Description
HR strategies as the key to Corporate success
HR STRATEGIES AS THE KEY TO CORPORATE SUCCESS
CERTIFICATE
ACKNOWLEDGEMENT
CONTENTS
SR. NO 1. 2. 3. 4. 5.
TOPICS
PAGE NO.
INTRODUCTION LITERATURE REVIEW RESEARCH METHODOLOGY CONCLUSION BIBLIOGRAPHY
5-34 35-38 39-47 48 49
CHAPTER-1 Introduction
1. INTERNATIONAL HRM
Global Human Resource Management is a process concerned broadly with recruiting of persons, training them and putting them to the most productive usage. It is also concerned with maintaining of congenial international industrial relations. It is the essential prerequisite for the success of the international firm owning to its complexities. Broadly defined, international human resource management (IHRM) is the process of procuring, allocating, and effectively utilizing human resources in a multinational corporation. If the MNC is simply exporting its products, with only a few small offices in foreign locations, then the task of the international HR manager is relatively simple. However, in global firms human resource managers must achieve two somewhat conflicting strategic objectives. First, they must integrate human resource policies and practices across a number of subsidiaries in different countries so that overall corporate objectives can be achieved. At the same time, the approach to HRM must be sufficiently flexible to allow for significant differences in the type of HR policies and practices that are most effective in different business and cultural settings. 1.1 Characteristics of International HR – • • International Human Resource Management (GHRM) -- the planning, selection, training, employment, and evaluation of employees for global operations. GHR managers serve in an advisory or support role to line managers by providing guidelines, searching, training, and evaluating employees. • How a firm recruits, trains, and places skilled personnel in its worldwide value chains sets it apart from competition. The combined knowledge, skills, and experiences of employees are distinctive and provide myriad advantages to the firm’s operations worldwide. • • 1.2 Regulatory Policies of International HR: Four major tasks of HRM – – Staffing policy. Management training and development.
– – 1.2.1
Performance appraisal. Compensation policy.
STAFFING POLICY: a. Selecting individuals with requisite skills to do a particular job. b. Tool for developing and promoting corporate culture. c. Types of Staffing Policy • • • Ethnocentric Polycentric Geocentric
1) Ethnocentric Policy: • • Key management positions filled by parent-country nationals. Best suited to international businesses.
? Advantages: – – – Overcomes lack of qualified managers in host nation. Unified culture. Helps transfer core competencies.
? Disadvantages: – – Produces resentment in host country. Can lead to cultural myopia.
2) Polycentric Policy: • • • Host-country nationals manage subsidiaries. Parent companies nationals hold key headquarter positions. Best suited to multi-domestic businesses.
? Advantages: – – – Alleviates cultural myopia. Inexpensive to implement. Helps transfer core competencies.
? Disadvantages: – Limits opportunity to gain experience of host country nationals outside their own country. – Can create gap between home and host country operations.
3) Geocentric Policy: • • Seek best people, regardless of nationality. Best suited to global and trans-national businesses.
? Advantages: – – – Enables the firm to make best use of its human resources. Equips executives to work in a number of cultures. Helps build strong unifying culture and informal management network.
? Disadvantages:
– – –
National immigration policies may limit implementation. Expensive to implement due to training and relocation. Compensation structure can be a problem.
The aim of the Human Resources Strategy is to support staff. This it will do by developing and promoting good HR practice for the recruitment and development of high quality staff, by effectively managing their performance and by providing appropriate rewards and flexible opportunities that allow individuals to manage their own development.
Core Functions of International Human resources are: A. Recruitment B. Selection Process C. Expatriates D. Performance Appraisal E. Training and Development F. Compensation Sources of Recruitment Sources of Recruitment
There are many different types of interviews. Once you are selected for an interview, you may experience one or more of the situations described below. When you schedule an interview, try to get as much information about whom you will be meeting. It is rare to have only one interview prior to a job offer. Most employers will bring back a candidate a number of times to be sure a potential employee will fit into the company culture. MODERN TECHNIQUES AND SOURCES OF RECRUITMENT FOR GLOBAL COMPANIES 1) Walk-In -: The busy global organizations and the rapid changing companies do not find time to perform various functions of recruitment. Therefore they advise the candidates to attend for an interview directly and without a prior application on a specified date, time and at a specified place. 2) Consult-In -: The busy and dynamic global companies encourage the potential job seekers to approach them personally and consult them regarding the jobs. The international companies select the suitable candidates from among such candidates though the selection process.
3) Head-Hunting -: The global companies request the professional organizations to search for the best candidates particularly for the senior executive positions. The professional organizations search for the most suitable candidates and advice the global company regarding the filling up of the positions. 4) Body-Shopping -: Professional organizations and the hi-tech training institutes develop the pool of human resources for possible employment. The prospective employers contact these organizations to recruit the candidates. The body shoppers appoint people for their organization and provide the required/specific employees to various organizations on request. In fact, body shoppers collect fee/commission from the organizations and pay the salary/benefits to the employees. 5) Business Alliance -: It is like acquisitions, mergers, and takeovers help in getting human resources. In addition, the companies do also have alliances in sharing their human resources on ad-hoc basis. 6) Tele-Recruitment -: The technological revolutions in telecommunication helped the organizations to use internet as source of recruitment. Organizations advertise the job vacancies though the World Wide Web internet. The job seekers send their application though e-mails or internet websites.
STEPS IN THE SELECTION PROCESS Step 1: Preliminary Selection Preliminary selection of applicants is often done by setting minimum standards for the job, and communicating these standards to the employees, and agencies who help them recruit. The fact that some potential applicants may not apply because of their inability to meet the minimum requirements serves as an initial screening device. Then, when reviewing resumes and application forms, firms are further able to screen out unacceptable job candidates. At this point, firms can also assign priorities to the resumes so that the most promising candidates may be seen first.
Step 2: Employment Tests One way to ensure that selection decisions are based on objective data, is to use employment tests. Employment tests provide firms with objective data for purposes of comparing applicants. Examples of such tests include; paper and pencil test, manual dexterity and strength tests, and simulation exercises. Employment Tests: Validation To be useful, employment test must be valid. Validity requires that the test scores relate to actual job performance. Hence, the use of tests is not necessarily a simple process. Whereas a firm may be inclined to use an "off-the-shelf" product, such a test may bear little resemblance to the jobrelated tasks a successful applicant might be required to do. Before using a test, firms should ensure that they are, in fact, valid. Tests must be validated on those jobs to which tests are being applied and, tests must be validated for all groups to which tests are being applied. Employment Tests: Reliability Not only must employment test be valid, they must also be reliable. That is, employment tests should yield consistent results. An employment test should give a similar score each time the person takes the test (tests that rely on luck are not reliable). Very often, paper and pencil tests are used to test knowledge. A firm could use a paper and pencil knowledge test to ascertain an applicant's knowledge of computer programming skills or to test whether or not an applicant understands government regulations governing an industry. Generally, knowledge tests have good reliability, but their validity must be tested before they are used. A keyboarding test, testing an applicant's keyboarding speed and accuracy, is an example of a manual dexterity or performance test. Performance tests measure the applicant's ability to perform some part of the job for which applicants are to be hired. Often, there is an assumption of validity insofar as the test includes a representative sample of the work the applicant may be required to do. Firms must be cautious not to use tests that might discriminate against any minority group.
An in-basket exercise, in which administrative activities are simulated and an applicant's abilities to deal with these activities is evaluated, is one example of a simulation exercise. Step 3: Selection Interview Selecting the best candidate for the job is the #1 priority of the selection process. The employment interview is conducted to learn more about the suitability of people under consideration for a particular job and is one further obstacle for the applicant to overcome. The interview is one further means of reducing the number of people who might be eligible for the job. The selection interview proceeds in a series of stages. Initially, the interviewer needs to be prepared. Part of this preparation includes deciding where to hold the interviews and which type of interview to conduct. Preparation also includes carefully reading through and making notes on the applicants' application forms and resumes. At this stage, interviewers should make frequent reference to the job (job description) to compare the applicant's background with the job's requirements. The preparatory stage also includes developing a series of job-related questions. During the interview, the interviewer should have an outline of questions, on which to take notes. During the interview process itself, initially, the interviewer(s) should ensure the creation of rapport between interviewer(s) and the interviewee. Next, the two parties can engage in the exchange of information. Once the interview has been terminated, the interviewer(s) must set aside some time to evaluate the notes they have taken during the process. Step 4: Verification of References Personal References
• •
Usually provided by friends or family. Objectivity and candor are questionable.
Employment References
•
Differ from personal references.
• •
Discuss the applicant's work history. Questionable usefulness
o
former employers are unlikely to be candid
• •
Useful primarily as confirmation of prior employment. Frequently omitted entirely from the selection process.
Employment References: the Telephone Inquiry
• • • • •
Fast. Cheap. Voice inflections or hesitations to blunt questions may be very informative. Less than 22% seek negative information. Approx. 48% used to verify application information.
Step 5: Medical Evaluation
•
Generally a health checklist
o o
health information accident information
• •
Occasionally the checklist is supplemented by a physical examination Rationale:
o
employer may be entitled to lower health or life insurance rates for company-paid insurance
o o
may be required by provincial or local health officials may be used to determine whether the applicant can handle physical or mental stress
•
Caution:
o
a congenital health condition may be considered a disability failure to hire an applicant due to a disability may be seen as discrimination against a qualified applicant
Step 6: Supervisory Interview Since the immediate supervisor is ultimately responsible for new workers, he or she should have input into the hiring decision. The supervisor is better able to evaluate the applicant's technical capabilities and is in a better position to answer the interviewee's job-related questions. Further, the supervisor's personal commitment to the success of the new employee is higher if the supervisor has played a role in the hiring decision. Step 7: Realistic Job Preview The realistic job preview involves showing the applicant(s) the job site in order to acquaint them with the work setting, commonly used equipment, and prospective co-workers. The realistic job preview is intended to prevent initial job dissatisfaction with a job by presenting a realistic view of the job. Research shows that job turnover is lower when realistic job previews are used.
Step 8: Hiring Decision The actual hiring of an applicant constitutes the end of the selection process. At this stage, successful (as well as unsuccessful) applicants must be notified of the firm's decision. Since money and effort has been spent on all applicants, the HR department may wish to consider even the unsuccessful applicants for other openings in the organization.
The applications of unsuccessful applicants are often kept on file and the applications of successful applicants will be retained in the employees' personnel files. No matter what the form of the job offer, the principle is generally the same: do not make promises or statements that you cannot or do not intend to keep. Such statements can lead to expensive litigation if it is later decided to terminate the employee. When a job offer is made, it should include the following information:
• • • • • • •
Position offered. Location of the job. Salary (although sometimes salary must be negotiated before the applicant will accept). Benefits. Starting date. Any papers or information that should be brought on the first day of work. A date (or time) by which the applicant must respond to your job offer, so you can move on to the next candidate if your first choice doesn't accept.
• • • •
Benefits. Starting date. Any papers or information that should be brought on the first day of work. A date (or time) by which the applicant must respond to your job offer, so you can move on to the next candidate if your first choice doesn't accept.
• •
The interviewing process. Did employment tests support or help the hiring decision? If not, maybe the firm will have not the kinds of test it administering. Further the evaluation process should help the firm decide if the time and cost involved in the testing is worth it.
EXPATRIATES Global companies, after selecting the candidates place them on the jobs in various countries, including the home country of the employee. But, the employees of the global companies are also placed in foreign countries. Even those employees who are placed initially in their home countries are sometimes transferred to various foreign countries. Thus the employees of global companies mostly work and live in foreign countries and their family members also live in foreign countries. 1.2.2 TRAINING AND DEVELOPMENT: Training is an act of increasing the knowledge and skill of an employee for doing a particular job.
Importance of Training and Development - It leads to • • • • • Improved job knowledge and skills at all levels of the organization Improved morale of the human resource Improved profitability and more positive attitudes towards profit-orientation Improved relation between boss and subordinated Improved understanding of culture of various countries
Need for Training and Development for Global Jobs • • • • To match employee specifications with the job requirement and organizational needs To achieve organizational viability and the transformation process To meet the challenges of technological advancement To understand the organizational complexity
•
To make the employee and his family members familiar with the language, customs, traditions etc of the foreign country
1.2.3 PERFORMANCE APPRAISAL: It is a method of evaluating employee behavior relating to expected work and behavior. Appraising the employee performance on foreign jobs is a highly complicated task as expectations of global company are multifarious. Objectives - The objectives of performance appraisal are to create and maintain a satisfactory level of performance, to contribute to the employee growth and development through training and to guide the job changes with the help of continuous ranking. Appraisers - The appraisers may be any person who has a thorough knowledge about the job content, content to appraised, standards of content and the one who observes the employee while performing a job. Typical Appraisers are: • • • • • • Supervisors Peers Subordinates Consultants Customers Users of Services
1.2.4 COMPENSATION: It is the amount of remuneration paid to the employees. Expatriate pay - It is mostly based on the balance sheet approach. Under the balance sheet approach, the compensation package enables the expatriate employees in various countries to maintain the same standard of living.
Gratuity - Expatriate employees are paid gratuity at a fixed rate for every year of completion of services in the foreign country Allowances - Expatriate employees are paid various allowances like car allowances, resettlement allowances, housing allowances etc Taxable - Some countries pay tax-free salary. Most of the countries pay taxable salary and gratuity
Profit Sharing & ESOP The Multinational corporations in order to motivate the employees for higher performance introduced a scheme of Profit Sharing. The Employee Stock Option allows the employees to purchase the share of the company at a fixed and reduced rate The advantages of stock ownership includes • • • • The plan enables the MNCs to retain efficient employees with them. It encourages the employees to improve performance. This scheme establishes significance of team effort among employees. It increases employee involvement and Participation.
2. FACTORS AFFECTING GLOBAL HRM Managing human resources in different cultures, economies, and legal systems presents some challenges. However, when well done, HR management pays dividends. A seven-year study in Britain of over 100 foreign companies showed that good HR management, as well as other factors, accounted for more of the variance in profitability and productivity than did technology, or research and development.
The most common obstacles to effective HR management are cross-cultural adaptation, different organizational/workforce values, differences in management style, and management turnover. Doing business globally requires that adaptations be made to reflect these factors. It is crucial that such concerns be seen as interrelated by managers and professionals as they do business and establish operations globally. Figure 2.1 depicts the general considerations for HR managers with global responsibilities. Each of those factors will be examined briefly.
POLITICA L LEGAL ECONOMI C
CULTUR AL
Fig.2.1 2.1 Legal and Political Factors The nature and stability of political systems vary from country to country. U.S. firms are accustomed to a relatively stable political system, and the same is true in many of the other developed countries in Europe. Although presidents, prime ministers, premiers, governors, senators, and representatives may change, the legal systems are well-established, and global firms can depend on continuity and consistency. However, in many other nations, the legal and political systems are turbulent. Some governments regularly are overthrown by military coups. Others are ruled by dictators and despots who use their power to require international firms to buy goods and services from host-country firms owned or controlled by the rulers or the rulers’ families. In some parts of the world, one-party rule has led to pervasive corruption, while in others there are so many parties those governments changes constantly. Also, legal systems vary in character and stability, with business contracts sometimes becoming unenforceable because of internal political factors.
International firms may have to decide strategically when to comply with certain laws and regulations and when to ignore them because of operational or political reasons. Another issue involves ethics. Because of restrictions imposed on U.S.-based firms through the Foreign Corrupt Practices Act (FCPA), a fine line exists between paying “agent fees,” which is legal, and bribery, which is illegal. HR regulations and laws vary among countries in character and detail. In many Western European countries, laws on labor unions and employment make it difficult to reduce the number of workers because required payments to former employees can be very high. Equal employment legislation exists to varying degrees. In some countries, laws address issues such as employment discrimination and sexual harassment. In others, because of religious or ethical differences, employment discrimination may be an accepted practice. All of these factors reveal that it is crucial for HR professionals to conduct a comprehensive review of the political environment and employment-related laws before beginning operations in a country. The role and nature of labor unions should be a part of that review. HR Perspective – The Legal and Political Environment of Unemployment in Europe Europe cannot seem to shake its chronic unemployment. The unemployment rate has ranged from almost 20% in Spain to over 10% in France—but it averages about 12%. Joblessness is much higher in Europe than in the United States or Japan. Forecasts are that even with an improvement in the economy and employment, unemployment at over 10% will continue in European Union (EU) countries. Why? Economists disagree about many matters, but not about unemployment. Generally they agree that labor markets need to be flexible, but in European countries they are relatively rigid. Very generous unemployment benefits, high minimum wages, strong unions, and unique (by U.S. standards) laws dissuade employers from hiring more employees. For example, in Spain, a permanent employee who is fired can get 45 days’ pay times the number of years he has been with the company. It is a large liability, so few firms create more permanent jobs. Similar legislation in other countries tends to keep those who have jobs at work, but the effect of the protective legislation keeps employers from creating more jobs. Economists tell us that in the
long run, without such laws, firms that cut costs and become more productive create more jobs because productive industries tend to expand. The pressure of world competition that is forcing painful reform is not popular in Europe. Many Europeans are crying “enough,” and questioning how quickly the European economies can transform themselves into the Anglo-Saxon model of capitalism. That formula - high productivity, low jobless rates, and a minimal social safety net – is not typical in most Western European countries. For example, a recent French poll found that two-thirds of the French people prefer their rich benefits and high unemployment to America’s approach of lower unemployment and limited social welfare benefits. Of course, elected politicians tend to follow the wishes of their constituents, bringing political and legal factors together—in this case, resulting in an average of 12% unemployment. Europe cannot seem to shake its chronic unemployment. The unemployment rate has ranged from almost 20% in Spain to over 10% in France—but it averages about 12%. Joblessness is much higher in Europe than in the United States or Japan. 2.2 Economic Factors Economic factors affect the other three factors. Different countries have different economic systems. Some even still operate with a modified version of communism, which has essentially failed. For example, in China communism is the official economic approach. But as the government attempts to move to a more mixed model, it is using unemployment and layoffs to reduce government enterprises bloated with too many workers. Many lesser-developed nations are receptive to foreign investment in order to create jobs for their growing populations. Global firms often obtain significantly cheaper labor rates in these countries than they do in Western Europe, Japan, and the United States. However, whether firms can realize significant profits in developing nations may be determined by currency fluctuations and restrictions on transfer of earnings. Also, political instability can lead to situations in which the assets of foreign firms are seized. In addition, nations with weak economies may not be able to invest in maintaining and upgrading the necessary elements of their infrastructures, such as roads, electric power, schools, and telecommunications. The absence of good infrastructures may make it more difficult to convince managers from the United States or Japan to take assignments
overseas. Economic conditions vary greatly. Cost of living is a major economic consideration for global corporations. In many developed countries, especially in Europe, unemployment has grown, but employment restrictions and wage levels remain high. Consequently, many European firms are transferring jobs to lower-wage countries, as Mercedes-Benz did at its Alabama plant. In addition, both personal and corporate tax rates are quite high. These factors all must be evaluated as part of the process of deciding whether to begin or purchase operations in foreign countries. 2.3. Cultural Factors Cultural forces represent another important concern affecting international HR management. Culture is composed of the societal forces affecting the values, beliefs, and actions of a distinct group of people. Cultural differences certainly exist between nations, but significant cultural differences exist within countries also. One only has to look at the conflicts caused by religion or ethnicity in Central Europe and other parts of the world to see the importance of culture on international organizations. Getting individuals from different ethnic or tribal backgrounds working together may be difficult in some parts of the world. Culture can lead to ethical differences among countries. One widely used way to classify and compare cultures has been developed by Geert Hofstede, a Dutch scholar and researcher. Hofstede conducted research on over 100,000 IBM employees in 53 countries, and he identified five dimensions useful in identifying and comparing culture. A review of each of those dimensions follows. POWER DISTANCE - The dimension of power distance refers to the inequality among the people of a nation. In countries such as Germany, the Netherlands, and the United States, there is a smaller power distance—which means there is less inequality—than in such countries as France, Indonesia, Russia, and China.
As power distance increases, there are greater status and authority differences between superiors and subordinates. One way in which differences on this dimension affect HR activities is that the reactions to management authority differ among cultures. A more autocratic approach to managing is more common in most other countries, while in the United States there is a bit more use of participatory management. INDIVIDUALISM - Another dimension of culture identified by Hofstede is individualism, which is the extent to which people in a country prefer to act as individuals instead of members of groups. On this dimension, people in Asian countries tend to be less individualistic and more group-oriented, whereas those in the United States score the highest in individualism. An implication of these differences is that more collective action and less individual competition is likely in those countries that deemphasize individualism. MASCULINITY/FEMININITY - The cultural dimension masculinity/femininity refers to the degree to which “masculine” values prevail over “feminine” values. Masculine values identified by Hofstede were assertiveness, performance orientation, success, and competitiveness, whereas feminine values included quality of life, close personal relationships, and caring. Respondents from Japan had the highest masculinity scores, while those from the Netherlands had more femininity-oriented values. Differences on this dimension may be tied to the role of women in the culture. Considering the different roles of women and what is “acceptable” for women in the United States, Saudi Arabia, Japan, and Mexico suggests how this dimension might affect the assignment of women expatriates to managerial jobs in the various countries. UNCERTAINTY AVOIDANCE - The dimension of uncertainty avoidance refers to the preference of people in a country for structured rather than unstructured situations. A structured situation is one in which rules can be established and there are clear guides on how people are expected to act. Nations high on this factor, such as Japan, France, and Russia, tend to be more resistant to change and more rigid. In contrast, people in places such as Hong Kong, the United States, and Indonesia tend to have more “business energy” and to be more flexible.
A logical use of differences on this factor is to anticipate how people in different countries will react to changes instituted in organizations. In more flexible cultures, what is less certain may be more intriguing and challenging, which may lead to greater entrepreneurship and risk taking than in the more “rigid” countries. LONG-TERM ORIENTATION - The dimension of long-term orientation refers to values people hold that emphasize the future, as opposed to short-term values, which focus on the present and the past. Long-term values include thrift and persistence, while short-term values include respecting tradition and fulfilling social obligations. People scoring the highest on longterm orientation were China and Hong Kong, while people in Russia, the United States, and France tended to have more short-term orientation. Differences in many other facets of culture could be discussed. But it is enough to recognize that international HR managers and professionals must recognize that cultural dimensions differ from country to country and even within countries. Therefore, the HR activities appropriate in one culture or country may have to be altered to fit appropriately into another culture or country.
WORK CULTURE OF MAJOR ECONOMIES 1) Major Japanese national cultural characteristics and management practicesNational Culture • • • • • • • • • Collectivism: group-orientation, a strong sense of community, loyalty to group Masculine: competitive, ambitious Endurance: the way of warrior, acceptance of hardship without complain Indebtedness: a strong sense of duty and obligation Absence of horizontal social grouping: vertical stratification by institution or group Observance of social status: deference to seniors, status clearly signaled in social interaction Harmony: preference for consensus over conflict Avoidance of loss of face High uncertainty avoidance
HRM and other employee related values and practices • • • • • • • • • • • Enterprise-based trade unions, cooperative relationship between employees and company, avoidance of open conflict Emotional and dependent relation between company and employees Ringi method: collective decision making Quality circles Implicit discreet performance appraisal Teamwork: multi-skill work teams, team appraisal and reward Nenko: life-time (or long term) employment for regular core employees Seniority-based pay and promotion Process-oriented A strong sense of obligation to colleagues and supervisors Discrimination against women
• • •
Employee-oriented leadership style Job-rotation, job-flexibility Employee loyalty and long-term commitment to company
2) Major American national cultural characteristics and management practices National Culture • • • • • • • • • • Highly individualistic: self-focused, preference to act as individual rather than as members of group, yet can be collectivist in face of a common threat Small power distance: egalitarian, tend not to treat people differently even when there are great differences in age or social standing Masculine: ambitious, competitive, goal-oriented, achievers Low uncertainty avoidance, risk-takers, entrepreneurial Low context: directness, expressive in communication, do not talk around things, tend to say exactly what they mean Open: friendly, informal Ethnocentric: believe their culture and value are superior to all others Future-oriented: strong belief that present ways of doing things in evidently are to be replaced by even better ways Readiness to change: try new things, a predisposition to believe that new is good ‘can-do’ attitude
HRM and other employee related values and practices • • • • • • Prefer participative leadership style Superiors are approachable Subordinates are willing to question authority Status based on how well people perform their functions Performance-oriented Promotion and reward based on merits as opposed to status, hierarchy, or gender
• • • • • • • • • • • • • • • •
Live more easily with uncertain, skeptical about rules and regulations Value punctuality and keep appointments and calendars Much more concerned with their own careers and personal success than about the welfare of the organisation or the group Value success and profit Acceptance conflict System-driven: conviction that all problems can be solved, system and energy will overcome any obstacles Proactive take initiative, aim high, ‘go for it’ Result-oriented Professional educated and well trained Strong devotion to managerial prerogative Hire and fir policies Communications skill, informal, direct, explicit, often aggressive Emphasis on entrepreneurship and innovation Legalist approach to contracts Informality yet a preference for written rules and procedures Dislike of trade unions
3) Major Indian national cultural characteristics and management practices National Culture • • • • • Collectivism, clannish, community conscious, large in-group includes extended family, clan, and friends Low concern for privacy Large power distance, obedience to seniors and respect for people in position of power, all wisdom comes from elders Resourcefulness, hard work, tenacity, ability to cope with diversity Risk aversion, low tolerance for ambiguity and uncertainty
• • • • • • • •
Emotional dependence Rigid social stratification, caste system Acceptance of status quo, preference for conformity Disciplined, self-resistant, yet emotional and display their emotions in public Honest, trustworthy, yet considerable corruption in public sector Law-abiding but prepared to bend the rules for friends and relatives Ambitious and materialistic High rate of illiteracy, especially among lower caste people and in rural areas
HRM and other employee related values and practices • • • • • • • • • • • • Entrepreneurial Preference for paternalistic and authoritative leadership Prefer to work under supervision Contractual relations with the workplace, in-group does not include the workplace, low level of commitment Manual workers are unskilled and uneducated Well educated and highly skilled managers and high-ranking staff National and plant based trade unions, confrontational industrial relations Pro-workers labour legislation Strong sense of responsibility Centralised decision making, little or no job autonomy for middle and low ranking staff and shop floor Low level of formulisation and use of written instructions and rules and regulations especially at the shop floor mainly because of workers illiteracy Differentiated reward systems and control strategies for white collar and manual workers. 4) Major British national cultural characteristics and management practises
National Culture • • • • • • • • • • • • Individualism: antimony, liberty, love of privacy, yet caring for community Small power distance, yet deference and acceptance of inequality, class conscious Aggressive, yet caring and friendly Reserve: shy, self-control, self-discipline High ideals of conduct both for themselves and for others Conservatism: dislike of change and uncertainty, aversion to risk, lack of ambition Tenacity: resilience, resourcefulness Pragmatic: social-political realism, compromise, flexible unwritten constitution, common law, prepared to bend the law when it does not suit them Chauvinism: dislike of foreigners, xenophobia Honesty, trustworthy, and trusting Past-orientation: love of age-old traditions, the present is a culmination of past developments, ambivalence towards new technology Dislike of open conflict
HRM and other employee related values and practices • • • • • • • • Preference to have freedom to choose their own approach, using individual skills and abilities Job satisfaction derived from personal sense of achievement and superiors recognition of individual contributions Leadership style: persuasive Expectation from subordinate: commitment, initiative, ownership, responsibility, honesty Deference to authority Comfortable with minimal amount of rules and procedure Flexibility yet a preference to work according to the rules Well educated, skilled and , in certain circumstances, adaptable workforces
• • • • • • • • •
Compliance with legislation Short-term perspective: low expenditure on training and low employee productivity rates compared to many leading economies Some evidence of discrimination among employees and job applicants on the ground of age, gender or ethnicity, ‘glass ceiling’ Formal in communication and interpersonal relationships at work Ethnocentric attitudes towards foreign counterparty Conservative approach towards new technology Contractual, non-emotional relationship with the workplace Strong trade union tradition Pragmatic trade unions: fight for better pay and working conditions not ideologicallybased class struggle against managers, absence of serious trade union challenges to managements prerogative and right to manage
• •
Class distinctions reflection within the workplace in form of hostile them-and-us-attitude Expectation of governmental involvement in employment relationships
HR Perspective – Cultural and Ethical Differences Why do negotiators from some countries get loud, angry, emotional, and gesture wildly in business negotiations, while others sit quietly, smile, and make sure they get what they want? It is, in many cases, differences in culture. Culture is in one sense a shared set of meanings, values, and common views on relations with other people, right and wrong, etc. These differences lead to different ideas as to what constitutes ethical business behavior. For example: In one Eastern European country, obtaining a new telephone line in less than three months requires making a cash payment, referred to as an “expediting charge” (a bribe in most places), to the local manager of the telephone office. All parties to the deal know that the manager will retain the cash, but a telephone is essential for doing business internationally.
Foreign firms wishing to do business in one Asian Pacific country must hire a “business representative” in order to obtain appropriate licenses and operating permits. In this country, it is well known that the two best representatives are relatives of the head of the country. It also is common to give the representative 10%—20% ownership in the business as a “gift” for promptly completing the licensing process. A U.S.-based firm engaged in such practices could be violating the Foreign Corrupt Practices Act (FCPA), which prohibits U.S. firms from engaging in bribery and other practices in foreign countries that would be illegal in the United States. Competing firms from other countries are not bound by similar restrictions. However, the law reflects the U.S. culture’s view on the ethics of bribery. Specifically relating to HR management, another major concern is the use of child labor and prison labor. According to one estimate, over 80 million children under age 18 are working in factories and fields for international companies. In some countries, people convicted of “political crimes” are forced to work in factories that manufacture goods to be sold to U.S. and European firms. In those countries, prison labor also competes with other labor sources at lower wage rates. When stories of these situations have been publicized, customer boycotts and news media coverage have focused unfavorable attention on the companies involved. To counter such concerns, firms such as Levi Strauss and Starbuck’s Coffee, among others, have established minimum standards that must be met by all operations of their subcontractors and suppliers. Unfortunately, other firms have not been as aggressive.
3. ETHICAL ISSUES Ethics, social responsibility of business and corporate governance have become hot issues in the wake of a series of scandals reported from all over the world. It needs special attention because multinationals operate in a large number of countries with varying standards of moral behaviors and multicultural perceptions about what is right and what is wrong. Their workforce also consists of high diversity with individuals having different values and beliefs. Their actions and activities are also commented upon and attention from the media as well as national governments. As the issues faced by HR managers have increased in number and complexity, so have the pressures and challenges of acting ethically. Ethical issues pose fundamental questions about fairness, justice, truthfulness, and social responsibility. Concerns have been raised about the ethical standards used by managers and employees, particularly those in business organizations. It appears that the concerns are well-founded, if the results of one study of 1,300 employees and managers in multiple industries are an indication. About 48% of those surveyed admit engaging in unethical behavior at work. Some of the most frequently mentioned items were cheating on expense accounts, paying or accepting bribes and kickbacks, forging signatures, and lying about sick leave. 3.1 What is Ethics? Ethics is the discipline that examines the moral standards by an individual or a corporate or a society. Its explicit purpose is to determine whether the actions or activities of an individual or corporate are within the framework of moral standards or value systems embedded in a particular society. Different societies have a different moral standards and value systems according to their own culture.
Ethics is a function of one’s consciousness. It is, therefore, beyond the boundaries of law. Some activities may be legal but may not be ethical, although law represents the moral code or standards practiced by a society or country to resolve conflicts and allow freedom to individuals and groups to achieve their uniqueness, pursue their goals and live in peace. Ethics exists at the individual level, organizational level, and at the societal level. It represents the practiced value system. If ethics at the societal level is not strong, it affects the performance and ethical climate of organizations, which in turn influences individual actions and approach to work and life. In this context, the role of multinationals becomes interesting as different ethical climates may exist in their various subsidiaries operating in different societies. This may create problems for the parent company as actions of any one subsidiary may tarnish its image across the globe. However, there are international norms and conventions from which their actions can also be judged. 3.2 ETHICAL ISSUES & CORPORATE SOCIAL RESPONSIBILITY Ethics and corporate social responsibility are differently interpreted, complex and controversial subjects in the context of organizations which are operating internationally in diverse social, economic, political, cultural and legal environments. Ethical issues and considerations arise in particular when the business practices in the host country differ markedly from those in the home country. Three types of “ethical responses“ have been identified: Ethical relativism (the ethical standards in the host country should be followed), Ethical absolutism (the ethical standards of the home country should be followed), and Ethical universalism (this presumes that there is a universal ethical standard of right and wrong which transcend cultural boundaries and that these must be followed by the organization (distinction between morally wrong and culturally different. Corporate Social Responsibility is basically about an organization promoting non-economic objectives, i.e., instead of just focusing on maximizing value for shareholders, organization (specifically business corporations) attempt to play the role of “good citizens“, balancing the
interests of shareholders with those of society at large. Corporate Social Responsibility can be a complex issue at the domestic level, but at the international level it takes on a much larger significance. Areas where organizations operating internationally can demonstrate their social responsibility include, for example, observance of basic human rights, adoption of adequate workplace working conditions and health and hygiene standards, payment of adequate wages and salaries, equal employment opportunities, avoidance of child labor, adequate education and training, allowing unionization and protection of the environment. 3.3 ETHICAL ISSUES FACING MULTINATIONALS – The most common unethical practices business resort to include: Manipulation of stock markets: In India, manipulation of stock market is not uncommon. There are several investigations and a few brokerage firms and individuals have been prosecuted. MNC’s generally avoid manipulation of capital markets. Lobbying: Lobbying is the practice of influencing decisions made by government for the benefit of its citizens (in groups or individually). It includes all attempts to influence legislators and officials, whether by other legislators, constituents, or organized groups. A lobbyist is a person who tries to influence legislation on behalf of a special interest or a member of a lobby. Governments often define and regulate organized group lobbying. This is a tool of public relations. Japanese spend millions of dollars in the US every year to bend rules in award of contracts or to get sensitive information or restricted equipment more than other countries. Fudging of accounts and balance sheet: It is very common in developing countries like India and Indonesia to manipulate accounts to avoid taxes or manipulate share price before public issues. However it was shocking when American corporate heavyweights Enron and World.com were found manipulating accounts and balance sheets. Product Piracy: Lax enforcement of intellectual property rights has resulted in large-scale piracy of music and picture videos, software, fake drugs and other intellectual property capital in China, India, Latin America and Eastern Europe. It is estimated that 30,000 shops in Shanghai
alone sell pirated videos. In a raid in Thailand, 44,000 bootleg tapes were recovered from one shop alone. Here lax societal moral standards cause great loss to multinationals. Surrogate and deceptive advertising: There are many ethical issues in advertising, including violation of cultural norms and nudity, apart from false information ot customers. Many MNC’s are not sensitive to these issues though they spend most on advertisement and promotion. Discrimination in selection, compensation and promotion: In spite of equality laws in different countries, companies still practice some bias in selection and other management processes on the basis of gender, color, race and show ethnocentrism. Sexual harassment at workplace is growing trend. 3.4 STEPS FOR ORGANIZATION TO BUILD ETHICAL BEHAVIOR – Ethical issues and corporate social responsibility are closely related to the human resource function in organizations which are operating internationally and in diverse contexts: ? Minimize the exposure of employees to corrupt conduct by assisting in the development, publication, and implementation of appropriate codes of conduct. ? Ensure training programmes cover areas which are of ethical concern (e.g. bribery, human rights, justice, and the common good). ? Align performance appraisal and compensation systems so that they support the ethical stance taken. ? Be conversant with the type of requests that may be made of staff operating internationally, and provide them the necessary training so that they have the requisite negotiating skills to handle possible problem situations. ? Ensure that employees understand the difference between corrupt payments, gifts and permissible facilitation payments. It is not easy to build an ethical climate and accompany and it requires the top management’s best effort.
CHAPTER-2 LITERATURE REVIEW
INTERNATIONAL HR STRATEGIES USED Strategic Management refers to the process of Formulating, implementation and evaluating business strategies to achieve organizational objectives. At the core strategic management process is a team comprising the CEO aided by top executives. For example, the core team that formulated and executed the recent strategic takeover of Corus by Tata Steel considered of Ratan Tata, the CEO, and Muthuraman, MD. Tata Steel, Arunkumar Gandhi, Head of the M&A cell if the Tata Group and Koushik Chatterjee, VP Finance, Tata Steel International Human Resource Strategy refers to the process of developing practices, programmes and policies that help achieve organizational objectives. What is essential is that these programmes, policies and practices need to be aligned with organizational strategies. Elaborating further, strategic human resource management considers the implications of business strategy for all hr systems within the firm by translating company objectives into specific people management systems. The specific approach and process utilized will vary from organization to organization, but the key concept is consistent, that is, essentially all HR programmes and policies are integrated within a larger framework helping achieve the firm’s objectives. HR role in strategic management seems to be merely latitudinal but little in practice. Rarely in HR executive consulted in vital decisions, such as mergers or acquisitions. This popular perception, invites your attention towards a reality check It is not that the HR manager himself/Herself formulates strategies. He or she will be the member of a core team which formulates company strategies and ensures their implementation. To be full-fledged strategic partners with senior management, HR executives should impel and guide
serious discussion of how the company should be organized to carry out its strategy. Four roles of HR executives are relevant in this context. First, HR should define an organization’s architecture. In other words, it should identify the underlying model of the company’s way of doing business. More specifically, the architecture is a judicious mix of structure, systems, rewards, processes, people, styles, skills and shared values. After the architecture is defined it needs to be articulated explicitly. Without such clarity, managers tend to become more myopic about how the company runs Second, HR needs to be accountable for conducting an organizational audit. Audit helps identify which components of the architecture should be changed in order to facilitate strategy execution The third role of HR as a strategic partner is to identify methods for renovating the parts of the organizational architecture that need it. In other words, HR manager should be assignees to take the lead in proposing, creating, and debating best practice that can help implementing strategies. Fourth and finally, HR must take stock of its own work and set clear priorities. At any given time, the HR staff might have several initiatives in its sights, such as pay-for-performance, global team work, and action-learning development experiences. But to be truly to business outcomes, HR needs to join forces with line managers to continuously assess the impact and importance of each one of these initiatives. STRATEGIC HRM VERSUS CONVENTIONAL HRM Traditional HRM Staff specialists Employee relations Transactional, change follower, and respondent Slow, reactive, fragmented Short term Bureaucratic-roles, policies, procedures Fast, proactive, integrated Short, medium, long (as necessary) Organic-flexible, whatever is necessary to succeed Strategic HRM Line managers Partnerships with internal and external customers
Responsibility of HRM Focus Role of HR Initiatives Time horizon Control
Job Design Key Investment Accountability
Tight division of labor, independence, specialization Capital, products Cost center
Broad, flexible, whatever is necessary to succeed People, knowledge Investment center
BARRIERS TO STRATEGIC HRM Though strategic HRM looks convincing and essential, several barriers operate in the way of organizations taking to strategic orientation of their HR functions. The first barrier is that most organizations adopt a short-term mentality and focus on current performance. This is no surprise since stakeholders, particularly shareholders, expect quick rewards and executives need to live up to these expectations. Employees expect quick rewards based on their performance. The second barrier relates to the inability of HR executives to think strategically. They are unable to go beyond their area of operation. Their knowledge about general business functioning, their awareness about technological advancements and their ability to convince colleagues in other department is limited. The third barrier is that most senior managers lack appreciation for the value of HR and its ability to contribute to the organization from strategic perspective. Many understand only the conventional HR and fail to realize the contribution HR can make as a strategic partner A fourth barrier is that some functional managers as well and is concerned more with technical aspects of their areas of responsibility than the human aspects. As stated earlier, every line manager is an HR manager too. But in reality, finance controller for example, fails to see beyond cash inflows and outflows, so also the operations executive who is obsessed with inputs, outputs and the conversation process. A fifth barrier to strategic HR is the problem of quantifying many of the outcomes and benefits if HR programs. It is believed that many of the outcomes of HR function are abstract – felt but not seen. In an environment where firms operate under pressure, what attracts every ones attention is an activity that contributes to the bottom line. Anything else is shelved
Yet another barrier to strategic HR is the fact that human assets are not owned by organizations and, therefore, are perceived as higher risk investment than capital asset, particularly in highly competitive environment where key executives are poached from competitors, there is a tendency to invest less in employees than in technology and information, which are more propriety. This mindset and approach prevents organization from realizing the fact that it is the people who invest technology and it is human brains behind revolution in informatics, and it is a competitive advantage to invest in people. How can such firms adopt strategic approach to human resources? Finally, strategic HR may be resisted because of the incentives for change that might arise. Taking a strategic approach to HR may mean making drastic changes in the firm’s architecture. Not many executives are prepared to accept such drastic changes. Short- term mentality/focus on current performance Inability of HR to think strategically Lack of appreciation of what HR can contribute Failure to understand general manager’s role as an HR manager Difficulty in quantifying many HR outcome Perception of human assets as higher risk investments Incentives for change that might arise Barrier to Strategic HR
CHAPTER- 3
RESEARCH METHODOLOGY
The importance of Human Resource management is being increasingly realized in industrial and non-industrial organization both in India and abroad. The realization
has come about because of increasing complexity of the task of managers and administrators. In most organizations the problems of getting the competent and relevant people, retaining them, keeping up their motivation and morale, and helping them to both continuously grow and contribute their best to the organizations, are now viewed as the most critical problems. The study is aimed to cover some knowledge of the HR Strategies followed in an organization with reference to Aditya Birla Group. Aditya Birla Group is India's first truly multinational corporation. The group has an annual turnover of US$ 24 billion and has over 1,00,000 employees belonging to over 25 different nationalities on its rolls. Aditya Birla Group has its presence in 20 countries – India, Thailand, Laos, Indonesia, Philippines, Egypt, Canada, Australia, China, USA, UK, Germany, Hungary, Brazil, Italy, France, Luxembourg, Switzerland, Malaysia and Korea. Globally the Aditya Birla Group is: A metals powerhouse, among the world’s most cost-efficient aluminium and copper producers. Hindalco, from its fold, is a Fortune 500 Company. It is also the largest aluminium rolling company and one of the 3 biggest producers of primary aluminium in Asia Ultra Tech Cement: The Groups cement business is under both Grasim and UltraTech cement. Together the two companies under the group account for a substantial share of the cement market in India. Now a day the cement division of the Grasim industries Limited works under the banner of the Ultra Tech Cement limited (UTCL). UltraTech Cement Ltd is having its own vision, mission and values. Vision of the company: To be a premium global conglomerate with a clear focus on each business. Mission of the company: To deliver superior value to the customers, shareholders, employees and society at large.
Values of the company: People contribute when they relate to an organization and they relate, when they understand the organization. People understand an organization through its values by experiencing the culture that values create and by using the systems and processes that values define. In large organizations, such shared understanding cannot be created through leadership of individuals
alone; it requires leadership of principles, of beliefs, of conviction . Integrity, Commitment, Passion, Seamlessness, Speed; These together constitute what they call their “Value”. Organizational Structure (HR)
HR PRACTICES The success of any business depends as much on appropriate, effective, well-communicated, HR and business practices as it depends on meeting the requirements of mandated laws and regulations. In fact, good planning and the development of effective practices make regulatory compliance much easier. HR practices helps in increasing the productivity and quality, and to gain the competitive advantage of a workforce strategically aligned with the organization’s goals and objectives. Some of the key performance indicators for Human Resources include: • Employees’ clarity on HR policies • Employees’ clarity on roles, responsibilities and expectations • Development of qualitative staff • Number of HR issues arising for which there are no clear policies and Guidelines • Competitiveness of compensation structure relative to industry benchmark • Usefulness and accuracy of compensation survey • Lead time to respond to staff welfare issues • Employees’ assessment of promotion criteria and process (clarity, fairness) • Measurement of HR policy violation • Average time required to fill vacancies • Proportion of training programs resulting in productivity improvement • Staff attrition rate • Understanding / Clarity of the Organizational philosophy
Recruitment and Selection: Recruitment is the process of searching for prospective employees and stimulating them to apply for jobs in the organization. Effectively, selection is 'buying' an employee (the price being the wage or salary multiplied by probable years of service) hence bad buys can be very expensive. The recruitment process of Ultra Tech Cement Ltd starts from the requirement of different departments as per to the org chart. Then they tell to the HR Department. HR Department takes the candidates from Data bank of company, Poornata etc, then does the short-listing, then does the scheduling for the interview. After this the selection and negotiation process occurs. Then offer letter is been given to the selected candidate. The employee then joins in the organization. Then the company arranges the Induction Program for the employee. After this the recruitment process ends with this. The Recruitment Process of UTCL
Performance Management System It is a structured method of formally and objectively evaluating employee’s performance with respect to their objectives. It addresses the issue of an employee’s development by providing them with structured and in-depth analysis of strengths and areas of improvement. It provides with input for annual increments, training and development. For an organization the aim should not be just to have the best people, but also to retain them and get best out of them. Employee
Performance management includes planning work and setting expectations, developing the capacity to perform, continuously monitoring performance and evaluating it. Most organizations focus on an annual evaluation process for employees and call that Performance Management. However, annual evaluations are often subjective and can lack specific measurements and supportive data to help the employee truly improve their behavior. Mainly the performance management of UTCL is done by online system includes the following basic processes 1. Annual goal setting 2. Midyear review 3. Annual performance review Annual goal setting: _ In the month of April/May every year, after the annual planning and budgeting rounds, all teams identify their KRA’s and goals for the forthcoming financial year. This process occurs by offline. _ Then the employees fill their goal setting document in the MIS, listing the KRA’s, Goals, Measurement Criteria, Assigning weightage and due date for completion of specific goals as already discussed offline. _ Then they notify the same to their manager/immediate supervisor and await approval. _ The manager recommends any changes if required or else approves the goals set in the document. _ The approval of the goals set by the managers completes the goal setting process. _ The approved documents will be then available to the employees as well as their managers for the reference throughout the year. These documents can also be viewed by manager’s manager (Reviewer) for their indirect subordinates. Mid Year Review: _ Mid year review of goals set at the beginning of the financial year held on the months of October/November every year. _ The mid year review generally initiated by the manager. _ The main focus of the mid year review is to check if the goals set at the beginning of the year are relevant or if they need to be revised or updated. _ The mid year review is also an opportunity for the manager and his team members to identify and discuss about any performance issues and initiate corrective action for the same. _ The mid year review does not entail any ratings.
Annual Performance review:
_ The annual performance reviews against goals set and achieved held during the months of April- May every year. _ The employee completes his self-review /appraisal against goals set, online in the MIS and submits the same to his manager for review. _ The manager then discuss the performance of the employee with him/her off-line, give him feedback on his performance and capture his own comments and performance ratings against goals and overall ratings in the manager’s evaluation form. _ The manager also discusses the employee’s performance as well as rating with the manager’s manager (reviewer) and sends the document to the HR department for further processing
Training and Development Training refers to the process of imparting specific skills. An employee undergoing training is presumed to have had some formal education. No training program is complete without an element of education. Hence we can say that Training is offered to operatives. Development means those learning opportunities designed to help employees to grow. Development is not primarily skills oriented. Instead it provides the general knowledge and attitudes, which will be helpful to employers in higher positions. Efforts towards development often depend on personal drive and ambition. Development activities such as those supplied by management development programs are generally voluntary in nature. Development provides knowledge about business environment, management principles and techniques, human relations, specific industry analysis and the like is useful for better management of a company. The need for Training and Development is determined by the employee’s performance deficiency, computed as follows. Training & Development Need = Standard Performance – Actual Performance Importance of Training & Development • Helps remove performance deficiencies in employees • Greater stability, flexibility and capacity for growth in an organization • Accidents, scraps and damages to machinery can be avoided • Serves as effective source of recruitment • It is an investment in HR with a promise of better returns in future • Reduces dissatisfaction, absenteeism, complaints and turnover of employees Training is given on • Safety aspects • Behavorial aspects • Technical aspects • Communication skills Identification of Training needs (Methods) Individual Training Needs Identification 1. Performance Appraisals
2. Interviews 3. Questionnaires 4. Attitude Surveys 5. Training Progress Feedback 6. Work Sampling 7. Rating Scales Group Level Training needs Identification 1. Organizational Goals and Objectives 2. Personnel / Skills Inventories 3. Organizational Climate Indices 4. Efficiency Indices 5. Exit Interviews 6. MBO / Work Planning Systems 7. Quality Circles 8. Customer Satisfaction Survey 9. Analysis of Current and Anticipated Changes
Talent Management It is a holistic and systematic process, across the group. It is built on the work done so far on people processes, and has a Talent Identification and Talent Development Strategy for all the 3 levels of management i.e. Senior, Middle & Junior Management.
The talent management process includes HR process for • Recruitment,
• • • • •
Performance, Compensation, Succession planning, Learning and other capabilities around self-service Reporting.
Companies that are engaged in talent management (human capital management) are strategic and deliberate in how they source, attract, select, train, develop, promote, and move employees through the organization. This term also incorporates how companies drive performance at the individual level (performance management). Human Resource Information System POORNATA, an ERP (People soft) implementation of Human Resource practices has been introduced in UTCL to elevate HR processes to world class levels and standardize them across Units and Businesses. This has resulted in single integrated HR-ERP for all management cadre employees of the group. These automated HR Processes will also aid in faster, efficient, timely and accurate data availability to Management for decision-making. UTCL’s People Soft Enterprise Performance Management (EPM) enables it to achieve world-class performance by aligning the right information and resources to strategic objectives. EPM offers performance management solutions for every budget and every phase of the management cycle, helping its managers to formulate strategies for profitable growth, align strategies with operational plans, and actively monitor day-to-day operations. Poornata helps a lot in the different works of the organization. It helps in the following ways • It helps in entry of all the database of all the employees. • It reduces time to note all the databases of the employees. • It reduces different mistakes or errors while maintaining the databases • It helps in doing performance appraisal of the employees. • It also helps in doing the data updation of the employees. • It helps in recruitment and selection of the employees • It reduces the time of the work • It also reduces the no of employees for maintaining the database. • It helps in maintaining the job description of employees. • It records the compensation details for the employee. Poornata (ERP) helps UTCL in the following ways • Poornata helps in performing day to day roles. • Poornata helps in creating and updating of the positions of the employee Compensation It is an outcome of what the Organization would like to pay for, which is determined by external and internal factors. The company views compensation not only as something that reflects on the pay slip or in the CTC (Cost To Company) but also they are concerned about overall employee well being though they may not put any monetary value on items like Scholarships, Club membership, Retirement benefit, Health and Accident coverage.
The Group’s approach towards various aspects of compensation focuses on: • Pay for performance (Variable Pay) _ Rewards stretch performance which is linked to business, team and individual results • Compensation increase _ Pay for the job _ Internal equity based on contribution to the organization Three major terms used in the company’s compensation: 1. Fixed Cost: It is the fixed component of the salary that is committed to an employee and is paid on monthly / annual basis. This includes base salary, all perks and reimbursements and retrials such as PF, Gratuity and Superannuation. 2. Variable Pay: This is the variable component, payout of which is contingent on Business, Unit/Zone and Individual performance. Targets for the year will be fixed and communicated at the beginning of every performance year 3. Cost to Company: This is a sum of Fixed Cost and Variable Pay. CTC is decided based on designation, qualification and experience. Basic is around 42% of fixed cost without housing. Perks and allowances are fixed as per the designations. Variable pay based on job band is payable at 18%, 15% and 12% of fixed cost without housing. Balance amount is paid as special allowance. EXIT INTERVIEWS An exit interview is simply a conversation between a departing employee (who is leaving the company either voluntarily or involuntarily) and a representative from the organization. The interview can follow a structured format or be conducted on an informal basis; written questionnaires can even be used in place of a face-to-face meeting. Whichever format is used, exit interviews are generally documented The exit interview is an important learning tool for employers. When properly conducted, the interview provides the employer with the opportunity to: • Discuss and clarify the reasons for the termination • Clarify pay and benefits issues (e.g., receipt of the last paycheck, the amount of unused vacation, conversion or continuation of benefits, terms of a severance package, unemployment insurance, etc.) • Explain company policies relating to departing employees (e.g., trade secret confidentiality, restrictive covenants or non-compete agreements, the possibility of future re-employment, freelance or contract work, the provision of references to prospective employers, etc.) Ensure the return of keys, security cards, and company property • Obtain information about improper or questionable management practices connected with the employee's termination • Obtain information about a supervisor's management skills • Obtain information about how effectively a department operates • Obtain feedback about employees' opinions and attitudes about the company • Resolve or defuse any remaining disputes with the exiting employee
• Protect itself against subsequent charges that the employee was forced to resign (i.e., constructive discharge) UTCL is doing this interview. Because it knows “Learn of potential changes in policies and practices that may make the company more competitive (e.g., compensation and benefits packages, flexible work arrangements).
CHAPTER-4 CONCLUSION
Effective and Efficient HR practices are very much important for every organization. So, UTCL has also its HR Practices, which helps it a lot to achieve the targets. Human Resource Management initiatives in any Organization endeavor to change, redefine, revisit, renew, reinvent, revitalize & restructure the Organization architecture. This is effectively done with the help of alignment & integration of HR policies & strategies with business goal & objectives. All companies are having their HR Practices but the company who is having the best, is the most successful company among its competitors. So the company can get success within its competitors by applying best, effective HR Practices. The best practices in the management of human resources are the ones which optimize a workforce so that it can not only get work done, but also ensure a greater level of efficiency, timeliness and quality as it accomplishes increases productivity overall. Hence the job of the best practices human resources firm is to make sure that these benefits and pay scales meet the company’s budget while remaining attractive and competitive enough to pull in the very best talent possible. We should know that these figures put the company in a good light while also presenting themselves as engaging and competitive for company’s recruitment efforts. Transparent HR practices ensure continuous business growth in every organization. • It gives the suitable working environment to the employees. • The success of company motivates the employees of organization to continue relationship with it. For example as all the employees Perks chart has been mentioned according to their designation in the HR practices, it helps the employees to know what their perks charts are. So it creates a transparency
CHAPTER-5 BIBLIOGRAPHY
• www.adityabirla.com • IBSAR Navi Mumbai • Wikipedia
doc_681328944.doc
HR strategies as the key to Corporate success
HR STRATEGIES AS THE KEY TO CORPORATE SUCCESS
CERTIFICATE
ACKNOWLEDGEMENT
CONTENTS
SR. NO 1. 2. 3. 4. 5.
TOPICS
PAGE NO.
INTRODUCTION LITERATURE REVIEW RESEARCH METHODOLOGY CONCLUSION BIBLIOGRAPHY
5-34 35-38 39-47 48 49
CHAPTER-1 Introduction
1. INTERNATIONAL HRM
Global Human Resource Management is a process concerned broadly with recruiting of persons, training them and putting them to the most productive usage. It is also concerned with maintaining of congenial international industrial relations. It is the essential prerequisite for the success of the international firm owning to its complexities. Broadly defined, international human resource management (IHRM) is the process of procuring, allocating, and effectively utilizing human resources in a multinational corporation. If the MNC is simply exporting its products, with only a few small offices in foreign locations, then the task of the international HR manager is relatively simple. However, in global firms human resource managers must achieve two somewhat conflicting strategic objectives. First, they must integrate human resource policies and practices across a number of subsidiaries in different countries so that overall corporate objectives can be achieved. At the same time, the approach to HRM must be sufficiently flexible to allow for significant differences in the type of HR policies and practices that are most effective in different business and cultural settings. 1.1 Characteristics of International HR – • • International Human Resource Management (GHRM) -- the planning, selection, training, employment, and evaluation of employees for global operations. GHR managers serve in an advisory or support role to line managers by providing guidelines, searching, training, and evaluating employees. • How a firm recruits, trains, and places skilled personnel in its worldwide value chains sets it apart from competition. The combined knowledge, skills, and experiences of employees are distinctive and provide myriad advantages to the firm’s operations worldwide. • • 1.2 Regulatory Policies of International HR: Four major tasks of HRM – – Staffing policy. Management training and development.
– – 1.2.1
Performance appraisal. Compensation policy.
STAFFING POLICY: a. Selecting individuals with requisite skills to do a particular job. b. Tool for developing and promoting corporate culture. c. Types of Staffing Policy • • • Ethnocentric Polycentric Geocentric
1) Ethnocentric Policy: • • Key management positions filled by parent-country nationals. Best suited to international businesses.
? Advantages: – – – Overcomes lack of qualified managers in host nation. Unified culture. Helps transfer core competencies.
? Disadvantages: – – Produces resentment in host country. Can lead to cultural myopia.
2) Polycentric Policy: • • • Host-country nationals manage subsidiaries. Parent companies nationals hold key headquarter positions. Best suited to multi-domestic businesses.
? Advantages: – – – Alleviates cultural myopia. Inexpensive to implement. Helps transfer core competencies.
? Disadvantages: – Limits opportunity to gain experience of host country nationals outside their own country. – Can create gap between home and host country operations.
3) Geocentric Policy: • • Seek best people, regardless of nationality. Best suited to global and trans-national businesses.
? Advantages: – – – Enables the firm to make best use of its human resources. Equips executives to work in a number of cultures. Helps build strong unifying culture and informal management network.
? Disadvantages:
– – –
National immigration policies may limit implementation. Expensive to implement due to training and relocation. Compensation structure can be a problem.
The aim of the Human Resources Strategy is to support staff. This it will do by developing and promoting good HR practice for the recruitment and development of high quality staff, by effectively managing their performance and by providing appropriate rewards and flexible opportunities that allow individuals to manage their own development.
Core Functions of International Human resources are: A. Recruitment B. Selection Process C. Expatriates D. Performance Appraisal E. Training and Development F. Compensation Sources of Recruitment Sources of Recruitment
There are many different types of interviews. Once you are selected for an interview, you may experience one or more of the situations described below. When you schedule an interview, try to get as much information about whom you will be meeting. It is rare to have only one interview prior to a job offer. Most employers will bring back a candidate a number of times to be sure a potential employee will fit into the company culture. MODERN TECHNIQUES AND SOURCES OF RECRUITMENT FOR GLOBAL COMPANIES 1) Walk-In -: The busy global organizations and the rapid changing companies do not find time to perform various functions of recruitment. Therefore they advise the candidates to attend for an interview directly and without a prior application on a specified date, time and at a specified place. 2) Consult-In -: The busy and dynamic global companies encourage the potential job seekers to approach them personally and consult them regarding the jobs. The international companies select the suitable candidates from among such candidates though the selection process.
3) Head-Hunting -: The global companies request the professional organizations to search for the best candidates particularly for the senior executive positions. The professional organizations search for the most suitable candidates and advice the global company regarding the filling up of the positions. 4) Body-Shopping -: Professional organizations and the hi-tech training institutes develop the pool of human resources for possible employment. The prospective employers contact these organizations to recruit the candidates. The body shoppers appoint people for their organization and provide the required/specific employees to various organizations on request. In fact, body shoppers collect fee/commission from the organizations and pay the salary/benefits to the employees. 5) Business Alliance -: It is like acquisitions, mergers, and takeovers help in getting human resources. In addition, the companies do also have alliances in sharing their human resources on ad-hoc basis. 6) Tele-Recruitment -: The technological revolutions in telecommunication helped the organizations to use internet as source of recruitment. Organizations advertise the job vacancies though the World Wide Web internet. The job seekers send their application though e-mails or internet websites.
STEPS IN THE SELECTION PROCESS Step 1: Preliminary Selection Preliminary selection of applicants is often done by setting minimum standards for the job, and communicating these standards to the employees, and agencies who help them recruit. The fact that some potential applicants may not apply because of their inability to meet the minimum requirements serves as an initial screening device. Then, when reviewing resumes and application forms, firms are further able to screen out unacceptable job candidates. At this point, firms can also assign priorities to the resumes so that the most promising candidates may be seen first.
Step 2: Employment Tests One way to ensure that selection decisions are based on objective data, is to use employment tests. Employment tests provide firms with objective data for purposes of comparing applicants. Examples of such tests include; paper and pencil test, manual dexterity and strength tests, and simulation exercises. Employment Tests: Validation To be useful, employment test must be valid. Validity requires that the test scores relate to actual job performance. Hence, the use of tests is not necessarily a simple process. Whereas a firm may be inclined to use an "off-the-shelf" product, such a test may bear little resemblance to the jobrelated tasks a successful applicant might be required to do. Before using a test, firms should ensure that they are, in fact, valid. Tests must be validated on those jobs to which tests are being applied and, tests must be validated for all groups to which tests are being applied. Employment Tests: Reliability Not only must employment test be valid, they must also be reliable. That is, employment tests should yield consistent results. An employment test should give a similar score each time the person takes the test (tests that rely on luck are not reliable). Very often, paper and pencil tests are used to test knowledge. A firm could use a paper and pencil knowledge test to ascertain an applicant's knowledge of computer programming skills or to test whether or not an applicant understands government regulations governing an industry. Generally, knowledge tests have good reliability, but their validity must be tested before they are used. A keyboarding test, testing an applicant's keyboarding speed and accuracy, is an example of a manual dexterity or performance test. Performance tests measure the applicant's ability to perform some part of the job for which applicants are to be hired. Often, there is an assumption of validity insofar as the test includes a representative sample of the work the applicant may be required to do. Firms must be cautious not to use tests that might discriminate against any minority group.
An in-basket exercise, in which administrative activities are simulated and an applicant's abilities to deal with these activities is evaluated, is one example of a simulation exercise. Step 3: Selection Interview Selecting the best candidate for the job is the #1 priority of the selection process. The employment interview is conducted to learn more about the suitability of people under consideration for a particular job and is one further obstacle for the applicant to overcome. The interview is one further means of reducing the number of people who might be eligible for the job. The selection interview proceeds in a series of stages. Initially, the interviewer needs to be prepared. Part of this preparation includes deciding where to hold the interviews and which type of interview to conduct. Preparation also includes carefully reading through and making notes on the applicants' application forms and resumes. At this stage, interviewers should make frequent reference to the job (job description) to compare the applicant's background with the job's requirements. The preparatory stage also includes developing a series of job-related questions. During the interview, the interviewer should have an outline of questions, on which to take notes. During the interview process itself, initially, the interviewer(s) should ensure the creation of rapport between interviewer(s) and the interviewee. Next, the two parties can engage in the exchange of information. Once the interview has been terminated, the interviewer(s) must set aside some time to evaluate the notes they have taken during the process. Step 4: Verification of References Personal References
• •
Usually provided by friends or family. Objectivity and candor are questionable.
Employment References
•
Differ from personal references.
• •
Discuss the applicant's work history. Questionable usefulness
o
former employers are unlikely to be candid
• •
Useful primarily as confirmation of prior employment. Frequently omitted entirely from the selection process.
Employment References: the Telephone Inquiry
• • • • •
Fast. Cheap. Voice inflections or hesitations to blunt questions may be very informative. Less than 22% seek negative information. Approx. 48% used to verify application information.
Step 5: Medical Evaluation
•
Generally a health checklist
o o
health information accident information
• •
Occasionally the checklist is supplemented by a physical examination Rationale:
o
employer may be entitled to lower health or life insurance rates for company-paid insurance
o o
may be required by provincial or local health officials may be used to determine whether the applicant can handle physical or mental stress
•
Caution:
o
a congenital health condition may be considered a disability failure to hire an applicant due to a disability may be seen as discrimination against a qualified applicant
Step 6: Supervisory Interview Since the immediate supervisor is ultimately responsible for new workers, he or she should have input into the hiring decision. The supervisor is better able to evaluate the applicant's technical capabilities and is in a better position to answer the interviewee's job-related questions. Further, the supervisor's personal commitment to the success of the new employee is higher if the supervisor has played a role in the hiring decision. Step 7: Realistic Job Preview The realistic job preview involves showing the applicant(s) the job site in order to acquaint them with the work setting, commonly used equipment, and prospective co-workers. The realistic job preview is intended to prevent initial job dissatisfaction with a job by presenting a realistic view of the job. Research shows that job turnover is lower when realistic job previews are used.
Step 8: Hiring Decision The actual hiring of an applicant constitutes the end of the selection process. At this stage, successful (as well as unsuccessful) applicants must be notified of the firm's decision. Since money and effort has been spent on all applicants, the HR department may wish to consider even the unsuccessful applicants for other openings in the organization.
The applications of unsuccessful applicants are often kept on file and the applications of successful applicants will be retained in the employees' personnel files. No matter what the form of the job offer, the principle is generally the same: do not make promises or statements that you cannot or do not intend to keep. Such statements can lead to expensive litigation if it is later decided to terminate the employee. When a job offer is made, it should include the following information:
• • • • • • •
Position offered. Location of the job. Salary (although sometimes salary must be negotiated before the applicant will accept). Benefits. Starting date. Any papers or information that should be brought on the first day of work. A date (or time) by which the applicant must respond to your job offer, so you can move on to the next candidate if your first choice doesn't accept.
• • • •
Benefits. Starting date. Any papers or information that should be brought on the first day of work. A date (or time) by which the applicant must respond to your job offer, so you can move on to the next candidate if your first choice doesn't accept.
• •
The interviewing process. Did employment tests support or help the hiring decision? If not, maybe the firm will have not the kinds of test it administering. Further the evaluation process should help the firm decide if the time and cost involved in the testing is worth it.
EXPATRIATES Global companies, after selecting the candidates place them on the jobs in various countries, including the home country of the employee. But, the employees of the global companies are also placed in foreign countries. Even those employees who are placed initially in their home countries are sometimes transferred to various foreign countries. Thus the employees of global companies mostly work and live in foreign countries and their family members also live in foreign countries. 1.2.2 TRAINING AND DEVELOPMENT: Training is an act of increasing the knowledge and skill of an employee for doing a particular job.
Importance of Training and Development - It leads to • • • • • Improved job knowledge and skills at all levels of the organization Improved morale of the human resource Improved profitability and more positive attitudes towards profit-orientation Improved relation between boss and subordinated Improved understanding of culture of various countries
Need for Training and Development for Global Jobs • • • • To match employee specifications with the job requirement and organizational needs To achieve organizational viability and the transformation process To meet the challenges of technological advancement To understand the organizational complexity
•
To make the employee and his family members familiar with the language, customs, traditions etc of the foreign country
1.2.3 PERFORMANCE APPRAISAL: It is a method of evaluating employee behavior relating to expected work and behavior. Appraising the employee performance on foreign jobs is a highly complicated task as expectations of global company are multifarious. Objectives - The objectives of performance appraisal are to create and maintain a satisfactory level of performance, to contribute to the employee growth and development through training and to guide the job changes with the help of continuous ranking. Appraisers - The appraisers may be any person who has a thorough knowledge about the job content, content to appraised, standards of content and the one who observes the employee while performing a job. Typical Appraisers are: • • • • • • Supervisors Peers Subordinates Consultants Customers Users of Services
1.2.4 COMPENSATION: It is the amount of remuneration paid to the employees. Expatriate pay - It is mostly based on the balance sheet approach. Under the balance sheet approach, the compensation package enables the expatriate employees in various countries to maintain the same standard of living.
Gratuity - Expatriate employees are paid gratuity at a fixed rate for every year of completion of services in the foreign country Allowances - Expatriate employees are paid various allowances like car allowances, resettlement allowances, housing allowances etc Taxable - Some countries pay tax-free salary. Most of the countries pay taxable salary and gratuity
Profit Sharing & ESOP The Multinational corporations in order to motivate the employees for higher performance introduced a scheme of Profit Sharing. The Employee Stock Option allows the employees to purchase the share of the company at a fixed and reduced rate The advantages of stock ownership includes • • • • The plan enables the MNCs to retain efficient employees with them. It encourages the employees to improve performance. This scheme establishes significance of team effort among employees. It increases employee involvement and Participation.
2. FACTORS AFFECTING GLOBAL HRM Managing human resources in different cultures, economies, and legal systems presents some challenges. However, when well done, HR management pays dividends. A seven-year study in Britain of over 100 foreign companies showed that good HR management, as well as other factors, accounted for more of the variance in profitability and productivity than did technology, or research and development.
The most common obstacles to effective HR management are cross-cultural adaptation, different organizational/workforce values, differences in management style, and management turnover. Doing business globally requires that adaptations be made to reflect these factors. It is crucial that such concerns be seen as interrelated by managers and professionals as they do business and establish operations globally. Figure 2.1 depicts the general considerations for HR managers with global responsibilities. Each of those factors will be examined briefly.
POLITICA L LEGAL ECONOMI C
CULTUR AL
Fig.2.1 2.1 Legal and Political Factors The nature and stability of political systems vary from country to country. U.S. firms are accustomed to a relatively stable political system, and the same is true in many of the other developed countries in Europe. Although presidents, prime ministers, premiers, governors, senators, and representatives may change, the legal systems are well-established, and global firms can depend on continuity and consistency. However, in many other nations, the legal and political systems are turbulent. Some governments regularly are overthrown by military coups. Others are ruled by dictators and despots who use their power to require international firms to buy goods and services from host-country firms owned or controlled by the rulers or the rulers’ families. In some parts of the world, one-party rule has led to pervasive corruption, while in others there are so many parties those governments changes constantly. Also, legal systems vary in character and stability, with business contracts sometimes becoming unenforceable because of internal political factors.
International firms may have to decide strategically when to comply with certain laws and regulations and when to ignore them because of operational or political reasons. Another issue involves ethics. Because of restrictions imposed on U.S.-based firms through the Foreign Corrupt Practices Act (FCPA), a fine line exists between paying “agent fees,” which is legal, and bribery, which is illegal. HR regulations and laws vary among countries in character and detail. In many Western European countries, laws on labor unions and employment make it difficult to reduce the number of workers because required payments to former employees can be very high. Equal employment legislation exists to varying degrees. In some countries, laws address issues such as employment discrimination and sexual harassment. In others, because of religious or ethical differences, employment discrimination may be an accepted practice. All of these factors reveal that it is crucial for HR professionals to conduct a comprehensive review of the political environment and employment-related laws before beginning operations in a country. The role and nature of labor unions should be a part of that review. HR Perspective – The Legal and Political Environment of Unemployment in Europe Europe cannot seem to shake its chronic unemployment. The unemployment rate has ranged from almost 20% in Spain to over 10% in France—but it averages about 12%. Joblessness is much higher in Europe than in the United States or Japan. Forecasts are that even with an improvement in the economy and employment, unemployment at over 10% will continue in European Union (EU) countries. Why? Economists disagree about many matters, but not about unemployment. Generally they agree that labor markets need to be flexible, but in European countries they are relatively rigid. Very generous unemployment benefits, high minimum wages, strong unions, and unique (by U.S. standards) laws dissuade employers from hiring more employees. For example, in Spain, a permanent employee who is fired can get 45 days’ pay times the number of years he has been with the company. It is a large liability, so few firms create more permanent jobs. Similar legislation in other countries tends to keep those who have jobs at work, but the effect of the protective legislation keeps employers from creating more jobs. Economists tell us that in the
long run, without such laws, firms that cut costs and become more productive create more jobs because productive industries tend to expand. The pressure of world competition that is forcing painful reform is not popular in Europe. Many Europeans are crying “enough,” and questioning how quickly the European economies can transform themselves into the Anglo-Saxon model of capitalism. That formula - high productivity, low jobless rates, and a minimal social safety net – is not typical in most Western European countries. For example, a recent French poll found that two-thirds of the French people prefer their rich benefits and high unemployment to America’s approach of lower unemployment and limited social welfare benefits. Of course, elected politicians tend to follow the wishes of their constituents, bringing political and legal factors together—in this case, resulting in an average of 12% unemployment. Europe cannot seem to shake its chronic unemployment. The unemployment rate has ranged from almost 20% in Spain to over 10% in France—but it averages about 12%. Joblessness is much higher in Europe than in the United States or Japan. 2.2 Economic Factors Economic factors affect the other three factors. Different countries have different economic systems. Some even still operate with a modified version of communism, which has essentially failed. For example, in China communism is the official economic approach. But as the government attempts to move to a more mixed model, it is using unemployment and layoffs to reduce government enterprises bloated with too many workers. Many lesser-developed nations are receptive to foreign investment in order to create jobs for their growing populations. Global firms often obtain significantly cheaper labor rates in these countries than they do in Western Europe, Japan, and the United States. However, whether firms can realize significant profits in developing nations may be determined by currency fluctuations and restrictions on transfer of earnings. Also, political instability can lead to situations in which the assets of foreign firms are seized. In addition, nations with weak economies may not be able to invest in maintaining and upgrading the necessary elements of their infrastructures, such as roads, electric power, schools, and telecommunications. The absence of good infrastructures may make it more difficult to convince managers from the United States or Japan to take assignments
overseas. Economic conditions vary greatly. Cost of living is a major economic consideration for global corporations. In many developed countries, especially in Europe, unemployment has grown, but employment restrictions and wage levels remain high. Consequently, many European firms are transferring jobs to lower-wage countries, as Mercedes-Benz did at its Alabama plant. In addition, both personal and corporate tax rates are quite high. These factors all must be evaluated as part of the process of deciding whether to begin or purchase operations in foreign countries. 2.3. Cultural Factors Cultural forces represent another important concern affecting international HR management. Culture is composed of the societal forces affecting the values, beliefs, and actions of a distinct group of people. Cultural differences certainly exist between nations, but significant cultural differences exist within countries also. One only has to look at the conflicts caused by religion or ethnicity in Central Europe and other parts of the world to see the importance of culture on international organizations. Getting individuals from different ethnic or tribal backgrounds working together may be difficult in some parts of the world. Culture can lead to ethical differences among countries. One widely used way to classify and compare cultures has been developed by Geert Hofstede, a Dutch scholar and researcher. Hofstede conducted research on over 100,000 IBM employees in 53 countries, and he identified five dimensions useful in identifying and comparing culture. A review of each of those dimensions follows. POWER DISTANCE - The dimension of power distance refers to the inequality among the people of a nation. In countries such as Germany, the Netherlands, and the United States, there is a smaller power distance—which means there is less inequality—than in such countries as France, Indonesia, Russia, and China.
As power distance increases, there are greater status and authority differences between superiors and subordinates. One way in which differences on this dimension affect HR activities is that the reactions to management authority differ among cultures. A more autocratic approach to managing is more common in most other countries, while in the United States there is a bit more use of participatory management. INDIVIDUALISM - Another dimension of culture identified by Hofstede is individualism, which is the extent to which people in a country prefer to act as individuals instead of members of groups. On this dimension, people in Asian countries tend to be less individualistic and more group-oriented, whereas those in the United States score the highest in individualism. An implication of these differences is that more collective action and less individual competition is likely in those countries that deemphasize individualism. MASCULINITY/FEMININITY - The cultural dimension masculinity/femininity refers to the degree to which “masculine” values prevail over “feminine” values. Masculine values identified by Hofstede were assertiveness, performance orientation, success, and competitiveness, whereas feminine values included quality of life, close personal relationships, and caring. Respondents from Japan had the highest masculinity scores, while those from the Netherlands had more femininity-oriented values. Differences on this dimension may be tied to the role of women in the culture. Considering the different roles of women and what is “acceptable” for women in the United States, Saudi Arabia, Japan, and Mexico suggests how this dimension might affect the assignment of women expatriates to managerial jobs in the various countries. UNCERTAINTY AVOIDANCE - The dimension of uncertainty avoidance refers to the preference of people in a country for structured rather than unstructured situations. A structured situation is one in which rules can be established and there are clear guides on how people are expected to act. Nations high on this factor, such as Japan, France, and Russia, tend to be more resistant to change and more rigid. In contrast, people in places such as Hong Kong, the United States, and Indonesia tend to have more “business energy” and to be more flexible.
A logical use of differences on this factor is to anticipate how people in different countries will react to changes instituted in organizations. In more flexible cultures, what is less certain may be more intriguing and challenging, which may lead to greater entrepreneurship and risk taking than in the more “rigid” countries. LONG-TERM ORIENTATION - The dimension of long-term orientation refers to values people hold that emphasize the future, as opposed to short-term values, which focus on the present and the past. Long-term values include thrift and persistence, while short-term values include respecting tradition and fulfilling social obligations. People scoring the highest on longterm orientation were China and Hong Kong, while people in Russia, the United States, and France tended to have more short-term orientation. Differences in many other facets of culture could be discussed. But it is enough to recognize that international HR managers and professionals must recognize that cultural dimensions differ from country to country and even within countries. Therefore, the HR activities appropriate in one culture or country may have to be altered to fit appropriately into another culture or country.
WORK CULTURE OF MAJOR ECONOMIES 1) Major Japanese national cultural characteristics and management practicesNational Culture • • • • • • • • • Collectivism: group-orientation, a strong sense of community, loyalty to group Masculine: competitive, ambitious Endurance: the way of warrior, acceptance of hardship without complain Indebtedness: a strong sense of duty and obligation Absence of horizontal social grouping: vertical stratification by institution or group Observance of social status: deference to seniors, status clearly signaled in social interaction Harmony: preference for consensus over conflict Avoidance of loss of face High uncertainty avoidance
HRM and other employee related values and practices • • • • • • • • • • • Enterprise-based trade unions, cooperative relationship between employees and company, avoidance of open conflict Emotional and dependent relation between company and employees Ringi method: collective decision making Quality circles Implicit discreet performance appraisal Teamwork: multi-skill work teams, team appraisal and reward Nenko: life-time (or long term) employment for regular core employees Seniority-based pay and promotion Process-oriented A strong sense of obligation to colleagues and supervisors Discrimination against women
• • •
Employee-oriented leadership style Job-rotation, job-flexibility Employee loyalty and long-term commitment to company
2) Major American national cultural characteristics and management practices National Culture • • • • • • • • • • Highly individualistic: self-focused, preference to act as individual rather than as members of group, yet can be collectivist in face of a common threat Small power distance: egalitarian, tend not to treat people differently even when there are great differences in age or social standing Masculine: ambitious, competitive, goal-oriented, achievers Low uncertainty avoidance, risk-takers, entrepreneurial Low context: directness, expressive in communication, do not talk around things, tend to say exactly what they mean Open: friendly, informal Ethnocentric: believe their culture and value are superior to all others Future-oriented: strong belief that present ways of doing things in evidently are to be replaced by even better ways Readiness to change: try new things, a predisposition to believe that new is good ‘can-do’ attitude
HRM and other employee related values and practices • • • • • • Prefer participative leadership style Superiors are approachable Subordinates are willing to question authority Status based on how well people perform their functions Performance-oriented Promotion and reward based on merits as opposed to status, hierarchy, or gender
• • • • • • • • • • • • • • • •
Live more easily with uncertain, skeptical about rules and regulations Value punctuality and keep appointments and calendars Much more concerned with their own careers and personal success than about the welfare of the organisation or the group Value success and profit Acceptance conflict System-driven: conviction that all problems can be solved, system and energy will overcome any obstacles Proactive take initiative, aim high, ‘go for it’ Result-oriented Professional educated and well trained Strong devotion to managerial prerogative Hire and fir policies Communications skill, informal, direct, explicit, often aggressive Emphasis on entrepreneurship and innovation Legalist approach to contracts Informality yet a preference for written rules and procedures Dislike of trade unions
3) Major Indian national cultural characteristics and management practices National Culture • • • • • Collectivism, clannish, community conscious, large in-group includes extended family, clan, and friends Low concern for privacy Large power distance, obedience to seniors and respect for people in position of power, all wisdom comes from elders Resourcefulness, hard work, tenacity, ability to cope with diversity Risk aversion, low tolerance for ambiguity and uncertainty
• • • • • • • •
Emotional dependence Rigid social stratification, caste system Acceptance of status quo, preference for conformity Disciplined, self-resistant, yet emotional and display their emotions in public Honest, trustworthy, yet considerable corruption in public sector Law-abiding but prepared to bend the rules for friends and relatives Ambitious and materialistic High rate of illiteracy, especially among lower caste people and in rural areas
HRM and other employee related values and practices • • • • • • • • • • • • Entrepreneurial Preference for paternalistic and authoritative leadership Prefer to work under supervision Contractual relations with the workplace, in-group does not include the workplace, low level of commitment Manual workers are unskilled and uneducated Well educated and highly skilled managers and high-ranking staff National and plant based trade unions, confrontational industrial relations Pro-workers labour legislation Strong sense of responsibility Centralised decision making, little or no job autonomy for middle and low ranking staff and shop floor Low level of formulisation and use of written instructions and rules and regulations especially at the shop floor mainly because of workers illiteracy Differentiated reward systems and control strategies for white collar and manual workers. 4) Major British national cultural characteristics and management practises
National Culture • • • • • • • • • • • • Individualism: antimony, liberty, love of privacy, yet caring for community Small power distance, yet deference and acceptance of inequality, class conscious Aggressive, yet caring and friendly Reserve: shy, self-control, self-discipline High ideals of conduct both for themselves and for others Conservatism: dislike of change and uncertainty, aversion to risk, lack of ambition Tenacity: resilience, resourcefulness Pragmatic: social-political realism, compromise, flexible unwritten constitution, common law, prepared to bend the law when it does not suit them Chauvinism: dislike of foreigners, xenophobia Honesty, trustworthy, and trusting Past-orientation: love of age-old traditions, the present is a culmination of past developments, ambivalence towards new technology Dislike of open conflict
HRM and other employee related values and practices • • • • • • • • Preference to have freedom to choose their own approach, using individual skills and abilities Job satisfaction derived from personal sense of achievement and superiors recognition of individual contributions Leadership style: persuasive Expectation from subordinate: commitment, initiative, ownership, responsibility, honesty Deference to authority Comfortable with minimal amount of rules and procedure Flexibility yet a preference to work according to the rules Well educated, skilled and , in certain circumstances, adaptable workforces
• • • • • • • • •
Compliance with legislation Short-term perspective: low expenditure on training and low employee productivity rates compared to many leading economies Some evidence of discrimination among employees and job applicants on the ground of age, gender or ethnicity, ‘glass ceiling’ Formal in communication and interpersonal relationships at work Ethnocentric attitudes towards foreign counterparty Conservative approach towards new technology Contractual, non-emotional relationship with the workplace Strong trade union tradition Pragmatic trade unions: fight for better pay and working conditions not ideologicallybased class struggle against managers, absence of serious trade union challenges to managements prerogative and right to manage
• •
Class distinctions reflection within the workplace in form of hostile them-and-us-attitude Expectation of governmental involvement in employment relationships
HR Perspective – Cultural and Ethical Differences Why do negotiators from some countries get loud, angry, emotional, and gesture wildly in business negotiations, while others sit quietly, smile, and make sure they get what they want? It is, in many cases, differences in culture. Culture is in one sense a shared set of meanings, values, and common views on relations with other people, right and wrong, etc. These differences lead to different ideas as to what constitutes ethical business behavior. For example: In one Eastern European country, obtaining a new telephone line in less than three months requires making a cash payment, referred to as an “expediting charge” (a bribe in most places), to the local manager of the telephone office. All parties to the deal know that the manager will retain the cash, but a telephone is essential for doing business internationally.
Foreign firms wishing to do business in one Asian Pacific country must hire a “business representative” in order to obtain appropriate licenses and operating permits. In this country, it is well known that the two best representatives are relatives of the head of the country. It also is common to give the representative 10%—20% ownership in the business as a “gift” for promptly completing the licensing process. A U.S.-based firm engaged in such practices could be violating the Foreign Corrupt Practices Act (FCPA), which prohibits U.S. firms from engaging in bribery and other practices in foreign countries that would be illegal in the United States. Competing firms from other countries are not bound by similar restrictions. However, the law reflects the U.S. culture’s view on the ethics of bribery. Specifically relating to HR management, another major concern is the use of child labor and prison labor. According to one estimate, over 80 million children under age 18 are working in factories and fields for international companies. In some countries, people convicted of “political crimes” are forced to work in factories that manufacture goods to be sold to U.S. and European firms. In those countries, prison labor also competes with other labor sources at lower wage rates. When stories of these situations have been publicized, customer boycotts and news media coverage have focused unfavorable attention on the companies involved. To counter such concerns, firms such as Levi Strauss and Starbuck’s Coffee, among others, have established minimum standards that must be met by all operations of their subcontractors and suppliers. Unfortunately, other firms have not been as aggressive.
3. ETHICAL ISSUES Ethics, social responsibility of business and corporate governance have become hot issues in the wake of a series of scandals reported from all over the world. It needs special attention because multinationals operate in a large number of countries with varying standards of moral behaviors and multicultural perceptions about what is right and what is wrong. Their workforce also consists of high diversity with individuals having different values and beliefs. Their actions and activities are also commented upon and attention from the media as well as national governments. As the issues faced by HR managers have increased in number and complexity, so have the pressures and challenges of acting ethically. Ethical issues pose fundamental questions about fairness, justice, truthfulness, and social responsibility. Concerns have been raised about the ethical standards used by managers and employees, particularly those in business organizations. It appears that the concerns are well-founded, if the results of one study of 1,300 employees and managers in multiple industries are an indication. About 48% of those surveyed admit engaging in unethical behavior at work. Some of the most frequently mentioned items were cheating on expense accounts, paying or accepting bribes and kickbacks, forging signatures, and lying about sick leave. 3.1 What is Ethics? Ethics is the discipline that examines the moral standards by an individual or a corporate or a society. Its explicit purpose is to determine whether the actions or activities of an individual or corporate are within the framework of moral standards or value systems embedded in a particular society. Different societies have a different moral standards and value systems according to their own culture.
Ethics is a function of one’s consciousness. It is, therefore, beyond the boundaries of law. Some activities may be legal but may not be ethical, although law represents the moral code or standards practiced by a society or country to resolve conflicts and allow freedom to individuals and groups to achieve their uniqueness, pursue their goals and live in peace. Ethics exists at the individual level, organizational level, and at the societal level. It represents the practiced value system. If ethics at the societal level is not strong, it affects the performance and ethical climate of organizations, which in turn influences individual actions and approach to work and life. In this context, the role of multinationals becomes interesting as different ethical climates may exist in their various subsidiaries operating in different societies. This may create problems for the parent company as actions of any one subsidiary may tarnish its image across the globe. However, there are international norms and conventions from which their actions can also be judged. 3.2 ETHICAL ISSUES & CORPORATE SOCIAL RESPONSIBILITY Ethics and corporate social responsibility are differently interpreted, complex and controversial subjects in the context of organizations which are operating internationally in diverse social, economic, political, cultural and legal environments. Ethical issues and considerations arise in particular when the business practices in the host country differ markedly from those in the home country. Three types of “ethical responses“ have been identified: Ethical relativism (the ethical standards in the host country should be followed), Ethical absolutism (the ethical standards of the home country should be followed), and Ethical universalism (this presumes that there is a universal ethical standard of right and wrong which transcend cultural boundaries and that these must be followed by the organization (distinction between morally wrong and culturally different. Corporate Social Responsibility is basically about an organization promoting non-economic objectives, i.e., instead of just focusing on maximizing value for shareholders, organization (specifically business corporations) attempt to play the role of “good citizens“, balancing the
interests of shareholders with those of society at large. Corporate Social Responsibility can be a complex issue at the domestic level, but at the international level it takes on a much larger significance. Areas where organizations operating internationally can demonstrate their social responsibility include, for example, observance of basic human rights, adoption of adequate workplace working conditions and health and hygiene standards, payment of adequate wages and salaries, equal employment opportunities, avoidance of child labor, adequate education and training, allowing unionization and protection of the environment. 3.3 ETHICAL ISSUES FACING MULTINATIONALS – The most common unethical practices business resort to include: Manipulation of stock markets: In India, manipulation of stock market is not uncommon. There are several investigations and a few brokerage firms and individuals have been prosecuted. MNC’s generally avoid manipulation of capital markets. Lobbying: Lobbying is the practice of influencing decisions made by government for the benefit of its citizens (in groups or individually). It includes all attempts to influence legislators and officials, whether by other legislators, constituents, or organized groups. A lobbyist is a person who tries to influence legislation on behalf of a special interest or a member of a lobby. Governments often define and regulate organized group lobbying. This is a tool of public relations. Japanese spend millions of dollars in the US every year to bend rules in award of contracts or to get sensitive information or restricted equipment more than other countries. Fudging of accounts and balance sheet: It is very common in developing countries like India and Indonesia to manipulate accounts to avoid taxes or manipulate share price before public issues. However it was shocking when American corporate heavyweights Enron and World.com were found manipulating accounts and balance sheets. Product Piracy: Lax enforcement of intellectual property rights has resulted in large-scale piracy of music and picture videos, software, fake drugs and other intellectual property capital in China, India, Latin America and Eastern Europe. It is estimated that 30,000 shops in Shanghai
alone sell pirated videos. In a raid in Thailand, 44,000 bootleg tapes were recovered from one shop alone. Here lax societal moral standards cause great loss to multinationals. Surrogate and deceptive advertising: There are many ethical issues in advertising, including violation of cultural norms and nudity, apart from false information ot customers. Many MNC’s are not sensitive to these issues though they spend most on advertisement and promotion. Discrimination in selection, compensation and promotion: In spite of equality laws in different countries, companies still practice some bias in selection and other management processes on the basis of gender, color, race and show ethnocentrism. Sexual harassment at workplace is growing trend. 3.4 STEPS FOR ORGANIZATION TO BUILD ETHICAL BEHAVIOR – Ethical issues and corporate social responsibility are closely related to the human resource function in organizations which are operating internationally and in diverse contexts: ? Minimize the exposure of employees to corrupt conduct by assisting in the development, publication, and implementation of appropriate codes of conduct. ? Ensure training programmes cover areas which are of ethical concern (e.g. bribery, human rights, justice, and the common good). ? Align performance appraisal and compensation systems so that they support the ethical stance taken. ? Be conversant with the type of requests that may be made of staff operating internationally, and provide them the necessary training so that they have the requisite negotiating skills to handle possible problem situations. ? Ensure that employees understand the difference between corrupt payments, gifts and permissible facilitation payments. It is not easy to build an ethical climate and accompany and it requires the top management’s best effort.
CHAPTER-2 LITERATURE REVIEW
INTERNATIONAL HR STRATEGIES USED Strategic Management refers to the process of Formulating, implementation and evaluating business strategies to achieve organizational objectives. At the core strategic management process is a team comprising the CEO aided by top executives. For example, the core team that formulated and executed the recent strategic takeover of Corus by Tata Steel considered of Ratan Tata, the CEO, and Muthuraman, MD. Tata Steel, Arunkumar Gandhi, Head of the M&A cell if the Tata Group and Koushik Chatterjee, VP Finance, Tata Steel International Human Resource Strategy refers to the process of developing practices, programmes and policies that help achieve organizational objectives. What is essential is that these programmes, policies and practices need to be aligned with organizational strategies. Elaborating further, strategic human resource management considers the implications of business strategy for all hr systems within the firm by translating company objectives into specific people management systems. The specific approach and process utilized will vary from organization to organization, but the key concept is consistent, that is, essentially all HR programmes and policies are integrated within a larger framework helping achieve the firm’s objectives. HR role in strategic management seems to be merely latitudinal but little in practice. Rarely in HR executive consulted in vital decisions, such as mergers or acquisitions. This popular perception, invites your attention towards a reality check It is not that the HR manager himself/Herself formulates strategies. He or she will be the member of a core team which formulates company strategies and ensures their implementation. To be full-fledged strategic partners with senior management, HR executives should impel and guide
serious discussion of how the company should be organized to carry out its strategy. Four roles of HR executives are relevant in this context. First, HR should define an organization’s architecture. In other words, it should identify the underlying model of the company’s way of doing business. More specifically, the architecture is a judicious mix of structure, systems, rewards, processes, people, styles, skills and shared values. After the architecture is defined it needs to be articulated explicitly. Without such clarity, managers tend to become more myopic about how the company runs Second, HR needs to be accountable for conducting an organizational audit. Audit helps identify which components of the architecture should be changed in order to facilitate strategy execution The third role of HR as a strategic partner is to identify methods for renovating the parts of the organizational architecture that need it. In other words, HR manager should be assignees to take the lead in proposing, creating, and debating best practice that can help implementing strategies. Fourth and finally, HR must take stock of its own work and set clear priorities. At any given time, the HR staff might have several initiatives in its sights, such as pay-for-performance, global team work, and action-learning development experiences. But to be truly to business outcomes, HR needs to join forces with line managers to continuously assess the impact and importance of each one of these initiatives. STRATEGIC HRM VERSUS CONVENTIONAL HRM Traditional HRM Staff specialists Employee relations Transactional, change follower, and respondent Slow, reactive, fragmented Short term Bureaucratic-roles, policies, procedures Fast, proactive, integrated Short, medium, long (as necessary) Organic-flexible, whatever is necessary to succeed Strategic HRM Line managers Partnerships with internal and external customers
Responsibility of HRM Focus Role of HR Initiatives Time horizon Control
Job Design Key Investment Accountability
Tight division of labor, independence, specialization Capital, products Cost center
Broad, flexible, whatever is necessary to succeed People, knowledge Investment center
BARRIERS TO STRATEGIC HRM Though strategic HRM looks convincing and essential, several barriers operate in the way of organizations taking to strategic orientation of their HR functions. The first barrier is that most organizations adopt a short-term mentality and focus on current performance. This is no surprise since stakeholders, particularly shareholders, expect quick rewards and executives need to live up to these expectations. Employees expect quick rewards based on their performance. The second barrier relates to the inability of HR executives to think strategically. They are unable to go beyond their area of operation. Their knowledge about general business functioning, their awareness about technological advancements and their ability to convince colleagues in other department is limited. The third barrier is that most senior managers lack appreciation for the value of HR and its ability to contribute to the organization from strategic perspective. Many understand only the conventional HR and fail to realize the contribution HR can make as a strategic partner A fourth barrier is that some functional managers as well and is concerned more with technical aspects of their areas of responsibility than the human aspects. As stated earlier, every line manager is an HR manager too. But in reality, finance controller for example, fails to see beyond cash inflows and outflows, so also the operations executive who is obsessed with inputs, outputs and the conversation process. A fifth barrier to strategic HR is the problem of quantifying many of the outcomes and benefits if HR programs. It is believed that many of the outcomes of HR function are abstract – felt but not seen. In an environment where firms operate under pressure, what attracts every ones attention is an activity that contributes to the bottom line. Anything else is shelved
Yet another barrier to strategic HR is the fact that human assets are not owned by organizations and, therefore, are perceived as higher risk investment than capital asset, particularly in highly competitive environment where key executives are poached from competitors, there is a tendency to invest less in employees than in technology and information, which are more propriety. This mindset and approach prevents organization from realizing the fact that it is the people who invest technology and it is human brains behind revolution in informatics, and it is a competitive advantage to invest in people. How can such firms adopt strategic approach to human resources? Finally, strategic HR may be resisted because of the incentives for change that might arise. Taking a strategic approach to HR may mean making drastic changes in the firm’s architecture. Not many executives are prepared to accept such drastic changes. Short- term mentality/focus on current performance Inability of HR to think strategically Lack of appreciation of what HR can contribute Failure to understand general manager’s role as an HR manager Difficulty in quantifying many HR outcome Perception of human assets as higher risk investments Incentives for change that might arise Barrier to Strategic HR
CHAPTER- 3
RESEARCH METHODOLOGY
The importance of Human Resource management is being increasingly realized in industrial and non-industrial organization both in India and abroad. The realization
has come about because of increasing complexity of the task of managers and administrators. In most organizations the problems of getting the competent and relevant people, retaining them, keeping up their motivation and morale, and helping them to both continuously grow and contribute their best to the organizations, are now viewed as the most critical problems. The study is aimed to cover some knowledge of the HR Strategies followed in an organization with reference to Aditya Birla Group. Aditya Birla Group is India's first truly multinational corporation. The group has an annual turnover of US$ 24 billion and has over 1,00,000 employees belonging to over 25 different nationalities on its rolls. Aditya Birla Group has its presence in 20 countries – India, Thailand, Laos, Indonesia, Philippines, Egypt, Canada, Australia, China, USA, UK, Germany, Hungary, Brazil, Italy, France, Luxembourg, Switzerland, Malaysia and Korea. Globally the Aditya Birla Group is: A metals powerhouse, among the world’s most cost-efficient aluminium and copper producers. Hindalco, from its fold, is a Fortune 500 Company. It is also the largest aluminium rolling company and one of the 3 biggest producers of primary aluminium in Asia Ultra Tech Cement: The Groups cement business is under both Grasim and UltraTech cement. Together the two companies under the group account for a substantial share of the cement market in India. Now a day the cement division of the Grasim industries Limited works under the banner of the Ultra Tech Cement limited (UTCL). UltraTech Cement Ltd is having its own vision, mission and values. Vision of the company: To be a premium global conglomerate with a clear focus on each business. Mission of the company: To deliver superior value to the customers, shareholders, employees and society at large.
Values of the company: People contribute when they relate to an organization and they relate, when they understand the organization. People understand an organization through its values by experiencing the culture that values create and by using the systems and processes that values define. In large organizations, such shared understanding cannot be created through leadership of individuals
alone; it requires leadership of principles, of beliefs, of conviction . Integrity, Commitment, Passion, Seamlessness, Speed; These together constitute what they call their “Value”. Organizational Structure (HR)
HR PRACTICES The success of any business depends as much on appropriate, effective, well-communicated, HR and business practices as it depends on meeting the requirements of mandated laws and regulations. In fact, good planning and the development of effective practices make regulatory compliance much easier. HR practices helps in increasing the productivity and quality, and to gain the competitive advantage of a workforce strategically aligned with the organization’s goals and objectives. Some of the key performance indicators for Human Resources include: • Employees’ clarity on HR policies • Employees’ clarity on roles, responsibilities and expectations • Development of qualitative staff • Number of HR issues arising for which there are no clear policies and Guidelines • Competitiveness of compensation structure relative to industry benchmark • Usefulness and accuracy of compensation survey • Lead time to respond to staff welfare issues • Employees’ assessment of promotion criteria and process (clarity, fairness) • Measurement of HR policy violation • Average time required to fill vacancies • Proportion of training programs resulting in productivity improvement • Staff attrition rate • Understanding / Clarity of the Organizational philosophy
Recruitment and Selection: Recruitment is the process of searching for prospective employees and stimulating them to apply for jobs in the organization. Effectively, selection is 'buying' an employee (the price being the wage or salary multiplied by probable years of service) hence bad buys can be very expensive. The recruitment process of Ultra Tech Cement Ltd starts from the requirement of different departments as per to the org chart. Then they tell to the HR Department. HR Department takes the candidates from Data bank of company, Poornata etc, then does the short-listing, then does the scheduling for the interview. After this the selection and negotiation process occurs. Then offer letter is been given to the selected candidate. The employee then joins in the organization. Then the company arranges the Induction Program for the employee. After this the recruitment process ends with this. The Recruitment Process of UTCL
Performance Management System It is a structured method of formally and objectively evaluating employee’s performance with respect to their objectives. It addresses the issue of an employee’s development by providing them with structured and in-depth analysis of strengths and areas of improvement. It provides with input for annual increments, training and development. For an organization the aim should not be just to have the best people, but also to retain them and get best out of them. Employee
Performance management includes planning work and setting expectations, developing the capacity to perform, continuously monitoring performance and evaluating it. Most organizations focus on an annual evaluation process for employees and call that Performance Management. However, annual evaluations are often subjective and can lack specific measurements and supportive data to help the employee truly improve their behavior. Mainly the performance management of UTCL is done by online system includes the following basic processes 1. Annual goal setting 2. Midyear review 3. Annual performance review Annual goal setting: _ In the month of April/May every year, after the annual planning and budgeting rounds, all teams identify their KRA’s and goals for the forthcoming financial year. This process occurs by offline. _ Then the employees fill their goal setting document in the MIS, listing the KRA’s, Goals, Measurement Criteria, Assigning weightage and due date for completion of specific goals as already discussed offline. _ Then they notify the same to their manager/immediate supervisor and await approval. _ The manager recommends any changes if required or else approves the goals set in the document. _ The approval of the goals set by the managers completes the goal setting process. _ The approved documents will be then available to the employees as well as their managers for the reference throughout the year. These documents can also be viewed by manager’s manager (Reviewer) for their indirect subordinates. Mid Year Review: _ Mid year review of goals set at the beginning of the financial year held on the months of October/November every year. _ The mid year review generally initiated by the manager. _ The main focus of the mid year review is to check if the goals set at the beginning of the year are relevant or if they need to be revised or updated. _ The mid year review is also an opportunity for the manager and his team members to identify and discuss about any performance issues and initiate corrective action for the same. _ The mid year review does not entail any ratings.
Annual Performance review:
_ The annual performance reviews against goals set and achieved held during the months of April- May every year. _ The employee completes his self-review /appraisal against goals set, online in the MIS and submits the same to his manager for review. _ The manager then discuss the performance of the employee with him/her off-line, give him feedback on his performance and capture his own comments and performance ratings against goals and overall ratings in the manager’s evaluation form. _ The manager also discusses the employee’s performance as well as rating with the manager’s manager (reviewer) and sends the document to the HR department for further processing
Training and Development Training refers to the process of imparting specific skills. An employee undergoing training is presumed to have had some formal education. No training program is complete without an element of education. Hence we can say that Training is offered to operatives. Development means those learning opportunities designed to help employees to grow. Development is not primarily skills oriented. Instead it provides the general knowledge and attitudes, which will be helpful to employers in higher positions. Efforts towards development often depend on personal drive and ambition. Development activities such as those supplied by management development programs are generally voluntary in nature. Development provides knowledge about business environment, management principles and techniques, human relations, specific industry analysis and the like is useful for better management of a company. The need for Training and Development is determined by the employee’s performance deficiency, computed as follows. Training & Development Need = Standard Performance – Actual Performance Importance of Training & Development • Helps remove performance deficiencies in employees • Greater stability, flexibility and capacity for growth in an organization • Accidents, scraps and damages to machinery can be avoided • Serves as effective source of recruitment • It is an investment in HR with a promise of better returns in future • Reduces dissatisfaction, absenteeism, complaints and turnover of employees Training is given on • Safety aspects • Behavorial aspects • Technical aspects • Communication skills Identification of Training needs (Methods) Individual Training Needs Identification 1. Performance Appraisals
2. Interviews 3. Questionnaires 4. Attitude Surveys 5. Training Progress Feedback 6. Work Sampling 7. Rating Scales Group Level Training needs Identification 1. Organizational Goals and Objectives 2. Personnel / Skills Inventories 3. Organizational Climate Indices 4. Efficiency Indices 5. Exit Interviews 6. MBO / Work Planning Systems 7. Quality Circles 8. Customer Satisfaction Survey 9. Analysis of Current and Anticipated Changes
Talent Management It is a holistic and systematic process, across the group. It is built on the work done so far on people processes, and has a Talent Identification and Talent Development Strategy for all the 3 levels of management i.e. Senior, Middle & Junior Management.
The talent management process includes HR process for • Recruitment,
• • • • •
Performance, Compensation, Succession planning, Learning and other capabilities around self-service Reporting.
Companies that are engaged in talent management (human capital management) are strategic and deliberate in how they source, attract, select, train, develop, promote, and move employees through the organization. This term also incorporates how companies drive performance at the individual level (performance management). Human Resource Information System POORNATA, an ERP (People soft) implementation of Human Resource practices has been introduced in UTCL to elevate HR processes to world class levels and standardize them across Units and Businesses. This has resulted in single integrated HR-ERP for all management cadre employees of the group. These automated HR Processes will also aid in faster, efficient, timely and accurate data availability to Management for decision-making. UTCL’s People Soft Enterprise Performance Management (EPM) enables it to achieve world-class performance by aligning the right information and resources to strategic objectives. EPM offers performance management solutions for every budget and every phase of the management cycle, helping its managers to formulate strategies for profitable growth, align strategies with operational plans, and actively monitor day-to-day operations. Poornata helps a lot in the different works of the organization. It helps in the following ways • It helps in entry of all the database of all the employees. • It reduces time to note all the databases of the employees. • It reduces different mistakes or errors while maintaining the databases • It helps in doing performance appraisal of the employees. • It also helps in doing the data updation of the employees. • It helps in recruitment and selection of the employees • It reduces the time of the work • It also reduces the no of employees for maintaining the database. • It helps in maintaining the job description of employees. • It records the compensation details for the employee. Poornata (ERP) helps UTCL in the following ways • Poornata helps in performing day to day roles. • Poornata helps in creating and updating of the positions of the employee Compensation It is an outcome of what the Organization would like to pay for, which is determined by external and internal factors. The company views compensation not only as something that reflects on the pay slip or in the CTC (Cost To Company) but also they are concerned about overall employee well being though they may not put any monetary value on items like Scholarships, Club membership, Retirement benefit, Health and Accident coverage.
The Group’s approach towards various aspects of compensation focuses on: • Pay for performance (Variable Pay) _ Rewards stretch performance which is linked to business, team and individual results • Compensation increase _ Pay for the job _ Internal equity based on contribution to the organization Three major terms used in the company’s compensation: 1. Fixed Cost: It is the fixed component of the salary that is committed to an employee and is paid on monthly / annual basis. This includes base salary, all perks and reimbursements and retrials such as PF, Gratuity and Superannuation. 2. Variable Pay: This is the variable component, payout of which is contingent on Business, Unit/Zone and Individual performance. Targets for the year will be fixed and communicated at the beginning of every performance year 3. Cost to Company: This is a sum of Fixed Cost and Variable Pay. CTC is decided based on designation, qualification and experience. Basic is around 42% of fixed cost without housing. Perks and allowances are fixed as per the designations. Variable pay based on job band is payable at 18%, 15% and 12% of fixed cost without housing. Balance amount is paid as special allowance. EXIT INTERVIEWS An exit interview is simply a conversation between a departing employee (who is leaving the company either voluntarily or involuntarily) and a representative from the organization. The interview can follow a structured format or be conducted on an informal basis; written questionnaires can even be used in place of a face-to-face meeting. Whichever format is used, exit interviews are generally documented The exit interview is an important learning tool for employers. When properly conducted, the interview provides the employer with the opportunity to: • Discuss and clarify the reasons for the termination • Clarify pay and benefits issues (e.g., receipt of the last paycheck, the amount of unused vacation, conversion or continuation of benefits, terms of a severance package, unemployment insurance, etc.) • Explain company policies relating to departing employees (e.g., trade secret confidentiality, restrictive covenants or non-compete agreements, the possibility of future re-employment, freelance or contract work, the provision of references to prospective employers, etc.) Ensure the return of keys, security cards, and company property • Obtain information about improper or questionable management practices connected with the employee's termination • Obtain information about a supervisor's management skills • Obtain information about how effectively a department operates • Obtain feedback about employees' opinions and attitudes about the company • Resolve or defuse any remaining disputes with the exiting employee
• Protect itself against subsequent charges that the employee was forced to resign (i.e., constructive discharge) UTCL is doing this interview. Because it knows “Learn of potential changes in policies and practices that may make the company more competitive (e.g., compensation and benefits packages, flexible work arrangements).
CHAPTER-4 CONCLUSION
Effective and Efficient HR practices are very much important for every organization. So, UTCL has also its HR Practices, which helps it a lot to achieve the targets. Human Resource Management initiatives in any Organization endeavor to change, redefine, revisit, renew, reinvent, revitalize & restructure the Organization architecture. This is effectively done with the help of alignment & integration of HR policies & strategies with business goal & objectives. All companies are having their HR Practices but the company who is having the best, is the most successful company among its competitors. So the company can get success within its competitors by applying best, effective HR Practices. The best practices in the management of human resources are the ones which optimize a workforce so that it can not only get work done, but also ensure a greater level of efficiency, timeliness and quality as it accomplishes increases productivity overall. Hence the job of the best practices human resources firm is to make sure that these benefits and pay scales meet the company’s budget while remaining attractive and competitive enough to pull in the very best talent possible. We should know that these figures put the company in a good light while also presenting themselves as engaging and competitive for company’s recruitment efforts. Transparent HR practices ensure continuous business growth in every organization. • It gives the suitable working environment to the employees. • The success of company motivates the employees of organization to continue relationship with it. For example as all the employees Perks chart has been mentioned according to their designation in the HR practices, it helps the employees to know what their perks charts are. So it creates a transparency
CHAPTER-5 BIBLIOGRAPHY
• www.adityabirla.com • IBSAR Navi Mumbai • Wikipedia
doc_681328944.doc