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Emerging Issues in HRM

MBA- IV Sem
UNIT - II

1 Compiled By S.Suresh Kumar,Asst.Prof.FMS,SSTC


Virtual Organization
Introduction
1. Traditional organizations integrated work vertically; that is,they
delegated authority in a pyramidal, hierarchical structure. As the
pyramid shape suggests, power was concentrated primarily among
the handful of individuals at the top.
2. Since the 1980s, many organizations have flattened their
structures by shifting authority downward, giving employees increased
autonomy and decision-making power.
3. Advantages of flatter organization forms include a decreased need for
supervisors and middle management, faster decision making, and the
ability to process information faster because of the reduced number of
layers in the organization.

2 Compiled By S.Suresh Kumar,Asst.Prof.FMS,SSTC


INTRODUCTION cont….
4. A consequence of flatter organizations, though, is that employees
tend to be more dispersed both geographically and organizationally.
5. Responding to this problem of dispersion, many organizations have
eliminated superfluous processes and begun focusing on their core, value-
added business.
6. Flat organizations using joint ventures and strategic alliances are providing
increased flexibility and innovation, and are replacing many traditional
hierarchies.
7. A flexible network of independent entities linked by information
technology to share skills, knowledge and access to others' expertise
in non traditional ways.
8. A form of cooperation involving companies, institutions
and/or individuals delivering a product or service on the basis of a
common business understanding. The units participate in the
collaboration and present themselves as a unified organization.
9. Virtual organizations do not need to have all of the people, or
sometimes any of the people, in one place to deliver their service. The
organization exists but you cannot see it. It is a network, not an office.
3 Compiled By S.Suresh Kumar,Asst.Prof.FMS,SSTC
What Is a Virtual Organization?

 A virtual organization is a “business without walls”.


 A temporary network of independent companies, suppliers,
customers, even rivals — linked by information technology to
share skills, cost, and access to one another’s markets.
 Its goal is to deliver highest quality product at the lowest possible cost
in a timely manner.
 The term virtual organization is used to describe a network of
independent firms that join together, often temporarily, to produce a
service or product.
 Virtual organization is often associated with such terms as virtual
office, virtual teams, and virtual leadership. The ultimate goal of
the virtual organization is to provide innovative, high-quality
products or services instantaneously in response to customer
demands.

4 Compiled By S.Suresh Kumar,Asst.Prof.FMS,SSTC


 Why own when you can rent? That’s the essence of the virtual
organization— a small, core organization that outsources major
business functions. In structural terms the virtual organization is
highly centralized, with little or no departmentalization.
 The core of the organization is a small group of executives,
overseeing in- house activities and coordinating relationships
with the other external organizations.
 The major advantage to the virtual organization is its flexibility.
 The primary drawback to this structure is that it reduces
management’s control over key parts of its business.
 The virtual organization:
I. Outsources in a virtual world
II. Forms a network of strategic alliances
III. Keeps virtual employees and strategic partners linked

5 Compiled By S.Suresh Kumar,Asst.Prof.FMS,SSTC


Features of Virtual Organization

1. A dispersed network of skills and capabilities--The structure of a VO


is distributed among multiple locations resulting in the capacity
of bringing in a wider pool of skills and capabilities.
2. The use of telecommunications and computing technologies—
Barriers of distance and time have been overcome by technology.
3. Integration--This implies greater levels of collaboration,
cooperation and trust. Integration leverages the synergy of
individuals.
4. Flexible & dynamic-- VO support dynamic changes to the
organization including employee work environments and processing
structures. This has the potential of leading toward higher levels
of innovation and creativity.

6 Compiled By S.Suresh Kumar,Asst.Prof.FMS,SSTC


Need of Virtual Organization
 A need for process innovation--This is often motivated by
competitive pressures, stakeholder demands and other factors to
achieve increased productivity and quality. There is typically a 30 to
50 percent increase in productivity as result of implementing VOs.
 Sharing of core competencies--VOs help address the voids in an
organization resulting from starting up, turnover and retirements.
 Globalization--Many organizations are finally realizing there is a vast
pool of untapped skills, knowledge and abilities throughout the world.
 Mobile workers--VO concepts can help the numerous companies
employing mobile workers such as auditors, consultants,
salespersons and service technicians.

7 Compiled By S.Suresh Kumar,Asst.Prof.FMS,SSTC


Need of Virtual Organization cont..
 Cost reduction--Improving efficiency often means reducing overhead,
such as physical assets used to support traditional work
environments or redistributing costs over several physical locations.

 Changes in employee values and attitudes toward work--Quality of life is


a major factor particularly in attracting and retaining quality
employees. Employers have realized that a balance of work and
personal life, family requirements, personal fulfillment and flexibility
are important considerations among employees.

 Costs and problems of traveling--VOs address transportation issues, such


as unproductive commute time, traffic hassles, the cost of
fuel and environmental impact of commuting vehicles

8 Compiled By S.Suresh Kumar,Asst.Prof.FMS,SSTC


Examples of Virtual Organizations

9 Compiled By S.Suresh Kumar,Asst.Prof.FMS,SSTC


Examples of Virtual Organizations

 An industry that is known for its use of partners and alliances is the
entertainment industry, which has partnered with the computing,
communications, consumer electronics, and publishing industries to convert
movies, textbooks, and other software into digital formats.

 Corning, the glass and ceramics maker, is one such firm known for making
partnerships work to their advantage. Corning has partnered with firms like
Siemens, Germany's electronics conglomeration, and Vitro, Mexico's largest
glassmaker. Alliances are so important to Corning's business strategy that the
corporation has defined itself as a network of organizations.

 Computer organizations that have successfully implemented forms of this


new structure include Apple Computer. When Apple Computer linked its easy-
to-use software with Sony's manufacturing skills in miniaturization, Apple was
able to get its product to market quickly and gain a market share in the
notebook segment of the PC industry.

10 Compiled By S.Suresh Kumar,Asst.Prof.FMS,SSTC


Approaches in Vos
1. Telecommuting--Employees work at a location away from the usual
workplace ,but not necessarily at home. Computers and telecommunications
equipment are used to maintain contact between the telecommuterand the home
office.
2. Telecenters--These satellite offices typically are located in communities outside of
major cities and provide space and equipment for employees commonly not
available in the telecommuter's home.
3. Mobile working--This refers to the working environment of mobile workers who
require tools such as cell phones, e-mail wireless devices, pagers and laptops.
4. Hot desking--This arrangement is for offices in which staff members spend
a significant amount of time on customer premises. It involves the removal of
permanently assigned desks to all or some of the employees. When they arrive,
they are assigned a computer workstation where they can access their documents,
files, applicationsand e-mail.
5. Hoteling--This is when the client provides a hot desk for the VO's employees.
6. Virtual teams--Employees collaborate from remote locations using e-mail,
groupware, the Intranet and/or video conferencing

11 Compiled By S.Suresh Kumar,Asst.Prof.FMS,SSTC


Types of Virtual Organizations:
According to the degree of virtuality, there are three types of
virtual organizations:
1. Telecommuters. In telecommuting companies, employees work from their
homes. Dow chemicals, Xerox, Coherent Technologies Inc. are
some examples of companies using some form of telecommuting.
2. Outsourcing Employees. These organizations outsource most or all core
competencies like marketing and sales, human resources,
finance, information systems, etc. are the areas of outsourcing. Such a
virtual organization performs one or two areas of core competence with
excellence and other functions are outsourced. For instance, Nike does
product design and marketing very well and depends on outsources
for information technology as a means for maintaining inter-organizational
coordination.
3. Completely Virtual. This type of virtual organization is tightly linked to a
large network of suppliers, distributors, retailers and customers as well as to
strategic and joint venture partners. IBM’s development effort of the PC and
Atlanta Committee for the Olympic Games (ACOG) in 1996 are examples of
completely virtual organizations.

12 Compiled By S.Suresh Kumar,Asst.Prof.FMS,SSTC


Traditional vs Virtual Organization
Factors TraditionalOrganization VirtualOrganization
Thereiselectroniccommunication
AbsenceofParaverbal/ Thereisfacetoface
Systeminvirtualorg.sothereis
Non-verbalCues communicationintraditionalorg.
absenceofparaverbalcues
Communicationisdonethrough
Astraditionalorg.worksmanually,
LimitedSocialContacts internetsotherearelimitedsocial
EasyaccessibilityofSocialContacts
contacts

Abilitytoovercometime& Lackofproperutilizationof 23
Highlytechnologicalinnature
spaceconstraints technology

WorksManuallysoless Itworksthroughelectronicmediaso
Technology
technological itshighlytechnologicalinnature
Organizationsarehighly
Noscopefortechnically Intraditionalorg.skilled&unskilled
computerizedsoonlytechnically
unskilledworkers workersareaccomodated
skilledworkersarerequired.
Smallorganizationwithlimited
area,workmanually,workis
Effectiveforbigger Needhightechnology&higher
contentedwithwiththeavailable
organizations investment&skilledpersons.
manpower,noneedofhuge
technology&capital
13 Compiled By S.Suresh Kumar,Asst.Prof.FMS,SSTC
ADVANTAGES
 Saves time and travel expenses.
 Provides excess to outside experts, without down time and travel or logging
expenses.
 Ability to organize in teams even if members are not in reasonable proximity to
each other.
 Firms can expand their potential labour markets. They can hire and retain the
best people irrespective of their physical locations.
 Employees can accommodate both personal and professional lives.
 Employees can be assigned to multiple concurrent teams.
 Dynamic team membership allows people to move from one project to another.
 Team communication and work reports are available on-line to facilitate
swift responses to the demands of a global market.
 Virtual teams are able to work even when they are miles apart. People
who never get a chance to meet each other face-to-face can also work in virtual
teams.

14 Compiled By S.Suresh Kumar,Asst.Prof.FMS,SSTC


Disadvantages

1. Lack of physical interactions.


2. Lack of synergies arising from face-to-face interaction.
3. Non-availability of verbal and non-verbal cues such as
voice, eye movement, facial expression and body
language which make communication more effective.
4. Lack of control on outsourced process or system.

15 Compiled By S.Suresh Kumar,Asst.Prof.FMS,SSTC


Human Resource Issues In Virtual Organization
 Virtual organization has both positive and negative
implications for human resources.
Positive Implications Negative Implications
Greater job autonomy and Longer working hours
More financial stability due to Increased work demands
reduced Poor physical working conditions
commuting, lunches and clothing Less social support from work
costs. Poor social position skills are required
Increase in performance to
Reduced job stress share and assimilate information easily
Better social relationships owing to for quick decision-making.
Dissolution of barriers between the
home and work interface

16 Compiled By S.Suresh Kumar,Asst.Prof.FMS,SSTC


Human Resource Issues In Virtual Organisation

The main human resource issues in a virtual organisation are as follows:

1. Recruitment is conducted under time pressure and requires high


performance expectations.
2. Both human capital (knowing one’s job) and social capital (knowing each
other) become extricably linked.
3. Social relationships do not require much stability.
4. Workplace is variable because there is high need for readiness to be mobilized at
any moment.
5.Value of idleness is shown in terms of learning by watching what others do.
6. Master apprentice relationships and craft based learning become
significant.
7. Job status and project feedback is short-term. Therefore, virtual
organizations require a heavy investment to create systems and staffing
structure.

17 Compiled By S.Suresh Kumar,Asst.Prof.FMS,SSTC


Human Resource Issues In Virtual Organisation
1. Employee selection and performance management are the two critical
human resource problems in virtual organization. People who are to
work in a virtual organization require the following traits:
a) Self guided and self motivated.
b) Familiarity and comfort ability with the job.
c) Effective communication skills- both oral and written.
d) Adaptability.
e) Technical self sufficiency.
f) Result orientation
2. Performance management is the most difficult problem in virtual
organizations. It requires daily attention on three principles due to
physical separations of workers and managers:
a) Define performance goal of each member or team clearly.
b) Facilitate performance by eliminating all obstacles and providing
necessary
c) resources.
d) Encourage performance by providing rewards.
18 Compiled By S.Suresh Kumar,Asst.Prof.FMS,SSTC
Human Resource Audit
Introduction
1. To get the best out of HR function, there should be a good alignment of the
functions strategies, structure, systems & styles with business goals both
long & short.
2. Besides this alignment, the skills & styles of the HR staff, line managers & top
management should be in synergy with the HR goals & strategies.
3. HR Audit is an attempt to assess these alignments & ensure that they take place
4. HR Audit is a comprehensive evaluation of the current HR strategies,
structure, systems, styles & skills in the context of the short & long term
business plans of a company.
5. It attempts to find future needs of the company after assessing the
current HR activities & inputs.
6. It is used widely to check the organizations performance in the management
of HR.
7. The primary objective is the critical review & evaluations of the manpower
management programme in the organization

19 Compiled By S.Suresh Kumar,Asst.Prof.FMS,SSTC


HR Audit: Concept

1. Review & verification of completed transactions.

2. Examination & evaluation of policies, procedures &


practices to determine the effectiveness & efficiency of HRM.

3. It involves a systematic review of all aspects of HR


function.

4. The aim is to learn in the process or discover, not test.

20 Compiled By S.Suresh Kumar,Asst.Prof.FMS,SSTC


HR Audit: Definition
1. “HR audit is a systematic survey & analysis of all operative
functions of personnel with a summarized statement of
findings & recommendations for correction of deficiencies.”
- Edwin B Flippo.
2. “HR Audit refers to an examination & evaluation of policies,
procedures & practices to determine the effectiveness of HR
management” - Dale Yoder

21 Compiled By S.Suresh Kumar,Asst.Prof.FMS,SSTC


HR Audit Objectives

 Measurement & evaluation of personnel programmes,


policies & practices
 Identification of gaps between objectives & results
 Determination of what should or should not be done in
future

22 Compiled By S.Suresh Kumar,Asst.Prof.FMS,SSTC


HR Audit: Benefits
1. Identify the HR programmes needed to achieve organizations
objective.
2. Find out how well the HR dept. is delivering these programmes.
3. Benchmark HR work to ensure continuous improvement.
4. Promote change & creativity.
5. Direct the focus of HR staff to important issues.
6. Bring HR closer to line function.
7. Identification of contributions of HR dept. to the organization
8. Improvement of professional image of the HR dept.
9. Encouragement of greater responsibility
10. Clarification of duties & responsibilities
11. Finding critical problems
12. Ensuring timely compliance with legal problems
13. Reduction of HR cost
14. Review of the dept. information system

23 Compiled By S.Suresh Kumar,Asst.Prof.FMS,SSTC


HR Audit: Scope

The HR Audit should cover the following aspects:


1. Mission statement relating to HRM
2. Objectives, goals & strategies of HRM
3. Accomplishments of HRM
4. Programme of HRM including practices & procedures
5. HRM policies, philosophy& values
6. Responses of employees, trade unions & government to the
HRM practices & achievements
7. Role of HR in TQM
8. Role of HRM in achieving organizations mission,
objectives, goals & strategies

24 Compiled By S.Suresh Kumar,Asst.Prof.FMS,SSTC


HR Audit: Scope
• HR Audit covers following areas:
1. Audit of HR function
1) Planning
2) Staffing & development
3) Organizing
4) Administration
5) Research & Innovation
2. Audit of managerial compliance
3. Audit of HR climate
1) Commitment
2) Motivation
4. Audit of corporate strategy

25 Compiled By S.Suresh Kumar,Asst.Prof.FMS,SSTC


HR Audit:Types
Internal Audit
External Audit
Regular Audit
Crisis Audit

26 Compiled By S.Suresh Kumar,Asst.Prof.FMS,SSTC


HR Audit: Approaches
Five Approaches for the purpose of evaluation

 Comparative Approach
 Outside Authority Approach
 Statistical Approach
 Compliance Approach
 MBO Approach

27 Compiled By S.Suresh Kumar,Asst.Prof.FMS,SSTC


HR Audit: Modules
 Recruitment & Selection Module
 Performance Management Module
 Compensation Module

28 Compiled By S.Suresh Kumar,Asst.Prof.FMS,SSTC


HR Audit: Process
 Hr Audit is conducted in 5 different phases:

Pre-audit Pre-audit
Information Self-assessment

On site
Review

Audit Report Records Review

29 Compiled By S.Suresh Kumar,Asst.Prof.FMS,SSTC


HR Audit: Methodology
Different methods to conduct an HR Audit are:
 Individual Interviews
 Group Interviews
 Workshops
 Questionnaires
 Observations
 Secondary Analysis

30 Compiled By S.Suresh Kumar,Asst.Prof.FMS,SSTC


HR Audit: Process

HR Comparison
Functions
Outside
Authority
Managerial HR Audit
Compliance Statistical Research Report
Employee Compliance
Satisfaction
MBO
Corporate
Strategy

Feedback

31 Compiled By S.Suresh Kumar,Asst.Prof.FMS,SSTC


HR Audit: Report
The following items are included in the HR Audit report:
 Highlight the content
 Objectives of audit
 Summary & Conclusions of audit report
 Department wise evaluations
 Summary
 Appendix

32 Compiled By S.Suresh Kumar,Asst.Prof.FMS,SSTC


HR Audit: Components
 An HR Audit consist of 2 main components:
1. A thorough compliance review and
2. A strategic assessment of HR practices

33 Compiled By S.Suresh Kumar,Asst.Prof.FMS,SSTC


HR Audit: Committee
1. While an audit can be conducted in-house, many companies
prefer to turn to outside consultants because they are
objective driven and can fully concentrate their efforts on this
project for the timeframe that is needed.

2. Also, many companies find that managers and employees are


more open and frank when speaking with someone outside an
organization.

3. The team that is responsible for the audit should represent a


cross-section of the organization’s staff including line staff,
middle and upper management, and those responsible for HR
functions.
34 Compiled By S.Suresh Kumar,Asst.Prof.FMS,SSTC

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