GLOBAL HR

Q 1. Define the term Global HR. Explain its concept in detail with the help of Model of International HRM, its activities, Scope and significance. Ans. In order to survive and prosper in the new global competition, companies are embracing global integration and coordination, but at the same time they must push for local flexibility and speed. Global companies have to nurture global organization learning by stimulating creativity, innovation and the free-flow of ideas across boundaries, but also advocate a disciplined and methodical approach to global continuous improvement. To succeed in global competition requires an open and empowered organizational climate, but also a tightly focused global competitive culture. If global organizational capability, intrinsically linked to people issues, is the principal tool of competition, it is only natural that HR in the future should become the pivotal partner in the globalization process. Having a global HR mindset implies a recognition of benefits that can flow to the whole organization from encouraging and valuing cultural diversity in people, not just as members of distinct cultural groups but as individuals. Yet valuing diversity must go well beyond the traditional emphasis on bridging the distance between the clusters of national cultures by focusing on average national characteristics. The barrier that hinders effective cross-cultural interactions is the lack of comprehension about diversity within a given culture by outsiders who do not understand the historical, political, and social context of culture differences and thus have to often rely on often misleading general assumptions and stereotypes. Outsiders view cultures through coloured lens. The role of HR is to implement the necessary organizational strategies with sensitivity to specific cultural influences. Globalizing HR Processes: Global staffing and global leadership development are the two components of global human resources with the greatest potential for powerful leverage for global firms. In both the areas, a major paradigm shift is required in comparison to the traditional perspective. Global Staffing: While it may be obvious that global firms will need more and more employees with global brains, translating this attractive vision into operational reality is not simple. Most managers are not born global; they acquire global brains through a series of experiences, many of them at a substantial cost to the organization. Making a rational business case concerning the future need and use of global managers is one of the critical decisions the global HR function and business leaders must make together. Global Leadership Development: One of the principal tasks of global leadership development should be to create and support an environment where global mindsets can flourish. It will focus on providing a broad spectrum of employees with opportunities to acquire and enhance their global leadership skills and capabilities, often using

nontraditional developmental techniques such as cross-border assignments to multicultural task forces and project teams.

job

swaps

or

The challenges facing human resources in the future as the function strives to become the champion of globalization can be generalized under three problem areas: (1) developing a global mindset inside the HR organization, including a deep understanding of the new global competitive environment and the impact it has on the management of people worldwide; (2) aligning core human resource processes and activities with the new requirements of competing globally while simultaneously responding to local issues and requirements; and (3) enhancing global competencies and capabilities within the HR function so it can become a borderless business partner in rapidly exploiting business opportunities worldwide.

INTERNATIONAL PERSPECTIVES OF HRM

International human resource management (IHRM) involves ascertaining the corporate strategy of the company and assessing the corresponding human resource needs; determining the recruitment, staffing and organizational strategy; recruiting, inducting, training and developing and motivating the personnel; putting in place the performance appraisal and compensation plans and industrial relations strategy and the effective management of all these. "The strategic role of HRM is complex enough in a purely domestic firm, but it is more complex in an international business, where staffing, management development, performance evaluation, and compensation activities are' complicated by profound differences between countries in labor markets, culture, legal systems, economic systems, and the like." Understanding of international perspective of HRM is required because of cultural diversity, workforce diversity, language diversity, and economic diversity.

1. Cultural Diversity Culture is one of the most important factors affecting HRM practices. However, when we consider international perspective of HRM, we find cultural diversity across the globe, that is, culture of two countries is not alike. Cultural diversity exists on following dimensions:
lndividualism and Collectivism. After the study of culture of sixty countries, Hofstede, a Dutch researcher, has concluded that people differ in terms of individualism and collectivism. Individualism is the extent to which people place value on themselves; they define themselves by referring themselves as singular persons rather than as part of a group or organisation. For them individual tasks are more important than relationships. Collectivism is the extent to which people emphasise the good of the group or society: They tend to base their identity on the group or organisation to which they belong. At work, this means that relationships are more important than individuals or tasks; employer employee links are more like family relationships.

2. Workforce Diversity Workforce is the building block of any organisation but there is workforce diversity in global companies. Based on their place of origin, employees of a typical global company can be divided into the following groups: a. Parent-country national permanent resident of the country where the company is headquartered.

b. Host-country national-permanent resident of the country where the operations of the company are located. c. Third-country national - permanent resident of a country other than the parent country and the host country. 3. Language Diversity Language is a medium of expression but employees coming from different countries have different languages. Though English is a very common language, it does not serve the purpose adequately as it does not cover the entire world. While employees coming from different countries may be encouraged to learn the language of the host country for better dissemination of the information, it does not become feasible in many cases. An alternative to this is to send multilingual communications. It implies that anything transmitted to employees should appear in more than one language to help the message get through. While there are no hard-and-fast rules in sending such messages, it appears safe to say that such a message should be transmitted in the languages the employees understand to ensure adequate coverage. 4. Economic Diversity Economic diversity is expressed in terms of per capita income of different countries where a global company operates. Economic diversity is directly related to compensation management, that is, paying wages / salaries and other financial compensation to employees located in different countries. MODEL OF IHRM An international business must procure, motivate, retain, and effectively utilize services of people both at the corporate office and at the foreign plants. The process of procuring, allocation, and effectively utilizing human resources in an international business is called international human resources management (IHRM). IHRM is the interplay among the three dimensions - HR activities, types of employees, and countries of operation. 1. The three broad activities of IHRM, namely procurement, allocation and utilizing cover all six activities of domestics HRM. The six functions of domestic HRM are HR planning, employee hiring, training an development, remuneration, performance management, and industrial relations. These six functions can be dovetailed with the three broad activities of IHRM.. 2. The three national or country categories involved in IHRM activities are - the host country where a subsidiary may be located, the home country where the company has its headquarters, and other countries that may be the source of labour or finance. 3. The three types of employees of an international business are host country nationals, parent country nationals, and third country nationals.

HUMAN RESOURCE ACTIVITIES

Develop

Train Retain
Procure Host Country Nationals (HCNs) Home Allocate Utilize Others

Parent Country Nationals (PCNs) Third Country

Nationals (TCNs) Type of Employees Countries

Host

SCOPE OF IHRM Several factors differentiate IHRM from domestic HRM. The main characteristics of IHRM are. 1. More HR activities. 2. Need for a borader perspective. 3. More involvement in employee personal lives, 4. Changes in emphasis as the workforce mix of expatriates and locals varies. 5. Risk expousure, and 6. More external influences. More Human Resources Activities : The scope of IHRM is much broader than managing domestic HR activities. There are issues connected with international taxation, international orientation and relocation, administrative services for expatriates, host government regulations, and language translation services. Need for Broader Perspective : When compared to domestic HRM, IHRM requires a much broader perspective on even the most common HR activities. For example, while dealing with pay issues, the corporate HR manager must co-ordinate pay systems in different countries with different currencies that may change in relative value to one another over time. While handling fringe benefits too,

complications tend to arise. It is a common practice in most countries to provide health insurance to employees and their families. The family in some countries is understood to include the employees spouse and children. In other countries, the term family may encompass a more extended group of relative multiple spouses, aunts, uncles, grandparents, nephews and nieces. It is a difficult task for an international business to deal with the different definitions of family. More Involvement in Employees Personal Lives: A greater degree of involvement in the employees personal lives is necessary for the selection, training and effective management of both parent country and third country nationals. The HR department needs to ensure that the expatriate employee understands housing arrangements, health care, and all aspects of remuneration packages provided for the foreign assignment. Many international business maintain an International Human Resource Service section that coordinate administration of the above programmes and provides service for the parent country and third country nationals such as handling their banking, investments, home rental while on assignment, coordinating home visits, and final repatriation. Changes in Emphasis As an international business matures, the emphasis placed on various HR activities change. For example, as the need for parent company and third country nationals declines and more trained locals become available, resources previously allocated to areas such as expatriate taxation, relocation, and orientation are transferred to activities such as staff selection, training, and management development. The later activity may require establishment of a programme to bring high potential local staff to corporate headquarters for development assignments. The need to enhance emphasis in HR activities, as a foreign subsidiary matures, is clearly a factor that broadens the responsibilities of local HR activities. External Influence The IHRM activities are influenced by a greater number of external factors than are domestic HRM functions. Because of the visibility that the international business tend to have in host countries (particularly in developing countries) the subsidiary HR managers may have to deal with ministers, political figures, and a greater variety of economic and social interest groups than domestic HR managers would normally encounter. SIGNIFICANCE OF IHRM

Diversity of various types in a global company suggests that HRM practices have to be tailor-made to suit the local conditions. Such practices can be seen in the context of different HRM functions. Recruitment and Selection A global company has the following alternative approaches to recruitment and selection of employees: a. Ethnocentric-all key positions, in headquarters as well as subsidiaries, are staffed by parent-country nationals.

b. Polycentric-key positions in subsidiaries staffed by host-country nationals and those in headquarters staffed by parent-country nationals. c. Regiocentric-key positions staffed by host-country nationals within particular geographical regions (such as continent-wise). d. Geocentric-key positions in headquarters as well as subsidiaries staffed by people based on merit, irrespective of their nationality.
Performance Management Performance management, that is, assessment of employee performance, discussing its results with employees, and suggesting and working out way for improvement in performance, is based on the practices adopted by MNCs in this respect for parent-country nationals. MBO works in an environment which is open and provides platform for discussion between superior and subordinate on equal footing. In countries where people are highly oriented towards authority, any open discussion with superior by subordinate is treated as insubordination, and MBO system does not work. Therefore, the alternatives suggested are recognising and formally incorporating the difficulty level of operating in different countries, relying the foreign on-site manager to consult the home-site manager before finalising assessment, and involving the expatriate in deciding on performance criteria and making them more appropriate to the expatriate's position and circumstances. Training and Development MNCs provide pre-departure training to expatriates. However, in many cases, such a training is superficial without really addressing the issues uppermost in the minds of expatriates and their families. The depth and breadth of training can vary from a simple information-giving approach (films/books) to effective approach (culture and language training) and impression approach (field experience) depending on the length of stay and nature of the position. Compensation Management There are two commonly used approaches in international compensation systems going-rate approach in which compensation is tied to host-country norms and the balance-sheet approach in which compensation is tied to home country norms. In both approaches, additional expenses in the form of housing and additional taxes are reimbursed. Both the approaches have their own merits and limitations. Industrial Relations Industrial relations depend on the history, legal framework, power relations, and ideologies of management and trade unions in each country. Therefore, MNCs have to adopt specific industrial relations strategies to suit local conditions. However, MNCs face pressure for standardisation in terms of productivity at least within a region if not internationally. Therefore, they have to strike a balance between industrial relations strategies to suit local conditions and standardisation.

EMERGING CHALLENGES IN INTERNATIONAL HRM

Beginning with the last decade of 20th century, globalisation, liberalisation and technological advances have changed the way the business is being done across the world, and India has not been exception to that. These three factors are still continuing to haunt business organisations to align their strategies to the needs of fast changing environment. Since HRM is the prime mover of human resources through which organisations have to encounter threats posed by the environment, it is facing lot of challenges in managing people effectively. In order to meet its basic objectives, HR personnel have to identify the nature of these challenges and define their roles and responsibilities more sharply to counter these challenges. HR challenges posed by the present dynamic environment may be broadly classified into following four categories:
1. Mergers and acquisitions, 2. Changing workforce profile, 3. Newer organisational designs, and 4. Increasing quality consciousness. These are the major categories of challenges, and within each category, there might be several challenges that HR personnel have to face. The following are some of the important factors which make international HRM complex and challenging. Q.2. Discuss various Global Training and Development Strategies in detail. Ans. Training and development is essential to continue to build the capacity of individuals in organization to deal with the modern sports and development landscape working towards a view of empowerment and sustainability. Ability to perform at your best, is largely dependent on the team of individuals who drive your organization it is essential that these individuals are empowered, enabled and possess the critical skills required to perform at their optimum. Effective Training & Development is essential to continuously get the best from people and extend the knowledge shelf-life of any company. Companies everywhere deliver products and service to their customers using a multi-cultural workforce, whether or not they are global companies. Employees, managers and executives need to be able to work productively with people different from themselves - people who want the same things - safety, security, a good job, a decent wage, and interesting work - but who may have different perspectives on what makes a good manager, on how best to resolve conflict, on what is important in getting the job done or in helping the customer even if it takes a long time. To be effective across borders, organizations and employees at all levels need to broaden their collective understanding of other cultures and the needs of people from these cultures.

Some examples of global workforce development include:

1. Managers need to know how to motivate and organize people from a variety of cultural backgrounds 2. Sales people need to know how to build relationships, negotiate and sell across cultures 3. HRD specialists need to understand how best to develop the capability of employees in countries other than their own.

4. Employees need to be able to work effectively with a wide variety of types of people 5. Financial advisors need to understand how differences among cultures impact ethical conduct in their area of responsibility. 6. Contact center offshorers need to know how to provide effective learning and development in other geographies and cultures on client-specific products and processes while maintaining high quality customer service levels. Ambitious companies across the world recognize the opportunities that the global market place offers them.

Cross-cultural Training and Development:

Many international companies continue to use training program content that assumes knowledge of the organization's home-culture, or that employs culture-specific metaphors or critical incidents, or that rely on styles of training-delivery that are counter-cultural and therefore counter-productive in many of the cultures in which the training is delivered.

Cross-cultural Coaching:
Sometimes employees from cultural backgrounds different from the company home culture need a specialist who understands cultural differences to partner with them in providing guidance on how to best succeed while working across cultures. The coaching relationship is a very specialized one and coaches who speak the mother tongue and/or deeply understand the coachee's background can more effectively work to help talent succeed.

Global Diversity Development

As companies globalize to take advantage of emerging markets and the newly freed movement of capital and labor, new issues emerge. One of the most prominent is the global workforce itself. In many companies, groups of technicians, scientists, financial analysts and other professionals are comprised of people whose national origins are different from the country in which they work, and in which the local workforce itself may be diverse. They are employed by companies because of their professional training and skills, but often cultural differences begin to arise which may threaten the very advantages of diversity.

Workforce Opinion Surveys:

Many companies survey their employees to identify levels for motivation and change. Global companies may need more sophisticated approaches when surveying a global or multi-cultural, multi-lingual workforce. Analysis of responses also may need a culturally-sophisticated approach and understanding of how rating itself differs across cultures.

Cultural Audits:
Before embarking on development of global approaches to any HR function (from compensation to succession management), a Cultural Audit to assess the level of appropriateness across cultures of anything from policies and practices to programs and processes.

Business Ethics Practice:

Business ethics encompasses the rules, roles, and values that inform ethical conduct. It is the framework for compliance behavior, risk management, business strategy and growth. Both the behavioral and systemic implications of business ethics offers a variety of services to help strengthen the ethics in organization. Secondary socialization and training The excellent companies that we studied used a variety of socialization mechanisms to preserve their core values and organizational practices. The socialization process begins with recruitment in that the organization is likely to select new members who already have the right set of attitudes, beliefs, and values. Once the individual has joined the organization, induction programs, apprenticeships, individual coaching by the superior, training and development programs, and other socialization practices ensure that the newcomer learns the values, expected behaviours, and social knowledge that are necessary to become an effective and accepted member of the organization. The use of standardized induction programs, often accompanied by individualized coaching or mentoring activities, was common practice among the companies within the sample. Although socialization was considered important in all companies, a wide variation in approaches and methods emerged, largely depending on the culture (both national and corporate) of the organization.

Orientation training includes the study of the corporate culture, work ethics, and rules and regulations. Each phase of the induction program contains an evaluation of the employee and leads to the next phase. Leading companies around the world extensively use training and development not only as means of enhancing the skills and knowledge of their employees but to manage and reinforce the company culture. Training is often internal so as to socialize employees into the culture, and leadership development and training programs are built around the company core values and business principles. The objective of training programs focused on corporate culture and shared values is not always to ensure continuity of the culture but often to initiate culture change and transform the organization. Developing Global Mindset: Having a global HR mindset implies a recognition of benefits that can flow to the whole organization from encouraging and valuing cultural diversity in people, not just as members of distinct cultural groups but as individuals. Yet valuing diversity must go well beyond the traditional emphasis on bridging the distance between the clusters of national cultures by focusing on average national characteristics. The barrier that hinders effective cross-cultural interactions is the lack of comprehension about diversity within a given culture by outsiders who do not understand the historical, political, and social context of culture differences and thus have to often rely on often misleading general assumptions and stereotypes. Outsiders view cultures

through coloured lens. The role of HR is to implement the necessary organizational strategies with sensitivity to specific cultural influences. Global Leadership Development: One of the principal tasks of global leadership development should be to create and support an environment where global mindsets can flourish. It will focus on providing a broad spectrum of employees with opportunities to acquire and enhance their global leadership skills and capabilities, often using nontraditional developmental techniques such as cross-border job swaps or assignments to multicultural task forces and project teams. Training is the process of altering employee behavior and attitudes in away that increases the probability of goal attainment. Training is particularly important in preparing employees for overseas assignments because it helps ensure that their full potential will be tapped. One of the things that training can do is to help expat managers better understand the customs, cultures, and work habits of the local culture. The simplest training, in terms of preparation time, is to place a cultural integrator in each foreign operation. This individual is responsible for ensuring that the operation's business systems are in accord with those of the local culture. The integrator advises, guides, and recommends actions needed to ensure this synchronization. Unfortunately, although using an integrator can help, it is seldom sufficient. Recent experience clearly reveals that in creating an effective global team, the MNC must assemble individuals who collectively understand the local language, have grown up in diverse cultures or neighborhoods, have open, flexible minds, and will be able to deal with high degrees of stress. In those cases where potential candidates do not yet possess all of these requisite skills or abilities, MNCs need a well-designed training program that is administered before the individuals leave for their overseas assignment (and, in some cases, also on-site) and then evaluated later to determine its overall effectiveness. The most common topics covered in cultural training are social etiquette, customs, economics, history, politics, and business etiquette. The Impact of Overall Management Philosophy on Training The type of training that is required of expatriates is influenced by the firm's overall philosophy of international management. For example, some companies prefer to send their own people to staff an overseas operation; others prefer to use locals whenever possible. Briefly, four basic philosophical positions of multinational corporations (MNCs) can influence the training program: 1. An ethnocentric MNC puts home-office people in charge of key international management positions. The MNC headquarters group and the affiliated world company managers all have the same basic experiences, attitudes, and beliefs about how to manage operations.

2. A polycentric MNC places local nationals in key positions and allows these managers to appoint and develop their own people. MNC headquarters gives the subsidiary managers authority to manage their operations just as long as these operations are sufficiently profitable. 3. A regiocentric MNC relies on local managers from a particular geographic region to handle operations in and around that area A geocentric MNC seeks to integrate diverse regions of the world through a global approach to decision making. Assignments are based on qualifications, and all subsidiary managers throughout the structure are regarded as equal to those at headquarters. The impact of Different Learning Styles on Training and Development Another important area of consideration for development is learningstyles. Learning is the acquisition of skills, knowledge, and abilities that result in a relatively permanent change in behavior. Over the last decade, growing numbers of multinationals have tried to become "learning organizations," continually focused on activities such as training and development. In the new millennium, this learning focus applied to human resource development may go beyond learning organizations to "teaching organizations." Of course, the way in which training takes place can be extremely important those responsible for training programs must remember that even if learning does occur, the new behaviors will not be used if they are not reinforced. For example, if the head of a foreign subsidiary is highly ethnocentric and believes that things should be done the way they are in the home country, new managers with intercultural training likely will find little reward or reinforcement for using their ideas. This cultural complexity also extends to the way in which the training is conducted. Reasons for Training Training programs are useful in preparing people for overseas assignments for many reasons. These reasons can be put into two general categories: organizational and personal. Organizational Reasons Organizational reasons for training relate to the enterprise at large and its efforts to manage overseas operations more effectively. One primary reason is to help overcome ethnocentrism, the belief that one's way of doing things is superior to that of others. Ethnocentrism is common in many large MNCs where managers believe that the home office's approach to doing business can be exported intact to all other countries because this approach is superior to anything at the local level. Training can help home-office managers to understand the values and customs of other countries so that when they are transferred overseas, they have a better understanding of how to interact with local personnel. This training also can help managers to overcome the common belief among many personnel that expatriates are not as effective as host country managers. This is particularly important given that an increasing number of managerial positions now are held by foreign managers in U.S. MNCs. Another organizational reason for training is to improve the flow of communication between the home office and the international subsidiaries and branches. Quite often, overseas managers

find that they are not adequately informed regarding what is expected of them although the home office places close controls on their operating authority. This is particularly true when the overseas manager is from the host country. Effective communication can help to minimize these problems. Finally, another organizational reason for training is to increase overall efficiency and profitability. Personal Reasons The primary reason for training overseas managers is to improve their ability to interact effectively with local people in general and with their personnel in particular. Increasing numbers of training programs now address social topics such as how to take a client to dinner, effectively apologize to a customer, appropriately address one's overseas colleagues, communicate formally and politely with others, and learn how to help others "save face." These programs also focus on dispelling myths and stereotypes by replacing them with facts about the culture. Types of Training Programs There are many different types of multinational management training programs. Some last only a few hours; others last for months. Some are fairly superficial; others are extensive in coverage. Figure 1 shows some of the key considerations that influence development of these programs. There are nine phases. In the first phase the overall objective of the program to increase the effectiveness of expats and repatriated executives is emphasized. The second phase focuses on recognition of the problems that must be dealt with in order to reach the overall objective. The third phase is identification of the developmental objectives. The fourth phase consists of determining the amount of development that will be needed to achieve each objective. The fifth phase entails choosing the specific methods to be used in the development process-from types of predeparture training to language instruction to reentry training. The sixth phase is an intermediate evaluation of how well things are going and the institution of any needed midstream corrections. The seventh phase is an evaluation of how well the expat managers are doing, thus providing evaluation feedback of the developmental process. The eighth phase is devoted to reentry training for returning expats. The ninth, and final, phase is an evaluation of the effectiveness of the executives after their return. By carefully laying out this type of planning model, MNCs ensure that their development training programs are both realistic and productive. In this process they often rely on both standardized and tailor-made training and development approaches. Standardized vs. Tailor-Made Some management training is standard, or generic. For example, participants often are taught how to use specific decision-making tools, such as quantitative analysis, and regardless of where the managers are sent in the world, the application is the same. These tools do not have to be culturally specific. Research shows that small firms usually rely on standard training programs. Larger MNCs, in contrast, tend to design their own. Some of the larger MNCs are increasingly turning to specially designed video and PowerPoint programs for their training and development needs.

In the final analysis, the specific training program to be used will depend on the needs of the individual. Tung, after surveying managers in Europe, Japan, and the United States, found that there are six major types of cross-cultural training programs: 1. Environmental briefings used to provide information about things such as geography, climate, housing, and schools. 2. Cultural orientation designed to familiarize the individual with cultural institutions and value systems of the host country. Cultural assimilators using programmed learning approaches designed to provide the participants with intercultural encounters. 4. Language training. 5. Sensitivity training designed to develop attitudinal flexibility. 6. Field experience, which sends the participant to the country of assignment to undergo some of-the emotional stress of living and working with people from a different culture.

Q3. Discuss Mergers and Acquisitions with reference to implication of HR at Global Level. Ans. To put it simply, the term Merger refers to the combination of two or more organizations to form a new company, which often has a new corporate identity. Acquisition, on the other hand, is the purchase of a company by another company. Besides assessing the risk and potential of the merged entity, it is just as important to derive synergy from the merger or acquisition so that the company can quickly transit into the new entity and operate at its maximum efficiency. This is crucial in meeting the various bigger organisational objectives including growth in market share. To achieve this, it is essential for HR to play a pivotal role in ensuring the smooth integration of HR policies and managing employees of differing work cultures all through the merger and acquisition life cycle. Mergers and acquisitions represent the ultimate in change for a business. No other event is more difficult, challenging, or chaotic as a merger and acquisition. It is imperative that everyone involved in the process has a clear understanding of how the process works.. Mergers and acquisitions are now a normal way of life within the business world. In today's global, competitive environment, mergers are sometimes the only means for long-term survival. Mergers and acquisitions represent the ultimate in change for a business. No other event is more difficult, challenging, or chaotic as a merger and acquisition. When we use the term "merger", we are referring to the merging of two companies where one new company will continue to exist. The term "acquisition" refers to the acquisition of assets by one company from another company. In an acquisition, both companies may continue to exist. However, throughout this course we will loosely refer to mergers and acquisitions ( M & A ) as a business transaction where one company acquires another company. The acquiring company will remain in business and the acquired company (which we will sometimes call the Target Company) will be integrated into the acquiring company and thus, the acquired company ceases to exist after the merger.

Mergers can be categorized as follows: Horizontal: Two firms are merged across similar products or services. Horizontal mergers are often used as a way for a company to increase its market share by merging with a competing company. For example, the merger between Exxon and Mobil will allow both companies a larger share of the oil and gas market. Vertical: Two firms are merged along the value-chain, such as a manufacturer merging with a supplier. Vertical mergers are often used as a way to gain a competitive advantage within the marketplace. For example, Merck, a large manufacturer of pharmaceuticals, merged with Medco, a large distributor of pharmaceuticals, in order to gain an advantage in distributing its products. Conglomerate: Two firms in completely different industries merge, such as a gas pipeline company merging with a high technology company. Conglomerates are usually used as a way to smooth out wide fluctuations in earnings and provide more consistency in long-term growth. Typically, companies in mature industries with poor prospects for growth will seek to diversify their businesses through mergers and acquisitions. For example, General Electric (GE) has diversified its businesses through mergers and acquisitions, allowing GE to get into new areas like financial services and television broadcasting.

OBJECTIVES OF M&A Every merger has its own unique reasons why the combining of two companies is a good business decision. The underlying principle behind mergers and acquisitions ( M & A ) is simple: 2 + 2 = 5. The value of Company A is $ 2 billion and the value of Company B is $ 2 billion, but when we merge the two companies together, we have a total value of $ 5 billion. The joining or merging of the two companies creates additional value which we call "synergy" value. Synergy value can take three forms: 1. Revenues: By combining the two companies, we will realize higher revenues then if the two companies operate separately. 2. Expenses: By combining the two companies, we will realize lower expenses then if the two companies operate separately. 3. Cost of Capital: By combining the two companies, we will experience a lower overall cost of capital. For the most part, the biggest source of synergy value is lower expenses. Many mergers are driven by the need to cut costs. Cost savings often come from the elimination of redundant services, such as Human Resources, Accounting, Information Technology, etc. However, the best mergers seem to have strategic reasons for the business combination. These strategic reasons include:

Positioning - Taking advantage of future opportunities that can be exploited when the two companies are combined. For example, a telecommunications company, might improve its

position for the future if it were to own a broad band service company. Companies need to position themselves to take advantage of emerging trends in the marketplace. Gap Filling - One company may have a major weakness (such as poor distribution) whereas the other company has some significant strength. By combining the two companies, each company fills-in strategic gaps that are essential for long-term survival. Organizational Competencies - Acquiring human resources and intellectual capital can help improve innovative thinking and development within the company. Broader Market Access - Acquiring a foreign company can give a company quick access to emerging global markets. Mergers can also be driven by basic business reasons, such as:

Bargain Purchase - It may be cheaper to acquire another company then to invest internally. For example, suppose a company is considering expansion of fabrication facilities. Another company has very similar facilities that are idle. It may be cheaper to just acquire the company with the unused facilities then to go out and build new facilities on your own. Diversification - It may be necessary to smooth-out earnings and achieve more consistent longterm growth and profitability. This is particularly true for companies in very mature industries where future growth is unlikely. It should be noted that traditional financial management does not always support diversification through mergers and acquisitions. It is widely held that investors are in the best position to diversify, not the management of companies since managing a steel company is not the same as running a software company. Short Term Growth - Management may be under pressure to turnaround sluggish growth and profitability. Consequently, a merger and acquisition is made to boost poor performance. Undervalued Target - The Target Company may be undervalued and thus, it represents a good investment. Some mergers are executed for "financial" reasons and not strategic reasons. For example, Kohlberg Kravis & Roberts acquires poor performing companies and replaces the management team in hopes of increasing depressed values. THE MERGER AND ACQUISITION LIFE CYCLE There are five key phases to the life cycle of mergers and acquisitions. These can be identified as follows: PRE DEAL The first phase involves searching for suitable entities for mergers or acquisitions. During this phase it is usual to develop a set of criteria for the selection of a suitable entity. In this early phase the organization defines its objectives and desired outcomes of the merger or acquisition and searches for suitable entities. This often involves extensive research and gathering of market intelligence to assess the potential of suitable candidates.

DUE DILIGENCE Once a suitable entity has been identified, usually the next step is to make an offer to acquire or merge with the new entity. This offer is usually made conditional on the completion of a due diligence. During this second phase, a review of the new entity is undertaken to ensure the soundness of the deal and to assess any risks involved with the completion of the deal. During this phase the organization will typically review the financial statements, strategies, business plans, resources and operations of the entity to confirm their assessment of the commercial suitability of the deal. Often many transactions do not go beyond this phase because the due diligence highlights the inappropriate risks associated with the deal.

INTEGRATION PLANNING In this third phase detailed plans, milestones and activities are developed to ensure the successful implementation of the deal. This phase is often conducted under very tight time frames and requires extensive and detailed involvement from experienced personnel. Detailed project management plans are established to ensure the smooth implementation of the deal. IMPLEMENT MERGER Phase four requires the execution of the detailed planning conducted in phase three. Again, this phase is usually conducted under tight time frames and requires the execution of many complex plans simultaneously. Strong project management skills are required during this phase. The implementation phase is very visible to shareholders, staff, clients and competitors and is conducted under tremendous scrutiny of these parties. EVALUATE MERGER The final phase requires reviewing the performance of the new entity to ensure that a successful integration has been completed and that the objectives of the merger or acquisition have been achieved. Performance of the new entity is assessed against the original objectives determined in the Pre Deal phase. THE ROLE OF HR IN MERGERS AND ACQUISITION The success rate of mergers and acquisitions is dismal. Research (Gaplin and Hendron) has shown that during mergers and acquisitions: Only 30% of companies acquired their return on the cost of capital Close to 50% of executives leave in the first year 70% do not realise their projected synergies

There are many reasons that can be attributed to these results. Several of them revolve around the people and cultural issues.The Bureau of Business Research at the American International College (1996) reported that the ten pitfalls which had negative impact on successful mergers and acquisitions were: 1. Incompatible cultures 2. Inability to manage targets 3. Inability to effectively implement change 4. Non-existent or overestimated synergies 5. Lack of anticipation of foreseeable events 6. A clash in management styles 7. Excessive premium for acquisition 8. Unhealthy acquisition target 9. Requirement to spin off or liquidate too much 10. Incompatible marketing systems For a successful merger and acquisition it is essential that HR play a pivotal role through all the five phases of the process. The Role Of HR In The Pre Deal Phase One of the first critical areas that HR can be involved is in assessing the potential compatibility of cultures. This involvement could also extend into phase two of the process as part of the due diligence. This could involve reviewing an array of things such as leadership style, mission, vision and values of the organisation, team strength, performance and reward management systems, customer focus and organizational capabilities. One of the challenges that HR faces is obtaining this information in an environment where the organisation may not want to alert other parties of their intent to acquire or merge. As such, much of this information is usually obtained on an informal level or through the use of third parties. The Role Of HR In The Due Diligence Phase During this phase, the organization determines the associated risks and the soundness of the deal. It is at this stage that the organization determines whether it will purchase the entity and its correct value. Many of the HR activities identified in the pre deal phase are continued with greater detail in the due diligence phase to ascertain the correctness of the perceptions obtained in phase one. It is during the due diligence phase that potential problems and risks are often identified. It is particularly important that the HR representatives access professional help when dealing with acquisitions in countries outside of their own areas of expertise and knowledge. During this phase

it is important to determine any liabilities that may be a result of partial or unfunded benefits such as retirement schemes, long service leave and other accrued benefits. The Role Of HR During The Integration Planning It is during this phase when the HR professionals skills in project management and change management are a critical asset to the life cycle of the merger or acquisition. HR is usually involved in a wide range of planning issues such as: Talent management; Retention initiatives for key personnel; Determining transition strategies to move people to new roles, provide training and reskilling; Determining the direction for the new organisational culture; Designing the communication strategy for staff and other relevant bodies such as Unions and the Ministry of Manpower; Determining the leadership style for the new organisation; The Role Of HR During The Implementation Phase One of the key roles for HR professionals during the implementation phase is the co-ordination of communications to staff. It is critical that the new organisation maximize productivity and focus on client and shareholder satisfaction as soon as possible. HR can play a pivotal role in maximising employee engagement through effective and timely communications to staff. The Role Of HR In Evaluating The Merger In addition to comparing the achievements of the new organisation against the original objectives, often HR professionals will use a range of tools such as cultural surveys to benchmark and monitor the success of establishing the new organisational culture. Q.4. Define culture. Discuss the various elements of culture. Ans. Culture is a complex issue that essentially includes all of a groups shared values, attitudes, beliefs, assumptions, artifacts, and behaviors. Culture is broad encompassing all aspects of its internal and external relationshipsand culture is deep in that it guides individual actions even to the extent that members are not even aware they are influenced by it. Scholars tend to agree that the root of any organizations culture is grounded in a rich set of assumptions about the nature of the world and human relationships. It is difficult to present only one definition of culture and except it to portray the richness of the field and its relevance to understanding consumers Culture isThat distinct way of life of a group of people, their complete design for living. That complex whole that includes knowledge, belief, art, morals, law, custom, and any other

capabilities and habits acquired by man as a member of society. Culture is everything that is socially learned and shared by the members of a society. COMPONENTS Culture consists of material and non material components Nonmaterial culture includes the words people use; the ideas, customs, and beliefs they share and the habits they pursue Material Culture consists of all the physical substances that have been changed and used by people, such as tools, automobiles, roads and farms. It has long been recognized that culture influences individuals. The following are such manifestations of culture: National character: The differences that distinguish one national group from another. These are the obvious as well as more subtle cultural differences that distinguish Indians, Germans, Americans, Brazilians and Chinese. Subcultures : Differences in subcultures such as North Indians and South Indians. Differences in castes such as Brahmins. In America there are differences in subcultures such as blacks, Jews and Hispanics. Non- Verbal Communication: The silent language of gestures, postures, food and drink preference and other non verbal preferences to behaviour Symbols: The science of semiotics provides a structure for studying and analyzing how signs (anything that conveys meaning) function within a culture. Taboos: Taboos, or prohibitions in a culture, relating to various things such as the use of a given colour, phase, or symbol Ritualized activities: These are activities in which people participate at home, work and play, both as individuals and as members of a group. Such behaviour is expressive and symbolic, occurs in a fixed episodic sequence, and tends to be repeated over time. E.g. Marriage, Retirement, Death. CHARACTERISTICS OF CULTURE 1. Culture is Invented. Culture simply does not simply exist somewhere waiting to be discovered. People invent their culture. The invention consists of three interdependent systems or elements: An ideological system (ideas, beliefs and values) A technological system (skills, crafts and arts

An organizational system (family system and social class). 2. Culture is Learned Culture is not innate or instinctive, but is learned beginning early in life and is charged with a good deal of emotion This learning is handed from one generation to another at an early age, such that children are firmly imbued with their cultures way of acting, thinking and feeling. 3. Culture is Socially Shared Culture is a group phenomenon, shared by human beings living in organized societies and are kept relatively uniform by social pressure. E.g.Important parts of American Culture are shared with foreign countries by the way of export. In many countries there is an insatiable appetite for American pop culture, movies and fashion. 4. Cultures are Similar but Different All Cultures exhibit certain similarities. For Example each of the following elements are found in society: Sports, a Calendar, cooking, courtship, dancing, education, family, gestures, government, housing, language, law, music, religious rituals and numerous other items. 4. Culture Is Gratifying and Persistent Culture satisfies basic biological needs as well as learned needs It consists of habits that will be maintained and reinforced as long as those who practice them are gratified Due to this gratification, cultural elements are handed down from generation to generation Thus people are comfortable doing things in a customary way.

5. Culture Is Adaptive In spite of our resistance to change, cultures are gradually and continuously changing. Some societies are quite static, with very slow rate of change, while others are more dynamic, with very rapid changes taking place. 6. Culture is Prescriptive Culture involves ideal standards or patterns of behaviour so that members of society have a common understanding of the right and proper way to think, feel and act. Norms are societys rules or guidelines specifying what behaviour are appropriate or inappropriate in given situations. Dimensions of such cultural factors: Time

Americans place a very high priority on time and believe that efficiently conserving time is a significant asset However, many cultures value a decelerated, relaxed lifestyle that places more worth on relationships.

Thought and Communication Patterns Americans speech and thought behaviour is direct, or linear, whereas in some other cultures it is more circuitous E.g. In Japan it may take considerably longer to transact business because the people need to know more about each other before a business relationship develops. Personal Space Ideas about the distance one should maintain from one another in face-to-face interaction, may very among cultures E.g. Americans typically become uncomfortable when someone invades their space, by engaging in close conversation or by touching them on the arm. Materialism and Achievement Americans are preoccupied with a more and / or bigger is better mentality, which equates success with material wealth Rather than achievement, another culture may stress quality of family and relationships as it is symbol of success and prestige.

Family Roles Indian cultures have a very traditional family roles. Generally in such societies, males hold prominent positions in society, the husband is the provider and the wife supervises the household In European and American Cultures families illustrate equality and shared roles.

Religion In certain cultures religion dominates the daily lives of people In an environment where religion governs business and social practices, foreign business people must respect their hosts customs, such as those pertaining to prayer and food habits E.g. Americans are religious but religion does not dominate their daily lives and business culture.

Competitiveness and Individuality

Americans encourage and reward individual ambition as a natural and desired trait However, many other cultures value modesty, team spirit and patience Thus aggressive demeanour by the Americans in their interpersonal verbal communication, advertisements, physical gestures, status symbols, and so forth represents unacceptable behaviour in other cultures.

Social Behaviour In Indian culture noisy eating and belching is considered as a sign of satisfaction But these habits and behaviour are unacceptable in American or European culture.

SUBCULTURES There are various homogeneous subgroups within the heterogeneous national society. These groups are called subcultures because they have values, customs, traditions, and other ways of behaving that are peculiar to a particular group within a culture. THE COMPETING VALUES FRAMEWORK:

The first dimension places the values of flexibility, discretion, and dynamism at one end of the scale with stability, order, and control on the other. This means that some organizations emphasize adaptation, change, and organic processes (like most start-up companies) while others are effective in emphasizing stable, predictable, and mechanistic processes (like NASA, Citigroup, and most universities). The second value dimension is marked by internal orientation, integration, and unity at one end of the scale with external orientation, differentiation, and rivalry on the other. Some organizations are effective through focusing on themselves and their internal processesIf we improve our efficiency and do things right, we will be successful in the marketplace. Others excel by focusing on the market or competition Our rivals have weak customer service, so this is where we will differentiate ourselves. Further work on defining how each of the four quadrants (formed by combining these two dimensions) is related to company characteristics was conducted by Kim Cameron and Robert Quinn (1999). Each quadrant represents those features a company feels is the best and most appropriate way to operate. In other words these quadrants represent their basic assumptions, beliefs, and valuesthe stuff of culture. None of the quadrantsCollaborate (clan), Create (adhocracy), Control (hierarchy), and Compete (market)is inherently better than another just as no culture is necessarily better than another. But, some cultures might be more appropriate in certain contexts than others. The key to using culture to improve performance lies in matching culture or attributes to organizational goals Four Organizational Culture Types:

Acknowledging that organizational culture is an important aspect for space planners, this paper provides an overview of four organizational culture types: Control (hierarchy), Compete (market), Collaborate (clan), and Create (adhocracy). This typology reflects the range of organizational characteristics across two dimensions that were found critical to organizational effectiveness. The spatial implications for each type are presented so that workspace planners might be able to interpret the results of an organizational culture assessment in their process of designing environments that support the way companies work and represent themselves. CONTROL (HIERARCHY) Hierarchical organizations share similarities with the stereotypical large, bureaucratic corporation. As in the values matrix, they are defined by stability and control as well as internal focus and integration. They value standardization, control, and a well-defined structure for authority and decision making. Effective leaders in hierarchical cultures are those that can organize, coordinate, and monitor people and processes. Good examples of companies with hierarchical cultures are McDonalds (think standardization and efficiency) and government agencies like the Department of Motor Vehicles (think rules and bureaucracy). As well, having many layers of managementlike Ford Motor Company with their seventeen levelsis typical of a hierarchical organizational structure.

COMPETE (MARKET) While most major American companies throughout the 19th and much of the 20th centuries believed a hierarchical organization was most effective, the late 1960s gave rise to another popular approachCompete (market) organizations. These companies are similar to the Control (hierarchy) in that they value stability and control; however, instead of an inward focus they have an external orientation and they value differentiation over integration. This began largely because of the competitive challenges from overseas that forced American companies to search for a more effective business approach. With their outward focus, Compete (market) organizations are focused on relationshipsmore specifically, transactionswith suppliers, customers, contractors, unions, legislators, consultants, regulators, etc. Through effective external relations they feel that they can best achieve success. While Control (hierarchy) optimize stability and control through rules, standard operating procedures, and specialized job functions, Compete (market) organizations are concerned with competitiveness and productivity through emphasis on partnerships and positioning. General Electric, under the leadership of former CEO Jack Welch, is a good example of a Compete (market) organization. He famously announced that if businesses divisions were not first or second in their markets then, simply, they would be sold. Their corporate culture was (and still largely is) highly competitive where performance results speak louder than process. COLLABORATE (CLAN) In the values matrix Collaborate (clan) are similar to Control (hierarchy) in that there is an inward focus with concern for integration. However, Collaborate (clan) emphasize flexibility and discretion rather than the stability and control of Control (hierarchy) and Compete (market) organizations.

With the success of many Japanese firms in the late 1970s and 1980s, American corporations began to take note of the different way they approached business. Unlike American national culture, which is founded upon individualism, Japanese firms had a more team-centered approach. This basic understanding affected the way that Japanese companies structured their companies and approached problems Their Collaborate (clan) organizations operated more like familieshence the nameand they valued cohesion, a humane working environment, group commitment, and loyalty. Companies were made up of semiautonomous teams that had the ability to hire and fire their own members and employees were encouraged to participate in determining how things would get done. A good example of a Collaborate (clan) in American business is Toms of Maine, which produces all-natural toothpastes, soaps, and other hygiene products. The founder, Tom Chappell, grew the company to respect relationships with coworkers, customers, owners, agents, suppliers, the community, and the environment. According to their company statement of beliefs, they aim to provide their employees with a safe and fulfilling environment and an oppor tunity to grow and learn. Typical of Collaborate (clan) cultures, Toms of Maine, is like an extended family with high morale and Tom himself takes on the role of mentor or parental figure.

CREATE (ADHOCRACY)

In the values matrix Create (adhocracy) are similar to Collaborate (clan) in that they emphasize flexibility and discretion; however, they do not share the same inward focus. Instead they are like Create (adhocracy) in their external focus and concern for differentiation. With the advent of the Information Age, a new approach developed to deal with the fast-paced and volatile business environment. Social, economic, and technological changes made older corporate attitudes and tactics less efficient. Success now was envisioned in terms of innovation and creativity with a future-forward posture. An entrepreneurial spirit reigns where profit lies in finding new opportunities to develop new products, new services, and new relationshipswith little expectation that these will endure. Adhocracy organizations value flexibility, adaptability, and thrive in what would have earlier been viewed as unmanageable chaos. High-tech companies like Google are prototypical Create (adhocracy). Google develops innovative web tools, taking advantage of entrepreneurial software engineers and cutting-edge processes and technologies. Their ability to quickly develop new services and capture market share has made them leaders in the marketplace and forced less nimble competition to play catch-up.

Q5. Write Short Notes on (Any Two) Cross Cultural Management Ans. More and more companies have adopted a global outlook in which the world becomes their market

E.g. Numerous major corporations, such as Coca Cola, IBM, Pfizer and Gillette, receive over half of their earnings from foreign operations, while many others also have significant international markets. The diversity among cultures is reflected not only in management but also individual behaviour and it takes some time to get used to such a difference in culture. Thus when marketers ventures abroad, they experience a culture shock, that is a series of psychological jolts when they encounter new customs, value systems, attitudes and work habits; the shock reduces their effectiveness in foreign commercial environment. Therefore, it is very important for the manager of the firm venturing abroad to be well acquainted with the culture of the domestic country A lack of understanding of the host culture will lead the manager to think and act as he would in his home culture. The goal should be to eliminate this cultural myopia. The following are dimensions of such cultural factors and how differences might play havoc with cross cultural management and communication : Time Americans place a very high priority on time and believe that efficiently conserving time is a significant asset However, many cultures value a decelerated, relaxed lifestyle that places more worth on relationships.

Thought and Communication Patterns Americans speech and thought behaviour is direct, or linear, whereas in some other cultures it is more circuitous E.g. In Japan it may take considerably longer to transact business because the people need to know more about each other before a business relationship develops. Personal Space Ideas about the distance one should maintain from one another in face-to-face interaction, may very among cultures E.g. Americans typically become uncomfortable when someone invades their space, by engaging in close conversation or by touching them on the arm. Materialism and Achievement Americans are preoccupied with a more and / or bigger is better mentality, which equates success with material wealth

Rather than achievement, another culture may stress quality of family and relationships as it is symbol of success and prestige.

Family Roles Indian cultures have a very traditional family roles. Generally in such societies, males hold prominent positions in society, the husband is the provider and the wife supervises the household In European and American Cultures families illustrate equality and shared roles.

Religion In certain cultures religion dominates the daily lives of people In an environment where religion governs business and social practices, foreign business people must respect their hosts customs, such as those pertaining to prayer and food habits E.g. Americans are religious but religion does not dominate their daily lives and business culture.

Competitiveness and Individuality Americans encourage and reward individual ambition as a natural and desired trait However, many other cultures value modesty, team spirit and patience Thus aggressive demeanour by the Americans in their interpersonal verbal communication, advertisements, physical gestures, status symbols, and so forth represents unacceptable behaviour in other cultures.

Social Behaviour In Indian culture noisy eating and belching is considered as a sign of satisfaction But these habits and behaviour are unacceptable in American or European culture.

SUBCULTURES There are various homogeneous subgroups within the heterogeneous national society. These groups are called subcultures because they have values, customs, traditions, and other ways of behaving that are peculiar to a particular group within a culture.

2. Strategic HRM The role of HR is changing. Previously considered a support function, HR is now becoming a strategic partner in helping a company achieve its goals. A strategic approach to HR means

going beyond the administrative tasks like payroll processing. Instead, managers need to think more broadly and deeply about how employees will contribute to the companys success. Strategic human resource management is not just a function of the HR departmentall managers and executives need to be involved because the role of people is so vital to a companys competitive advantage. In addition, organizations that value their employees are more profitable than those that do not. Research shows that successful organizations have several things in common, such as providing employment security, engaging in selective hiring, using self-managed teams, being decentralized, paying well, training employees, reducing status differences, and sharing information. When organizations enable, develop, and motivate human capital, they improve accounting profits as well as shareholder value in the process. The most successful organizations manage HR as a strategic asset and measure HR performance in terms of its strategic impact. Strategic HRM is an approach to making decisions on the intentions and plans of the organization concerning the employment relationship and its recruitment, training, development, performance management, reward and employee relations strategies, policies and practices. The key characteristic of strategic HRM is that it is integrated. HRM strategies are generally integrated vertically with the business strategy and horizontally with one another. The HRM strategies developed by a strategic HRM approach are essential components of the organization's business strategy. Strategic HRM Links HRM with strategic goals and objectives to improve business performance and develop organizational cultures fostering innovation and flexibility. It defines the organisations intentions and plans on how its business goals should be achieved through people.

Strategic HRM is concerned with the relationship between human resource management and strategic management in the firm. Strategic HRM refers to the overall direction the organization wishes to pursue in order to achieve its goals through people. It is argued that, because intellectual capital is a major source of competitive advantage, and in the last analysis it is people who implement the strategic plan, top managernent must take these key considerations fully into account in developing its corporate strategies. Strategic HRM is an integral part of thosestrategies. Strategic HRM addresses broad organizational issues relating to organizational effectiveness and performance, changes in structure and culture, matching resources to future requirements, the development of distinctive capabilities, knowledge management and the management of change. It is concerned with both meeting human capital requirements and the development of process capabilities, that is, the ability to get things done effectively. Overall, it will consider any major people issues that affect or are affected by the strategic plan of the organization. 'The critical concerns of HRM such as choice of executive leadership and formation of positive patterns of labour relations, are strategic in any firm.'

Strategic HRM focuses on actions that differentiate the firm from its competitors. It develops declarations of intent which define means to achieve ends, and it is concerned with the long term allocation of significant company resources, and with matching those resources and capabilities to the external environment. Strategy is a perspective on the way in which critical issues or success factors can be addressed, and strategic decisions aim to make a major and long term impact on the behaviour and success of the organization.

The fundamental aim of strategic HRM is to generate strategic capability by ensuring that the organization has the skilled, committed and well-motivated employees it needs to achieve sustained competitive advantage. Its objective is to provide a sense of direction in an often turbulent environment, so that the business needs of the organization, and the individual and collective needs of its employees, can be met by the development and implementation of coherent and practical HR policies and programmes. Strategic HRM should provide unifying frameworks which are at once broad, contingency based and integrative.

Implications of SHRM

Successful SHRM efforts begin with identification of strategic needs. Employee participation is critical to linking strategy and HR practices. Strategic HR depends on a systematic and analytical mindset.
Corporate HR departments can have an impact on their organizations efforts to launch strategic initiatives.

Barriers To SHRM

Short term Mentality Inability of HR to think Strategically Lack of appreciation of what HR can contribute Failure to understand GMs role as HR mgr. Difficulty in quantifying many HR outcomes Perception of Human assets as high risk investment Incentives for change that may arise.

Unfortunately, many HR managers are more effective in the technical or operational aspects of HR than they are in the strategic, even though the strategic aspects have a much larger effect on the companys success. In the past, HR professionals focused on compliance to rules, such

as those set by the government, and they tracked simple metrics like the number of employees hired or the number of hours of training delivered. The new principles of management, however, require a focus on outcomes and results, not just numbers and compliance. Just as lawyers count how many cases theyve wonnot just how many words they usedso, too must HR professionals track how employees are using the skills theyve learned to attain goals, not just how many hours theyve spent in training. HR executives need to understand the companys goals and strategy and then provide employees with the skills needed. Too often, HR execs get wrapped up in their own initiatives without understanding how their role contributes to the business. That is dangerous, because when it comes to the HR department, anything that is administrative or transactional is going to get outsourced. To avoid outsourcing, HR needs to stay relevant and accept accountability for its business results. In short, the people strategy needs to be fully aligned with the companys business strategy and keep the focus on outcomes.