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UNIT-4 HR in knowledge era: HR in knowledge industry, HR in virtual organizations, HR in mergers and acquisitions, outplacement, outsourcing HR functions: Employee leasing, HR audit International HRM.


HR in Virtual Organizations
A virtual organization is a network of corporations made possible by ICT,which is flexible and comes to meet the dynamics of the market. In this way virtual organization gains benefit with regard to the traditional hierarchical systems. This new form of organization emerged in 1990,known as modular organization, network organization or digital organization. A virtual organization is a social network in which all the horizontal and vertical boundaries are removed. It consists of individual working out of physically dispersed workspaces, or even individuals working from mobile devices and not tied to any particular workplace.


HR in Virtual Organizations
IT plays a very important role.ICT-information n communication technology coordinates the activities, combines the workers skills and resources in order to achieve a common goal. Managers spend time coordinating and controlling external relations with the help of computer links. Example-Nike,Dell,Puma


Characteristics of Virtual Organization

flexibility  Informal Communication  Flat organization,multi disciplinary teams  Goal orientation  Dynamics  Home work  Customer Orientation  Organizational boundaries are vague  Sharing of information  Communication through electronic communication systems-WAN, videoconferencing and email


Characteristics of Virtual Organization

 Collaboration and

virtual teamwork.

3 primary factors that differentiate virtual organizations from face to face teams are: 1.Absence of Para verbal and non verbal cues 2. Limited social context 3.Ability to overcome time and space constraints. The advantages provided by such teams are as follows: 1.It saves time, travel expenses and eliminates lack of access to experts. 2.Teams can be organized whether or not members are in reasonable proximity to each other.


Characteristics of Virtual Organization

3.Firms can use consultants from outside without incurring expense for travel, lodging and downtime. 4.Employees can accommodate both personal and professional lives. 5.Dynamic team membership allows people to move from one project to another. 6.Employees can be assigned to multiple ,concurrent teams 7.Team communications and work reports are available online to facilitate swift responses to the demands of a global market.


Features of Virtual organization

Technology: has transformed the traditional way of working. Worlds of Computing and telephony .Computer Telephony Integration(CTI) Email Integration: Email and SMS Office Systems integration: SMS Technology Voice mail Alert: SMS with Voice mail system Mobile Data: one can retrieve information through mobile phone notebook. Mobile data communication revolutionize where and how work is done. Link mobile phone to laptop.


Types of Virtual Organizations

Telecommuters Employees

Least Virtual
Core Corp. with Virtual outsourcing Combination of employees Virtual Employees, outsourcing,(Virtual office, Virtual production)

Most Virtual
Completely Virtual Virtual Employees and or Participants in a completely virtual organization

With Virtual Office


Emerging HR issues in Virtual Org.

 Virtual Organizations is

a loose web of individuals,

capital and technology.  Project focus collaborative networks uninhibited by time and space. No defined structure.  There is loose connections of highly proficient ppl who are left to do their own thing in order to produce innovative products.  The positive side is that there is greater job autonomy and more financial stability ,coz of reduced commuting, lunches and clothing cost.  Less work stress, increase in performance(with more working hours)


Emerging HR issues in Virtual Org.

 Negative aspects-longer hrs,increase in

perceived work demands, poorer physical working conditions, less social support from work, poorer social position and few career opportunities.


Career Dynamics
In a virtual organization, the following HR issues are a matter of concern:  Recruitment is conducted under time pressure and requires high performance expectations.  Human Capital (knowing ones job)and Social capital (knowing each other)become extricable linked. Reputation is a key asset.  The formation of some stability in social relationship is not very much required.  Work pace is variable. The need for a state of readiness to be mobilized at any moment is high.


Career Dynamics
 Value of

idleness is shown in terms of learning by watching what others do. Master apprentice relationship and craft-based techniques become important.  Job status and project feedback is very short. Therefore it can be seen that virtual org. require a heavy investment to create systems and staffing structures.


Performance management
Define Performance: clear idea of what he is supposed to do??challenging goals to be set. Appraisal system to be objective rather than subjective. Measurement of work is important as theses are distantly located. Facilitate Performance: eliminate obstacles-inability to access centrally maintained files and databases from remote locations. Provide tools and resources. Here employee has to be self managed, more autonomous, risk taking in a virtual set up. Motivate the performance. Encourage Performance:


Emerging HR issues in Virtual Org.

Information Selection Process: Certain requirements for working in a virtual organizations are:  Familiarity and comfort ability with the jobs.  Self Motivation, Non requirement of high structure and detailed instructions in order to work effectively  An effective communication, both orally and in writing  Adaptability  Knowledge about organizational procedures  Technical self sufficiency  Result oriented


HR in Mergers and Acquisitions

 Today Organizations: Development

oriented,agile,fast,consistent in growth,adaptable,flexible,profitably proactive.  Firms need Merger and Acquisition  Example:Daimler-Chrysler,Chas-J.P.Morgan,Mc Kinsey-Envision,Nations Bank-Bank of America,GEHoneywell,  India-chemical,finance,communication,IT sector,BPO


Mergers and Acquisitions

 Mergers: Two

Companies come together and create a

new entity  Acquisition: One co. buys the other company and manages it by implementing terms and conditions consistent with the acquire's needs.  Size of investment,control,integration reqd,people mgmt issues


Why do Mergers and Acquisitions fail??

 Attention paid

on Strategic and Financial aspect, Human aspect is neglected.  Key aspects-Retention of good talent, integration of cultures and communication Schuler & Jackson gave typical reasons for failure: 1. Expectations are unrealistic 2. Hastily constructed Strategy, poor planning, unskilled execution. 3. Failure/inability to unify behind a single macro message. 4. Talent is lost and mismanaged 5. Power and politics are the driving force.


Why do Mergers and Acquisitions fail??

6.Requires an impossible degree of synergy. 7. Culture clashes between 2 entities goes unchecked 8.Trasition Mgmt fails 9.The underestimation of transition cost. 10.Financial drain 11.Defensive Motivation 12.Focus on executives is distracted from the core business. 13.Cultural differences 14.Ill conceived human resource integration strategy.


Why do Mergers and Acquisitions fail??

 Culture-internalisation of

set of values,feelings,attitudes,expectations and mindsets of people with in an organization.  2 companies have different cultures-anxiety,anger,low employee morale, communication issues.  Top Management ignores soft issues-culture clash  They rather than We feeling.  Example-P&G and Godrej


Why do Mergers and Acquisitions fail??

Steps in the post acquisition phase to manage the apprehensions of employees:  Clear communication by the new mgmt to employees about strategy and performance  Mgmt commitment not to retrench the people of the acquired company & reach an agreement of redeployment.


Stages of Merger and Acquisition

The role/importance of HR in the 3 stages are as follows: 1.Pre Union: Prior to M& A, understand the org. and ppl process. a. Identify the reason for M&A b.Assign a team dedicated on due diligence of all areas of M&A. c.Pay attention to Human capital issues-diffrences in HR functions. d. Identify key risks and differences, then estimate the difficulty and expenses of rationalizing and aligning these practices.


Stages of Merger and Acquisition

e.Transition team should study options for combining the two companies. Do culture assessments,HR issues of the company-Recruitment,manpower planning,selsction,labour relations,govt compliance,compensation and benefit programmes,HRIS,traing and development, safety and environment issues. 2.In-Process Union: Under this stage, one should have a smooth integration managing all transaction to address all the apprehensions of people at work. Select integration mgr who will lead the process of integration.-project mgr,communicator,advisor,advocate,relationship


Stages of Merger and Acquisition

 builder,facilitator,teamwork,negotiator.  Do

talent assessment-restructuring process to be faster to manage the transition psychology of people.  Place structure, manage change process, retain and motivate employees, communication.  Prepare organizational chart-vacant positions will be there-as few ppl did not accept the job or lack of qualified ppl internally.  Prepare severance plan & retention bonus programme.  Outplacement strategy to be prepared to know the type of employees being affected and how long will they take for adjustment.


Stages of Merger and Acquisition

 Finally communicate by

assimilating employees in the org.Individual and group meetings. Educational seminars. 3.Post Union: the structure and staffing patterns need to be tested in action in terms of value creation in the org.  Culture that emerged in the org due to two organizations need to be monitored in line with the objective set in for the organization.-senior mgmt.  HR should see the new teams formed, interpersonal conflicts, undefined roles and responsibilities.  HR should develop transparent communication channel to disseminate info to stake holders to satisfy them for


Stages of Merger and Acquisition

Co. performance  HR policies should be reviewed, created ,implemented and communicated. Compensation and Benefit pakages,staffing n manpower planning, training n development,  HR dept should identify core competencies of individuals for development and growth.


Key Communication Principles & tactics for smooth integration

 Maximize face

to face presentations  Remember nature abhors a vacuum  Realize that ppl assume the worst  Push information out  Use multiple forms of communication  Watch the informal channel  Believe that repetition counts  Communicate timeliness in general terms  Communicate logic and empathy


Key to success of M & A


thought out goals and objectives  Due diligence on hard and soft issues  Well managed m & A team  Effective leadership  Taking lessons from previous experience  Friendly climate  High commitment to deadlines  Key trained retained  Trust building across all levels of employees  Proper allocation of resources and responsibilities.  Accept the unwilling people and plan for their change.


Skills and Competencies for HR Prof.

 Planning for

in process union and post union steps completed early  Extensive and timely communications to all stake holders. Skills & competencies for HR professionals:  Good strategic knowledge to develop and implement the strategic plan for M & A.  Effective Communication skills  Motivating skills to motivate self and others  Analytical ability to understand and access people dynamics


Skills and Competencies for HR Prof.

 Thorough knowledge of

assessing work culture and

bring about changes  Planning, monitoring and bringing change effectively.  Good mediator having sound negotiation skills.  Effective in selection and retaining people.  Effective trainer and facilitator.  Visionary,dreamer,and good leader who identifies and embraces new roles.


International HRM
 Liberalization  Mergers and

acquisitions  IHRM:is an interplay between three important dimensions of HRM Types of employees Country of operations HR activities Morgan (1986) highlighted 3 broad functions of IHRM in a model that consists of 3 dimensions: 1.3 broad HR activities- procurement, allocation and utilization.


International HRM
2. 3 major country categories involved in international HRM activities: host country where a subsidiary may be located, home country where the firm is headquartered and the other countries(source of labour and finance) 3. 3 types of employees of an international firmHNC(host country nationals,PCN(parent country nationals and TCN(third country nationals.


Domestic v/s International HRM

More HR activities


International taxation, international relocation, orientation, administrative services for expatriates, host govt. relations.immigration,traveling details,

Broader perspective. More involvement in employees personal lives

Single govt. scenario HR is just related with employee insurance programmes,transfer,assistance in relocating employee. Remains same Less risk as compared to

Expatriates benefits and cross cultural work dynamics Selection,training,placementPCN and TCN.make expatriates understand housing, health care,culture,compenation, Changes over a period of time Chances of failure-

Emphasis change Risk exposure


Domestic v/s International HRM

Industry within which the MNC is primarily involved.

Cultural environment

HRM functiondomestic as well as international

Complexity involved in operating in diff. countries and employing diff national categories of employees

Extent of reliance of MNC on its home country or domestic mrkt. Attitudes of Senior Management


Domestic v/s International HRM

environment: values,attitudes,behaviour.homesickness,counseling.  Industry within which MNC is involved:multidomestic and multinational  Extent of reliance of multinational on its home country market  Attitudes of the senior management: determine the role the HR has to play.


International HRM
Recruitment: the response of International firms to an International recruitment and selection depends on :  Its general staffing policy on key positions in HQs and subsidiaries  Its ability to attract the right candidate and  The constraints placed by the host govt. on hiring policies. Ethnocentric approach: Polycentric Approach: Geocentric approach: Regiocentric Approach:


International HRM
 Selection: of

people of the parent company nationals for their home country and selection of expatriates.  Expatriate selection:  expatriate failure-premature return of an expat from an international assignment-Direct cost and Indirect cost.


International HRM
US firms Japanese Firms Indian Firms

Inability of the spouse to adjust. Managers inability to adjust Other family reasons

Inability to cope with larger Home sickness, home intl responsibility. country hangover Difficulties with new environment Personal or emotional problems Lack of technical competence Inability of the spouse to adjust Adjustment problem in a new culture Difference in work habits, lifestyle and values Personal and emotional maturity Other family reasons

Managers personal and emotional maturity Inability to cope with larger intl responsibility


International HRM
Selection criterion for expatriates:Dowling,Welch &Schuler model Cross cultural
Technical ability suitability Family requirements

Selection Decision

Individual Situation
Country/cultur al requirement Language MNE requirements

Factors impacting probable success if intl. assignment


International Performance Management

International Performance Management:
Multinationals internationalization strategies and goals

Subsidiary Goals

Individual(PCH,HCN and TCN) Job analysis and description Job goals,standards, competencies Performance assessment


International Performance Management

MNC makes its strategic choices based on economic and political imperatives. Now to analyze the subsidiary performance against these expectations, its imp to recognize the constraints that affect the goal attainment:  Whole as against a part  Volatility of international environment  Variable levels of maturity


International Performance Management

Factors associated with individual perf .and appraisal in an intl context: To determine expat. performance, it is important to consider the impact of the following variables and their relationships. Compensation package: Task: Headquarters support: The environment in which performance occurs: Cultural adjustments


International Compensation Management

 Knowledge of

taxation, employment laws, foreign currency fluctuations,socio economic conditions. Broad Objectives:  Compensation package to be in line with structure,biz needs and strategy of the org.  Attract and retain the best talent  Enhance employee satisfaction  Convenient to administer  Proper package as per performance  Should give financial gain for employee and family comfort  Policy should be progressive in nature


International Compensation Management

Major aspects of an Intl Comp. Package:  Base salary:  Foreign service inducement premium:  Allowance: COLA-cost of living allowance  Benefits: Approaches to International Compensation:  Market Rate approach: base salary linked to the structure in the host country.Bechmark concept  Balance Sheet approach: compensate for the cost of intl assignment. No tangible loss.


HR audit
Human Resource audit is the systematic assessment of an organizations HR service excellence. A good HR audit helps org. to  Identify the HR programmes that are most important to achieving org goals.  How well HR deptt is delivering these programmes  Benchmark HR work to ensure continuous improvement.  Promote change and creativity  Direct the focus of HR staff to imp. Issues  Bring HR closer to the line functions of the org.


Human Resource Accounting


an information system that tells the mgmt what changes have been occurring in the HR deptt of the biz over a period of time.HRA also involves accounting for investment in ppl,their replacement costs, and the economic value of the people in an org. Issues:  Competencies  Commitment  Culture


HR Audit
current position of an org.  What can be done to improve HR function.  Its a review with the help of a checklist in order to ensure that the regulations and corporate policies are adhered to. HR Audit Process: Comprehensive process, firstly understand the future biz plans and corporate strategies of the org.Important questions: What is the five ten years plan of the org? What competencies are reqd for it? Does the org has learning culture
 Assess the


HR Audit
are the various HR systems and subsystems being geared up to meet these reqts.? HR systems and sub systems are examined in totality and in relation to the various linkages and relationships with other aspects such as quality improvement processes, strategic planning. Reasons for HRD audit:  Make the hr function more biz driven  Evaluate hr systems and processes  Improve productivity and efficiency level  Support growth and expansion plans  Prepare org for change in leaderships


HR Audit
Methodology of HRD Audit:  Individual interviews  Group interviews  Workshops  Questionnaires  Observations  Secondary analysis Few tips: Combination of all these Interview hierarchically-macro view Varios aspects look out-physical layout,workenvironment


HR Audit
Challenges in HRD Audit:org has to  Build and improve quality consciousness  Strive to recruit and retain competent ,creative employees  Align biz processes with technology infrastructure  Nurture creative and supportive work culture  Train and develop the ppl thru 360 degree feedbacks, appraisals.  Promote learning orientation-informal networks


HR Audit
The Audit Process has different phases:  Pre audit information  Pre audit self assessment  On site review  Record review  Audit report-Urgent and Important(UI),not urgent but important(NUI),not urgent and not important(NNI),important opportunities needs are sorted out(IO)


HR Audit
Using Audit Findings: Org have 3 options for dealing with HR audit  Use it as a blue print or action plan for addressing HR needs.  Address as many needs as possible using the organizations internal expertise and resources.  Contract out those need areas where internal expertise and resources are not available or do not fit in the core objectives of the organization.


HR Audit
Modules of HR audit:  Recruitment and selection assessment module  Performance management module  Compensation management module HR audit-Action Plan:  Define the role of HR function in the line org and biz plans.  Create a system for cost effective hiring.  Develop programmes for the orientation and training of the new employees.


HR Audit
 Prepare key

personnel policies and make it available to employees and also train the employees in policy adherence.  Implement and install the HR IS systems. Limitations of HRD Audit:  Top mgmt can influence HR audit.  Failure of implementation of corrective action based on the feedback.  Victimize the HR deptt and remove some HR staff, due to negative audit feedback.


Balance Scorecard
 Provides a

framework for organizations to mange the implementation of strategy in an org by linking the objectives, initiatives and corresponding measures for evaluating success in the org.  It is an overall view of the organizations performance by integrating financial measures along with the key performance indicators such as the perspective of customers, internal biz processes. STEPS for individual balance scorecard.  Defining objectives and levels at the corp level.  Linking corp. objectives to individual line of biz and measures


Balance Scorecard
 Linking line

of biz objectives ad measures to critical biz

processes. Building a Balanced Scorecard:  Building the biz case  Identifying strategies  Identifying tactical objectives  Identifying perf measurements  Identifying data sources for calculating the measurements  Creating a data warehouse to supply the data  Selecting IT to create data warehouse  Creating balance scorecard report


Balance Scorecard
 Managing the

strategy using balance scorecard  Refining the tactical objectives in support of the strategy

Balance Scorecard-Strategic Initiative  Strategy clarification  Communication of strategic objectives  Planning and aligning strategic initiatives  Learning from feedback


Knowledge Management
The advent of the networked org. means that organizations can no longer function in isolation within their economies and have to function on a global scale.Mgmts are finding it increasingly necessary to align their structures and culture to the requirements of knowledge mgmt. Globalization-Impact on HR: Globalization is defined as the process wherein the production and distribution of goods and services by organizations are not restricted within geographic boundaries.


Globalization-Impact on HR:
Human resource Development: is a process encompassing a gamut of activities in an organizationmanpower planning,recruitment,selection,training and development and providing for satisfactory exit of employees. Strategic activities linked with HR activities. HR processes have their origin in the strategic activities of an organization aimed at improving the bottom line while maintaining or improving the market place.


Global Marketplace
Increased salary structures and expectations/aspirations of the employees are forcing the HR functionaries of firms to adopt innovative HR systems, such as ESOPs, Performance Management systems and Flexible working Hours Orgs have to understand the 4 Ps- Product, price ,promotion, PEOPLE. ESOPs, Performance Management Systems,flexiwork hours


Technological Revolution
 Developing countries have bigger markets

and increasing purchasing power but scarce invest for resources and R n D.The thrust areas in HRD are education and training of employees to manage technology transfer.  Tech savvy manpower, train the trainers, training in network management, IT audit,biz process reengineering, MIS. Change in Employer-Employee relations Emergence of intellectual property rights and internet marketing has changed the scene of IR.-restructuring, performance linked promotions, contractual or task based employment


Knowledge Management
Hayek's insight was that an organization's perf. depends on the allocation of decision making authority with the knowledge important to these decisions. What is Knowledge?? Is the fact or condition of knowing something with familiarity gained through experience or association. Its a set of models that described various properties and behaviors within a domain or stored in org processes, products ,facilities, systems and documents. Knowledge Asset: as applied to biz firms means know regarding markets,products,technologies and the org that generates profits and value.


Knowledge Management
Sources of Knowledge: Formal: notes, manuals,reports,memos Informal:Experts,end users, multiple experts, literature. What is Knowledge management?? Its about connecting people to people and people to information to create competitive advantage. Systematic process of finding ,selecting,organizing,distilling and presenting information in a way that improves employees comprehension in specific area of interest.


Knowledge Management
 What are

the knowledge assets a co. possesses?  Where is the Knowledge asset?  What does it contain?  What is its use?  What form is it in?  How accessible it is?  How can the knowledge add value?  What are the opportunities for using knowledge assets?  What are the current obstacles in its use?  What would be the effect of its use?  What are the actions to use know asset planned???


Knowledge Management-Approaches
Approach Mechanistic It is with application of technology and resource to do better Accessibility to info is the Key.resuse f docs,intranet,netw rking tech,groupwares Unless experience is combined in this model, it yet becomes yet another paper model. Cultural/Behavio ural Focus on innovation and creativity rather than leveraging existing explicit resources Behaviour culture and environment needed to be changed and not just technology. Systematic This approach is rational coupled with new ways of thinking.


A systematic way of reviewing the processes, cultural pattern, and practices is needed


Interplay of It has shown culture and org sustained positive change may not be result measured, cumulative or replicable.


Process of Knowledge mgmt

Identification: Knowledge that exists in various formsfiles,computers,conversations is located. Elicitation: next is to retrieve the know that is identified. Appropriate systems used to retrieve the knowl.interviews,case study,protocols,observations, Classification: Next is to classify the retrieved information. make it accessible for those who need it. Storing: Store it in a way that it is readily and easily accessible. Building a robust infra will allow knowledge to be leveraged thru systems and tech platforms


Knowledge Work and Worker

 Knowledge workers basically use

their intellect to transform ideas,products,services and processes. Their main value to an org is their ability to gather and analyze info and make decisions to benefit the company.  They are essentially investors. The main discretionary choices as to how and when their energies and skills may be invested in their companies. The decision to invest or apply the skill may be contingent on their ability and motivation and opportunity available top them  Emphasis on relationships,collaborations,professionalism.


Performance Planning and Improvement

Perf planning-of the employees vis avis the goals and objectives of the org, thru continuous or gradual improvement can be termed as performance planning. Objective is to improve the performance. Organizational Strategy and Performance Researchers in the field of organizational change have emphasized the need for change from the perspectives of survival requirements and perf improvement. Change and Learning: The concept of learning organization and organizational learning have made it imperative for org to understand the correlation between learning environment and employee performance


Knowledge, learning and Performance

 The learning concept has

made it necessary for orgs to understand knowledge, capture it, facilitate its dissemination to achieve the objectives of organizational learning. Key concepts:  Organizational knowledge  Knowledge management


Knowledge management and HR

The impact of knowledge management on HR can be seen in the following lines:  Organizational culture and performance  HR strategy and performance Planning  Organizational learning and Performance Feedback  Technology based learning and Performance


Technology and Innovation mgmt

 The modern

organization relies upon talent and knowledge mgmt and effectiveness of the org is measured more in terms of RoT-return of talent rather than return of investment.  Organizational innovation is a new idea that leads to a tangible product, process or procedure with the organization and should be able to benefit a part of or the entire organization.