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DIPLOMA in PROJECT MANAGEMENT 8: Organizational Development and Human Resource Factors Vigneshwaran
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JX78946HP702 October 9, 2008
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Module 8: Organizational Development and Human Resource Factors
Table of Contents 1 Introduction Summary...................................................................................................3 2 Human Capital Management........................................................................................4 2.1 Basic Functions of Human Capital Management......................................................4 2.2 Human Capital Management as a growing importance factor in an organization’s growth 5 2.2.1 Adhering and adapting to employee’s needs......................................................5 2.2.2 Increasing responsibility in the evolution of a Manager.....................................6 2.2.3 Legal matters.......................................................................................................6 2.2.4 Consistency.........................................................................................................7 2.2.5 Expertise.............................................................................................................7 2.2.6 Increasing cost of Human Capital Management ................................................8 3 Human Capital Management moves from operational to strategic...........................8 3.1 Human Capital Management Challenges................................................................10 3.1.1 Economic and Technological Change..............................................................11 3.1.2 Workforce Availability and Quality.................................................................11 3.1.3 Demographics and Diversity.............................................................................12 3.1.4 Organizational Restructuring............................................................................13 4 Human Capital Management and the Organizational Culture ..............................13 4.1 Organization/ Industry Life-Cycle Stages and HCM Strategy explaining Appendix 1 15 5 HCM as a strategic business contributor to improve the organization...................17 5.1 Strategies to improve the organization....................................................................19 5.2 Linking the HCM Strategies and Plans to the Organization for Effective Strategic Contribution...................................................................................................................22 6 Final Summary..............................................................................................................24 7 Appendixes....................................................................................................................26 8 Bibliography (information not used directly but used to supplement information) 27 9 References (text you actually used but not entirely)..................................................28
organizations endure high budgetary expenditures to ensure success which does not necessarily guarantee success. and too inward organizational focused.Module 8: Organizational Development and Human Resource Factors 1 Introduction Summary Human Capital Management is regarded as an important function in your organization. compensation. process and technology. Weak human capital management can be caused by many factors such as hierarchical management. In focusing this enabler called people capital to excel in organizations. will show how HCM has moved from an administrative role to a strategic contributor to an organization. Out of these key three enablers. focus intensive on processes. a company would cease to exist. However. training and development. the most important component is people. Human capital management is regarded as important in an organization because without it. How would you use the theories learnt to improve this resourcecapital management in your organization? There are three key enablers to have an effective management: people. With people. 3 . the combination of an effective strategy and sound investment of human capital management does serve as the catalyst of an organization’s positive market competitive performance. your organization’s key strategic capital would always be its human capital because people capital defines the organization as well as it is also a reflection of either a performance of positives or negatives. This paper on Human Capital Management which we will cover on at matters of recruitment.
they would be able to meet the challenges in managing human capital with the proper planning and measure put in place as a result of proper strategic planning. training and personnel development. should problems arise. an organization is then able to bring in the necessary human capital resources for the work required by the organization and compensate them for their task. compensation. Their functions cover these roles: • Staffing (human resources planning. 2 2. you would then have a formalized design of a human capital management system that is meant to manage effectively the use of human talent from the aspect of recruitment.Module 8: Organizational Development and Human Resource Factors In ensuring the competitive success of an organization. Human Capital Management must look beyond the administrative activity role and more into contributing as a strategic role in an organization. Having a formalized human capital management system. recruitment and selection) • Human resource development • Compensation and benefits • Safety and health 4 . Within the organization. By formulating strategies. the Human Capital Management functions as a internal organization that focuses on the policies and strategies in managing people resource activity.1 Human Capital Management Basic Functions of Human Capital Management Human Capital Management is a set of strategies or a formalized system that focuses on the policies and practices in managing the people resource activity in a work environment. In addition.
They play an important role in creating the organization because human capital management talks about the management of human resources in terms of recruitment. The today’s worker also seeks to balance between the working life and individual personal pursuits. training and development.2. controlling and executing such policies designed to 5 .2 Human Capital Management as a growing importance factor in an organization’s growth Human capital management is viewed today as becoming more and more critical to an organization’s success in today’s corporate world. no organization can provide competitive advantage in today’s business world.1 Adhering and adapting to employee’s needs The employee today faces a lot of personal responsibilities like health care. Success of an organization today is dependant on its people because without it. As such. The factors below will illustrate the dynamic growing importance of human capital management in today’s organization: 2. family care including child and elderly care as well as family vacation planning. (Virtual University of Pakistan 2006) 2. designing and implementing employee communication system) • Interrelationship of human capital functions. the HCM is central to planning. compensation.Module 8: Organizational Development and Human Resource Factors • Employee and labor relations • Records maintaining • Research (providing a human resources information base.
2. training and personnel development.2 Increasing responsibility in the evolution of a Manager The role of management today has evolved from not only just managing the work activity of the human capital and processes but has gone beyond. The today’s manager looks at the complexities and demands in challenges to businesses such as local and foreign enterprise competition. As a result. compensation.2. HCM is tasked with developing and executing strategic business decisions relating to the organization’s objectives and matching that with the competency of the human capital.2. evolving new technologies and new major improvement in scientific research and development.Module 8: Organizational Development and Human Resource Factors accommodate the demands of the employee’s needs as well as balancing the employer’s needs and requirement. 2.3 Legal matters The introduction of fair and proper legislation has increased the importance of human capital functions today. This results in strategic decisions being made with concern to matters of recruitment. Some policies are listed below: • • • • • • Social Security benefits (employee’s provident fund and social medical security) Observance to a country’s national holiday Family and sick leave Labor relations Compensation Work safety 6 .
class action legal suits. this would result in costly back-pay awards. meals. 2. compensation and personnel development. HCM also looks into the employee matching and selection process. Compensation packages developed with attractive benefits such as allowances on transport travel. telecommuting and bonuses. the compensation structure can be viewed as uneven and unfair. HCM keeps the level of consistency equal because they ensure the stability of fairness when it comes to matters of promotion. As a result.5 Expertise In today’s organization they face many challenges. because it can be viewed as either unfair or uneven.4 Consistency Managers need to be consistent when making certain decisions such as compensation. and organization’s stock purchase plan or given stock options to employees. loans for housing. This is for HCM to evaluate a 7 . providing tests to potential candidates such as psychometric testing (the measurement of knowledge.Module 8: Organizational Development and Human Resource Factors The points above are some of the policies that has entrenched the importance of having a proper HCM in not performing administrative but also in a strategic role in managing today’s human capital. attitudes. Challenges such as compensation and candidate selection are one of those responses. many of which are external in nature. abilities. academic and training. and personality traits). competition. 2. and legal penalties. HCM is tasked with coming up with new ideas in response to those challenges. However.2. for example. entertainment and gadget.2. Without the consultation of the HCM. should these policies be infringed. They have to look into subjective and objective interviews.
(Virtual University of Pakistan 2006) 3 Human Capital Management moves from operational to strategic The traditional role of HCM has today been increased to not look only at administrative and daily operations but to a more strategic role. they must look into developing their skills and attitudes. For HCM to execute the new role in strategy. (Norman and Powell 2004) 8 . 2. negotiation skills and creativity. the knowledge base of the skilled human capital department is needed to ensure the ongoing advancement in human capital management. With the increasing demand for businesses globally and advancement in technology. the human capital development would be able to lead change.These methods have added on the commonplace traditional matching and selection of potential employees. HCM has now moved to being a strategic partner in contributing to the success of an organization by developing and executing the human capital management strategies and practices. With this regard. As such.2.6 Increasing cost of Human Capital Management The largest contributor of organizational cost today is the cost of human capital.Module 8: Organizational Development and Human Resource Factors candidate’s ability to solve problems under pressure must have team spirit. the human capital department would start a changes process strategically executing at the same time the role of a strategic partner and change agent. In doing so. the highly skilled employee today has become a valuable asset. facilitate business growth and enhance innovation across the organization. As a result. logical analytical thinking. budgetary expense for managing human capital is considered the highest in budgetary expenditure of an organization. excellent communication skills.
Figure 1 : Human Capital role framework (Ulrich 1998) 9 . The first dimension represents the focus of HCM and it ranges from operational to strategic. HCM is regarded as the vanguards and the vehicle of an organization’s culture and are also the main contributors to identification and implementation of change processes. change agent.Module 8: Organizational Development and Human Resource Factors The role of the change agent here is to manage the transformation of the employee. The second dimension reflects the human capital activities and distinguishes between managing human capital processes and managing people. Ulrich (Ulrich 1998) differentiates four roles for the up-to-date HCM derived from two dimensions. administrative expert and employee champion. Crossing these axes we arrive at the four roles of HCM: strategic partner. In Figure 1.
1 Human Capital Management Challenges In today’s competitive business world. For example. These skills are then used to add value to building the competence skills at senior director level. networking and exchanging support (Norman and Powell 2004). This program is called “High impact Program for HR People”. a technology management consulting company. in Accenture. (Judy and D’Amico 1997) In that study. the challenges facing HCM are: • Economic and technological change 10 . the role of HCM has become very challenging as well. the change transformation happens for HCM at a strategic level enabling HCM to be a change agent as well as a strategic partner. Thus.Module 8: Organizational Development and Human Resource Factors For HCM to excel in a new role. According to a study by the Hudson Institute. mentoring. the person has to be able to contribute at a strategic level towards the organization’s growth and success. the HCM professional has to be developed and be transformed. entitled Workforce 2020. problem sharing. Central to this program are coaching. Not only does the HCM professional have to play an operational role. Not only will HCM take on the operational role but they will also undertake a strategic role in leading change. 3. augment innovation and assist the organization growth and success. strategy. the study has indicated issues concerning the labor workforce. the HCM professionals have to develop new skills such as guiding and supporting.
3. This is a result of the growing use of information communication technology 11 . there is significant labor demand due to the lack of supply of workers with the necessary skills. organizations have been forced to also increase productivity and decrease labor costs in order to become more competitive.Module 8: Organizational Development and Human Resource Factors • • • Workforce availability and quality concerns Demographics and diversity issues Organizational restructuring 3.1. with a growing global marketplace.2 Workforce Availability and Quality In most parts of the world today. Malaysia’s current industrial focus has moved from manufacturing and agriculture to service and information communications technology industries. organizations now faced with a different set of challenges to recruitment and retention of employees. As a result of this shift. At the same time. organizations have had to lay off a number of employees.1 Economic and Technological Change Economic changes can alter employment patterns due to increasing demand in a particular occupational skill or an industrial shift. With the growing influence of information communications technology related to the global commerce.1. For example.
the workplace is a more diverse environment with peoples of different ethnic background. Also.3 Demographics and Diversity In the past where men were supposed to work with retirement package. now it is not the case. With the decline of the traditional family. you would have dual-career couples and working single parents. the quality of hiring of an employee is also a concern because employers in many organizations today seek to recruit employees who have technical competencies in engineering or information communications technology. the concept of balancing family and work poses a challenge to human capital management. this decreases the challenges to global commerce.1. In order to alleviate this situation. As a result. At the same time.Module 8: Organizational Development and Human Resource Factors and its correlation to global business because with technology. HCM today has had to adapt to a different working environment. HCM is being challenged to recruit and train new employees. where there is only a single income earner and usually male. important HCM legislation are put in place that 12 . matters relating to employment relocation and transfer which some employees maybe less than willing to accept. In the current workplace today. the balance of work and family life comes to a challenge especially for employees who have families as the employee faces a decision between child rearing and employment. Today. skills which are considered niche. 3. For example. both male and female as well.
However. As an agent of change. Today with mergers and acquisitions of organizations. facilities closing and out-placing workers. the HCM professional has to manage this human consequence of change. which could sometimes have a negative effect. 4 Human Capital Management and the Organizational Culture The culture of an organization is based on the professionally accepted norms and common values the working place in an organization. 3. values. this could result in drastic and sudden organizational changes. As a result.1.Module 8: Organizational Development and Human Resource Factors ensures that employers provide up to 2 weeks of unpaid parental/ family leave to employees. organizations seek to become more competitive to succeed in business. the organizational culture would be defined by the different characteristic of each employee that contributes to a norm of expected behaviors. 13 . Basing firmly on the on the vision and mission objective of the organization. jobs are redesigned and this affects the employee.4 Organizational Restructuring Organizations today are differently structured than it was the past few years as it strives to achieve market competitiveness. In doing so. Examples of negative effects are employee redundancies. the employees would be able to share values and beliefs which allows the employee to be able to define the necessary work opportunities and plan strategies.
However. With that in mind. this will explain the relationship between the life cycle of an 14 . rituals. and symbols used by the organization’s employees.Module 8: Organizational Development and Human Resource Factors philosophies. the evolution of organizational culture starts with the different life cycle of an organization from the view of a start up to firmly established organization. where organizations that supports a working culture that values the employee or view business situations such as risks and changes thereby requiring immediate responses can a positive differential factor when it comes to attracting new talent. the human capital management strategy will differ from an Information Communications Technology company that is three years old vs. The correlation between organization culture and human capital management is the recruitment and retention of employees. employee prospects look at the internal organizational culture of the organization that would set apart from another. Each different stage of an organization’s growth affects the human capital management strategy. However. a company that is like IBM or HP. organizational culture takes time to evolve as it takes time for shared experiences to evolve as an organizational culture. If you look at Appendix 1. For example. In being able to attract talent to organizations.
As the organization is still at infancy and starting. marketing. Personnel training and development is based on ad-hoc demand basis and is usually on the job. Growth At this stage. the amount of resources in terms of capital finance. Human capital management efforts have to be expanded to ensure career planning. Recruitment of candidates is based on individuals who already have the necessary skill-sets. It is important to have human capital management plans to oversee necessary attracting and recruiting talent and not just deal with immediate business demand pressures. so does the need for stability to sustain its growth.Module 8: Organizational Development and Human Resource Factors organization and the Human Capital Management activities. This juncture is where necessary additional capital investments are needed to expand facilities. where an organization is growing at a pace rate. (Coff 1997) 4. compensation practices and retention plans so that an organization is able to ensure 15 .1 Organization/ Industry Life-Cycle Stages and HCM Strategy explaining Appendix 1 Embryonic At this stage is where the entrepreneurial character exists in the organization. compensation packages are modest. and human resources to take advantage of the growth rate of business demand of the organization’s business.
not all organization will survive. the organization should be stable and thus its culture are stabilized as well. However. As a result. At the stage. stability of the organization will allow human capital management to be developed further in having formalized plans. Maturity At this stage of the cycle. Also. a balance is needed at this level by using short term and long term inducements targeting high potential and niche skilled employees who will ensure the organization’s survivability. merged or cease to continue in operations. Personnel 16 . at the maturity stage of the organization.Module 8: Organizational Development and Human Resource Factors the organization has the necessary employee staff and is able to attract and recruit talent. Shakeouts At this level as the industry reacts to rapid growth. this would also the human capital management to allow plans for new compensation plans for recruitment as well as reward incentives for the retention. policies and procedures. most organizations will be acquired. Human capital management is very focused at this level of the organization because it to ensure that the necessary human capital is retained whilst reorganizing and reducing labor to manage costs efficiently.
With the ever growing market competition amongst enterprise in business so does the demand for attracting and retaining talent.Module 8: Organizational Development and Human Resource Factors training and development plans would also be executed at this stage for the benefit of the employee. Decline At this stage. human capital management has been gaining recognition in its effort as a strategic business contributor to the organization. plans such as productivity enhancement and cost reduction programs are introduced such as layoffs. it sometimes would face resistance to change. As an organization diversifies or decides to seek in another direction. human capital management faces a challenge in order to execute the organization strategy. Even organizations that are not-for-profit must be able to 17 . This is because employees or organized employees would demand no decrease in pay as well as better employment security. early retirement programs or simply facility closure or transfer. 5 HCM as a strategic business contributor to improve the organization Over the years. At this level. where the organization has grown beyond stabilization.
As such. they now also have contribute to the strategic success of the organization. today not only has the human capital professional has have to manage administrative human capital tasks. (Ulrich 1997) .Module 8: Organizational Development and Human Resource Factors manage their human capital and in an organized business oriented style. The points below will state the different strategic of HCM in contributing to the organization: 18 .
employee cost and necessary staffing requirement and staffing specifications. production. as well as delivery of organization activities this will enhance organizational performance. The HCM professional is able to provide input by providing information on the labor workforce by staffing availability. Decision Making on Mergers. they must take into account the HCM issues they have to face. (Forbringer and Oeth 1998) Involvement in Strategic Planning In the past where human capital managers play a more supporting back end role in administration and operations now they are needed as past of a strategic planning team. sales and other business department concerns. HCM professionals are needed to be part of the discussions as you look into matters such 19 . Acquisitions. merged or even downsized.1 Strategies to improve the organization Enhancing Organizational Performance The HCM professional can contribute to the strategic success of the organization by establishing activities by enhancing organizational performance. technology.Module 8: Organizational Development and Human Resource Factors 5. The HCM professional is now viewed as a strategic partner alongside other strategic roles such as finance. And Downsizing When companies are acquired. Through planning and development.
HCM was seen as an activity of an organization. the HCM professional can introduce high wages as well as program incentives in departments where there are high 20 . (Wall Street Journal 1997) Redesigning Organizations and Work Processes Organizational structure follows the strategic planning set by HCM. to reduce costs in employment vacancies and high employment turnover rate in certain departments. it is the HCM that is the architect of the organization structure. The HCM professional would analyze the internal strengths and weaknesses of the human capital in an organization in order to gain strategic competitiveness for the organization by working with the organizational managers and executives in coming up with the analysis. He feels that the HCM professionals would look into new ways to align the organization and its work with the strategic thrust of the organization. According to studies. its has been found that less than one-third of those involved in mergers surveyed have adequately considered HCM issues. According to Ulrich.Module 8: Organizational Development and Human Resource Factors as merged organizational cultures and operations. (Ulrich 1998) Ensuring Financial Accountability for HCM results In the past. For example. now it is seen as contributing to the organizational performance by looking at its financial cost and benefit of the HCM effort.
system maintenance. loss of control of data as well as risk of information loss of HCM data and the negative performance of the outsourcing vendor selected. The activities in outsourcing HCM activities are payroll. In this manner. some HCM professionals in the organization may not have a certain level of expertise an external HCM professional has. shift activity planning.Module 8: Organizational Development and Human Resource Factors employment turnover rates. (Davidson 1998) This shows that HCM does more than its typical activity and task performance but it also looks at contributing to the organizational strategy by looking at the returns of investment of human capital. there are concerns such as the competency of the vendor. The advantages in outsourcing is that the HCM does not have to be saddled with operational costs such system maintenance of its HCM processes. it also contributes to better financial performance of the organization rather than being a cost activity center. (Huselid 1995) Outsourcing HCM Activities Nowadays. (Outsourcing Guide 1998) However. In order to alleviate the concerns of 21 . most organizations seek to outsource activities that can be handled in a cost effective manner. the organization’s HCM is able to be more flexible and able to adapt in changes to the organizational structure. with effective and efficient HCM programs. In addition. HCM is no exception. specialist HCM external expertise consulting and recruitment.
(McKee. The organization’s HCM must come up with a detailed analysis and must have periodic key performance indicators to provide key reporting to ensure service levels are met.Module 8: Organizational Development and Human Resource Factors outsourcing. (Mitchell III 1998) 5. the organization’s HCM must link the HCM strategy to the organization’s plans. Jones 1998 and Kochan and Barocci 1985) 22 . Hill.2 Linking the HCM Strategies and Plans to the Organization for Effective Strategic Contribution In order to be an effective strategic contributor. the service level contract must define the activity clearly indentifying the outsourcing relationship. Figure 3 will show the relationship among variables that will determine the HCM plans an organization will develop.
two basic business strategies can be identified: cost-leadership and differentiation. When an organization decides to further improves itself or decides on a different business strategy. When certain specific skills are needed for a new market or product. (Porter 1980) Figure 2-4 will show the different HCM needs under each strategy and the appropriate HCM measures suggestions. it is a challenge to develop internally the resources. (Barney 1997) To show the relationship between the relationship between strategy and HR.Module 8: Organizational Development and Human Resource Factors Figure 3 Business strategy affects strategy and HCM plans as well. using this strategy. (Ragburam and Arvey 1994) • The differential strategy is a HCM strategy in dynamic environments where there are rapid changes in an organization such as ICT companies. This is because companies as seek to continuously find new products and new segments. 23 . With this challenge. the HCM must be able to support the strategy by coming up with adequate HCM planning so that it can well coordinated with the organization’s business strategy if there is any organizational human capital deficiency that must be remedied. the HCM would be able to shorten the time frame and would use external resource to adequately staff the organization.
it is important for a project manager to take note of the matters of human capital management. However. which maybe challenging if niche skills are needed internally. The right incentive and the right planning would allow the project manager to have the necessary resources in order to complete the task 24 . this requires a long term planning. the HCM would be able to contribute strategically by focusing on developing internal resources for the long term. On the other hand.Module 8: Organizational Development and Human Resource Factors • The cost-leadership strategy requires the HCM to be able to plan and develop employees to fit the specialized needs of organization. Figure 2-4 6 Final Summary In project management. by using this strategy.
however. human capital management has moved from the administrative and operational aspect of an organization and now has become a strategic contributor to the organization. “The most effective project managers are developed day-to-day.” Neal Whitten (Whitten 1999) 25 . Being part of a providing strategy. not year-to-year or project mistake-to-project mistake. The benefit is that the company and everyone connected to the project shares in those gains. By being a strategic contributor.Module 8: Organizational Development and Human Resource Factors set forth by the project manager. human capital management would be able to see good returns to the organization such as in reduction of unnecessary costs on activities that can be outsourced such as payroll and data management. Mistakes will happen. better returns of investment on labor with proper recruitment planning and avoiding other large costs thereby allowing the HCM professional deployed to other more important and strategic tasks. HCM is now viewed as more of a profit center and away from its past view as an activity based cost center. Over the years. project managers with strong mentors should find their people effectiveness continually improving. The right strategic plan for the organization and different stages of organization growth allows the HCM professional to plan and execute accordingly to the organizational objectives. even with the best of mentoring.
Module 8: Organizational Development and Human Resource Factors 7 Appendixes Appendix 1 26 .
Management (MGT) 501: Human Resource Management (2006) Virtual University of Pakistan. October 7. Strategic HR Review 3 (3). Neal Whitten 1999. 11. “The Impact of Human Resource Management Practices on Turnover. 27 . A1. 34—40. 5. 9. Summer 1998. “Human Resources at Mercantile Bancorporation. Ulrich D (1998) A New Mandate for Human Resource.” Human Resource Management.” Outsourcing Guide. “Measure What You Bring to the Bottom Line. 6.” Academy of Managemen Journal. 38 (1995). Nov 2006 2. Howard R. Powell A (2004) Transforming HR to Deliver Innovation at Accenture. Norman C. 177—189. 635—672. and Corporate Financial Performance. Mark Huselid. September 1998. Mitchell III. 22(1997). 7.32-35 4. “The Ongoings of Outsourcing. Harvard Business Review January.” Academy of Management Review.February 1998. 8.Module 8: Organizational Development and Human Resource Factors 8 Bibliography (information not used directly but used to supplement information) 1.” Workforce. Productivity. 374—402. May 1998. “A Moving Issue: To Outsource or Not to Outsource.125-134 3. PM Network Magazine. pp. “Human Assets and Management Dilemmas: Coping with Hazards on the Road to Resource-Based Theory. 1997. 2—5. Forbringer and Carol Oeth. Inc.” TheWall Street Journal. Coff. Russell W. Linda Davidson. pp. August 1998. 10.” HR Magazine. 59—68.. Louis R. “The Missing M & A Link.
Strategic Management (Boston: Houghton Mifflin. 1980). “Business Strategy Links with Staffing and Training Practices.Module 8: Organizational Development and Human Resource Factors 9 References (text you actually used but not entirely) 1. is based on ideas suggested in S. 105. Kochan and Thomas A. Richard W. Human ResourceManagement and IndustrialRelations (Chicago: Scott. Barney. Human ResourceChampions (Boston: Harvard Business School Press. Figure 2—2 are based on ideas suggested by Kathryn D. 3. Porter. Barocci. 58. 6. Jones. as adapted. 2. Gaining and Sustaining Competitive Advantage (Reading. Hill and Gareth R. L. Charles W. Competitive Strategy: Techniques for Analyzing Industries and Competitors (New York: Free Press. 1997). Arvey. Chapter 1. SPHR. Dave Ulrich. 5.” Human Resource Planning 17(1994). 4. CCP. 1998). Michael E. 92—96. 1997). Judy and Carol D’Amico. Foresman. Figure 2—4. Jay B. Workforce 2020: Work and Workers in the 21st Century (Indianapolis: Hudson Institute. McKee. and Thomas A. 1997). MA: Addison-Wesley. Ragburam and R. 1985). 28 .
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