in Countercyclical Hiring
In addition to not laying off as many employees as technical production
requirements might suggest, companies may pursue countercyclical
hiring strategies of hiring a limited number of managers and
professionals during economic downturns. In essence, companies would
be stockpiling a limited number of high-quality key personnel for future
use in pursuing strategies requiring certain personnel capabilities. As
opposed to economic upturns when competitors are also attempting to
obtain the same personnel, bargains in quality can be obtained during
downturns.

45. UNIT - 3
MANAGING
STRATEGIC
ORGANIZATION
PROF. SYED BILAL IRFAN

46. INTRODUCTION
Change is the law of nature. It is a necessary way of life in most organizations
for their survival and growth. Though there may be some discontentment,
during the early days of the change, persons learn to meet the change and adopt
themselves to the changing situation; hence, resistance to change would be a
short-term phenomenon.
Man has to mould himself continuously to meet new demands and face new
situations. Despite the fact that change is a persistent phenomenon, it is a
common experience that people resist change, whether in the context of their
pattern of life or in the context of their work situation in an organization.
ORGANIZATIONAL CHANGE
Organizational Change can be defined as "A concerted, planned effort to
increase organizational effectiveness and health through changes in the
organization's dynamics using behavioral science knowledge".
The term Organizational Change' implies to the creation of imbalances in the
existent pattern or situation. Adjustment among people, technology and
structural set up is established when an organization operates for a long time.
People adjust with their jobs, working conditions, colleagues, superiors etc.
Similarly, an organization establishes relationship in the external environment.
Change requires individuals and organizations to make new adjustments.
Complexity and fear of adjustment give rise to resistance and problem of
change. Human resource is an important factor in the adjustments among
individuals as well as between the organization and environment, as an
organization is mostly composed of people. Individual members can resist
either individually or in-group.

47. TYPES OF CHANGES
1) Strategic Change
This is a change in the very mission of the organization. A single mission
may have to be changed to multiple missions.
For example, when British Airways acquired a major part of U.S. Air, the
culture of the entire organization had to be modified to accommodate
various aspects of American organizational culture into the British
organizational culture.
2) Structural Change
Decentralized operations and participative management style have seen
more recent trends in the organizational structure. Since these structural
changes shift the authority and responsibility to generally lower level
management, it has a major impact on an organization's social climate
and members have to be prepared to develop a team spirit as well as
acquire skills to make on-the spot decisions at points of operations.
3) Technological Change
The technology of an organization is the conversion process an
organization uses to transfer inputs into outputs. Due to the rapid rate of
technological innovation in the industrial world, technological change is
becoming increasingly important to many organizations. The five major
areas where technological change is likely to be experienced is –
 Equipment
 Work process
 Work sequence
 Information processing system
 Automation
4) People - Oriented Change
People-oriented changes might be conceived with changing employee
performance, skills, attitudes, perceptions, behaviours or expec-tations.
Such changes are considered part of organizational development. Here, it
suffices to focus on efforts to upgrade employee skills and performance.

48. Major areas where People-oriented change is likely to be experienced is–
 Replacement
 Selection
 Training & Development
5) Incremental Change
A gradual change, those who are affected do not experience it initially.
Computerisation in offices has been introduced as an incremental change
in most of the organizations.
6) Exceptional Change
A particular change is accepted as an exception; there is no change in
ongoing aspects. The existing beliefs are not changed but specific change
is introduced separately, as an exception. In the R&D division of a large
organization flexi-time was introduced as an exception all other divisions
were continuing the ongoing system.
RESISTANCE TO CHANGE
What is Resistance to Change?
 Resistance to change is the unwillingness to adapt to altered
circumstances.
 Employees may realize they do not like or want a change and resist
publicly, and that can be very disruptive.
 Employees can also feel uncomfortable with the changes introduced and
resist, sometimes unknowingly, through their actions, their language, and
in the stories and conversations, they share in the workplace.
But we have studied earlier that change is important in every organization even
if there is resistance i.e. employees are uncomfortable with changes in the
organization.
Let us understand resistance with an example.
A company wanted to install a new software program in cash counter computer
terminals to facilitate the fast movement. But some employees may not respond
favorably and display their refusal to cooperate by increasing absenteeism,

49. sub-standard work, joining of unions, increased labor turnover etc. Resistance
to change can also be a source of functional conflict.
This is the time where the manager should take necessary steps to convince the
employees to adapt to the change.
How to Overcoming Resistance?
While change will usually face resistance, it is certainly possible to overcome it.
Managers must strive to help their employees adjust to changes and facilitate
new variations in functioning.
Firstly, managers must be able to convince workers that the changes they are
proposing are necessary. They should show how the workers and the
organization itself would benefit from these changes.
Secondly, the management can keep the following considerations in mind to
implement changes smoothly:
 Changes should not happen suddenly because it is easier to implement
them in stages.
 Changes should never cause security problems for the workers.
 Managers must consider the opinions of all employees on whom the
proposed change will have an effect.
 If managers portray leadership by first adapting to the changes
themselves, employees are less likely to resist.
 Sufficient prior training of employees can help them accept changes with
confidence.

50. APPROACHES TO ORGANIZATIONAL CHANGE
Management is said to be an agent of change. It means that management has to
introduce change successfully in its organization. It has to overcome the
resistance and make it a successful venture.
The management must realize that resistance to change is basically a human
problem, though on surface, it may appear to be related to the technical aspect
of change. So, it must be tackled in a human and social manner. Management
has to take the following steps to implement the change successfully:
1) Participation of employees:
Before introducing any change, the employees should be fully consulted and
they must be made a party to any such decision. The meaning and purpose of
the change must be fully communicated to those who will be affected by it.
Enough time should be allowed for discussion and pros cons of the change
should be explained, in detail, to employees
2) Planning for change:
Before implementing any change, the management should plan for it.
Employees should get an opportunity to participate both in planning the
change and installing it. This will help the group of the affected employees to
recognize the need for change and thus prepare them for receiving it without
any fear.
3) Protecting employees interests:
Management should ensure that employees are protected from economic
loss, loss in status or personal dignity. If those things are protected, the
degree of resistance to change will be at the lowest.
4) Group dynamics:
Group dynamics refers to the ever changing interactions and adjustments in
the mutual perceptions and relationships among members of the groups.
Such group interactions are the most powerful instruments which facilitate
or inhibit adaptation to change. Adaptation is a team activity which requires
conformity to the new group norms, mover traditions and work patterns. If

51. these could be positivity articulated by management the results are likely to
be more successful and durable.
5) Cautions and slow introduction:
The management should not introduce any change suddenly and abruptly. It
must be an objective for the management to build in the organization an
awareness of change and an ability to forecast it and also to construct an
attitude of welcoming change. Change must be introduced in sequential
parts, if possible. the results must be reviewed and required adjustments
must be made in it.
6) Positive motion:
The management should use the policy of positive motivation to counteract
negative resistance. It should be the attempt of the management to make the
job easier and less exerting The management should impart proper training
to its employees in new techniques and work knowledge, etc. The leadership
styles should also be supportive and human oriented. This policy will also
bring down the resistance to change.
7) Sharing the benefits of change:
Any change whether technical, social or economic will be least resisted by the
employees if the management permits the employees to share benefits which
arise out of the change. So, the management must see that employees are not
only assured of it, they are given due advantage of it as well.
8) Training and development:
Management should plan for change. Based on the change plan, the job
should be redesigned. Management should train the employee's before-hand
and prepare the employees to invite change. Normally trained and developed
employees will not resist change as they cannot keep quiet with enriched skill
and knowledge.
9) Career planning and development:
Organization on the basis of change plans and redesigned jobs should plan
for careers of employees, possibilities to move the employees to the higher

52. levels and develop them. The developed employees for future careers
demand the management to implement change.
10) Organization development:
Organization development aims at moulding and development of employees
in the psychological and behavioural areas with a view to achieve
organizational intervenes. Employees with enriched behaviors welcome the
change.
ORGANIZATIONAL DEVELOPMENT
Organizational development is an educational strategy which focuses on the
whole culture of the organization in order to bring about planned change.
It seeks to change beliefs, attitudes, values and structures, in fact, the entire
culture of the organization so that the organization may better adapt to
technology and live with the pace of change.
Thus, organizational development may be defined as a technique for bringing
change in the entire aspects of the organization so that change is easily
absorbed.
What is organizational development in HR?
Organizational development in HR involves changes and improvement of the
processes and structures that are part of HR’s responsibility. These include
processes and systems related to performance management, talent
management, diversity, employee wellness, and so on.
Organization development (OD) is a deliberately planned effort to increase an
organization's relevance and viability.
Organizational development is the framework for change, and often times a
manager helps to lead this change.
Objectives of Organizational Development
 To increase the level of inter-personal trust among employees.
 To increase employee's level of satisfaction and commitment.
 To confront problems instead of neglecting them.
 To effectively manage conflict.

53.  To increase cooperation among the employees.
 To increase the organization problem solving.
 To put in place process that will help improve the ongoing operation of
the organization on a continuous basis.
Organization Development Values
Organization development constitutes various people, professionals,
technocrats, researchers, managers and a host of other employees working in
the organization contributing to the accomplishment of organizational
objectives. They behave differently. Authority and power, conflicts, control
takes backseat during OD process.
The following are the values in OD efforts:
1) Respect People:
People are the raison d’etre of organization and they are responsible for
creating opportunities for growth. They must, therefore, be treated with
respect and dignified manners.
2) Confidence and Support:
Organizations are made up of people and they are to be believed and supported
in order to have effective organization. The healthy environment prevails when
people are trusted and taken into confidence and a necessary support is
extended to them as and when needed.
3) Confrontation:
Any conflict on any issue should not be suppressed. It should be dealt with
openness. Suppression leads to dampening of morale. Identifying the problem
and its causes, discussing it openly and finding out feasible solution leads to
boosting up morale of the employees and creating good environment.
4) Employee Participation:
The participation of employees who will be affected by the OD should be sought
in decision-making.

54. 5) Expression:
Human beings differ in experience, maturity, ideas, opinions, and outlook. The
organization is at the receiving end. It gains from the differences in quality,
ideas, opinions and experiences of its people. Human beings are social animals;
they have feelings, emotions, anger and sentiments etc. They should be allowed
to express their feelings and sentiments. This will result in building up high
morale and the people will be motivated towards hard work ultimately
resulting in increased efficiency.
6) Seeking Cooperation:
Managers should learn to seek cooperation from each of the employees
working under him in his department. This will develop in creating the
atmosphere of cooperation leading to organizational effectiveness and
willingness to accept change in the event of organization development process.
Organizational Development Techniques
1) Survey feedback
The survey technique involves data be collected via a questionnaire. The
collected information is meant to help managers make decisions. The
answers to the survey feedback will range from quality of work, working
condition, working hours, salaries, and employees’ attitude in relation to
all of the above.
The team of managers proceeds to analyze and interpret the gathered
data. They pinpoint problems, assess the results and start drafting plans
for solutions. All the members of the organization are expected to submit
this data. Manager meetings are meant to bring subordinates and
superiors together in order to discuss the information and interpret it. All
levels of management play an active role in this technique whose end
result is implementing necessary changes.
2) Team Building
Team Building is another method of organization development. This
method is specifically designed to make improvement in the ability of
employees and motivating them to work together. It is the organization

55. development technique which emphasizes on team building or forming
work groups in order to improve organizational effectiveness.
These teams consist of employees of the same rank and a supervisor. This
technique is an application of sensitivity training to the teams of different
departments. The teams or work groups are pretty small consisting of 10
to 15 persons. They undergo group discussion under the supervision of
an expert trainer usually a supervisor. The trainer only guides but does
not participate in the group discussion.
3) Sensitivity Training
It is quite popular OD intervention. It is also known as laboratory
training. Under this unique the employees in groups are asked to interact.
The aim of sensitivity training is to help people understand each other,
gain insight so that they feel free, and become fearless.
"Under this technique the different groups of employees are allowed to
mix up with each other and communicate freely and build up
interpersonal relationship. They learn the reflection of their behaviour
and try to improve it.
In the words of Chris Argyris, "Sensitivity training is a group experience
designed to provide maximum possible opportunity for the individuals to
expose their behaviour, give and receive feedback, experiment with new
behaviour and develop awareness of self and of others."
4) Management By Objectives (MBO)
Management by Objectives (MBO) is a strategic approach to enhance the
performance of an organization. It is a process where the goals of the
organization are defined and conveyed by the management to the
members of the organization with the intention to achieve each objective.
In simple words, MBO is a method where objectives of the organization
are fixed and responsibility to achieve them lie on the managers and
results are expected from them.
Benefits of Management by Objectives
a) Management by objectives helps employees appreciate their on-
the-job roles and responsibilities.

56. b) The Key Result Areas (KRAs) planned are specific to each
employee, depending on their interest, educational qualification,
and specialization.
c) The MBO approach usually results in better teamwork and
communication.
d) It provides the employees with a clear understanding of what is
expected of them. The supervisors set goals for every member of
the team, and every employee is provided with a list of unique
tasks.
e) Every employee is assigned unique goals. Hence, each employee
feels indispensable to the organization and eventually develops a
sense of loyalty to the organization.
f) Managers help ensure that subordinates’ goals are related to the
objectives of the organization.
MBO Process
MBO process involves four major steps:
a) Goal Setting by Top Management:
For effective planning the organizational goals are set by the top
management. These goals provide an outline or base for different
departments to set their goals after making certain modifications etc. if
at all necessary,
b) Individual Goals:
Organizational goals cannot be fulfilled by a single individual but all the
members cooperative and active participation is necessary, It is therefore
pertinent to assign a target to every individual and he must attain it,
c) Freedom for Selection of Means:
A considerable amount of freedom or autonomy is given for the
accomplishment of goals to the managers and subordinates
d) Making Appraisal:

57. The performance is to be reviewed and appraised in relation to the goals.
This will help the subordinates and employees to make the corrections if
any and make further improvements.
5) Brain Storming
This Organizational Development technique involves six to eight
managers coming together and pitching ideas for solving a problem.
Brain Storming aims to promote creative thinking, whilst bringing team
leaders together and helping them engage in a lucrative discussion of
fixing a common issue. The participants are required to critically assess
the matter that is put forward. They are then asked to contribute new
ideas or new angles on tackling the conflict. The principle behind brain
storming is that managers come together and build a plan based on all of
their suggestions.
No expert conducts the discussions, which encourages all leaders to
speak freely and make suggestions. The brain storming technique is
meant to get participants to debate potential solutions and choose the
best ones. All of this is done in a safe environment where members can
express themselves freely.
6) Quality circles
This technique requires up to a dozen team members to come together
on their own accord in order to discuss important work related issues
and come up with efficient solutions that can be implemented by the
management team. The method that has its roots in the 60s is meant to
be carried out once a week during working hours. Any team member who
feels they can bring their contribution is free to join the discussion.
Quality circles have been shown to heighten moral, reduce costs and
boost quality in the working environment. All the success of the
technique is owed to the effort of the participants who are willing to
devote their time in order to pitch solutions and join forces to fix
problems.
7) Process consultation
An expert or an Organizational Development consultant gives feedback
to the trainee and offers insight into solving problems. Process

58. consultation can help team members experience a change of perspective
and experiment with various problem fixing suggestions. The clear
insight provided by the expert or consultant is extremely valuable since
it offers both team members and top managers guidelines on how to
approach, handle and tackle a wide array of work-related problems.
PROCESS OF ORGANIZATIONAL DEVELOPMENT
1) Initial Diagnosis:
The initial diagnosis refers to finding the inadequacies within the
organization that can be corrected by organizational development
activities then it is necessary to find out the professionally competent
persons within organization to plan and execute organizational
development activities. The outside consultants can be also employed to
help in diagnosing the problems and diagnosing organizational
development activities. The consultants adopt various methods and that
primarily includes interviews, questionnaires, direct observation,
analysis of documents and reports for diagnosing the problem.
2) Data Collection:
The survey method is employed to collect the data for determining
organizational climate. It also helps in identifying the behavioral
problems that are rising in the organization.
3) Data Feedback:
The collected data are analyzed and reviewed by various work groups
that are formed for this purpose. It is done in order to intervene in the
areas of disagreement or confrontation of ideas or opinions.
4) Selection of Interventions:
The interventions can be described as the planned activities that are
introduced into the system to achieve desired changes and
improvements. The suitable interventions are to be selected and
designed at this stage.
5) Implementation of Interventions:

59. The selected intervention should be implemented progressively as the
process is not a one shot, quick cure for organizational problems.
Consequently, it achieves real and lasting change in the attitudes and
behaviour of employees.
6) Action Planning and Problem Solving:
To solve the specific and identified problems by using the collected data,
groups prepare recommendations and specific action planning.
7) Team Building:
The consultants explain the advantages of the teams in organizational
development process and encourage the employees throughout the
process to form into groups and teams.
8) Inter-group Development:
After the formation of groups/teams, the consultants encourage the
inter-group meetings, interaction etc.
9) Evaluation and follow up:
The organization should evaluate the organizational development
programmes and should find out their utility, and develop the
programmes further for correcting the deviations. The consultants make
great significance to the organization in this respect. The entire steps in
the organizational development processes should be followed by the
organization in order to derive full range of organizational development
benefits.

60. INSTITUTING TOTAL QUALITY MANAGEMENT
TQM is the philosophy that involves everyone in an organization in a continual
effort to improve quality and achieve customer satisfaction.
Below are the important factors that are to be considered to institute TQM in
an organisation.
1) Customer-focused:
The customer ultimately determines the level of quality. No matter what
an organization does to foster quality improvement training employees,
integrating quality into the design process for process gains a= upgrading
computer or software or buying new measuring tools the customer
determines whether the efforts were worthwhile.
2) Total employee involvement:
All employees participate in working toward common goals. Total
employee commitment can only be obtained after fear has been driven
from the workplace, when empowerment has occurred and management
has provided the proper environment. High-performance work systems
integrate continuous improvement efforts with normal business
operations. Self-managed work teams are one form of empowerment.
3) Process-centered:
A fundamental part of TQM is a focus on process thinking. A process is a
series of steps that take inputs from suppliers (internal or external) and
transforms them into outputs that are delivered to customers (again,
either internal or external). The steps required to carry out the process
are defined and performance measures are continuously monitored in
order to detect unexpected variation.
4) Integrated system:
Although an organization may consist of many different functional
specialties often organized into vertically structured departments(from
top level to lower level management), it is the horizontal processes(lower
level to top level management) interconnecting these functions that are
the focus of TQM.

61. CREATING TEAM BASED ORGANISATIONS
Team based organizations are non-traditional organizations that rely on teams
to achieve its objectives. Team-based organizations require that all employees
participate in the decision-making process.
A team organizational structure is meant to disrupt the traditional hierarchy,
focusing more on problem solving, cooperation, and giving employees more
control.
Advantages of team-based organizations:
1) Increases productivity, performance, and transparency by breaking
down traditional hierarchical organisations.
2) Promotes a growth mindset.
3) Changes the traditional career models by getting people to move
laterally.
4) Values experience rather than seniority.
5) Requires minimal management.
6) It requires all employees participate in the decision-making process.
7) It runs more efficiently and effectively.
8) It creates competitive edge.
Disadvantages of team-based organizations:
1) Lack of focus on the individual.
2) Motivating individuals in a team-based organization can be more
challenging.
3) It is decentralized.
4) It leads to coordination problems for management.
5) It leads to control problems for management.

62. HUMAN RESOURCE & BUSINESS PROCESS
RE-ENGINEERING
Business Process Re-Engineering is a management approach aiming at
improvements by means of elevating efficiency and effectiveness of the process
that exist within and across organizations.
Re-Engineering is the fundamental rethinking and radical redesign of business
processes to achieve dramatic improvements in critical, contemporary
measures of performance, such as cost, quality, service and speed.
Differences between HR and BPR
Human Resource Business Process
Re-engineering
1. It is the set of individuals who make
up the workforce of an organization,
business sector, or economy.
1. It is the practice of rethinking and
redesigning the way work is done to
better support an organization's
mission and reduce costs.
2. It deals with human resource
management practices.
2. It deals with underlying processes
to improve the efficiency.
3. It oversees an organization's human
resources.
3. It aimed to help organizations
fundamentally rethink.
4. Assets to the enterprise. 4. It creates value to business.
5. Value is enhanced by further learning
and development.
5. Value is enhanced by further
investigation.
6. Designed to maximize employee
performance.
6. Designed to enhance process
performance.
7. Focus towards HR policies and
system.
7. Focus towards redesigning the
process and system.
The Relation between HR and BPR can be understood as follows:
1) Reengineering involves looking at the whole of a process which includes
customers, competitors, environments, as well as human resources.
2) Reengineering means radical and often painful change. This is where the
role of an HR becomes important as the job of managing change is
handled by the human resources of the company.

63. 3) Reengineering must come from the top. The leaders must inspire a
commitment to change throughout the organization. This requires
communication of the right information from the top management to the
lower level employees and vice - versa. Human resources play an
important role in improving communication within the organization.
4) Business process reengineering brings about huge amounts of change in
the organization. New methods, equipments, softwares etc. are
introduced in the management which requires large amounts of training
provided to the employees by the HR
5) Reengineering requires serious introspection about what the company is
trying to achieve and what job and role responsibilities will help realize
the goals. This is taken up by the HR.
6) HR plays an important role in BPR by implementing the following:
 Managing resistance to change.
 Building a flat organization structure.
 Downsizing or redeploying people.
 Restructuring and reorganizing
 Structuring pay scales and rewards to create the desired results.
 Molding the new corporate culture.

64. FLEXIBLE WORK ARRANGEMENT
Flexible work arrangement is defined as any one of a spectrum of work
structures that alters the time and/or place that work is done on a regular basis.
It includes:
1) Flexibility in the hours worked.
2) Flexibility in the amount of hours worked.
3) Flexibility in the place of work.
Flexible working is a way of working that suits an employee's needs, eg having
flexible start and finish times, or working from home.
The main advantages of flexible work arrangement are as follows:
Employees enjoy the following advantages:
(a) Flexibility to meet family needs, personal obligations, and life
responsibilities conveniently.
(b) Employee saves on the time to commute as well as the money to commute
to office on a regular basis.
(c) It helps in avoiding traffic and stress related to the same.
Employers enjoy the following advantages:
(a) It leads to increased employee morale, engagement and commitment
towards the organization.
(b) It leads to a decrease in absenteeism.
(c) It allows people to work when they accomplish most, feel freshest, and enjoy
working.
(d) It helps in reducing employee turnover.
(e) It helps in developing an image as an employer of choice with family friendly
flexible work schedules.

65. UNIT - 4
ESTABLISHING
STRATEGIC PLANS
PROF. SYED BILAL IRFAN

66. STRATEGIC PAY PLANS
Strategic pay plans refer to the policies and decisions on how organizations give
compensation to its employees that may satisfy employee as well as achieve
organizational goals and objectives.
In simple terms, a strategic pay plan is a plan for employee compensation that
determines how much you want to pay employees and what type of employees
you want to attract.
Strategic pay is payment being made to employees, focusing more on the
strategic perspective as to how & when the pay should be disbursed to ensure
that the employee is performing to the fullest. Pay in the literal meaning refers
to the compensation or remuneration a person expects after doing his/her job.
It could also refer to as the benefits that the person gets which he can redeem.
ESTABLISHING STRATEGIC PAY PLANS
Establishing pay rates involves five steps which are as follows:
1) Evaluating Jobs:
Job evaluation is aimed at determining the relative worth of jobs within a firm,
it compares jobs to one another based on their content, which is usually defined
in terms of compensable factors like skill, effort, responsibility, and working
conditions.
Various methods of job evaluation include the following:
1) Ranking and Grading Method: Ranking method consists of three stages, viz.
 Analysing the job or job analysis.
 On the basis of job analysis, writing a job description.
 Ranking each job by arranging them in an ascending order, starting
with a job which involves minimum requirements.
For ranking the job, some factors related to the jobs must be kept in view. These
factors are:
 Difficulty of work.
 Monotony of work.
 Responsibility involved.
 Supervision required.

67.  Working conditions.
 Knowledge and experience required.
 Volume of work.
2) Factor Comparison Method: This method consists of evaluating each job on
the basis of the following factors:
 Mental requirements
 Skill requirements.
 Physical requirements.
 Responsibility
 Working conditions.
By considering each of the above factors, the jobs are ranked. One factor is
taken at a time for consideration and each job is compared with the other with
respect to its worth on this factor alone. The weighing of the relative value of
this factor in each job is done by applying money values to the ranking. After all
the jobs have been rated on each factor, the total of the welghtings is arrived at
and on the basis of this total weightage, a wage rate for job determines the wage
scale.
3) Point Method: This method is the most widely used type of job evaluation
plan. It requires identifying a number of compensable factors (1.e. various
characteristics of jobs) and then determining degree to which each of these
factors is present in the job. A different number of points is usually assigned
for each degree of each factor. Once the degree to each factor is determined,
the corresponding number of points of each factor are added and an overall
point value is obtained. The sum of these points gives us an index of the
relative significance of the jobs that are rated.
2) Developing Pay Grades:
Most managers group similar jobs Into wage or pay grades for pay purposes.
These comprise jobs of approximately equal value or importance as
determined by job evaluation.

68. 3) Conducting a Salary Survey:
Salary surveys collect data from other employers in the marketplace who are
competing for employees in similar kinds of positions.
A good salary survey provides specific wage rates for specific jobs. Sources for
salary survey Include the following:
 Consulting firms
 Government agencies
 Professional associations
4) Using Wage Curves:
The wage curve (or line) shows the average target wage for each pay grade (or
job). It illustrates what the average wage for each grade should be, and whether
any present wages or salaries are out of line
5) Fine - Tuning Pay Rates:
Five basic elements of compensation for managers: The five basic elements are
as follows:
 Salary
 Benefits
 Allowances
 Short-term Incentives & Long-term incentives
 Perquisites
ESTABLISHING PERIODS
Period is the amount of time taken to meet and communicate among the
organization's leaders and personnel to develop a common understanding and
give the response regarding the competitive environment.
The establishing periods includes:
 Goal/Objective setting period
 Goal/Objective implementation period
 Outcome Assessment period

69. COMPENSATION TRENDS
Compensation is the sum total of all forms of payments and rewards provided
to employees for performing tasks to achieve organizational objectives.
Compensation and rewards management is a complex process that includes
decisions regarding benefits and variable pay and is one of the most significant
and dynamic of HR practices.
The various compensation trends are as follows:
 Payment of a one-time, lump sum payment for a result or outcome that
deserves recognition.
 Providing employees with laptops and mobiles etc.
 Compensating employees in the form of recreation, ATM and concierge
facilities.
 Payment of smaller rewards with "thank you" notes for above the call of
duty contributions which may or may not be tied to an achieved result.
 Increased emphasis on additional benefits such as pre-paid legal
assistance, educational assistance, and vision insurance.
 Increased opportunity for flexible work arrangements and job
 An organizational emphasis on the training and development of sharing
employees.
 Clear career paths so employees see opportunities within the
organization
 Provision of a corporate credit card.
 Providing regular medical and health check - ups.
COMPENSATION OF EXECUTIVES & MANAGERS
Compensation for top executives has increased to unbelievable levels in the
past few years. The compensation of chief executive officers (CEO) in India has
touched global levels. There has also been a big shift in the way senior
executives and CEOs are paid. There has been much innovation in structuring
CEO compensation. It is also being benchmarked against other firms in the
industry.

70. Components of Executive Compensation
Executive salaries tend to vary by region, industry, size of the organization, type
of job, etc.
1) Short-term incentives:
These are designed to motivate the short-term performance of managers
and are tied to company profitability. The annual bonus is a short-term
incentive. The bonus component of the compensation is tied to some
performance measure. In a sales-driven firm, the bonus of the sales manager
or business unit manager may be tied to the increase in sales territory, sales
volume, or market share. Bonus payments may be as high as 35% of the
manager's salary.
2) Long-term incentives:
These are designed to motivate executives to stay with the organization for
a longer period. These allow executives to accumulate capital that can be
encashed only after a few years, thus resulting in retention.
3) Benefits:
These may include health insurance, vacations, etc. However, executive
benefits are often packaged differently from other employees'.
For example, executive health plans may allow the executive to charge all
medical bills (with no limit specified) to the company. The organization may
also allow complete freedom to the executive in the choice of hospital or
physician.
4) Perquisites:
Some special benefits for executives come in the form of non-cash
perquisites. They serve to retain the executive by enhancing his/ her status
by means of visible symbols.

71. INTERNATIONAL COMPENSATION
International compensation is defined as the provision of monetary and non-
monetary rewards, including base salary, benefits and perquisites, long and
short-term incentives, valued by employees in accordance with their relative
contributions to MNC performance.
Objectives of International Compensation
Most expatriate compensation plans are designed to achieve the following
objectives:
1) Attract and retain employees who are qualified and interested in
international assignments.
2) Facilitate the movement of expatriates from one subsidiary to another, from
home to subsidiaries, and from subsidiaries back home.
3) Provide a consistent and reasonable relationship between the pay levels of
employees at headquarters, domestic affiliates, and foreign subsidiaries
4) Align compensation administration with the strategy of the firm.
5) Increase and maintain employee motivation Compensation must motivate
employees to join the firm, be productive while members of the firm and
stay with the firm.
6) Must be perceived as fair by the employees. Fairness of equity are powerfull
motivator of human behaviour and it may be the most important objective
of an international compensation policy.
7) Secure consistency between pay and performance & equity among
employees of different nationalities and categories
8) Assist the employee and family adapt to the host country culture
9) Reduce employee grievances and simplify collective bargaining procedures.
10) To ensure that the package is both competitive and comparable. It must
always better the package available comparable.

72. International Compensation Approaches
1) Balance sheet approach
The balance sheet approach involves ensuring that the expatriate does not lose
money by taking the foreign assignment. The basic objective is to maintain the
home country living standard, plus offer some financial Inducement. The salary
package is divided into four parts which are as follows:
a) Goods and Services that include food, personal care, clothing, household
furnishing, recreation etc.
b) Housing which involves the major costs associated with housing in the host
country.
c) Income taxes which includes parent - country and host –country Income
taxes.
d) Reserves that include contributions to savings, payments for benefits,
pension contributions, investments, education expenses etc.
When costs associated with the host country assignment exceed equivalent
costs In the parent country, the firm and expatriates, together meet these costs
to ensure that parent country equivalent purchasing power Is achieved.
The main advantages of the balance sheet approach are as follows:
a) Expatriate is guaranteed his home country spending power.
b) Easy to understand and communicate to employees
The main disadvantages of the balance sheet approach are as follows:
a) Recalculating the salary from gross to net and vice versa.
b) Can result in disparities between expatriates of different countries

73. 2) Going rate approach
In this approach, expatriates are paid according to the host country salary
structures.
The main advantages of this approach are as follows:
a) Equality with local nationals.
b) Simplicity
c) Identification with host country.
d) Equity among different nationalities.
The main disadvantages of this approach are as follows:
a) Variation between assignments for same employees.
b) Variation between expats of same nationality in different locations.
DOUBLE TAXATION
Double taxation occurs when an Individual is required to pay two or more taxes
for the same income, asset, or financial transaction in different countries.
Double taxation occurs mainly due to overlapping tax laws and regulations of
the countries where an individual operates his business.
International Double Taxation mainly concerns multinational entities that
operate in jurisdictions other than their home country, but it can also affect
foreign income earned by individuals in foreign countries. There are instances
where foreign income is taxed in the country where the income is derived, as
well as the country where an investor resides.
Hence, double taxation induces a hardship on taxpayers through an increased
tax burden on the investor and can result in the increase of the price of goods
and services, discourages cross border investment through curtailing capital
movement, and violates the tax fairness principle.
Issues related to double taxation are as follows:
 The problem of double taxation arises because the existence of
international trade and investment creates the situation whereby a tax -

74. paying entity may be subject to the tax jurisdiction of more than one
country.
 As the volume of international trade and Investment increases, the
frequency of double taxation would also increase unless it is avoided
through agreements between the countries.

75. UNIT - 5
GLOBAL HRM
PROF. SYED BILAL IRFAN

76. MANAGING GLOBAL HUMAN RESOURCE
The process of procuring, allocating, and effectively utilizing human resources
in a multinational corporation is called Global Human Resources.
The process by which businesses or other organizations develop international
influence or start operating world-wide is known as Globalization.
The MNCs can recruit three types of employees:
1) Parent Country Nationals
The employee's nationality is same as that of the organization.
Example: Indian Citizen working in an Indian Company
Advantages:
 Organizational control and coordination is easy.
 It helps in ensuring that the subsidiary will comply with the objectives
and policies of the company.
Disadvantages:
 There are problems of Compensational differences.
 Promotional opportunities for HCNS are limited.
 It may result in longer period to adapt to the host country.
2) Host Country Nationals
The employee's nationality is same as location of a subsidiary.
Example: Indian citizen working for US Company in India.
Advantages:
 Easily adaptable.
 Language barriers are eliminated.
 Hiring costs are low as no work permit is required.
 There is continuity as the HCNS stay longer in positions.
 Favourable Government support.
 Enhances the goodwill and Image of the company as it increases domestic
employment in the host country.
 The morale of the HCNS is high due career advancement opportunities.

77. Disadvantages:
 Control and coordination between headquarters and subsidiaries
becomes difficult.
 It limits the PCNS to gain foreign exposure.
3) Third Country Nationals
The employee's nationality is neither that of organization nor that of the
subsidiary where he/she is employed.
Example: Indian citizen working for a U.S country in Japan.
Advantages:
 Cost may be reduced as salary may be lower
 The TCNs may be better informed than the PCNs about the host country
environment.
Disadvantages:
 Host country Government may not like hiring TCNs and may develop
laws against it.
 TCNS may not want to return to their own countries after the completion
of the assignment.
INTERNATIONALIZATION OF BUSINESS
Internationalization is the process by which a firm gradually changes in
response to international competition, domestic market saturation, and the
desire for expansion, new markets, and diversification.
Stages of Internationalization of Business
 Stage 1 – Domestic Companies
Domestic companies limits its operations, missions and visions to the
national political boundaries. Their entire focus is on domestic market
opportunities, domestic suppliers/ customers and domestic financial
companies.

78. They study the national environment and formulate the plans, strategies to
exploit the opportunities offered by such national environment. They are so
rigid in their operation that their unconscious motto is "if it is not happening
in the home country, it is not happening".
 Stage 2 - International Companies
The operations of such companies lie in one single home country as the base
center. These companies’ only export or import products from the home
country. The offices, hence, only exist in the home country and there is no
foreign direct investment in other countries.
The functioning and strategies are derived mostly from the primary market,
which is the domestic home country market. They have to continuously
adjust to trading norms of the home country.
Spencers is an example in the Indian context.
 Stage 3 - Multinational Corporations
As the name suggests, these companies have direct operations in more than
a single country, however, it is usually not a very large number.
However, MNC’s have a centralized structure, with the head office in the
home country calling all the shots.
In this case, products are decided and developed by the head office and
subsidiary offices do have options to adapt to local markets if needed.
Adidas is an amazing example to explain multinational companies.
 Stage 4 – Global Companies
These companies work to have a foothold in a large number of countries,
usually larger than a Multinational Corporation.
They, however, do not follow the system of having an official head office.
Various subsidiaries are set but standard products are sold, without any
flexibility in terms of adapting to local consumers.
There is no change in branding or information about a global company, even
if the country of operations changes.
McDonald’s – a fast-food chain, is an exemplary example of this kind of
companies.

79.  Stage 5 - Transnational Companies
These companies are operating in multiple countries, having foreign direct
investment in all of them. Such companies follow a flexible approach,
understanding and adapting to the local culture and demand of each
country.
Hence, offices in each country work in a decentralized manner with
decision-making powers. In fact, subsidiary offices can launch and make
products which might not be manufactured in the original home country, if
there is a chance of demand.
Nokia is one of the examples in the Indian context.
INTERNATIONAL ASSIGNMENTS THROUGH SELECTION
Expatriates are the employee who are sent to work abroad on a long-term
job assignment such as employees who need populate a new office or senior
managers who need to manage or set up a new branch.
Expatriate employees generally receive additional benefits, such as cost of
living and hardship allowances as well as housing or education and
sometimes even paid education for their children.
Expatriate selection is the process by which the need for an expatriate
assignment is determined and the candidates are identified, selected and
trained. It also involves pre assignment training, departure, post arrival
orientation, failure management, repatriation and international adjustment.
The following is the selection process:
1) Receiving and Scrutinizing of Applications:
Not all the candidates who have applied for the job may have the required
qualification and experience. On receiving the application, an organisation
has to select those applications who have the required experience and
qualification and call them for preliminary Interview.
2) Preliminary Interview:
Preliminary interview is conducted to find whether the information given
by the candidate is true or not. This is done to find out whether he is

80. physically and mentally fit for the job. Here Information regarding
qualification, experience, age etc, are enquired.
3) Selection Test:
Selection tests will be conducted for those candidates who have passed the
preliminary interview under selection tests, tests such as proficiency test,
aptitude tests etc., are conducted.
4) Checking of reference:
Checking of references refers to the names of the persons holding
respectable position in the society of whom the candidate would have
mentioned in the application. Checking of these references would help the
Interviewer In knowing the correctness of information that has been
furnished by the candidate.
5) Employment Interviews:
Interview is a face-to-face round conducted to know the fitness of the
candidate for the job, Interview helps the interviewer in finding out the level
of intelligence, capacity, smartness and a candidate's overall attitude.
Interview can be different types such as direct interview, indirect interview,
patterned interview, group Interview etc.
6) Medical examination:
This examination is conducted to find out a candidates physical fitness for
the job. The person who has passed the Interview will be asked for a fitness
certificate from a recognised practitioner.
7) Placement:
If a candidate is found medically fit, then he is placed.
8) Orientation:
Here the selected candidate shall be explained about the nature of his job,
his duties, and responsibilities, his authority, whom should he report to, who
are his subordinates etc.

81. Global Selection Approaches
1) Ethnocentric Approach :
The Ethnocentric Approach is one of the methods of international
recruitment wherein, the HR recruits the right person for the right job for
the international businesses, on the basis of the skills required and the
willingness of the candidate to mix with the organization’s culture.
 In Ethnocentric Approach, the key positions in the organization are
filled with the employees of the parent country.
 All the managerial decisions viz. Mission, vision, objectives are
formulated by the MNC’s at their headquarters, and the same is to be
followed by the host company.
 It is based on the rationale that, the staff of the parent country is best
over the others, and also, they can better represent the interest of the
headquarters.
2) Polycentric Approach:
The Polycentric Approach is the international recruitment method
wherein the HR recruits the personnel for the international businesses.
 In Polycentric Approach, the nationals of the host country are
recruited for the managerial positions to carry out the operations of
the subsidiary company.
 The rationale behind this approach is that the locals of the host
country know their culture better and can run the business more
efficiently as compared to their foreign counterparts.
3) Geocentric Approach:
The Geocentric Approach is a method of international recruitment where
the MNC’s hire the most suitable person for the job irrespective of their
Nationality.
 The rationale behind the Geocentric Approach is that the world is a
pool of talented staff and the most eligible candidate, who is efficient
in his field, should be appointed for the job irrespective of his
nationality.
 This approach is followed by the firms that are truly global because
they follow the integrated global business strategy.

82. 4) Regiocentric Approach:
The Regiocentric Approach is an international recruitment method
wherein the managers are selected from different countries lying within
the geographic region of business.
In other words, the managers are selected from within the region of the
world that closely resembles the host country.
INTERNATIONAL ASSIGNMENTS THROUGH TRAINING
A Pre-departure Training for International Assignments for foreign posting
means much more than moving luggage and changing time zones; it means
starting a whole new life-new home, new school, new friends, new
neighborhood, and new culture and traditions. There is no culture uniform
to the world.
After selecting the most suitable and willing manager for an international
assignment, organizations must necessarily provide training to the selected
candidates.
The training should focus on global skills that are important for success
abroad, such as appreciation of cultural differences, understanding of the
socio-political atmosphere of the country of posting, etc.
Expatriate training and development programmes incorporate three
elements:
1) Language Training
2) Cultural Training
3) Training for Managing Personal and Family Life
1) Language training
This involves learning the language of the foreign country. For instance,
Café Coffee Day provides cross-cultural counselling and language
assistance to its employees. Tata Consultancy Services also imparts
language skills to its managers being posted abroad. Mahindra &
Mahindra provided their executives with Chinese language training
courses and sessions in Chinese culture and customs when the firm set
up a joint venture in China. Similarly, Chinese employees too were given
English language training.

83. However, learning the language is only one aspect of language training.
Managers on international assignments should also understand how the
usage of the same word differs across countries.
In India, saying that the consignment will be dispatched in one month
really means 'We will try to dispatch in one month'. Hence, a delay of
about a week is expected and not taken very seriously. However, in the
West, not meeting the committed deadline is not taken kindly, and results
in penalty or even cancelled orders. A commitment to a deadline is valued
very highly by Western managers. Managers should also learn the
meaning of certain gestures and non-verbal communication. Certain
gestures that are acceptable in one culture may be offensive in another.
The notions of acceptable physical distance in business interactions, eye
contact, punctuality, and time orientation are interpreted differently in
different cultures.
For example, in India, a senior manager is not expected to be punctual.
Coming late for a meeting communicates the status and importance of the
person. But in Western cultures, severe penalties are there for not
meeting deadlines. In Arab countries, it is considered rude to set
deadlines.
2) Cultural Training
Managerial attitudes and behaviour are culturally conditioned and are
different in different cultures.It is important for a manager to understand
how things are normally done in a particular culture. Training on cultural
differences helps managers understand work attitudes and motivation in
other cultures.
For Example, At 24/7 Customer, a BPO firm, the process of culture
sensitization' of the employees takes place in two phases. In the first
phase, the inductees are introduced to the linguistic, economic, and social
conditions of the country of posting. In the second phase, in depth
knowledge about values, appropriate gestures, habits consumer
behaviour are imparted.

84. 3) Training for Managing Personal and Family Life
Training also seeks to minimize the risk of culture shock. One of the
reasons for failure in foreign postings is personal and family stress. This
stress may be caused due to several day to-day issues;
For example, inability to read road signs, ignorance about where to shop
for groceries, currency conversion, etc.
Stress may also be because the spouse of the candidate may be working
(employed) and unable to move with the employee to another country.
Some firms are attempting to assist dual career couples in finding
suitable employ ment in the same location. At Café Coffee Day, relocation
of employees is a regular feature. In the case of married employees, Café
Coffee Day provides spouse job search assistance if the employee
requests it.
MULTINATIONAL, INTERNATIONAL & TRANSNATIONAL
STRATEGIES OF GLOBALISATION
1) Multinational Strategy:
Under this, a firm’s subsidiaries in the foreign countries enjoy strong local
autonomy of business decision-making.
2) Global Strategy:
Under this, the business is centrally governed in a strong manner so as to reap
economies of scale through global manufacturing, standardised procedure and
so on.
3) International Strategy:
The parent company deploys innovations and allocation of resources rapidly
through foreign direct investment in different nations. The firm can maintain a
differentiation strategy under this.
4) Transnational Strategy:
Under this multinational, global and international strategies are rationally
combined. It enables the firm to simultaneously achieve local flexibility while
rapidly absorbing and differing parent company’s innovations. Transnational

85. strategy implies seeking global integration, operational efficiency and
excellency of performance on a continuous basis.
STRATEGIC ALLIANCE
A strategic alliance is a formal relationship between two or more parties to
pursue a set of agreed upon goals or to meet a critical business need while
remaining independent organizations. Partners may provide the strategic
alliance with resources such as products distribution channels, manufacturing
capability, project funding capital equipment.
The various advantages of strategic alliances are as follows:
 Strategic alliances may facilitate entry into a foreign market.
 Many companies have entered into strategic alliances in order to share
the fixed costs (and associated risks) that arise from the development of
new products or processes.
 Alliances may be a way of bringing together complementary skills and
assets that neither company could easily develop on its own.
 Alliances may be useful if they help a company set technological
standards for its industry and if those standards benefit the company.
 The best alliances are highly selective, focusing on particular value chain
activities and on obtaining a particular competitive benefit.
 It improves efficiency, productivity, and financial stability.
 It increases market share and reduces competition