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Strategic Human Resource Management

SHRM or Strategic human resource management is a branch of Human resource
management or HRM. It is a fairly new field, which has emerged out of the parent discipline
of human resource management. Much of the early or so called traditional HRM literature
treated the notion of strategy superficially, rather as a purely operational matter, the results of
which cascade down throughout the organization. There was a kind of unsaid division of
territory between people-centered values of HR and harder business values where corporate
strategies really belonged. HR practitioners felt uncomfortable in the war cabinet like
atmosphere where corporate strategies were formulated.
Human resource management (HRM) is concerned with the personnel policies and
managerial practices and systems that influence the workforce. In broader terms, all decisions
that affect the workforce of the organization concern the HRM function.
Strategic human resource management is the process of linking the human resource function
with the strategic objectives of the organization in order to improve performance
The key features of SHRM
 There is an explicit linkage between HR policy and practices and overall
organizational strategic aims and the organizational environment
 There is some organizing schema linking individual HR interventions so that they are
mutually supportive
 Much of the responsibility for the management of human resources is devolved down
the line

Strategic Human Resource Management in a changing Environment

Changing Environment of SHRM
We all need to consider the environmental factors when wanting to implement anything. We
all require a contingency approach to be more effective in the present world. The same holds
true for organizations. The purpose of this topic is to unravel the mystery surrounding
external and internal factors that complicate the job of an HR manager in actual practice.
Thus you see, an HR manager works in a varied environment. He can only do his
duties well if he is updated with the changing needs of the employees. And for this he
naturally has to keep himself abreast with not only the environment in which the
organization exists, but of the environment from which the employees are coming to work.
Here, let’s take few of the environmental factors which have significant impact on the
organization. The term 'environment' here refers to the "totality of all factors while influence
both the organization and personnel sub-system"
External Factors influencing the Personnel Function

 Technological Factors
 Economic Challenges
 Political Factors
 Social Factors
 Local and Governmental Issues
 Unions
 Employers’ Demands
 Workforce Diversity
Internal Factors influencing the Personnel Function
 Mission
 Policies
 Organizational Culture
 Organization Structure

HR System

Each of the external factors separately or in combination can influence the HR function of
any organization. The job of a HR manager is to balance the demands and expectations of the
external groups with the internal requirements and achieve the assigned goals in an efficient
and effective manner. Likewise, the internal environment also affects the job of a HR
manager. The functional areas, structural changes, specific cultural issues peculiar to a unit,
HR systems, corporate policies and a lot of other factors influence the way the HR function is
carried out. The HR manager has to work closely with these constituent parts, understand the
internal dynamics properly and devise ways and means to survive and progress. In addition
to these, the personnel man has to grapple with the problem of workforce diversity.

Trends Enhancing the Importance of HRM

Trends in Strategic Human Resource Management
Human Resource Management professionals are increasingly faced with the issues of
employee participation, human resource flow, performance management, reward systems and
high commitment work systems in the context of globalization. Older solutions and recipes
that worked in a local context do not work in an international context. Cross-cultural issues
play a major role here. These are some of the major issues that HR professionals and top
management involved in SHRM are grappling with in the first decade of the 21st century:
 Internationalization of market integration.
 Increased competition, which may not be local or even national through free market
 Rapid technological change.
 New concepts of line and general management.
 Constantly changing ownership and resultant corporate climates.
 Cross-cultural issues
 The economic gravity shifting from 'developed' to 'developing' countries
SHRM also reflects some of the main contemporary challenges faced by Human Resource
Management: Aligning HR with core business strategy, demographic trends on employment
and the labor market, integrating soft skills in HRD and finally Knowledge Management.
HRM in a Changing Environment
1. Environmental Challenges
2. Organizational Challenges
3. Individual Challenges

Environmental Challenges refer to forces external to the firm that are largely beyond
management’s control but influence organizational performance.

Important environmental challenges

a) Rapid change,
b) Work force diversity,
c) Globalization,
d) Legislation,
e) Technology
f) Evolving work and family roles,
g) Skill shortages and the rise of the service sector

Rapid Change Many organizations face a volatile environment in which change is nearly
constant. If they are to survive and prosper, they need to adapt to change quickly and
effectively. Human resources are almost always at the heart of an effective response system.
Here are a few examples of how HR policies can help or hinder a firm grappling with
external change

Work Force Diversity All these trends present both a significant challenge and a real
opportunity for managers. Firms that formulate and implement HR strategies that capitalize
on employee diversity are more likely to survive and prosper.

Globalization One of the most dramatic challenges facing as they enter the twenty-first
century is how to compete against foreign firms, both domestically and abroad. Many
companies are already being compelled to think globally, something that doesn't come easily
to firms long accustomed to doing business in a large and expanding domestic market with
minimal foreign competition. Weak response to international competition may be resulting in
upwards layoffs in every year. Human resources can play a critical role in a business's ability
to compete head-to-head with foreign producers

Legislation Much of the growth in the HR function over the past three decades may be
attributed to its crucial role in keeping the company out of trouble with the law. Most firms
are deeply concerned with potential liability resulting from personnel decisions that may
violate laws enacted by the state legislatures, and/or local governments. These laws are
constantly interpreted in thousands of cases brought before government agencies, federal
courts, state courts, and Supreme Court. How successfully a firm manages its human
resources depends to a large extent on its ability to deal effectively with government
regulations. Operating within the legal framework requires keeping track of the external legal
environment and developing internal systems to ensure compliance and minimize
complaints. Many firms are now developing formal policies on sexual harassment and
establishing internal administrative channels to deal with alleged incidents before employees
feel the need to file a lawsuit.

Legislation often has a differential impact on public- and private sector organizations. (Public
sector is another term for governmental agencies private sector refers to all other types of
organizations.) Some legislation applies only to public-sector organizations. For instance,
affirmative action requirements are typically limited to public organizations and to
organizations that do contract work for them. However, much legislation applies to both
public- and private sector organizations. In fact, it's difficult to think of any HR practices that
are not influenced by government regulations.

Technology The world has never before seen such rapid technological changes as are
presently occurring in the computer and telecommunications industries. One estimate is that
technological change is occurring so rapidly that individuals may have to change their entire
skills three or four times in their career. The advances being made, affect every area of a
business including human resource management.

Evolving Work and Family Roles The proportion of dual-career families, in which both
wife and husband (or both members of a couple) work, is increasing every year.
Unfortunately, women face the double burden of working at home and on the job, devoting
42 hours per week on average to the office and an additional 30 hours at home to children.
This compares to 43 hours spent working in the office and only 12 hours at home for men.
More and more companies are introducing "family-friendly" programs that give them a
competitive advantage in the labor market. These programs are HR tactics that companies
use to hire and retain the best-qualified employees, male or female, and they are very likely
to payoff. For instance, among the well
Known organizations / firms, half of all recruits are women, but only 5% of partners are
women. Major talent is being wasted as many women drop out after lengthy training because
they have decided that the demanding 10- to 12-year partner track requires a total sacrifice of
family life. These firms have started to change their policies and are already seeing gains as a
result. Different companies have recently begun offering child-care and eldercare referral
services as well to facilitate women workers as well as are introducing alternative scheduling
to allow employees some flexibility in their work hours.

Skill Shortages and the Rise of the Service Sector Expansion of service-sector
employment is linked to a number of factors, including changes in consumer tastes and
preferences, legal and regulatory changes, advances in science and technology that have
eliminated many manufacturing jobs, and changes in the way businesses are organized and
managed. Service, technical, and managerial positions that require college degrees will make
up half of all manufacturing and service jobs by 2000. Unfortunately, most available workers
will be too unskilled to fill those jobs. Even now, many companies complain that the supply
of skilled labor is dwindling and that they must provide their employees with basic training
to make up for the shortcomings of the public education system. To rectify these
shortcomings, companies currently spend large amount year on a wide variety of training

Globalization of the economy

Advances in communication and transportation technology, combined with free-market
ideology, have given goods, services, and capital unprecedented mobility. Northern countries
want to open world markets to their goods and take advantage of abundant, cheap labor in the
South, policies often supported by Southern elites. They use international financial
institutions and regional trade agreements to compel poor countries to "integrate" by
reducing tariffs, privatizing state enterprises, and relaxing environmental and labor standards.
The results have enlarged profits for investors but offered pittances to laborers, provoking a
strong backlash from civil society. This page analyzes economic globalization, and examines
how it might be resisted or regulated in order to promote sustainable development.
International Trade and Development
Trade Agreements, such as the FTAA, NAFTA, and CAFTA facilitate international trade,
thereby strongly impacting people at all levels of the economy. They make trade "free" for
Northern exports, without prohibiting the rich countries' protectionist measures that harm
Southern competitors. Such agreements tend to slow development in poor countries and pull
them deeper into poverty.
Trade Agreements
Trade Agreements, such as the FTAA, NAFTA, and CAFTA facilitate international trade,
thereby strongly impacting people at all levels of the economy. Rich countries often manage
to prioritize their own interests in such agreements, which tend to harm development of poor
countries, pulling them deeper into poverty.
Multilateral Agreement on Investment and Related Initiatives
In May 1995, the Organization of Economic Co-operation and Development committed itself
to the immediate start of negotiations aimed at reaching a Multilateral Agreement on
Investment (MAI).
Transnational Corporations
Transnational corporations have become some of the largest economic entities in the world,
surpassing many states. Their continuous push for liberalization has driven globalization
while challenging environmental, health, and labor standards in many countries.
Export Processing Zones
Export Processing Zones, sometimes known as maquiladoras or Special Economic
Development Zones, are usually exempt from national taxes, tariff duties and a wide range of
regulations, including those on wages, working conditions, health protection, environmental
safety and trade union rights. Governments have set up these zones in the hope of attracting
investments and creating jobs. But in so doing, they turn over sovereignty to corporate
investors and seriously undermine national tax and regulatory systems.
Foreign Direct Investment
Transnational corporations and private individuals invest more money abroad than ever
before; foreign direct investment has increased tenfold over the last 20 years. While many
poor countries see foreign capital as a tool for growth, it has often increased instability and
inequality as well.
World Trade Organization
This intergovernmental organization sets and enforces the rules of international trade. It has
become a target of civil society's criticism over its opaque, undemocratic operating
procedures and neo-liberal ideology.
World Bank
The World Bank's mission is to eradicate poverty by loaning poor countries money for
economic development, but these loans often come with demands of economic liberalization.
International Monetary Fund
The IMF was originally envisioned as a "lender of last resort" for countries experiencing
economic crises. Now, however, the IMF conditions assistance on neo-liberal reforms that
exacerbate poverty.
Global Taxes
This page explores the different ways to implement global taxes, the need for democratic
oversight and control, the policy shaping effects, the distributive effects, and the possible use
of such taxes to fund the UN, its agencies, and other programs for worldwide human security
and development.
In many countries, the US dollar has become the national currency. In others, the national
currency has been pegged to the US dollar. In still others, major transactions like real estate
usually take place using the dollar. Dollarization eliminates the possibility of independent
national monetary policy and it exposes countries to policies set in Washington.

Technological Changes and Challenges, Challenging
 The second trend is the rate of change in technology. More organizations are now
evaluating their human resources and labor costs in the context of available
technologies, based on the theory that products and services can be delivered more
effectively (and efficiently) through an optimal combination of people, software, and
equipment, increasing productivity. Instead of speaking to a customer service
representative at Bank of America to discuss your account, you can interact with an
automated system via the Internet or an automated teller machine (ATM) or through
an 800 number.
 The program is designed to handle almost any problem about which you might
inquire. With the automated system, BOA is able to shed customer service
representatives, thereby reducing labor costs. As more people use their automated
services and ATMs, there is less need for supervision. Customers, as a result, pay less
in service charges and may earn more interest on their money. As these automated
systems evolve, customers ultimately could be more satisfied with the service, even
though they are not dealing with an actual person. HRM specialists participate in the
development and execution of user testing programs to assess the design of the
automated interface.
 Today, with the assistance of HR, more companies are evaluating the role of
organizational structure, technology, and human resources with the goal of providing
more and higher-quality products and services to the customer at a lower price. This
pricing reduction is at least partially achieved by controlling the cost of labor while
not losing the focus on meeting customer definitions of quality. Of course, the
ultimate goal of for-profit organizations is to maximize profit margins while
sustaining (or improving) perceived customer value. HR has a great deal to offer in
this endeavor.
 While the potential is there, HR specialists are often ignored. Technological advances
and off shoring are of course related. A recent survey found that only 35 percent of
respondents reported that HR was involved in the off shoring process from an early
stage, although HR does typically play a major role in restructuring the organization’s
workforce as a result of off shoring.
 Technology is revolutionizing many HRM activities. Most organizations now use
software packages to aid all HR domains. Many HR activities and outcome data are
tracked electronically, such as recruitment, turnover, performance appraisals, and
training. Managers from different departments, states, or even countries can readily
access the HR system and update employment files. Software packages are easily
customized to fit a specific organization’s HR activities.
 Technology has also changed the speed with which HR communicates with
employees. HR can draft and e-mail a companywide memo to all employees within a
single hour. In addition, employees can instantly communicate with Human
Resources. Many companies have created intranet sites. These Web sites provide
employees with a variety of information, such as health care benefits, personnel
policies, and proposed changes.
 The advent of new technology has created a variety of concerns for management.
Employee privacy and intellectual property rights are increasingly cited as major
concerns. With computer attacks occurring worldwide, ensuring confidentiality of
employee data is a growing concern, and the liability of an organization in the event
of security breaches is still unclear.

 Protecting intellectual property is vital for all organizations, especially emerging
technology and research and development organizations. As a result, organizations
are developing electronic communication policies that clearly outline permitted
electronic activities, uses of employer systems, and monitoring of employees’ files
such as e-mail. Many companies have banned cellular cameras and instant messaging
because of the increased risk of intellectual property theft.
 The job analysis information could also be used to construct or retrieve job-related
tests or questions for an employment interview. The manager might even have a Web
camera and could conduct the testing and “face-to-face” interviewing of the
candidates as soon as the contact is made (assuming the candidate also has access to a
camera-based computer). This process of going from describing the job to actually
interviewing candidates could take less than a day. HR is playing a key role in getting
these systems up and running.
Need To Be Flexible In Response to Changing Business Environments
Being innovative and responsive to changing business environments require great flexibility.
The trend toward the “elastic” company is affecting the HR function, too. These so-called
modular companies such as Nike and Dell Computers can be highly successful if they have
reliable vendors and suppliers and, of course, a hot product. HR consultants have been
instrumental in helping companies discover their core competencies and then developing
optimal work design and HR strategies.
1. Flexi time
A system of work which allows employees to start and finish work between flexible ranges
of agreed hours, so long as they work a set amount of hours each day or week. For example,
an employee may be required to work eight hours a day, but may start work at any time
between 7 am and 9 am and finish work eight hours later, between 3 pm and 7 PM.
2. Hr outsourcing
Human resources outsourcing is when a company gets an outside party to perform some or
all of their HR functions. Outsourcing can be used for a number of different HR related
activities. According to an August 2008 study conducted by the Society of Human Resources
Management (SHRM), the most commonly outsourced HR functions are background checks,
employee assistance programs, and flexible spending accounts that allow employees to use
pre-tax dollars to cover medical expenses. HR outsourcing is on the rise. In the same SHRM
study, 33 percent of HR professionals who participated believe their company will increase
their use of outsourcing within the next five years.

3. Telecommuting
Employees can work from their own home using computers and telephone or other
electronic and networking equipment.
Increase In Limitation Related To HRM

 Recent Origin
 Lack of Top Management Support
 Improper Implementation
 Inadequate Development Programmers
 Inadequate Information
Recent Origin
HRM is of recent origin, so it lacks universally approved academic base. Different
people try to define the term differently. Some thinkers consider it as a new name of
personnel management. Some organizations have named their traditional personnel

management department as human resource management department. With the passage
of time an acceptable approach will be developed.

Lack of Top Management Support

HRM must have the support of top level management. The change in attitude at the top
can bring good results while implementing HRM. Because of passive attitude at the top,
this work is handled by personnel management people. Unless otherwise there is a
change in approach and attitude nothing spectacular is going to happen.

Improper Implementation
Human resource management should be implemented by assessing the training and
development needs of employees the needs and aspirations of people should be taken
into account while framing human resource policies. HRM is implemented half-
heartedly. The organizing of some training programmers is considered as the
implementation of HRM Management’s productivity and profitability approach remains
undisturbed in many organizations.

Inadequate Development Programmers

Human resource management requires implementation of programmers such as career
planning, on the job training, development programmers, counseling etc. There is a need
to create an atmosphere of learning in the organization. In reality HRM programmers are
confined to class room lectures and expected results are not coming out from this

Inadequate Information
Some organizations do not have requisite information about their employees. In the
absence of adequate information and data base this system cannot be properly
implemented. There is a need to collect; store and retrieval of information before
implementing human resource management. The liberalization of economy, entry of
multinationals in Indian markets, rising of quality standards of Indian goods, growing
competition will put pressure on human resources of every organization. Managements
will be required to constantly assess and reassess competence levels of their employees.
Training and development programmers will be needed to motivate personnel to cope
with the new requirements. Human resource management will have a pivotal role in
managing the business in near future.

The Changing Characteristics Of The Workforce

The composition of the workforce is changing drastically and these changes are affecting
HRM policies and practices.
 Region
 Language
 Colour
 Culture….
Increasing diversity creates the need for more diverse HRM systems and practices and
increases the probability of litigation. It is estimated that by 2010 only 15 percent of the U.S.
workforce will be native-born white males. A greater proportion of women and minorities
have entered the workforce and are beginning to move into previously white, male-
dominated positions, including managers, lawyers, accountants, medical doctors, and
professors. Nearly 90 percent of the growth in the U.S. workforce from 1995 to 2005 came
from women, immigrants, African-Americans, and people of Hispanic or Asian origin. In
addition, there are more dual-career couples in the labor force. The “typical” U.S. worker in
the past was a male—often white— who was a member of a single-earner household. Fewer
than 20 percent of today’s employees fit this description.
organizations are having to develop and implement programs on diversity, more flexible
work schedules, better training programs, child and elder care arrangements, and career
development strategies, so that work and non work responsibilities can be more easily
integrated. Building and sustaining a quality workforce from this diversity is a great
challenge for HR.
While increasing diversity translates into a greater probability of EEO(Equal employment
opportunity) legal actions, many experts also argue that the diversity of the workforce must
match the population or the organization is vulnerable to public criticism that can hurt the
All of these trends are having a profound effect on the way HR is conducted. The changing
demographics and cultural diversity of the workforce, the increased number of lawsuits and
regulations, and the growing demands on American workers in the context of a paramount
need to improve U.S. productivity and establish a competitive edge all create a situation that
will challenge HRM professionals and line management. Yet through better coordination
with organizational planning and strategy, human resources can be used to create and sustain
an organization’s advantage in an increasingly competitive world.
Importance of HRM Measurement In Strategic Thinking
In an excellent new book entitled The Workforce Scorecard: Managing Human Capital to
Execute Strategy, Professors Mark Huselid, Brian Becker, and Dick Beatty argue that of all
the controllable factors that can affect organizational performance, is the workforce that can
execute strategy, is the most critical and underperforming asset in most of the organizations
Measurement is front and center in their prescription for a more effective workforce.
They outline three challenges organizations must take on to maximize workforce potential in
order to meet strategic objectives:
 View the workforce in terms of contribution rather than cost;
 Use measurement as a tool for differentiating contributions to strategic impact; and
 Hold line and HR management responsible for getting the workforce to execute
Their measurement strategy calls for the development of a “workforce scorecard” that
evolves from six general steps an organization needs to take.
1. Identify critical and carefully defined outcome measures that really matter;
2. Translate the measures into specific actions and accountabilities;
3. Employees receive detailed descriptions of what is expected and how improvements
can be facilitated;
4. Identify high and low performing employees and establish differentiated incentive
5. Develop supporting HR management and measurement systems; and
6. Specify the roles of leadership, ‘workforce, and HR in strategy execution.

Role of globalization in HR policy and practices

A policy is a plan of action. It is a statement of intention committing the management to a

general course of action. When the management drafts a policy statement to cover some
features of its personnel programmers, the statement may often contain an expression of
philosophy and principle as well. Although it is perfectly legitimate for an organization to
include its philosophy, principles and policy in one policy expression, it is desirable for a
student of HRM to separate a principle from a policy. The following statement is an
expression of a principle or an objective: ‘it is the intention of the company to provide a safe
plant and a healthy working environment'

The statement is too general to be any use. A Policy statement on the other hand is more
specific and commits the management to a definite course of action. The following is a
policy: ‘our policy is to institute every practical method for engineering safety into our
processes and equipment, to provide protective clothing where necessary, to train employees
in safe operating procedures, and to vigorously enforce established safety rules. Our policy is
to provide a healthy plant by giving adequate attention to cleanliness, temperature,
ventilation, light and sanitation'.
A policy does not spell out the detailed procedure by which it has to be implemented. That is
the role of a procedure. A procedure is in reality a method for carrying out a policy. A policy
should be stated in terms broad enough for it to be applicable in varying situations. Lower-
level managers who apply a policy must be allowed some discretion in carrying out the
policy. The circumstances between two departments or sections or nations vary. Before we
are going to discuss about the HR policies at global level, it is necessary to discuss the
concept of globalization and its impact on human resource management.

Nature of globalization
It refers to the process of integrating world economies. However much governments desire to
retain economic identities, the powerful trend to integrate national economies is sweeping
across the global and counties are falling in line and embracing rapid globalization.
Whenever it is the communist China or the communist party governed West Bengal in India,
the anxiety to join world economies is the most emerging concept today. Evidence of
globalization can be seen in the increased level of trade, investment glows and mobility of
people across the globe. Also called internationalization, the momentum of globalization has
been driven by several developments as explained below:
Drivers of Globalization
Companies seek to take advantage, by expanding their operations into foreign markets, in a
number of ways. First, rapidly developing economies have huge markets. For companies,
mostly in developed countries, which have been operating below capacities, the emerging
markets offer immense opportunities to increase their sales and profits. Second, many
multinational companies (MNCs) are locating their subsidiaries in low wage and low cost
countries to reduce their cost of production.
Regional trading blocs
Are adding to the pace of globalization. WTO, EU, NAFTA, MERCOSUR and FTAA are
few of the major alliances among countries. Trading blocs seek to promote international
business by minimizing trade and investment barriers. Fifth, the declining trade and
investment barriers have vastly contributed to globalization. Sixth, the most powerful
instrument that triggered globalization is Technology. Revolution is probably the right word
which can best describe the pace at which technology has changed in the recent past and is
continuing to change. Significant developments have been witnessed in communication,
transportation and information processing, including the emergence of the Internet.
The Global Picture

When it comes to business, the world is indeed becoming a smaller place. More and more
companies are operating across geographic and cultural boundaries. While most have adapted
to the global reality in their operations, many are lagging behind in developing the human
resource policies, structures, and services that support globalization. The human resource
function faces many challenges during the globalization process, including creating a global
mind-set within the HR group, creating practices that will be consistently applied in different
locations/offices while also maintaining the various local cultures and practices, and
communicating a consistent corporate culture across the entire organization. To meet these
challenges, organizations need to consider the HR function not as just an administrative
service but as a strategic business partner.

The process of globalizing resources, both human and otherwise, is challenging for any
company. Organizations should realize that their global HR function can help them utilize
their existing human talent from across multiple geographic and cultural boundaries.
International organizations need to assist and incorporate their HR function to meet the
challenges they face if they want to create a truly global workforce.
Globalization and management

A significant yet subtle shift has occurred in the area of management practice. While
management is well researched and documented in the western countries as also in the EU
countries, it is not the same with the APAC group of countries. The skill or the cost
advantages that drive globalization efforts also impact the way people are managed in
corporate. The older ‘personnel management' (Theory X) approach has given way to the
‘human resource management' (Theory Y) approach. The autocratic style that fed by
‘hierarchical position conscious systems' is being swiftly replaced by flat organization
structures, driven by competency and a highly decentralized decision-making and problem-
solving organizational hierarchies.

The individual in a position of power, driving policies and processes have swiftly evolved
into team-based collaborative management methods. Another landmark change in
management methods initiated by globalization happened in the area of organizational
leadership. A new generation of leadership skills, styles and methods have evolved. The
straight-jacketed approach to certain defined ‘good and bad' leadership styles has been
replaced with multiple theories supporting a variety of leadership styles. Leadership today is
associated with the particular phase in the life-cycle of an organization, it is industry specific
and increasingly, leaders are hired to achieve a very specific objective for an MNC.

General challenges for global hr function

Functions such as operations, sales, and marketing have generally made great progress in
adapting to the global reality. However, the HR function has typically lagged behind in
developing policies and structures that support globalization.
 Coordination of activities in many different locations.
 Understanding the continual change of the globally competitive environment.
 Building a global awareness in all HR departments/divisions.
 Creating a multicultural HR team
International Business Strategies
DHRM versus IHRM Definitions
Human resource management refers to all activities undertaken by an organization to
effectively utilize its human resources. These activities include, amongst others, HR
planning, staffing, performance management, development, compensation and
managing employee relations The trend over the past few years has been to identify the
linkage of HRM with organizational strategy in order to develop a strategic approach to
HRM (SHRM) and to offer an understanding of how single country or domestic human
resource management practices can contribute to organizational performance by
leveraging people’s capabilities.
In order to understand which activities change when HRM goes international, In other
words, the purpose of IHRM is to enable the multinational enterprise (MNE) to be
successful on a global level. Strategic international human resource management
(SIHRM) focuses on strategic HRM in MNEs and recognizes the importance of linking
HRM with organizational strategies in order to achieve sustainable competitive
Morgan developed a model that presents IHRM on three dimensions.
 All human resource activities that are undertaken (such as planning and staffing),
 The national or country categories involved (e.g. various host countries where
subsidiaries are located) and
 the three categories of employees of an international firm (host-country
nationals, parent-country nationals and third country nationals):
With regard to the similarities between DHRM and IHRM, Aswathappa & Dash (2007:
66) argue that the HR activities that are performed in an international context are very
similar to those performed in a domestic context. “The HR manager needs to plan for
the human resources, hire the right people in right numbers, train and develop,
compensate, maintain and motivate employees, whether his or her domain is domestic
or global”.
Another similarity relates to environmental forces that impact on both, HR departments
in global and domestic businesses. These forces include political, legal, cultural and
economic constraints. In an international context, however, there are multiple country-
specific forces to be considered (Shen 2005). Bamber, et al. (2004)
 economic - global convergence and ‘race to the bottom’,
 institutionalism - differing national regulations,
 integration - both, global economic trends and national peculiarities affect HRM
in domestic and in international business
Global Leadership and Global Mindsets
What Is Global Leadership
In order to grow in key markets around the world, there is nothing more important than
getting top talent in place through recruiting, developing, and retaining the right people. Two
vital questions must be answered in order to effectively target high priority global leadership
development efforts:
 What exactly is global leadership, and how is it different from leadership in general?
 How can global leadership competencies be disseminated as rapidly and effectively as
possible throughout the organization?
Global Leadership Development

In order to develop leaders who can effectively lead global operations, it is important to
understand what makes leaders effective across cultures. Culture shapes how we think about
what is good leadership, and the definitions of an "effective leader" vary from one culture to
another. In fact, effective leadership behavior in one culture could (and will) be completely
ineffective in others.

Therefore, a one-development-approach will not work when developing global leaders.

While true leaders can envision what they want to achieve, know how to meet the challenges
of the market and take steps to make that vision a reality, how they interact with people will
define their success. Leaders with cultural sensitivity can be more effective than those
without. Leadership is complex and leading across cultures is more complex

The framework for Global Leadership Development should include

1. Identification of talent
2. Assessment of the talent capabilities (and this should include cultural assessment for
global leaders)
3. A gap analysis (one to identify needs for each individual and a general one regarding
the talent pool so the organization can leverage needs across large employee
4. A variety of development approaches that address culturally appropriate learning
5. Measurement processes to track actual development

ITAP can help your organization

 assess the effectiveness of your recruitment, selection and succession policies to
insure that your talent pool is diverse and matches the qualities and characteristics
that will succeed in various cultures
 define what qualities and characteristics (competencies) are necessary to succeed
across cultures
 design learning opportunities that match leaders' learning styles, because these too
differ across cultures
 provide cross-cultural coaching for executives and leaders working in a multi-cultural
 Assess each leader's cultural profile to help him or her with self-understanding, the
first step to appreciation of cultural differences.
Cross-cultural Competency
Best practices in one culture can be career limiting in another. Through training, education or
coaching ITAP can support the development of global leaders. With attention to cultural
flexibility and understanding, ITAP develops leaders who focus on outcomes within a global
process framework.
Leadership Competency
The definition of an effective leader in one culture may be exactly opposite to the behaviors
needed to be effective in another. ITAP helps leaders and executives understand the
perceptions of their global workforce, customers and vendors. With ITAP, leaders focus on
the behaviors necessary to achieve results across cultures, to motivate global employees to
achieve business outcomes and to succeed in the global marketplace.
Assessment and Development
Global leaders often find out too late about the different assumptions among their
management team members from other cultures concerning their priorities in the business
and their preferred management styles. A leader's cultural sensitivity to local ideas about
business goals and values, performance improvement systems, conflicts between quality and
quantity, standards of customer service, work rules, decision making and information
management has a strong impact on his/her effectiveness.

ITAP designs and staffs virtual assessment centers specifically to support the development of
global talent. ITAP can help
 Identify the development needs within organizations
 Establish a development protocol, the first step of which is gathering data through
 Define how to use existing assessment information, cultural assessments and standard
assessment processes and tool.
 Design individual reports for those being assessed
 Design institutional reports that retain the confidentiality of those in the development
process while providing a summary of development needs to the organization
 Provide executive coaching using the ITAP Alliance network of globally experienced
coaches. International coaches are not enough.
Executive Coaching
Executive coaching is designed for senior managers, directors, VP's and high potentials.
Coaching assists these individuals to acquire higher level management skills and to refine
leadership competencies. Executives can learn how to:
 Lead teams effectively
 Communicate clearly and decisively
 Use their authority with more confidence, accountability and integrity
 Enhance cross-cultural awareness and global business skills.
Coaching prepares leaders for succession and helps them achieve more personal satisfaction.
To develop global leaders, coaches need to have work experience in their home country as
well as out of their home country. The ITAP Alliance can provide global coaching covering a
wide range of capabilities, in many languages and across many functional areas of expertise.

The Concept of an Individual Global Mindset

Already in the early 1980’s parallel to the discussion about globalization (levitt, 1983)
authors emphasized ‘global perspective’ as an essential quality for global leaders (das, 1983;
Maisonrogue, 1983). Other authors developed this”Frame of Mind’ idea into “transnational
scope”. The various definitions found in literature emphasize that global mindset refers to
corporate and individual levels, and has geographic and cultural dimensions. The geographic
dimension has been the main object of study on the corporate level while culture is the
prevailing dimension on the individual levels. These differences in interest may be related to
the origin of the mindset concept which has a basis in cognitive psychology and stems from
acculturation and expatriate adjustment theories. Only more recently, it was related to
organization theory.
Global Mindset at corporate level
The corporate global mindset mostly has been measured by top managers’ attitude toward
internationalization. Paul considered the global mindset as the aggregated mindset of all
members of a company which is shaped by its administrative heritage and structure or
industry drivers. Consequently, this way of determining the corporate global mindset is more
difficult than measuring managers; attitudes. At corporate level, a global mindset refers to
how firms balance organizational processes like global formalization versus local
customization, and hierarchical power like global dictate versus local delegation. Jeannet
linked the global mindset to the degree of internationalization from domestic, international,
multi domestic, regional, to global. Some authors emphasized other aspects of the corporate
mindset, like HRM policy or market characteristics. Finally, Govindarajan and Gupta added a
cultural dimension.
Global Mindset on the individual level
A person with a global mindset is described as a cosmopolitan with a broader view when
dealing with international business activities, with a personal space perspective that extend
beyond the personal; surroundings, and with the general disposition to be more tolerant of
other people and cultures. The person is able to conceive global thinking in local contexts
and to adapt global strategies to the needs of local environments. A number of authors
describe an individual global mindset as a cognitive structure, map or schema that guides the
noticing and interpreting of information. New information is assimilated when it is consistent
with the schema, or accommodated when it contradicts the schema.
A cognitive map can be compare with the cognitive part of the attitude concept. So at the
individual level global mindset refers to the predisposition to respond in a consistently
favorable or unfavorable way to globalization processes. In concurrence with the functions of
attitude, the function of a global mindset is to structure and simplify social reality and to
guide behavior. Past experiences with aspects of globalization are relevant for the formation
of this general disposition. Executives become more cosmopolitan by extending their
perspective and changing their “cognitive maps” or attitudes consider this attitude change a “
mindset, change peoples’ attitude toward globalization but most author agree that expatriate
assignments are the key to develop global mindsets. Gregersen, Morrison and Black also
consider formal training and leading multicultural teams as a way to influence attitudes.
Considering the above, social determinants of mindset transformations or attitude changes
 cognitive learning process in which a person forms beliefs through direct(job)
experience with crossing national and cultural borders and balancing the global/ local
paradox, or
 By reading about globalization, multinational companies and other national cultures.
Though these cognitive processes, a person acquires new beliefs about aspects of the
globalization processes, structures and evaluates these beliefs, and expands his or her
frame. Broader experience and more relevant knowledge could therefore result in a
fundamental change of the person when a person draws self-esteem from being a
cosmopolitan and expresses the needs to develop a “global identity”
Legal Environment of HRM
Equal Employment Opportunity Act
 The Equal Employment Opportunity Act of 1972 (Public Law 92-261) instituted the
federal Equal Employment Opportunity program, which is designed to ensure fair
treatment to all segments of society without regard to race, religion, color, national
origin, or sex.
 The goal of this law and program is to make discrimination in employment illegal.
Equal Employment Opportunity programs include affirmative action for employment
as well as processing of and remedies for discrimination complaints.
 All employees, including supervisors, managers, former employees, and applicants
for employment, regardless of grade level or position, are covered under this
 The Equal Employment Opportunity Act of 1972, which amended the Civil Rights
Act of 1964 to include public employees, granted enforcement authority to the Civil
Service Commission (now the Office of Personnel Management) to ensure non-
discrimination in human resources actions and to establish affirmative employment

 Equal Employment Opportunity (EEO) means fair treatment in employment,
promotion, training, and other personnel actions without regard to the previously
mentioned factors. The main misconception about the EEO is that it applies is only to
selected groups, but the EEO applies to everyone because it is the law. However, the
EEO program is not a guarantee of employment for anyone. Under the EEO law, only
job -related factors can be used to determine whether an individual is qualified for a
particular job.
 The development of the EEO policies and laws can be dated back to the Civil Rights
Act of 1883, which prohibited political favoritism in federal employment.
 In 1940, Executive Order 0948 prohibited discrimination in federal agencies based on
race, creed, or color. In 1961, Executive Order 10955 required that positive steps be
taken to eliminate workplace discrimination in agencies.
 The next landmark influencing equal employment opportunity was the Equal Pay Act
of 1963, which prohibited the payment of different wage rates to workers for
substantially similar work on the basis of sex. Title VII of the Civil Rights Act of
1964, which prohibited discrimination based on race, color, sex, religion, or national
origin and established the Equal Employment Opportunity Commission (EEOC), was
another very influential piece of legislation for the EEO movement.
 Executive Order 11246 in 1965 was also influential because it named the process for
achieving equal employment opportunity—affirmative action.
 Other important milestones were Executive Order 11375 in 1967, which prohibited
discrimination, based on sex and required affirmative action employment to help
women, and the Age Discrimination in Employment Act of 1967, which prohibited
discrimination against persons between the ages of 40 and 70.
 The final piece of legislation that influenced the Equal Employment Opportunity Act
of 1972 was Executive Order 11478 of 1969, which mandated that equal employment
opportunities be a part of every aspect of human resources policy and practice in the
employment, development, advancement, and treatment of civilian employees of the
federal government.
 In addition to the Equal Employment Opportunity Act of 1972, two other pieces of
legislation dealing with equal employment opportunities have been passed.
 The Equal Employment Opportunity Act of 1995 is one of these more recent laws.
This act prohibits discrimination on fourteen grounds:
1. Impairment
2. Marital status,
3. Political belief or activity,
4. Race,
5. Religion,
6. Sex,
7. Societal status as a person,
8. Age,
9. Role in business dealings,
10. Lawful sexual activity,
11. Physical features,
12. Pregnancy,
13. Position or past positions held as employment,
14. Association with a person who is identified by reference to any of the thirteen
other listed grounds.

 The act also prohibits sexual harassment, which applies to both employers and
employees. The other piece of legislation dealing with equal employment opportunity
is the Further Amendment to Executive Order 11478, Equal Employment Opportunity
in the Federal Government.
 The order provides a uniform policy for the federal government to use in prohibiting
discrimination based on sexual orientation in the federal civilian work force, in
addition to race, color, religion, sex, national origin, physical disabilities, or age for
which discrimination is prohibited in Executive Order 11478.
The Age Discrimination in Employment Act
The Age Discrimination in Employment Act (ADEA) prohibits any employer from refusing
to hire, discharge, or otherwise discriminate against any individual because of age. The act
covers compensation, terms, conditions and other privileges of employment including health
care benefits. This act specifically prohibits age-based discrimination against employees who
are at least 40 years of age. The purpose of the act is to promote the employment of older
persons and to prohibit any arbitrary age discrimination in employment
The roots of the ADEA can be traced back to 1964, when the U.S. government enacted Title
VII of the 1964 Civil Rights Act. This act radically changed working life in the United States.
The core of Title VII was to prohibit discrimination in employment based on race, color, sex,
national origin, or religion. This statute provided a way for women and minorities, in
particular, to challenge barriers that limited equal opportunities in organizations. States
adopted similar legislation as well. One variable noticeably missing from Title VII was age
discrimination. Three years later, the U.S. Senate and the House of Representatives enacted
the 1967 Age Discrimination in Employment Act (ADEA).
Scope of Coverage
 Under the act, employers are forbidden to refuse to hire, to discharge, or to
discriminate against anyone with respect to the terms, conditions, or privileges of
employment because of a person's age.
 The act also forbids employees from limiting, segregating, or classifying an
individual in a way that adversely affects their employment because of age.
 The act states that all job requirements must be truly job-related and forbids
employers to reduce the wage rate of an employee to comply with the Act. It forbids
seniority systems or benefits plans that call for involuntary requirements due to age
and also makes it illegal for employees to indicate any issue related to age in
advertisements for job opportunities
 The ADEA was enacted to promote the employment of older persons based on ability
rather than age and to help employers and employees find ways to meeting problems
arising from the impact of age on employment.
 As a result, the Act authorizes the Secretary of Labor to performs studies and provide
information to labor unions, management, and the public about the abilities and needs
of older workers and their employment potential and varied contributions to the

Strategic responses of organizations to change environment
The impact created by changing environment of organizations, fuelled by globalization,
liberalization, technological changes and market changes forces the organizations to make
various strategic responses. These responses largely revolve around and are based on
changing the portfolios, modifying organizational processes, or altering the organizational
1. Portfolio related strategic responses,
2. Process related strategic responses, and
3. Structure related strategic responses.
Portfolio Related Strategic Response
• Mergers, Acquisition & Takeovers
• Demergers
• Diversification
• Share Buyback
• Divestiture/Disinvestments
• Joint Venture
• Strategic Alliances/collaborations
Merger The combining of two or more companies, generally by offering the stockholders of
one company securities in the acquiring company in exchange for the surrender of their

Acquisition A corporate action in which a company buys most, if not all, of the target
company's ownership stakes in order to assume control of the target firm. Acquisitions are
often made as part of a company's growth strategy whereby it is more beneficial to take over
an existing firm's operations and niche compared to expanding on its own. Acquisitions are
often paid in cash, the acquiring company's stock or a combination of both.

Takeover A corporate action where an acquiring company makes a bid for an acquiree. If the
target company is publicly traded, the acquiring company will make an offer for the
outstanding shares.

Demerger The act of splitting off a part of an existing company to become a new company,
which operates completely separate from the original company. Shareholders of the original
company are usually given an equivalent stake of ownership in the new company. A
demerger is often done to help each of the segments operate more smoothly, as they can now
focus on a more specific task. Opposite of merge
Diversification A risk management technique that mixes a wide variety of investments
within a portfolio. The rationale behind this technique contends that a portfolio of different
kinds of investments will, on average, yield higher returns and pose a lower risk than any
individual investment found within the portfolio.
Diversification strives to smooth out unsystematic risk events in a portfolio so that the
positive performance of some investments will neutralize the negative performance of others.
Therefore, the benefits of diversification will hold only if the securities in the portfolio are
not perfectly correlated.

Buyback The repurchase of outstanding shares (repurchase) by a company in order to reduce
the number of shares on the market. Companies will buy back shares either to increase
the value of shares still available (reducing supply), or to eliminate any threats by
shareholders who may be looking for a controlling stake.

Share buy-back
It is when a company makes an offer to buy-back some of its own shares. There are several
types of buy-backs.
1. An equal access scheme - when the company offers to buy back the same proportion
of each shareholders share.
2. A selective buy-back - when the company offers to buy back shares from only one or
some of its shareholders
3. The company may buy the shares on the exchange where the shares are traded.
Disinvestment The action of an organization or government selling or liquidating an asset or
subsidiary. Also known as "divestiture". A reduction in capital expenditure, or the
decision of a company not to replenish depleted capital goods

Joint venture an association of two or more individuals or companies engaged in a solitary

business enterprise for profit without actual partnership or incorporation; also called a
joint adventure.

Strategic Alliance Any agreement where two or more companies agree to cooperate with
each other to achieve a certain, mutually beneficial goal. However, a strategic alliance is not
a merger, and the involved companies remain separate. A common strategic alliance is a joint
venture, where the involved companies partner together to conduct a certain project. Other
strategic alliances include management contracts and licensing agreements.
Structure Related strategic Response
• Strategic Business Units
• Matrix Structure
• Delayering/ Flat Organisation Structure
Strategic Business Units An autonomous division or organizational unit, small enough to be
flexible and large enough to exercise control over most of the factors affecting its long-
term performance. Because strategic business units are more agile (and usually
have independent missions and objectives), they allow the owning conglomerate to respond
quickly to changing economic or market situations.
Definition of matrix structure Firm’s organization with both horizontal and vertical
relationships a form of organizational structure based on horizontal and vertical relationships.
The matrix structure is linked closely to matrix management, and is related to project
management. It emerged on an improvised rather than a planned basis as a way of showing
how people work with or report to others in their organization, project, geographic region,
process, or team.
Flat organization structure An organizational structure in which most middle-
management levels and their functions have been eliminated, thus bringing the top
management in direct contact with the frontline salespeople, shop floor employees,
and customers. Despite their breadth, flat organizations can benefit from most of
the advantages enjoyed by small companies, such as faster response time to
changing conditions and customer preferences.

De-layering involves removing one or more levels of hierarchy from the organizational
structure. Frequently, the layers removed are those containing middle managers. For
example, many high-street banks no longer have a manager in each of their branches,
preferring to appoint a manager to oversee a number of branches. Some schools adopt this
policy too – with a director of studies looking after several schools in a local area.
Process Related Strategic Responses
• Quality Strategies
• International Quality
• Certification Programmes
• Just-in-time (JIT) Inventory
• Benchmarking
• Building Core Competence
• Setting Vision & Mission
• Cost & Asset Utilisa
Definition of Just In Time An inventory strategy companies employ to increase efficiency
and decrease waste by receiving goods only as they are needed in the production
process, thereby reducing inventory costs. This method requires that producers are able
to accurately forecast demand.

A measurement of the quality of an organization's policies, products, programs, strategies,
etc., and their comparison with standard measurements, or similar measurements of its peers.
 To determine what and where improvements are called for,
 To analyze how other organizations achieve their high performance levels,
 To use this information to improve performance.

A strategic perspective
In business, your strategic perspective determines how your company views and solves
important issues. Say your business discusses withdrawing from a certain market. Your staff
discusses the possibilities. But, if you discuss a market withdrawal from a strategic
perspective, you will consider the possibilities in light of your predetermined business
objectives. You exercise an enlightened process, exploring how the withdrawal affects your
business's priorities.
Strategic perspective
In business, your strategic perspective determines how your company views and solves
important issues. Putting the word "strategic" before the word "perspective" indicates a
tactical, carefully formulated approach. Say your business discusses withdrawing from a
certain market. Your staff discusses the possibilities. But, if you discuss a market withdrawal
from a strategic perspective, you will consider the possibilities in light of your predetermined
business objectives. You exercise an enlightened process, exploring how the withdrawal
affects your business's priorities.
Why a Stronger Strategic Perspective Is Needed

Understanding the significance of a business's strategic perspective invariably encourages

business leaders to create a stronger strategic perspective in hopes of making better decisions.
Carefully consider the past, present and future of your business objectives. Once senior
management clearly envisions its goals and objectives, it makes better decisions in all areas.
This can be applied to many aspects of decision making. But, staying with the marketing
example for now, establishing clear goals allows effective, profitable marketing decisions for

developing a branding strategy, generating growth and other key issues. All decisions are
viewed within the perspective of your most important goals.
The Strategic Thinking Process

A strategic perspective, formulated by strategic thinkers, puts information into its proper
context so it resonates with insight that is relevant to the business's objectives. With the
proper perspectives, business analysis results in sometimes-powerful conclusions. Because a
business often has many goals and objectives, thinking from a strategic perspective takes all
the goals into account, meaning the strategic thinker must consider multiple perspectives. He
must juggle objectives of all sorts not just a single, overriding objective.

Digital Intelligence Perspective

In the world of business, a useful perspective requires good information. Since the 1950s, it
has been a commonly held strategy to gather information about your own business and about
your competitors. As the Business Centre website states, the way we gather information
about our business and its competitors today has moved to digitally interactive, customer-
driven sources such as social media. Business Centre predicts that with customer input from
social media, the business's customers will increasingly drive business decision making. A
wise business today will not ignore customers with such a public platform. Therefore, one
strategic perspective for many businesses is the digital intelligence perspective.

Human Resources and Competitive Advantage

The role of human resources is constantly being refined in not only its nature, but the
understanding as to the contribution that HR can make to a business. The clichéd
proclamation that ‘a business’s best asset is its employees’ is heard often, however this
statement is often not qualified by an explanation. Strategic human resource management
attempts to provide quantifiable evidence to support the contribution of HR practices not
only to the employees, but in creation of competitive advantage and ultimately improve the
bottom line of a business’s performance. The measurement of its benefits has an elusive
element that puts pressure on HR managers to prove their worth.
Business strategies
 With the great competition existing today within most industries, companies are
constantly being urged to step up their game by internal and external pressure.
Because of this, it is important to plan and strategize in order to make the most out of
the current market situation and profit as much as possible. A good and effective
business strategy can do a lot for one's endeavor.
 There are actually a lot of strategies one can engage in with the goal of achieving
success in the business world. They are developed to help both the corporate newbies
as well as the pros in unlocking the ultimate potential of their businesses. This serves
as the main goal that drives the businessperson in strategizing and making it all work.
 Another characteristic of business strategies is how specific they are. There are
different businesses out there, and each one comes with a specific set of requirements,
assets and limitations. Hence, it is just logical to see some strategies being effective
for one yet not for another. The qualities of each industry help determine the level of
effectively, making a strategy more useful in one industry than in another.
 Those who are most innocent about the concept of strategizing within the business
setting should take time to get to understand what exactly this is all about. In the
simplest terms, this strategy is basically all about articulating the main direction of

one's business. It involves making use of the resources to their greatest potential, and
minimizing as many errors as possible.
 Although there is nothing inherently wrong about utilizing the strategies being used
by the competitors, this can be a reason for a quick downfall. Just because the said
strategy has brought success for another company, it does not necessarily mean it can
work for each company within the same industry. In fact, it can back fire big time.
This is because there are certain elements in a business that are unique to that
business; this causes a specific strategy to be effective.
 An effective strategy in any industry incorporates the use of one's potential. It should
not, in any way, focus on destroying the competition. Healthy competition brings
about a healthy norm within an industry, giving each player ample motivation to be
resourceful and creative in coming up with strategies that work.
 For a business strategy to work at its best, it should be uniquely created for one's
business. It is developed with one business and its unique characteristics in mind. It
has taken into consideration the business' strengths and weaknesses, and works to
juggle both in the most efficient manner.

Business strategies and HRD

Human resource development (HRD) refers to an approach for managing the human
resources of an organization that emphasizes the importance of developing the basic
capabilities to the people employed by the organization, working as individuals as well as in
groups. It can be contrasted with the alternate approach that is limited to selecting the people
with required capabilities and motivating them so that they work and use their capabilities in
the best interest of the company.
A theory is a framework for the expansion of human capital within an organization through
the development of both the organization and the individual to achieve performance
Adam Smith states, “The capacities of individuals depended on their access to
education” The same statement applies to organizations themselves, but it requires a much
broader field to cover both areas.
Human Resource Development is the integrated use of training, organization, and career
development efforts to improve individual, group and organizational effectiveness. HRD
develops the key competencies that enable individuals in organizations to perform current
and future jobs through planned learning activities. Groups within organizations use HRD to
initiate and manage change. Also, HRD ensures a match between individual and
organizational needs.

HRD and Organizational Life-cycle

An organization undergoes changes in its conceptual and structural dimensions over a period
of time, analogous to biological organisms, it is born, and it attains growth, gets matured and
eventually dies. Most research on life-cycle suggests three major growth stages and a decline
stage, each has its own conceptual variations and they result in observable change in
structure and vision.
Entrepreneurial stage It is the conceptual stage where the new product is defined, its market
is identified and development plan is executed.
 Leadership Focus is on successful development of prototype or marketable
product, while able to manage the necessary finance.
 Organization size is small, its reporting structure is flat and non-bureaucratic, and
founder bears the responsibility of managing all aspects of the organization.

 The culture is informal, promotes innovation and risk-taking, the decision making
is centralized and mostly lies with the founder, long working hours are expected.
 The specialization and growth are limited to the core functionalities like R&D,
manufacturing or service. The staff is usually highly skilled with relevant
experience in the core functions and the supporting staff is minimal
 Individual effectiveness is most important at this stage.
Expansion The organization emerges from entrepreneurial stage if it succeeds in its initial
goal of product creation and had secured finance and perhaps few customers. It then enters
the commercialization stage where it has to build the product in larger quantities, reach
wider customers and become a profitable venture.
 Leadership focus is on making the product work well and to increase the sales and
 The organization size needs to grow since it needs more resources for larger
production and sales. While a consistent growth in core functionality continues,
additional growth occurs in sales and marketing.
 The culture gets inclined towards market culture since external environment is for the
time being stable, the entrepreneurial success provides some buffer time before
competition emerges on the horizon.
 Organization structure starts its initial shift towards being more hierarchical; the
founder is incapable for managing everything and starts delegating tasks to his
subordinates creating management hierarchies. Since the expansion is particularly in
R&D and sales, the supporting staff is still minimal; the organization adopts a
functional structure.
 The organizational growth brings in more specialist and subordinates through hiring,
it inadvertently creates a leadership crisis at the top level since the changed
organization demands delegation of responsibility. All the initial founders and the
individual technical leads need to part with their autonomous powers that they
enjoyed during the entrepreneurial phase and learn to deled legate decision making
and perform the new task of coordination and team building. Middle management
evolves and is responsible for operations while the top management focuses on
business strategies.
 The management processes began to emerge in the activities related to production and
control, though they are still not very well defined and are still flexible.
Consolidation The expansion phase results in an expanded operation related to production
like purchasing, inventory control, etc and also diversely deployed sales staff. The
organization was geared towards maximizing its production and sales capacity. In
consolidation stage, the focus shifts towards cost control, productivity and profit.
 The leadership focus is on achieving the organizational effectiveness.
 The organization size is almost stable, the expansion stage might have lead to some
redundancies in core functions, but consolidation stage might include additional
manpower in supporting functions. The growth can occur in additional staff related
to quality control, customer support, administrative functions and marketing. Unlike
grow stage when the size increases linearly, the consolidation stage involves both
downsizing and hiring.
 There is an increase in number of products, even though they might be still related to
the core competencies; as a consequence, the organizational structure becomes
divisional with more departments.
 The organization’s culture becomes bureaucratic due to high degree of formalization
and processes that are deemed necessary as a way to better control the operations.
 The leadership challenge is to establish seamless communication protocol between
different departments, look for signs of external environmental changes and make
necessary corrective actions.
Decline An organization enters the decline phase when it experiences continuous reduction
in resources and revenue over a substantial period of time. Ironically, the decline can be
recognized with certainty only when it is too late to recover from it, early signs are often
mistaken to be temporary. The decline can occur after any growth stage, not necessarily after
consolidation stage; also growth does not always lead to decline, there is also possibility of
long period of stagnation. Stagnation can be defined as a state with no growth, fewer but
dedicated customers, few competitors, a niche market or availability of abundant resources.
Stagnation does not usually result in loss of revenues or downsizing.
Reasons for decline
There are several causes of decline, some are quantitative and are easier to detect while other
are qualitative and are hard to comprehend. The decline can be due to adverse changes in the
external environment or inefficiencies pertaining to internal operations of the organization.
 Quantitative reasons of decline
 Qualitative reasons of decline
Quantitative reasons of decline The quantitative analysis can be found in the organization’s
financial statements, its internal operation reports and by using other mathematically
measurable parameters.
 Reduced workforce A cutback in size of the organization reflects a reduced total
market, reduced need of products; lack of capability to deliver the product, hence the
underlying reasons implies a decline. However, there are times when cutback is a
temporary measure to realign and revitalize the organization for another phase of
 Reduced market share The reduction in the market share of the company implies
several issues, growing competition if the total market is indeed growing or is stable,
or contraction of overall market due to obsolete products or technologies.
 Reduced profit or share price It provides the investor’s assessment of the
companies operating margin and its prospects of growth in future.
Qualitative reasons of decline
 Fierce competition During the entrepreneurial stage, the big players might try all
tools in their arsenal to counter the threat of a newcomer. It includes practices of
aggressive pricing, luring their established client base with bonus deals, acquisition of
competitive technologies and developing parallel products etc. Many times, the
hostile takeover by large and established company is for the purpose of quick
termination of a competitor.
 Lack of Customers It happens due to unexpected decline in the niche market, a
change in consumer’s choice for a different product or simply because the
organization fails to find proper market for the product. It can happen at any stage of
life-cycle, the quarterly sales and revenue over a period of time are good indicators of
change in customer base.
 Obsolete technology Older organizations are very much vulnerable to newer
technologies that can adversely impact its core business and competencies. Economic
downfall: Harsh economic environment reduces the customer spending; multiple
vendors compete for the reduced market share. It also gets hard to obtain fresh credit
and finances for new ventures or existing operations.
 Organizational atrophy It usually occurs in older organizations that have
experienced healthy growth & long period of stability; the hierarchical structure & the
bureaucratic culture of such large organization cause its slow degeneration. The
organization size is large with excessive personnel, middle management is incumbent
that tolerates incompetence, management processes are excessive and
counterproductive; finally there is a leadership crisis. Employees loose trust in the
leadership and its vision; the employee satisfaction level starts to dip consistently and
so does its operational efficiency.
A Model of decline stages
Decline of an organization occurs in a series of observable and distinct stages, each
exhibiting a reduced capability to counteract. The most acknowledged model of decline
proposes that the organization goes through five stages of decline, before its final
 Blinded Stage
 Inaction Stage
 Faulty Action Stage
 Crisis Stage
 Dissolution Stage
Blinded Stage In this stage, the organization fails to recognize any of the internal or external
changes that may threaten its survival. Usually, causes for the decline are present but are not
evident; the leadership tends be insensitive and simply fails to make a connection between
the observed changes and a possible decline. Most organizations lack a unit that performs
the task of scanning both internal & external boundaries, partly due to additional cost and
uncertain advantage. The mere concept of a stable environment is a myth and exists only as a
theoretical concept; environment is stable only for short duration. Similarly the need for
internal surveillance cannot be ignored; it includes regular performance reviews, employee
satisfaction surveys, training and skill development, and most importantly an open
communication mechanism to aid in vertical flow of information. The initial signs of decline
are usually very much visible and known to the bottom of the organizational pyramid, but the
information fails to propagate upwards to its leaders.
Inaction Stage Unlike in blinded stage, the signs of deteriorating performance are clearly
evident in this stage, but the leadership still fails to take any action. Leaders often view them
as temporary changes and instead of interpreting them as a threat, they choose to take `wait
and see’ approach, perhaps because this approach has worked in the past. The past successful
approaches fail when the current situations are very different, however the leaders always
have tendency to follow the planned course and suppress any dissident opinions. Finally, the
aging leadership might simply lack the knowledge and insight to comprehend the influence
of the changing conditions.
Faulty Action Stage In this stage, the organization is clearly on its downfall and pressure to
take corrective action is very high. The vertical and horizontal information from within the
organization and the external environment increases manifolds along with its complexity. The
overload of conflicting information & suggestive actions, combined with time pressure,
compels the leadership to centralized decision making and they tend to create a biased task
force. However, due to high pressure, the decision makers tends to make quick, risky and
often fault decisions, that further accelerates the decline. This further reduces the confidence
in leadership and many talented employees might end up leaving the organization in
anticipation of its fall. Some of the prescribed cure include introduction of new leadership,
Diversification of core business either though self development or acquisitions and
disinvestment in failing product lines.
Crisis Stage The organization reaches a crisis stage when all prior actions have failed and it
becomes obvious that without any major change, its survival is questionable. All the
stakeholders, including customers, investors, suppliers and employees begin to distance
themselves from the organization and have lost faith in it. At this stage, the organization
requires a massive structural change, a new strategy to deal with the external environment
and a new ideology to revitalize the ailing organization.
Dissolution Stage This is the last stage of its demise and is irreversible; it is marked by
depletion of its finance, diminished market for its products and exodus of its talented
employees. The new leadership and the strategy had failed to revive the business and now
their responsibility lies in proper dissolution of the organization and its resources.
HRD and Organization performance
Comprises the actual output or results of an organization as measured against its intended
outputs (or goals and objectives).
According to Richard et al. (2009) organizational performance encompasses three specific
areas of firm outcomes
1. Financial performance (profits, return on assets, return on investment, etc.)
2. Product market performance (sales, market share, etc.)
3. Shareholder return (total shareholder return, economic value added, etc.).
Specialists in many fields are concerned with organizational performance including strategic
planners, operations, finance, legal, and organizational development. In recent years, many
organizations have attempted to manage organizational performance using the balanced
scorecard methodology where performance is tracked and measured in multiple dimensions
such as
 Financial performance (e.g. shareholder return)
 Customer service
 Social responsibility (e.g. corporate citizenship, community outreach)
 Employee stewardship
Performance improvement is the concept of measuring the output of a
particular process or procedure, then modifying the process or procedure to increase
the output, increase efficiency, or increase the effectiveness of the process or procedure. The
concept of performance improvement can be applied to either individual performance such as
an athlete or organizational performance such as a racing team or a commercial enterprise.
In Organizational development, performance improvement is the concept of organizational
change in which the managers and governing body of an organization put into place and
manage a program which measures the current level of performance of the organization and
then generates ideas for modifying organizational behavior and infrastructure which are put
into place to achieve higher output. The primary goals of organizational improvement are to
increase organizational effectiveness and efficiency to improve the ability of the organization
to deliver goods and or services. A third area sometimes targeted for improvement
is organizational efficacy, which involves the process of setting organizational goals and
Performance improvement at the operational or individual employee level usually involves
processes such as statistical quality control. At the organizational level, performance
improvement usually involves softer forms of measurement such as customer
satisfaction surveys which are used to obtain qualitative information about performance from
the viewpoint of customers.
Organizational Engineering (OE)
Is a form of Organizational Development. It was created by Dr. Gary Salton of Professional
Communications, Inc. It has been developing continuously since 1994 on both theoretical
and applied levels. The core premise of OE is that humans are information-processing
organisms. It posits that individual behavior can be understood and predicted using
engineering’s basic model of
This offers advantages over the more typical psychological approaches. Primary among these
is that it requires only simple logic. There is no need to rely on unseen forces or “inherent”
mental characteristics.
OE calls the strategies people regularly use Strategic Styles. Styles are different combinations
of the Input>Process>Output. Each mix produces a different but predictable pattern of
behavior. OE applies the same kind of logic to define the range of possible behaviors. These
relationships have been codified under the name of “I Opt.” This is an acronym for “Input
Output Processing Template.” It is the basic measuring tool of Organizational Engineering.

Managing strategic organizational renewal
1. Know the role of HR in achieving organizational change.
2. Describe the 10-step basic process for achieving organizational change.
3. Know the methods for identifying the need for change and implementing change.
4. Understand the nature of self-directed teams and worker empowerment.
5. Know the role of HR in Basic Process Reengineering.
6. List the pros and cons of flexible work arrangements.
Organizational renewal requires that top managers make adaptive changes to the
environment. Manager must analyze the organization, its departmental system
interrelationships, and the possible effects on the internal environment
Key challenges
 Defining a meaningful
 Inspiring organizational purpose
 Enabling a bottom-up flow of creativity
 Creating a culture of trust rather than control.
Managing change and OD
Beckhard defines Organization Development (OD) as "an effort, planned, organization-
wide, and managed from the top, to increase organization effectiveness and health
through planned interventions in the organization's processes, using behavioral-
science knowledge." In essence, OD is a planned system of change.
 Planned OD takes a long-range approach to improving organizational performance
and efficiency. It avoids the (usual) "quick-fix".
 Organization-wide OD focuses on the total system.
 Managed from the top to be effective, OD must have the support of top-management.
They have to model it, not just espouse it. The OD process also needs the buy-in and
ownership of workers throughout the organization.
 Increase organization effectiveness and health. OD is tied to the bottom-line. Its
goal is to improve the organization, to make it more efficient and more competitive
by aligning the organization's systems with its people.
 Planned interventions after proper preparation, OD uses activities called
interventions to make system wide, permanent changes in the organization.
 Using behavioral-science knowledge OD is a discipline that combines research and
experience to understanding people, business systems, and their interactions.
TQM Programmes
 Globalization in the business theater is driving companies toward a new view of
quality as a necessary tool to compete successfully in worldwide markets. A direct
outcome of this new emphasis is the philosophy of total quality management (TQM).
In essence, TQM is a company-wide perspective that strives for customer satisfaction
by seeking zero defects in products and services. Making quality improvements was
once thought to be the sole responsibility of specialists (quality engineers, product
designers, and process engineers).

 Developing quality across the entire firm can be an important function of the human
resource management (HRM) department. A failure on HRM's part to recognize this
opportunity and act on it may result in the loss of TQM implementation
responsibilities to other departments with less expertise in training and development.
The ultimate consequence of this loss is an ineffective piece mealing of the TQM

strategy. Thus, HRM should act as the pivotal change agent necessary for the
successful implementation of TQM.

 HRM can act as senior management's tool in implementing TQM in two fundamental
ways. First, by modeling the TQM philosophy and principles within its departmental
operations, the HR department can serve as a beachhead for the TQM process
throughout the company. Second, the HR department, with senior management's
support, can take the TQM process company-wide by developing and delivering the
long-term training and development necessary for the major organizational culture
shift required by TQM. The HR department also has major strengths in terms of
recruitment, selection, appraisal, and reward system development to institutionalize a
quality-first orientation. An appreciation of the capabilities of HRM to model and

The TQM Philosophy

Implementing a total quality management system has become the preferred approach for
improving quality and productivity in organizations. TQM, which has been adopted by
leading industrial companies, is a participative system empowering all employees to take
responsibility for improving quality within the organization. Instead of using traditional
bureaucratic rule enforcement

 An open, problem-solving atmosphere
 Participatory design making
 Trust among all employees (staff, line, workers, managers)
 A sense of ownership and responsibility for goal achievement and problems solving
 Self-motivation and self-control by all employees.

In cultivating the TQM philosophy, strategy implementation must involve a focused effort on
the part of every employee within the organization. It cannot be applied successfully on a
piecemeal basis. TQM requires that management, and eventually every member of the
organization, commit to the need for continual improvement in the way work is
accomplished. Business plans, strategies, and management actions require continual
rethinking in order to develop a culture that reinforces the TQM perspective. The challenge is
to develop a robust culture where the idea of quality improvement is not only widely
understood across departments, but becomes a fundamental, deep-seated value within each
function area as well.

HRM as a Role Model for TQM

HRM can jumpstart the TQM process by becoming a role model. This means that HRM has
two specific tasks: "Serving our customers, and making a significant contribution to running
the business." This emphasis on customer oriented service means that the HR department
must see other departments in the firm as their customer groups for whom making continuing
improvements in service becomes a way of life.
In their efforts to achieve total quality management, HRM can demonstrate commitment to
TQM principles by soliciting feedback from its internal customer groups on current HR
services. HRM should include suggestions from its customers in setting objective

performance standards and measures. In other words, there are a number of specific TQM
principles that the HR department can model.
Creating a Team based organization
Team-based organizations vary from traditionally hierarchical, directive organizations.
Instead of having a supervisor or manager focus on facilitation, teams focus on achieving
objectives together. This allows true collaboration in the workplace. Major characteristics of
team-based organization include trust, empowerment, goal setting, autonomy, team
accountability and shared leadership.

Benefits of team-based

Organizations include creating and implementing solutions that stem from collaboration.
Unlike the traditional format that relies on one director, team members focus on the
organizational goals. This leads to open communication and innovation, usually resulting in
better solutions and business strategies.

Training facilitators and team members is of the utmost importance. Team members must feel
valued as well as empowered to make the necessary decisions. Organizations should reward
employees for process gains as well as primary business indicator results. Open
communication and support systems are paramount. Team leader selection should be based
more on skill set and personality than on management or supervisory experience, as team-
based organizations employ not the authoritative but the collaborative approach. Supporting-
member selection is also important; team members' values can strengthen your team. Those
who value creativity will drive innovation. Those who value independence will work for long
stretches without needing external motivation. Team members who value structure will
provide a dependable cornerstone for the group. Recognize and utilize these strengths to your
organization's advantage.

Time Frame
The team-based organization approach is not about instant gratification. It's a process that
takes time. Initial implementation may take 12 months, while complete implementation,
resulting in a more routine-based event, could take two years to achieve. During this time
frame, ensure that team objectives are clear and pertinent. Evaluate the team's effectiveness.
Plan and change as necessary.
The six stages of TBW (Team base working)
1. Deciding on TBW understanding the value and benefits of TBW and conducting an
organizational review. Before introducing TBW it is important to understand the
existing structure, culture and extent of team working in the organization. This stage
also involves developing a plan for the implementation of TBW.
2. Developing support systems this stage requires an examination of support systems
relevant to TBW such as training, reward systems, communication, and interterm
relations, and making plans to adapt or develop them for TBW.
3. Team leader and team member selection establishing criteria for team leader and team
member selection and implementing appropriate recruitment and selection processes.
Team leader training is important leading teams is very different from other kinds of
leadership so team leaders need to be equipped with the necessary knowledge skills
and attitudes.

4. Developing effective teams understanding and enabling the team development
process, which includes clarifying objectives, roles, communication processes and
decision-making processes.
5. Reviewing and sustaining team effectiveness in this stage, teams must be coached to
set criteria for the evaluation of team performance and to identify required changes to
improve performance.
6. Reviewing TBW The final stage involves evaluating the contribution of TBW to the
organization’s effectiveness and making any necessary changes to ensure the
continued and optimal contribution of TBW to the organization.
Team Based Organization Implementing a team-based approach to organizational structure
can empower employees and increase cooperation among different skills and disciplines.
Based on the belief that organizational goals will be achieved not by individuals working
together separately, but by groups of people who share responsibility for outcomes and who
work efficiently and effectively in team? These processes require highly developed
communication competencies from all team members.
Team skills usually are divided into two categories
 Task roles
 Maintenance roles
Characteristics of Traditional Vs Team-based Organizations
Traditional Team-based
1. Individual command structures Collective structures
2. Manager controls Team monitors
3. Vertical hierarchy Horizontal integration
4. Stability and uniformity Change and flexibility
5. One best way to organize Organization-specific
6. Managers manage Self-managing teams

Benefits of Team-based Organization

 Efficient Process
 Flexible Response to change
 Improve Effectiveness
 Reduce Cost
 Increase Innovation
 Customer Involvement
 Employee commitment
 Skill utilization

Benefits of Teams in Organizations

Enhanced Performance Teams may take many forms, i.e. including improved productivity,
quality, and customer service such the enhancements result from pooling individual efforts in
new ways and continuously striving to improve for the benefit of the team.
Employee Benefits: Teams always provide the sense of self-control, human dignity,
identification with work, and sense of self-worth and self-fulfillment for which current
workers seem to strive.
Reduced Costs: Through empowered teams, an organization can reduce scrap, make fewer
errors, file fewer worker compensation claims, and reduce absenteeism and turnover. They
result in significant cost reductions.
Business process re-engineering
Business process re-engineering is also known as business process redesign, business
transformation, or business process change management.
Business process re-engineering is the analysis and design of workflows and processes within
an organization. According to Davenport (1990) a business process is a set of logically
related tasks performed to achieve a defined business outcome. Re-engineering is the basis
for many recent developments in management. The cross-functional team Enterprise resource
planning, supply chain management, knowledge management systems, systems,
Human and customer relationship management.

Main Issues
 Focus on process Reengineering involves looking at the whole of a process;
customers, competitors, environment, human resources.
 Radical change Reengineering means radical and often painful change.
 Commitment and leadership Reengineering must come from the top. The leaders
must inspire a commitment to change throughout the organization.
 Focus on the customers Reengineering is not just about changing internal processes;
it means focusing externally on the customer.
 Human resources Human resources are the most vital aspects of reengineering.
 Preparedness and commitment of the leadership.
 Preparedness and involvement of all the people.
 Create awareness: lot of training.
 Communication: intense and extensive.
 HRD in new technology and skills.
 HRD in change management skills
HR Implications of BPR
 Managing resistance to change.
 Restructuring and reorganization.
 Delaying; flat organization.
 Downsizing; redeploying people.
 New technologies
 New skills
 Non-value adding areas exposed.
 Power shifts.
Envision new processes: reengineering opportunities, management support, enabling
technologies, alignment with company strategies.
Initiate change: form reengineering team, decide performance goals.
Study existing process: to uncover and diagnose problems.
Redesign the process: think of alternative processes, select the most appropriate one,
develop it, select technologies (including IT), consider HR issues, and get feedback.
Reconstruct the process: Finalize the process design and associated IT solution.
Implement: Before implementation get an explicit buy-in from all the concerned.
Monitor the process: keep a tract of performance of the process against its performance
goals and integrate a built-in continuous improvement mechanism.

Flexible work arrangements
Flexible working relates to an organization’s working arrangements in terms of working
time, working location and the pattern of working. We have resources covering all aspects of
working flexibly and atypical working. You’ll find information on flexible working hours,
part time working, job sharing, temporary working, agency workers and casual employment,
term time and seasonal working, remote and home working and virtual organizations.
Working time
Working time is any period during which an individual is working, is at the employer's
disposal and is carrying out the employer's activities or duties. You’ll find here information
on hours of work, working time regulations, overtime and shift working, holidays and annual
leave, other time off, bank and public holidays, work life balance and reservists.
Terms and conditions / Dismissal of employment

Terms and conditions of employment are the elements of a contract which help to define the
relation between an employer and an employee. You’ll find here information on conditions of
employment, contracts of employment including fixed term, short term and temporary
contracts, contractual change, probationary periods, notice periods and restrictive covenants.

Dismissal It occurs when a contract is terminated with or without notice, a fixed term
contract ends and is not renewed or an employee leaves, with or without notice, when they
are entitled to do so because of the employer’s conduct. You’ll find here information on
termination of contract, unfair dismissal, wrongful dismissal and constructive dismissal.

Guidelines for Initiating Flexible Work Arrangements

In order to request a flexible work arrangement (FWA), a staff member must complete a
FWA proposal and submit it to the manager for consideration. Each staff-initiated proposal
goes through the same process, as described below, and is evaluated on its own merits.
Staff: How to Propose a Flexible Work Arrangement
Staff interested in a FWA should prepare a clear, realistic proposal that includes a strong
business rationale for the arrangement. Writing the proposal helps staff think through the
issues from their own and other perspectives, and provides a document that staff and
managers can use as a basis for discussion. By taking ownership of the process, the staff
member has more control and a greater stake in the arrangement’s success.
1. Assess your readiness for a FWA. Review the guidelines and requirements, your job
description and your tasks. Think about, and be prepared to answer questions on,
how such an arrangement would affect service delivery, deadlines, etc.
2. Complete the proposal form and submit it to your direct supervisor.
3. Meet with your supervisor to discuss the proposal.
4. Modify the proposal after the discussion, if necessary.
5. Submit the final draft of the proposal to your supervisor.
6. Confirm benefits and payroll impact by calling the HR Benefits Service Center at
212- 851-7000, or meeting with your departmental administrator or HR manager.
7. If the FWA is approved, work with your supervisor to develop an implementation
8. Keep a final draft and signed copy of the proposal for your records.

Managers: How to Initiate a Flexible Work Arrangement
When operational needs require a staffing review, managers may want to consider FWAs as
an option for their business planning. Manager-initiated FWAs should not be used as a
method for changing individuals’ hours or salary. Managers should base flexible work
decisions on business needs and operational goals. Managers are required to consult with
their HR client manager when considering implementing FWAs as part of business needs and
operational goals.
Managers: How to Review a Flexible Work Arrangement Proposal
Managers should understand that people want to work flexibly for diverse and compelling
personal reasons; managers should not be in the business of judging those reasons.
Managerial focus must be on how a change affects the organization, and on the value that
might be added by working differently.
1. Review the proposal. Consult with your department’s HR representative, HR Client
Manager, and/or the Office of Work/Life to prepare for your meeting with the staff
2. Meet with the staff member to discuss proposal.
3. Evaluate the proposal and consult with your department’s HR representative, HR
Client Manager, and/or the Office of Work/Life if you would like additional help in
evaluating the proposal, especially if you are considering denying the FWA request.
4. Accept or deny the proposal and inform the staff member of the decision as soon as
 If you accept the proposal, schedule a meeting with the staff member to
develop an implementation plan and discuss timekeeping issues.
Review and confirm expectations and deliverables.
 If you deny the proposal, schedule a meeting with the staff member to
explain the business rationale.
5. Communicate the change to the department and any necessary business partners.
6. Monitor the staff member’s progress and remain supportive.
Business-based decisions
Managers make decisions about FWAs based on whether business and operational goals can
be met under the proposed arrangement. People want to work flexibly for diverse and
compelling personal reasons. Managerial focus must be on how a change affects the
organization, and on the value that might be added by working differently. Managers work
from the proposal, conversations with the staff member, and consultations with CUHR to
make sound, value-based organizational decisions.
Business and department needs
 Job requirements
 The employee’s skills and performance history
Change models
David Ulrich’s defined the most common HR Roles model, which commonly used on the
market. The model is well known for introducing mainly the aspects of Human Resources
with the highest value added. The main contribution of the David Ulrich’s HR Model was the
start of the movement from the functional HR orientation to the more partnership
organization in HRM Function. Business Partnering is not possible to implement without a
major shift in the HR Organization. The benefit was a more responsible and flexible
organization of Human Resources, which allowed too many HR Professionals to become real
respected business partners. All the HR Roles defined by Ulrich are essential for the success
of the whole HRM Function.

The 4 HR Roles defined by Ulrich
1. Strategic partner
2. Change agent
3. Employee champion
4. Administrative expert
Strategic Partner is about alignment of HR activities and initiatives with the global business
strategy and it is the task of the HR Management and HR Business Partners. Sometimes, it
sounds easy to implement Strategic Partnership, but it needs a lot of effort from Human
Change Agent is a very important area of the Ulrich’s HR Model. Change agent is about
supporting the change and transition of the business in the area of the human capital in the
organization. The role of Human Resources is the support for change activities in the change
effort area and ensuring the capacity for the changes.
Administrative Expert changes over the period of time. In the beginning, it was just about
ensuring the maximum possible quality of delivered services, but nowadays the stress is put
on the possibility to provide quality service at the lowest possible costs to the organization.
Employee Champion is a very important role of Human Resources. The employee advocate
knows what employees need and HRM should know it. The employee advocate is able to
take care about the interest of employees and to protect them during the process of the
change in the organization.
Pitfalls in 4 HR Roles
 The stress must be put to all the areas; there is no chance to select one and to excel in
this one concrete area.
 Many HRM Managers forget to balance the approach and they decide to be a real star
in one of the needed components and they forget about the danger not meeting the
basic requests and expectations in the rest.

Lewins change models

Change is a common thread that runs through all businesses regardless of size, industry and
age. Our world is changing fast and, as such, organizations must change quickly too.
Organizations that handle change well thrive, whilst those that do not may struggle to
survive. The concept of "change management" is a familiar one in most businesses today.
But, how businesses manage change (and how successful they are at it) varies enormously
depending on the nature of the business, the change and the people involved. And a key part
of this depends on how far people within it understand the change process.
One of the cornerstone models for understanding organizational change was developed by
Kurt Lewin back in the 1940s, and still holds true today. His model is known as Unfreeze –
Change – Refreeze, refers to the three-stage process of change he describes. Lewin, a
physicist as well as social scientist, explained organizational change using the analogy of
changing the shape of a block of ice.
Practical Steps for Using the Framework
1. Determine what needs to change.
 Survey the organization to understand the current state.
 Understand why change has to take place.
2. Ensure there is strong support from upper management.
 Use Stakeholder Analysis and Stakeholder Management to identify and win the
support of key people within the organization.
 Frame the issue as one of organization-wide importance.
3. Create the need for change.
 Create a compelling message as to why change has to occur.
 Use your vision and strategy as supporting evidence.
 Communicate the vision in terms of the change required.
 Emphasize the "why".
4. Manage and understand the doubts and concerns.
 Remain open to employee concerns and address in terms of the need to change.
1. Communicate often.
 Do so throughout the planning and implementation of the changes.
 Describe the benefits.
 Explain exactly the how the changes will effect everyone.
 Prepare everyone for what is coming.
2. Dispel rumors.
 Answer questions openly and honestly.
 Deal with problems immediately.
 Relate the need for change back to operational necessities.
3. Empower action.
 Provide lots of opportunity for employee involvement.
 Have line managers provide day-to-day direction.
4. Involve people in the process.
 Generate short-term wins to reinforce the change.
 Negotiate with external stakeholders as necessary (such as employee
1. Anchor the changes into the culture.
 Identity what supports the change.
 Identify barriers to sustaining change.
2. Develop ways to sustain the change.
 Ensure leadership support.
 Create a reward system.
 Establish feedback systems.
 Adapt the organizational structure as necessary.
3. Provide support and training.
 Keep everyone informed and supported.
4. Celebrate success!

Kotter's 8-Step Change Model

1 Create Urgency
2 Form a Powerful Coalition
3 Create a Vision for Change
4 Communicate the Vision
5 Remove Obstacles
6 Create Short-term Wins
7 Build on the Change
8 Anchor the Changes in Corporate Culture

Step 1: Create Urgency

 Identify potential threats, and develop scenarios showing what could happen in the
 Examine opportunities that should be, or could be, exploited.
 Start honest discussions, and give dynamic and convincing reasons to get people
talking and thinking.
 Request support from customers, outside stakeholders and industry people to
strengthen your argument.
Step 2: Form a Powerful Coalition
 Identify the true leaders in your organization.
 Ask for an emotional commitment from these key people.
 Work on team building within your change coalition.
 Check your team for weak areas, and ensure that you have a good mix of people
from different departments and different levels within your company.
Step 3: Create a Vision for Change
 Determine the values that are central to the change.
 Develop a short summary (one or two sentences) that captures what you "see" as
the future of your organization.
 Create a strategy to execute that vision.
 Ensure that your change coalition can describe the vision in five minutes or less.
 Practice your "vision speech" often.
Step 4: Communicate the Vision
 Talk often about your change vision.
 Openly and honestly address peoples' concerns and anxieties.
 Apply your vision to all aspects of operations – from training to performance
reviews. Tie everything back to the vision.
 Lead by example.
Step 5: Remove Obstacles
 Identify, or hire, change leaders whose main roles are to deliver the change.
 Look at your organizational structure, job descriptions, and performance and
compensation systems to ensure they're in line with your vision.
 Recognize and reward people for making change happen.
 Identify people who are resisting the change, and help them see what's needed.
 Take action to quickly remove barriers (human or otherwise).
Step 6: Create Short-term Wins
 Look for sure-fire projects that you can implement without help from any strong
critics of the change.
 Don't choose early targets that are expensive. You want to be able to justify the
investment in each project.
 Thoroughly analyze the potential pros and cons of your targets. If you don't
succeed with an early goal, it can hurt your entire change initiative.
 Reward the people who help you meet the targets.
Step 7: Build on the Change
 After every win, analyze what went right and what needs improving.
 Set goals to continue building on the momentum you've achieved.
 Learn about kaizen, the idea of continuous improvement.
 Keep ideas fresh by bringing in new change agents and leaders for your change
Step 8: Anchor the Changes in Corporate Culture
 Talk about progress every chance you get. Tell success stories about the change
process, and repeat other stories that you hear.
 Include the change ideals and values when hiring and training new staff.
 Publicly recognize key members of your original change coalition, and make sure
the rest of the staff – new and old – remembers their contributions.
 Create plans to replace key leaders of change as they move on. This will help
ensure that their legacy is not lost or forgotten.
McKinsey's 7-S Model
The McKinsey 7-S Model was created by Tom Peters and Robert Waterman while they
were working for McKinsey & Company, and by Richard Pascale and Anthony Athos at a
meeting in 1978 (12Manage, 2007). The McKinsey 7-S model is a holistic approach to
company organization, which collectively determines how the company will operate
(12Manage, 2007). There are seven different factors that are a part of the model: shared
values, strategy, structure, systems, style, staff, and skills, which all work collectively to form
the model (12Manage, 2007).
Shared values are the center of the model because it is what the organization believes in and
stands for, such as the mission of the company (12Manage, 2007). Strategy represents what
the company plans to do react to any changes of its external surroundings (Recklies, 2007).
The structure refers to the organizational structure of the company (12Manage, 2007).
Systems are the portion of the model that represents "the procedures, processes and routines
that characterize how the work should be done" (12Manage, 2007). Staff is quite obvious in
the fact that it is a proper representation of who is employed by the organization and what
they do within the organization (12Manage, 2007). Style signifies the organizational culture
and management styles that are utilized within the organization (12Manage, 2007). Skills
indicate the abilities and competencies of either the employees or the organization
holistically (12Manage, 2007).
 It is an effective way to diagnose and understand the organization
 It is a guide for organizational change
 It is a combination of both rational and emotional constituents and all parts are
interrelated, so all portions must be addressed and focused on (12Manage, 2007).
 Is that when one of the parts is changed, all parts change because they are all
interrelated (12Manage, 2007).
 Is that this model ignores differences (Morgan, n.d.). After five years many of the
companies that used this model fell from the top (Morgan, n.d.).
Strategies for Developing the Employment Relationship
It is concerned with how to gain people’s commitment to the achievement of the
organization’s business goals and objectives in a number of different situations. It is also
about ensuring that organizational change is accepted.
This Standard widens and deepens the coverage of employee relations in the People
Management and Development Standard, with the aim of achieving professional competence
in this area. The Standard embraces the strategies, policies, structures and processes used to
develop and maintain employee commitment.
 Managerial colleagues, both inside and outside the people management function
 Individual employees, on grievances and discipline
Employees as a group as well as their representatives. Personnel and development
professionals are frequently involved in employee relations issues, whether they are
generalists or specialize in people resourcing, employee reward or learning and development.
An integrated approach to human resource management means that all these aspects have to
be considered together so that a mutually reinforcing and interrelated set of personnel
policies and practices can be developed

Personnel and development professionals are expected to play their part alongside line
managers in maximizing the contribution of people to the achievement of current and
evolving business objectives. In partnership with their colleagues they need to understand the
business context and the importance of taking a strategic viewpoint when meeting business
needs and managing change.
Employee relations management in context
Operational indicators Contribute to setting the strategic direction for an organization’s
employee relations policy and practice.
Knowledge indicators
 The various means and methods available for effective workplace decision-making
and management policies and approaches to gain the commitment, co-operation and
empowerment of the workforce.
 The organizational, regional, national and international context and their potential
impact on current employee relations policies, issues and practices.
 The implications of European Union membership and the internationalization of
employee relations policies, issues and practices.
Indicative content
 The changing economic, social, political and technological environment of employee
 The social dimension of the European Union and
 The Commission
 The Council of Ministers
 The Parliament
 The Court of Justice
 The European Trades Union Confederation (ETUC)
 UNICE, CEEP, framework agreements and directives.
 The role of the Government as an economic manager, through its fiscal and monetary
policies etc and its implications for employer/employee interests.
 The role of the Government as legislator and
 Employment protection legislation
 Maternity and parental leave
 Equal opportunities legislation
 Individual rights in relation to trade union membership (statutory
recognition for collective bargaining Purposes)
 The law relating to industrial conflict
 The health and safety legal framework
 The role of employment tribunals and the Labor Court (Ireland).
 The role of state agencies, including
 The Advisory, Conciliation and Arbitration Service (ACAS)
 The Central Arbitration Committee (CAC)
 The Labor Relations Commission (Ireland)
 The Certification Officer
 The Health and Safety Commission.

Employee relations process

Operational indicators
1. Provide advice on the appropriateness of adopting different forms of employee
involvement/participation and how to implement them.
2. Participate as a key team member in the effective implementation of organizational

3. Participate as a key team member in the consultation and communication process.
4. Monitor and evaluate the effectiveness of the organization’s strategies, policies,
procedures and processes to develop and maintain employee commitment.
5. Facilitate the resolution of differences with management colleagues within and
between the management functions, as well as employees individually and/or
6. Draft policies and procedures dealing with employee grievances, discipline, and
redundancy, job grading, harassment and bullying, and ensure their effective
implementation and management.
Knowledge indicators
1. The impact of organizational change on relationships within an organization
2. The mechanisms in both nonunion and unionized enterprises designed to reconcile
the different interests of employers and employees for mutual gain.
Indicative content
 The range of techniques for practicing employee involvement in organizations,
 Communication strategies and policies
 Problem-solving
 Task-based involvement
 Quality circles
 Team briefing
 Representative participation
 Financial involvement.

 Advice, conciliation, mediation and arbitration.

 Unilateral decision-making by employers.
 Employee participation in management decision-making by information and
consultation bodies, by worker directors, by collective bargaining (scope, level,
formality, bargaining units, single-table bargaining etc) and by health, safety and
environment committees.
 Industrial sanctions, including strikes and lockouts.
 Legal regulation to provide common standards
 The role and function of health and safety committees.
Operational Indicators
Monitor and evaluate the effectiveness of the organization’s strategies, policies, procedures
and processes to develop and maintain employee commitment.
Knowledge indicators
The key features of the individual employment relationship, including the psychological
contract. Indicative content
Agreements and their
 Types – substantive, procedural, partnership, technological, single-union/no-strike
and workforce
 Authorship – solely by management (as predominates in non-union
firms) or jointly (as normal in unionized organizations)
 Levels and formality – informal as against formal
 Scope – the subjects covered.
 The impact of employee relations on economic efficiency
Strategic HRD Systems Practices and Facilitators

HRD systems
1. Career system
2. Work system
3. Development system
4. Self-renewal system
5. Culture system
6. Reinforcement System
Career system Career system ensures attraction and retention of human resources through
the following sub-systems.
 Manpower planning
 Recruitment
 Career planning
 Succession planning
 Retention

Work system Work-planning system ensures that the attracted and retained human resources
are utilized in the best possible way to obtain organizational objectives. Following are the
sub systems of the work planning system.
 Role analysis
 Performance plan
 Performance feedback and guidance
 Performance appraisal
 Promotion
 Job rotation
 Reward

Development system The human resources within the organization have to rise up to the
occasion and change accordingly if the organization wants to be in business.
 Induction
 Training
 Job enrichment
 Self-learning mechanisms
 Potential appraisal
 Succession Development
 Counseling
 Mentor system

Self-renewal system it is not enough to develop individuals and teams in the organizations
but occasionally there is a need to renew the organization itself. Following are some of the
sub systems that can be utilized to renew the organization.
 Survey
 Action research
 Organizational Development interventions
 Organizational Retreats

Culture system It is the culture that will give a sense of direction, purpose, togetherness, and
 Vision, Mission and Goal
 Values
 Communication
 Get-togethers and celebrations
 Task forces
 Small Groups

Reinforcement System Important motivating factor for people joining and continuing in an
organization in the work they get.
 Reward
 High performance

Strategic HRD practices

Organizations face a challenging economic climate, changing demographics, constant
regulatory oversight, shifting employee values, and advancing technology all impacting the
ability of organizations to compete and succeed in a global environment. HRD provides a
variety of services designed to assist organizations in the ever-changing scope of the business
1. Human Resource Audits
2. Employee Handbooks/Policy Manuals
3. Policy Manuals
4. Outsourcing of Human Resources
5. HRIS/HR Administration
6. Employment Law Compliance
7. Compensation Development and Management
8. Payroll Services
9. Broad Banding
10. Benefits Administration
11. Affirmative Action Programs
Strategic HRD facilitator
1. Concerns of management
2. Concerns of trade unions,
3. Concerns of workers
4. Industrial relations scenario,
5. Trainability,
6. Employment externalization,
7. Manpower down-sizing.

Is a structured approach to shifting/transitioning individuals, teams, and organizations from a
current state to a desired future state. It is an organizational process aimed at helping
employees to accept and embrace changes in their current business environment. In project
management, change management refers to a project management process where changes to
a project are formally introduced and approved
Kotter defines change management as the utilization of basic structures and tools to control
any organizational change effort. Change management's goal is to minimize the change
impacts on workers and avoid distractions.

Successful change management is more likely to occur if the following are included
1. Benefits management and realization to define measurable stakeholder aims, create a
business case for their achievement (which should be continuously updated), and
monitor assumptions, risks, dependencies, costs, return on investment, benefits and
cultural issues affecting the progress of the associated work.
2. Effective Communications that informs various stakeholders of the reasons for the
change, the benefits of successful implementation as well as the details of the change
3. Devise an effective education, training and/or skills upgrading scheme for the
4. Counter resistance from the employees of companies and align them to overall
strategic direction of the organization.
5. Provide personal counseling (if required) to alleviate any change-related fears.
6. Monitoring of the implementation and fine-tuning as required.
Is the corporate management term for the act of reorganizing the legal, ownership,
operational, or other structures of a company for the purpose of making it more profitable, or
better organized for its present needs. Other reasons for restructuring include a change of
ownership or ownership structure, demerger, or a response to a crisis or major change in the
business such as bankruptcy, repositioning, or buyout. Restructuring may also be described
as corporate restructuring, debt restructuring and financial restructuring.
Executives involved in restructuring often hire financial and legal advisors to assist in the
transaction details and negotiation. It may also be done by a new CEO hired specifically to
make the difficult and controversial decisions required to save or reposition the company. It
generally involves financing debt, selling portions of the company to investors, and
reorganizing or reducing operations.
The basic nature of restructuring is a zero sum game. Strategic restructuring reduces financial
losses, simultaneously reducing tensions between debt and equity holders to facilitate a
prompt resolution of a distressed situation.
Corporate debt restructuring is the reorganization of companies’ outstanding liabilities. It
generally a mechanism used by companies which are facing difficulties in repaying their
debts. In the process of restructuring, the credit obligations are spread out over longer
duration with smaller payments. This allows company’s ability to meet debt obligations.
Also, as part of process, some creditors may agree to exchange debt for some portion of
equity. It is based on the principle that restructuring facilities available to companies in a
timely and transparent matter goes a long way in ensuring their viability which is sometimes
threatened by internal and external factors. This process tries to resolve the difficulties faced
by the corporate sector and enables them to become viable again.

 ensure the company has enough liquidity to operate during implementation of a
complete restructuring
 produce accurate working capital forecasts
 provide open and clear lines of communication with creditors who mostly control the
company's ability to raise financing
 update detailed business plan and considerations

Organizational restructuring
Organizations are human systems and their system structure includes the worldview, beliefs,
and mental models of their leaders and members. Changing organizational behavior requires
changing the belief system of its personnel. This process of changing beliefs is called
learning. Effective learning requires clear, open communications throughout the
Organizational performance ultimately rests on human behavior and improving performance
requires changing behavior. Therefore organizational restructuring should have as a
fundamental goal the facilitation of clear, open communication that can enable organizational
learning and clarify accountability for results.
Since the world is continually changing, continuous organizational learning is necessary to
stay up to date. Organizations that cannot or will not learn will become obsolete. Leaders
should periodically examine the organizational structure of their enterprise to assure that it
continues to provide an environment for organizational learning. A non threatening,
development focused performance appraisal process can be an effective organizational
learning tool.
The points of leverage in organizations are the beliefs and worldview of their leaders and
decision makers. The sense of purpose, vision and commitment of an organization's
leadership play a critical role in the results it can accomplish.
Symptoms indicating the need for organizational restructuring.
 New skills and capabilities are needed to meet current or expected operational
 Accountability for results are not clearly communicated and measurable resulting
in subjective and biased performance appraisals.
 Parts of the organization are significantly over or under staffed.
 Organizational communications are inconsistent, fragmented, and inefficient.
 Technology and/or innovation are creating changes in workflow and production
 Significant staffing increases or decreases are contemplated.
 Personnel retention and turnover is a significant problem.
 Workforce productivity is stagnant or deteriorating.
 Morale is deteriorating.
Performance management
Performance management involves thinking through various facets of performance,
identifying critical dimensions of performance, planning, reviewing, and developing and
enhancing performance and related competencies.”
Performance management is an interlocking set of policies and practices which focus to
enhance achievement of organizational objectives through a concentration of individual
 To improve employees work performance by helping them to realize and use their
full potential in carrying out their organizations goals and objectives.

 To provide information to employees and managers for use in making work/HR
related decisions.
Scope of performance management strategy
 Provide employees with a better understanding of their role and responsibilities
 Increase confidence through recognizing strengths while identifying training needs to
improve weaknesses
 Improve working relationships and communication between supervisors and
 Increase commitment to organizational goals
 Develop employees into future supervisors
 Assist in personnel decisions such as promotions or allocating rewards
 Allow time for self-reflection, self-appraisal and personal goal setting.

Types of performance management

Strategic vs. operational performance management How an executive team drives
strategy and change through the organization is quite different from the day-to-day
management of operational performance. Though strategic change will of course influence
how operational performance is being managed. Many organizations operate their balanced
scorecards as simple sets of operational measures in perspectives. Yet Norton & Kaplan
devised the system to manage strategy and organizational change. Both are useful but serve
quite different performance management needs and should complement one another.
Organizational performance vs. individual performance management: How individuals
(or teams) are incentivized, developed and managed is often left to the HR performance
management system, yet this is a major influence on operational performance and strategic
change. Change how people are developed and managed and you change how the
organization is managed. It seems easy to manage operations and teams yet the changes here
can clash with the individual appraisal, development and reward systems. Beware of tackling
any aspect in isolation.
External Governance vs. Internal management How you report externally is often quite
different to the tools for managing performance internally. Externally a much narrower subset
of information is reported, though there are exceptions where regulation is concerned.
Internally a wider set of information is needed to manage the drivers of performance rather
than merely the consequences of those actions. What is needed externally is not adequate to
manage internally. Recognize that different stakeholders have different needs.
Measures and targets vs. knowledge and facts One common mistake with performance
management systems is to say that every measure must have a target. We call it "the tyranny
of targets". Yet it can be as appropriate to merely have facts that you can examine and
evaluate. You might want to be gathering information without evaluation yet. This
compulsive target setting often creates dysfunctional behaviors which can be avoided with a
more practical approach to where and how targets are used.
Control vs. empowerment An organization approaching performance management with a
mind-set to "get a grip on" activities and performance is primarily interested in control. This
mind-set is quite different to one that seeks to empower the front-line staff. One that says,
"We want this information to be useful to the people who produce it, otherwise why would
we want it?" Imagine a situation where you look at performance combined with an analysis
of the situations and actions that were already being taken. You no longer asking, "How do I
manage this performance?", but rather, "Is this performance being managed appropriately?"

Judgment and evidence Neuroscientists say that purely fact based decision making is a
myth - in fact we are always using emotion and judgment, often backed up with evidence. In
reality we employ experienced people and give them information with which to make
decisions, establish whether it made a difference, and improve their judgment. Judgment and
evidence work together, when we manage performance, despite what the sellers of analytical
software believe.
The Culture and the Discipline of performance: Measures and scorecards and targets are
not the whole picture. Consider the messages that managers give out, the permission they
give, and the subtle communication of what is important and what they pay attention to.
Consider how performance is discussed, the latitude people have, what limits they have on
their behaviors. Consider the autonomous units and the ones under tight control. Consider the
conversations that occur and those that do not. These cultural elements exert far more
influence over behaviors than mere measures or targets. The scorecards, measures and
reports that represent the discipline of performance. In reality, it is this culture of
performance that makes the real difference to performance.
Managing, and managing performance, costs money I want to be really clear here. We
spend ages looking at the costs of our operations, products and services. Yet, how we manage
also costs the organization money. Excessive strategic management and performance
management, especially if we are doing it, costs excessive amounts. We work with clients to
introduce ways where the whole organization can be managed better, but that
does not increase the amount of management, and therefore the cost of management.
Process of Performance Management (PMP)

 Maximizes staff engagement, development, and performance

 Is consistent across units to enhance full development and utilization
of talent
 Remains flexible, efficient, measurable, fair, transparent
 Provides better alignment of staff roles and goals with the university’s mission
 Promotes on-going and proactive succession management
 Cornell’s Performance Management Philosophy:
 Addresses the relationship of employees to the institution, from the time they are
recruited, through their growth and development, to the time they depart
 Engages and develops employees throughout the year
 Establishes goals and measures performance to those goals
 Depends on the supervisor giving clear, developmental feedback
 Includes a review of past performance and goals and focuses on future development
opportunities that are aligned to individual, unit, and university goals
Performance management cycle
 Planning: work and setting expectations
 Monitoring: continually performance.
 Developing: the capacity to perform.
 Rating: periodically in a summary fashion.
 Rewarding: good performance
Evaluating the Effectiveness of Strategic Human Resource Management
1. Organizations are comparatively poised to grow subject to evaluation and utilization
of their human capital in roles that bring in a measurable value to the organization.
2. Human resources roles are so created as to bring in clarity and definitiveness to the
customers serviced, the external markets and to the individual.

3. Organizations can create systematic realities to identify, create and measure the
contributions of the human resources value in financial terms and profitability
4. Measurement could involve a combination of the qualitative and quantitative
benchmarks relevant in evaluation of a departmental/functional strength.
5. Defining and measuring ratios and standards that integrate the business goals,
functions and corporate strategy.
 Point of impact of decisions.
 Service parameters- both internal and external.
 Return on intellectual capital employed.
 Return on intellectual net worth.