Mergers & Acquisition - Managing the HR Issues

View the merger from the HRM Angle

People issue is one of the most sensitive but often ignored issues in a mergers & acquisitions scenario. When a decision is taken to merge or acquire, a company analyses the feasibility on the business, financial and legal fronts, but fails to recognize the importance attached to the human resources of the firms involved. Organizations fail to realize that people have the capability to make or break the alliance. Therefore, it is important for organizations on the verge of integration to analyze the feasibility of the integration on the human resources front.

            Organizational culture and the national culture become two important factors in determining the feasibility of integration. For example, the organizational culture of company A might be very open and transparent with free flow of communication in all directions. People enjoy their freedom of working in an informal and friendly atmosphere. On the other hand, company B might be known for its stringent privacy system and strict rules and regulations with marked hierarchical roles. People in this company are used to work in a bound and regulated environment. A blind eye to these differences would render a merger between these two companies, disastrous. 

                             Similarly, when it comes to cross-border mergers and acquisitions, care should be taken to see that the national cultures of the two companies are not drastically different. Hofstadter identified a set of cultural attributes that define and differentiate cultures. They can be studied under Uncertainty Avoidance, Power Distance, Individualism Vs Collectivism, Future Orientation and Gender Differentiation. For example, a country like Sweden, which is ranked high on uncertainty avoidance, would prefer a structured and orderly work environment.                              On the other hand, a country like Russia, which is ranked low on the same attribute, would thrive under uncertainty. If a company from Sweden, characterized by orderliness merges with a company from Russia characterized by uncertainty, it can lead to chaos and confusion. Therefore, a complete feasibility study on the human resources front is important while going for a merger or acquisition.

Develop the 'HR' Project Plan

A project plan is a critical document that directs and supports the whole process of integration and should be continuously updated to include the latest developments. The project plan should define the tasks to be performed in order of their priority. The owner for each task has to be identified and the responsibilities assigned. It is also important to note that the owner enjoys the authority to carry out the task successfully. Each task has to be given a due date of completion and the owner should keep track of the developments and record them. There should be common forum for exchange of information among the different task owners. In all probability, these tasks would be interrelated and the success of the project depends on effective coordination among all the task owners. Project plan is designed for any merger or acquisition. But, how many HR departments take the pains of designing a project plan exclusively for the HR activities planning. The project plan should also take into consideration some unavoidable hurdles that may arise and provide for contingencies.

It is also important to note that the support of other departments like the Finance and the Legal departments is essential for the successful implementation of the integration plan. Therefore, the inputs from these departments should be taken into consideration while working on the plan.

Conduct the 'HR' Due Diligence Review

A due diligence review helps the merging companies identify the presence of any hidden liabilities for the integrated business. This review would help the companies have a re-look at their decision and recheck its feasibility. It would also help the companies identify those critical areas which need immediate attention if the deal is to be carried out successfully. The common belief is that HR does not have any role to play during the due diligence review. But is it true?

It happened in some of the mergers that the companies failed to take note of the resentment brewing in the employees and by the time they realized it after the merger came through, more than half the workforce had left the integrated organization. HR due diligence review is one of the concepts that has come of age in the recent times. Some organizations are even looking at specific issues like "culture due diligence review". Some of the components for the HR due diligence review are:

• Organizational culture and structure

• Employee compensation & benefits

• Industrial relations

• Pending employee litigations

• HR policies and procedures

• Key talent analysis

An example of Acquisition….

In June 1999, Shaw's Supermarkets acquired Star Markets for roughly $500 million. Shaw's at that time had 126 stores and about $3 billion in volume; Star had 54 stores and $1 billion in sales. That acquisition was Shaw's largest to date, growing revenue by roughly 50 percent and increasing its workforce from 20,000 to 32,000. It took eight months from signing the agreement to Federal Trade Commission approval. Completion of the acquisition and integration--operationally and culturally--of the two companies required human resources to play a major role. The key HR initiatives included: • Development of preliminary organizational designs and identification of the top three levels of management • Assessment of critical players and deployment of appropriate resources in the new company • Retention of key people and separation of redundant staff • Development of a total rewards strategy for the combined companies • Communications strategy development and implementation

• Integration of payroll benefits and HR-IS

• An ability to do all of the above with speed.

Compare and develop the strategy to integrate

The next step is of course to compare the structures and systems, and policies and procedures of the two merging organizations. Standardized systems and structures and policies and procedures have to be developed to suit the changed needs of a merged organization. The management has to take an unbiased view while choosing the best suitable systems and procedures. The interest of the organization, which would presumably be bigger in size, with an expanded business, has to be the main consideration for any decision. No ego hassles should prevent the management from taking the most desirable decision for the organization.

The most common issues for comparison and integration would be employee compensation administration, benefits and incentives, employee performance management and rewards system, training and development policy, career advancement prospects, organizational reporting channels and decision-making levels. The acquiring company might feel that its policies and systems should be continued with. It might feel that it is the same company, but larger in size with a change in the size and nature of business. The acquired company might feel that its strengths are crucial for the new merged entity to thrive. They believe that they have been acquired for their strengths. So, a balance between the expectations and demands of the two merging entities is required. The guiding factor would be organizational interest.

On The Employee Front...

Organizations need to employ a little tact when it comes to handling human resources. There are two important steps to be taken by the management of both the companies. Identifying the key resources in both the organizations is the first step. Key resources do not necessarily mean the top people in the management cadres, but those, who have a following in the company as knowledgeable and trustworthy colleagues. They can manage a hold on at least some groups of employees in the organization. It is important to recognize them, take them into confidence and groom them as the change leaders. They should be given the responsibility of informally preparing the employees for the merger. Communication plays a very critical role at the time of a merger. Communicating with the employees of both the companies is very important as they should not feel that they have been kept in the dark. It should be remembered that they are one of the most important assets of an organization and also major stakeholders. Communication channels should be open in all directions once the decision is taken on a merger / acquisition.

Employees should be informed of the decision and the reason behind taking the decision through a proper channel. The implications of the decision for the employees and the company should also be conveyed to them. Any queries or apprehensions of the employees should be taken seriously and properly responded to.

Retaining and motivating employees is another major challenge for the HR department of the organization. One important point to note here is that it is the most talented resources of the organization that leave it first. Therefore, prompt and timely action (and not reaction) is essential on part of the HR department. A wait and watch attitude can only spell doom as the employees wouldn't think on similar lines. They have their career at stake and they wouldn't want to take any risks on that front. The minute they get the information of their company going in for a merger or an acquisition, they start looking out for opportunities. Speed, alacrity and discretion on part of the HR department therefore become very critical.

Points to Remember..

 

This is what an employee of an acquired IT company had to say:

• Treat even the 'acquired employees' with dignity and respect. Give them a reason to believe that they are valued in the company.

• Keep your communication channels open in all directions. Let the employees know what's in store for them. Clear all employee apprehensions.

• If downsizing is part of the integration plan, convey the same to the employees, well in advance. Show your concern for the laid-off employees by providing employment assistance.

• Concentrate on retaining and motivating the key talent. Key resources would be the first people to leave organizations as they have the best opportunities outside.

• Respect the allegiance of the employees to their former employer. In this case, the acquiring company, which failed to follow these basics, lost nearly 70% of the workforce and struggled to win the confidence and trust of the rest. 

All these initiatives should ensure a company involved in a merger or an acquisition, a successful integration, from the HR angle.

HRM functions

Human Resource Management

Function 1: Manpower planning

The penalties for not being correctly staffed are costly.

• Under-staffing loses the business economies of scale and specialization, orders, customers and profits.
• Overstaffing is wasteful and expensive, if sustained, and it is costly to eliminate because of modern legislation in respect of redundancy payments, consultation, minimum periods of notice, etc. Very importantly, overstaffing reduces the competitive efficiency of the business.

Planning staff levels requires that an assessment of present and future needs of the organization be compared with present resources and future predicted resources. Appropriate steps then be planned to bring demand and supply into balance.

Thus the first step is to take a 'satellite picture' of the existing workforce profile (numbers, skills, ages, flexibility, gender, experience, forecast capabilities, character, potential, etc. of existing employees) and then to adjust this for 1, 3 and 10 years ahead by amendments for normal turnover, planned staff movements, retirements, etc, in line with the business plan for the corresponding time frames.

The result should be a series of crude supply situations as would be the outcome of present planning if left unmodified. (This, clearly, requires a great deal of information accretion, classification and statistical analysis as a subsidiary aspect of personnel management.)

What future demands will be is only influenced in part by the forecast of the personnel manager, whose main task may well be to scrutinize and modify the crude predictions of other managers. Future staffing needs will derive from:

• Sales and production forecasts
• The effects of technological change on task needs
• Variations in the efficiency, productivity, flexibility of labor as a result of training, work study, organizational change, new motivations, etc.
• Changes in employment practices (e.g. use of subcontractors or agency staffs, hiving-off tasks, buying in, substitution, etc.)
• Variations, which respond to new legislation, e.g. payroll taxes or their abolition, new health and safety requirements
• Changes in Government policies (investment incentives, regional or trade grants, etc.)

What should emerge from this 'blue sky gazing' is a 'thought out' and logical staffing demand schedule for varying dates in the future which can then be compared with the crude supply schedules. The comparisons will then indicate what steps must be taken to achieve a balance.

That, in turn, will involve the further planning of such recruitment, training, retraining, labor reductions (early retirement/redundancy) or changes in workforce utilization as will bring supply and demand into equilibrium, not just as a one–off but as a continuing workforce planning exercise the inputs to which will need constant varying to reflect 'actual' as against predicted experience on the supply side and changes in production actually achieved as against forecast on the demand side.

Function 2: Recruitment and selection of employees

Recruitment of staff should be preceded by:

An analysis of the job to be done (i.e. an analytical study of the tasks to be performed to determine their essential factors) written into a job description so that the selectors know what physical and mental characteristics applicants must possess, what qualities and attitudes are desirable and what characteristics are a decided disadvantage;

• In the case of replacement staff a critical questioning of the need to recruit at all (replacement should rarely be an automatic process).
• Effectively, selection is 'buying' an employee (the price being the wage or salary multiplied by probable years of service) hence bad buys can be very expensive. For that reason some firms (and some firms for particular jobs) use external expert consultants for recruitment and selection.
• Equally some small organizations exist to 'head hunt', i.e. to attract staff with high reputations from existing employers to the recruiting employer. However, the 'cost' of poor selection is such that, even for the mundane day-to-day jobs, those who recruit and select should be well trained to judge the suitability of applicants.

The main sources of recruitment are:

• Internal promotion and internal introductions (at times desirable for morale purposes)
• Careers officers (and careers masters at schools)
• University appointment boards
• Agencies for the unemployed
• Advertising (often via agents for specialist posts) or the use of other local media (e.g. commercial radio)

Where the organization does its own printed advertising it is useful if it has some identifying logo as its trade mark for rapid attraction and it must take care not to offend the sex, race, etc. antidiscrimination legislation either directly or indirectly. The form on which the applicant is to apply (personal appearance, letter of application, completion of a form) will vary according to the posts vacant and numbers to be recruited.

It is very desirable in many jobs that claim about experience and statements about qualifications are thoroughly checked and that applicants unfailingly complete a health questionnaire (the latter is not necessarily injurious to the applicants chance of being appointed as firms are required to employ a percentage of disabled people).

Before letters of appointment are sent any doubts about medical fitness or capacity (in employments where hygiene considerations are dominant) should be resolved by requiring applicants to attend a medical examination. This is especially so where, as for example in the case of apprentices, the recruitment is for a contractual period or involves the firm in training costs.

Interviewing can be carried out by individuals (e.g. supervisor or departmental manager), by panels of interviewers or in the form of sequential interviews by different experts and can vary from a five minute 'chat' to a process of several days. Ultimately personal skills in judgment are probably the most important, but techniques to aid judgment include selection testing for:

• Aptitudes (particularly useful for school leavers)
• Attainments
• General intelligence

(All of these need skilled testing and assessment.) In more senior posts other techniques are:

• Leaderless groups
• Command exercises
• Group problem solving

(These are some common techniques - professional selection organizations often use other techniques to aid in selection.)

Training in interviewing and in appraising candidates is clearly essential to good recruitment. Largely the former consists of teaching interviewers how to draw out the interviewee and the latter how to xratex the candidates. For consistency (and as an aid to checking that) rating often consists of scoring candidates for experience, knowledge, physical/mental capabilities, intellectual levels, motivation, prospective potential, leadership abilities etc. (according to the needs of the post). Application of the normal curve of distribution to scoring eliminates freak judgments.

Function 3: Employee motivation

To retain good staff and to encourage them to give of their best while at work requires attention to the financial and psychological and even physiological rewards offered by the organization as a continuous exercise.

Basic financial rewards and conditions of service (e.g. working hours per week) are determined externally (by national bargaining or government minimum wage legislation) in many occupations but as much as 50 per cent of the gross pay of manual workers is often the result of local negotiations and details (e.g. which particular hours shall be worked) of conditions of service are often more important than the basics. Hence there is scope for financial and other motivations to be used at local levels.

As staffing needs will vary with the productivity of the workforce (and the industrial peace achieved) so good personnel policies are desirable. The latter can depend upon other factors (like environment, welfare, employee benefits, etc.) but unless the wage packet is accepted as 'fair and just' there will be no motivation.

Hence while the technicalities of payment and other systems may be the concern of others, the outcome of them is a matter of great concern to human resource management.

Increasingly the influence of behavioral science discoveries are becoming important not merely because of the widely-acknowledged limitations of money as a motivator, but because of the changing mix and nature of tasks (e.g. more service and professional jobs and far fewer unskilled and repetitive production jobs).

The former demand better-educated, mobile and multi-skilled employees much more likely to be influenced by things like job satisfaction, involvement, participation, etc. than the economically dependent employees of yesteryear.

Hence human resource management must act as a source of information about and a source of inspiration for the application of the findings of behavioral science. It may be a matter of drawing the attention of senior managers to what is being achieved elsewhere and the gradual education of middle managers to new points of view on job design, work organization and worker autonomy.

Function 4: Employee evaluation

An organization needs constantly to take stock of its workforce and to assess its performance in existing jobs for three reasons:

• To improve organizational performance via improving the performance of individual contributors (should be an automatic process in the case of good managers, but (about annually) two key questions should be posed:

• what has been done to improve the performance of a person last year?
• and what can be done to improve his or her performance in the year to come?).
• To identify potential, i.e. to recognize existing talent and to use that to fill vacancies higher in the organization or to transfer individuals into jobs where better use can be made of their abilities or developing skills.
• To provide an equitable method of linking payment to performance where there are no numerical criteria (often this salary performance review takes place about three months later and is kept quite separate from 1. and 2. but is based on the same assessment).

On-the-spot managers and supervisors, not HR staffs, carry out evaluations. The personnel role is usually that of:

• Advising top management of the principles and objectives of an evaluation system and designing it for particular organizations and environments.
• Developing systems appropriately in consultation with managers, supervisors and staff representatives. Securing the involvement and cooperation of appraisers and those to be appraised.
• Assistance in the setting of objective standards of evaluation / assessment, for example:

• Defining targets for achievement;
• Explaining how to quantify and agree objectives;
• Introducing self-assessment;
• Eliminating complexity and duplication.
• Publicizing the purposes of the exercise and explaining to staff how the system will be used.
• Organizing and establishing the necessary training of managers and supervisors who will carry out the actual evaluations/ appraisals. Not only training in principles and procedures but also in the human relations skills necessary. (Lack of confidence in their own ability to handle situations of poor performance is the main weakness of assessors.)
• Monitoring the scheme - ensuring it does not fall into disuse, following up on training/job exchange etc. recommendations, reminding managers of their responsibilities.

Full-scale periodic reviews should be a standard feature of schemes since resistance to evaluation / appraisal schemes is common and the temptation to water down or render schemes ineffectual is ever present (managers resent the time taken if nothing else).

Basically an evaluation / appraisal scheme is a formalization of what is done in a more casual manner anyway (e.g. if there is a vacancy, discussion about internal moves and internal attempts to put square pegs into 'squarer holes' are both the results of casual evaluation). Most managers approve merit payment and that too calls for evaluation. Made a standard routine task, it aids the development of talent, warns the inefficient or uncaring and can be an effective form of motivation.

Function 5: Industrial relations

Good industrial relations, while a recognizable and legitimate objective for an organization, are difficult to define since a good system of industrial relations involves complex relationships between:

(a) Workers (and their informal and formal groups, i. e. trade union, organizations and their representatives);

(b) Employers (and their managers and formal organizations like trade and professional associations);

(c) The government and legislation and government agencies l and 'independent' agencies like the Advisory Conciliation and Arbitration Service.

Oversimplified, work is a matter of managers giving instructions and workers following them - but (and even under slavery we recognize that different 'managing' produces very different results) the variety of 'forms' which have evolved to regulate the conduct of parties (i.e. laws, custom and practice, observances, agreements) makes the giving and receipt of instructions far from simple. Two types of 'rule' have evolved:

• 'Substantive', determining basic pay and conditions of service (what rewards workers should receive);
• 'Procedural,' determining how workers should be treated and methods and procedures.

Determining these rules are many common sense matters like:

• Financial, policy and market constraints on the parties (e.g. some unions do not have the finance to support industrial action, some have policies not to strike, some employers are more vulnerable than others to industrial action, some will not make changes unless worker agreement is made first, and rewards always ultimately reflect what the market will bear);
• The technology of production (the effect of a strike in newspaper production is immediate -it may be months before becoming effective in shipbuilding);
• The distribution of power within the community - that tends to vary over time and with economic conditions workers (or unions) dominating in times of full employment and employers in times of recession.

Broadly in the Western style economies the parties (workers and employers) are free to make their own agreements and rules. This is called 'voluntarism'. But it does not mean there is total noninterference by the government. That is necessary to:

• Protect the weak (hence minimum wage);
• Outlaw discrimination (race or sex);
• Determine minimum standards of safety, health, hygiene and even important conditions of service;
• To try to prevent the abuse of power by either party.

HR managers responsibilities

The personnel manager's involvement in the system of industrial relations varies from organization to organization, but normally he or she is required to provide seven identifiable functions, thus:

1.     To keep abreast of industrial law (legislation and precedents) and to advise managers about their responsibilities e.g. to observe requirements in respect of employing disabled persons, not to discriminate, not to disclose 'spent' convictions of employees, to observe codes of practice etc. in relation to discipline and redundancy, and similarly to determine organizational policies (in conjunction with other managers) relevant to legal and moral requirements (see also 4.).

2.     To conduct (or assist in the conduct) of either local negotiations (within the plant) or similarly to act as the employer's representative in national negotiations. This could be as a critic or advisor in respect of trade etc. association policies or as a member of a trade association negotiating team. Agreements could be in respect of substantive or procedural matters. Even if not directly involved the personnel manager will advise other managers and administrators of the outcome of negotiations.

3.     To ensure that agreements reached are interpreted so as to make sense to those who must operate them at the appropriate level within the organization (this can involve a lot of new learning at supervisory level and new pay procedures and new recording requirements in administration and even the teaching of new employment concepts – like stagger systems of work - at management level).

4.     To monitor the observance of agreements and to produce policies that ensure that agreements are followed within the organization. An example would be the policy to be followed on the appointment of a new but experienced recruit in relation to the offered salary where there is a choice of increments to be given for experience, ability or qualification.

5.     To correct the situations which go wrong. 'Face' is of some importance in most organizations and operating at a 'remote' staff level personnel managers can correct industrial relations errors made at local level without occasioning any loss of dignity (face) at the working level. 'Human resource management' and the obscurity of its reasoning can be blamed for matters which go wrong at plant level and for unwelcome changes, variations of comfortable 'arrangements' and practices and unpopular interpretation of agreements.

6.     To provide the impetus (and often devise the machinery) for the introduction of joint consultation and worker participation in decision-making in the organization. Formal agreement in respect of working conditions and behavior could never cover every situation likely to arise. Moreover the more demanding the task (in terms of the mental contribution by the worker to its completion) the more highly–educated the workers need to be and the more they will want to be consulted about and involved in the details of work life. Matters like the rules for a flexitime system or for determining the correction of absenteeism and the contents of jobs are three examples of the sort of matters that may be solely decided by management in some organizations but a matter for joint consultation (not negotiation) in others with a more twenty-first-century outlook and philosophy. Human resource management is very involved in promoting and originating ideas in this field.

7.     To provide statistics and information about workforce numbers, costs, skills etc. as relevant to negotiations (i.e. the cost of pay rises or compromise proposals, effect on differentials and possible recruitment/retention consequences of this or whether agreement needs to be known instantly); to maintain personnel records of training, experience, achievements, qualifications, awards and possibly pension and other records; to produce data of interest to management in respect of personnel matters like absentee figures and costs, statistics of sickness absence, costs of welfare and other employee services, statements about development in policies by other organizations, ideas for innovations; to advise upon or operate directly, grievance, redundancy, disciplinary and other procedures.

Function 6: Employee education, training and development

In general, education is 'mind preparation' and is carried out remote from the actual work area, training is the systematic development of the attitude, knowledge, skill pattern required by a person to perform a given task or job adequately and development is 'the growth of the individual in terms of ability, understanding and awareness'.

Within an organization all three are necessary in order to:

• Develop workers to undertake higher-grade tasks;
• Provide the conventional training of new and young workers (e.g. as apprentices, clerks, etc.);
• Raise efficiency and standards of performance;
• Meet legislative requirements (e.g. health and safety);
• Inform people (induction training, pre-retirement courses, etc.);

From time to time meet special needs arising from technical, legislative, and knowledge need changes. Meeting these needs is achieved via the 'training loop'. (Schematic available in PDF version.)

The diagnosis of other than conventional needs is complex and often depends upon the intuition or personal experience of managers and needs revealed by deficiencies. Sources of inspiration include:

• Common sense - it is often obvious that new machines, work systems, task requirements and changes in job content will require workers to be prepared;
• Shortcomings revealed by statistics of output per head, performance indices, unit costs, etc. and behavioral failures revealed by absentee figures, lateness, sickness etc. records;
• Recommendations of government and industry training organizations;
• Inspiration and innovations of individual managers and supervisors;
• Forecasts and predictions about staffing needs;
• Inspirations prompted by the technical press, training journals, reports of the experience of others;
• The suggestions made by specialist (e.g. education and training officers, safety engineers, work-study staff and management services personnel).

Designing training is far more than devising courses; it can include activities such as:

• Learning from observation of trained workers;
• Receiving coaching from seniors;
• Discovery as the result of working party, project team membership or attendance at meetings;
• Job swaps within and without the organization;
• Undertaking planned reading, or follow from the use of self–teaching texts and video tapes;
• Learning via involvement in research, report writing and visiting other works or organizations.

So far as group training is concerned in addition to formal courses there are:

• Lectures and talks by senior or specialist managers;
• Discussion group (conference and meeting) activities;
• Briefing by senior staffs;
• Role-playing exercises and simulation of actual conditions;
• Video and computer teaching activities;
• Case studies (and discussion) tests, quizzes, panel 'games', group forums, observation exercises and inspection and reporting techniques.

Evaluation of the effectiveness of training is done to ensure that it is cost effective, to identify needs to modify or extend what is being provided, to reveal new needs and redefine priorities and most of all to ensure that the objectives of the training are being met.

The latter may not be easy to ascertain where results cannot be measured mathematically. In the case of attitude and behavioral changes sought, leadership abilities, drive and ambition fostered, etc., achievement is a matter of the judgment of senior staffs. Exact validation might be impossible but unless on the whole the judgments are favorable the cooperation of managers in identifying needs, releasing personnel and assisting in training ventures will cease.

In making their judgments senior managers will question whether the efforts expended have produced:

• More effective, efficient, flexible employees;
• Faster results in making newcomers knowledgeable and effective than would follow from experience;
• More effective or efficient use of machinery, equipment and work procedures;
• Fewer requirements to implement redundancy (by retraining);
• Fewer accidents both personal and to property;
• Improvements in the qualifications of staff and their ability to take on tougher roles;
• Better employee loyalty to the organization with more willingness to innovate and accept change.

Human Resource Management and Changing Nature of HRM Function

Human Resource Management

Human Resource Management (HRM) is the function within an organization that focuses on recruitment of, management of, and providing direction for the people who work in the organization. Human Resource Management can also be performed by line managers.

Human Resource Management is the organizational function that deals with issues related to people such as compensation, hiring, performance management, organization development, safety, wellness, benefits, employee motivation, communication, administration, and training.

HRM:
The management of the workforce of a business to ensure sufficient staff levels with the right skills, properly rewarded and motivated.

Human resource management (HRM) is the strategic and coherent approach to the management of an organization's most valued assets - the people working there who individually and collectively contribute to the achievement of the objectives of the business. The terms "human resource management" and "human resources" (HR) have largely replaced the term "personnel management" as a description of the processes involved in managing people in organizations. In simple sense, HRM means employing people, developing their resources, utilizing, maintaining and compensating their services in tune with the job and organizational requirement.

Human Resource Management:  All methods and functions concerning the mobilization and development of personnel as human resources, with the objective of efficiency and greater productivity in a company, government administration, or other organization.

human resource management (HRM)

  

Administrative activities associated with human resources planning, recruitment, selection, orientation, training, appraisal, motivation, remuneration, etc. HRM aims at developing people through work.

Human Resource Management

Human resource (or personnel) management, in the sense of getting things done through people. It's an essential part of every manager's responsibilities, but many organizations find it advantageous to establish a specialist division to provide an expert service dedicated to ensuring that the human resource function is performed efficiently.

Objectives

• To help the organization reach its goals.
• To ensure effective utilization and maximum development of human resources.
• To ensure respect for human beings. To identify and satisfy the needs ofindividuals.
• To ensure reconciliation of individual goals with those of the organization.
• To achieve and maintain high morale among employees.
• To provide the organization with well-trained and well-motivated employees.
• To increase to the fullest the employee's job satisfaction and self-actualization.
• To develop and maintain a quality of work life.
• To be ethically and socially responsive to the needs of society.
• To develop overall personality of each employee in its multidimensional aspect.
• To enhance employee's capabilities to perform the present job.
• To equip the employees with precision and clarity in trans¬action of business.
• To inculcate the sense of team spirit, team work and inter-team collaboration.

The Changing Nature of HRM Function

Some critical issues have clearly emerged - planning, acquisition and development of human resources, responding to the demands of the work place and, above all, evolving a strategy of dealing with industrial conflict. As a management practice, it covers all the conventional areas of personnel management and industrial relations, as well as the relatively new areas such as communication, counseling, training and development, and job enrichment. An attempt has been made in this paper to point out the experiences on the emerging issues in managing human resources.

The Changing Nature of HRM Function

Today, competitive advantage is based on the successful application of knowledge. Managing people, as an HRM function, has broadened, to include managing organizational capabilities, relationships, learning and knowledge. These functions include four generic areas, i.e.,
(i) Roles,
(ii) Relationships,
(iii) Strategic focus, and
(iv) Learning focus.
These areas are different from each of the economy functions, like traditional, transitional and knowledge.

Innovate HRM

 Crafting creative business strategies·

 · Organizational restructuring

 · Creating social networks

 · Invoking new challenges

 · Shifting approach

 · Enabling companies to go global

 · Leading to superior performance

 · Creating knowledge work force

Human Resource Information System (HRlS) for Effective HRM

In today's competitive business environment, the cutting edge for any organization is given by the speed with which it takes decisions to respond to changes in the environment, internal or external. A well-designed computerized HRIS alone can provide

 the information and analysis within the shortest possible time. Now-a-days, many organizations are using the computerized HRIS. They keep records in a compact manner, enabling access and retrieval, in a flexible way.

Benefits of HRIS

 · Simplified data entry

 · Less paperwork

 · Fast and accurate

 · Better use of feedback

 · Increased efficiency

 · Improved tools for data analysis

HRIS has great significance in every sector and it can play a vital role. It helps to have a better communication process in the organization and we can offer better service with less effort at reduced cost.

Most importantly, organizations can hire and retain top performers, improve productivity and enhance job satisfaction of the employees.

Aspects of HRM

Human Resource Planning, Recruitment, Selection, Placement, Inductions, Transfer & Planning, Job Analysis, Performance Appraisal, HR Audit, Total Quality Management, Quality of Working Environment, Quality Cycle.

HRM in the Present Scenario

 · Low motivation or mounting frustration

 · Promotions are consolations for transfers

 · Cadre conflict

 · Reward and punishment system

 · Development of strong training system

Trends in HRM

An organization's labour force comes from its external labour market - individuals who are actively seeking employment. HRM helps organizations find and keep the best possible fit between their social system and technical system. Organizations need employees with broad skills and strong motivation. Recruiting and selection decisions are especially important for organizations that rely on knowledge workers. Employees' responsibility and authority are given to make decisions regarding all aspects of product development or customer service. HR professionals can support organizational strategies for quality growth and efficiency. Organizations with international operations hire employees in foreign countries, where they operate, as they need knowledge of differences in culture and business practices.

Now-a-days, information system has become a tool for more HR professionals, and often, these systems are provided through the Internet. The widespread usage of the Internet also includes HRM applications. Organizations search for talents, and screening candidates online. Employees may receive training online. The employment relationship takes the form of a psychological contract that describes what employers and employees expect from the employment relationship. The employees are looking for flexible work schedules, comfortable working conditions, greater autonomy, opportunities for training and development, and performance-related financial incentives. For HRM, the changes require planning for flexible staffing levels. Organizations seek flexibility in staffing levels through alternatives to the employment relationship. They may use outsourcing as well as temporary and contract workers.

Strategic HRM

It is that set of managerial decisions and actions that determine the long term performance of a corporation. It includes environmental scanning, strategy formulation, implementation, evaluation and control. The biggest benefit that strategic HRM offers is  competitive advantage by building critical capabilities of HR in an organization. Strategic HRM facilitates in strategy formulation by making an organization's SWOT analysis, and also in policy implementation by providing competent human resources and competitive intelligence.

HRM in LPG (Liberalization, Privatization & Globalization) Era

We can divide HRM into seven sections, i.e.,
(i) HRM - Environment and Strategies
(ii) HRM - Acquisition and Absorption
(iii) Development
(iv) Maintenance and Retention
(v) Control
(vi) Miscellaneous
(vii) HRM Practices

HRM Environment and Strategies includes objectives, scope and functions, evolution and development of HRM.

Acquisition and Absorption includes HR planning, job analysis and design, recruitment, selection, placement, induction and socialisation.

Development section includes career planning and development, employee training, executive development, organization development and internal mobility and separation.

Maintenance and Retention section includes job evaluation, wage and salary administration, incentives and benefits, motivation, employee empowerment, workers participation in management, employee health and safety, social security, employee discipline, employee grievance, industrial relations, industrial disputes, trade unions, collective bargaining, performance & potential appraisal.

Control section includes personnel research and audit, human resource audit and human resource information system.

The final section is HRM Practices in various organization levels.

Corporate Strategy in Human Resource Management

Today, there is an urgent need to link human resource management, inextricable, to the business of the organization, at both the strategic and practical levels. The HR manager has the task of being on a constant look-out for the right choice of employees, fine-tuning the job mix and compensation package to benefit the individual and the organization, devising a flat organization structure and organizing training programmes for continuing the education at different levels in the organization.

Best Practices in HRM

A best practice in HRM has invoked a great deal of interest among HR professionals. Companies that are currently under-performing in the HR area can learn and adopt some of the best practices from organizations that have acquired some mastery over the good practices in HR. In the era of liberalization, the competitive scenario in the business environment has changed a lot. Consequently, HR practices have also changed phenomenally. The performance of the employees determines the failure or the success of an organization. There are four stages of integration between HR functions and the strategic management functions: -

 · Administrative Linkage

 · One-way Linkage

 · Two-way Linkage

 · Integrative Linkage

HR experts are having the opinion that, though "best practices in HRM" cannot be uniformly applied to all the organizations, they have a kind of uniform applicability in some functional areas, where psychological factors play an important role. Such areas are broadly classified as follows: -

 · Process of selecting and recruiting the best talent.

 · Allotment of work and responsibility, as would be appropriate to the employees natural talent and skill.

 · System of initial training for new employees and specialized training for the experienced and skilled employees.

 · Inculcation of a sense of team spirit.

 · System of healthy and transparent communication, intra and extra company.

 · System of periodic appraisal of the performance of employees.

 · Suitable policy for career advancement of employees.

 · Suitable policy for placement and transfer of employees. 

 · Suitable policy of recognizing and rewarding merit.

 · Provision of security in service, to the deserving employees.

BPO Scenario: HR Issues & Challenges

Human resources are the lifeline of BPO companies. The majority of the workforces in the BPO industry are young, literate and dynamic. Outsourcing HR functions will be the next big leap in India's BPO arena. The HR outsourcing segment is still in its nascent stage in the BPO Industry.

HR Function & Performance Management

The challenge before human resource professionals today is to create an enabling organizational climate for the employees, For this, they need to examine relevant issues such as training and development, performance appraisal and career planning in the organization. Selection and recruitment of personnel is an important responsibility of the human resource department. The recruitment policy provides competitive remuneration as per industry norms, maintains high standards for selection of recruits, and encourages lateral induction to infuse fresh ideas and new skills in the organization.

Trends in Recruitment

Recruitment is increasingly becoming a two-way process, as a result of both employers and employees having higher expectations from one another. The first trend is using the resume database for recruitment; the other trend gaining prominence is the recruitment of key personnel from competitors, which is called "poaching".

Training

After successful selection and recruitment of manpower, it is essential that all employees undergo specific training programmes that help in maximizing their potential. Today's need is to place training and development at the heart of a business strategy. Training should be a continuous process keeping in view the changing market demands, the environment and the organizations' own culture. The role of a trainer, on the other hand, should be that of a mentor, facilitator and change agent.

Action Plan for Initiating Training & Development

 · Assess the training needs of individuals who will be undergoing training, to avoid a mismatch with training programme.

 · Provide a questionnaire to help the participants analyze their own capabilities. This includes their knowledge, skill, aptitude and attitude. 

 · Bring out the latent potential in people and channelize it towards the common goal of the organization.

 · Design training programmes.

 · Ensure that the programme covers behavioral and cognitive leaning, focuses on upgradation of skills and encourages group participation.

 · Include the real world programmes to solve the real life problems.

Role of HR Manager in Employee Training

 · To serve as an internal consultant.

 · To identify programmes for individuals in tune with their individual skills.

 · To plan a judicious mix of internal and external training programmes.

 · To follow up activities to ensure that new skills learned, are applied in the organization.

 · To monitor the performance appraisal of employees, to ascertain the impact of the training programmes and identify the future training needs.

Essentials of Performance Appraisal Alignment, Standards, Commitment

Performance appraisal is a process of assessing the capabilities, both known and hidden, of employees, so that their strengths and weaknesses can be determined for increasing the organizational effectiveness. The appraisal is for identifying, whether the employee is: -
(i) Due for a promotion or reward or an increase in salary.
(ii) Capable of handling additional responsibilities or needs future training and development to upgrade their skills.
(iii) Incapable of meeting the requirement and is, thus, dispensable.360° feedback appraisal system is the formal performance appraisal system. In this system, the employee receives feedback from his manager, supervisor, peers and others, that he comes in contact with. It helps in increasing employee participation, makes the person feel more committed, increases his sense of ownership for company policies, and allows alignment of personal expectations with organizational goals. It helps in assessing the employee strengths and weaknesses.

Action Plan for an Effective Performance Appraisal

 · The HR manager should explain the basic purpose of the exercise.

 · Formal communication workshops should be organized.

 · HR department should keep the confidentiality of the appraisal report; two-way feed-back should be created, the exercise should be presented as a forum.

 · HR department should make a time-table for the appraisal process and review discussion in forums.

 · HR department should work out the methods, incentives and department-wise ratings.

Performance & Rewards

It is a positive achievement cycle; it serves as a powerful motivational force for future growth. Success compensation refers to a salary component, various fringe benefits, performance-linked bonuses, stock options, etc. Compensation package emphasizes on performance, linked compensation, sharp increase in perks and allowances, recognition of special skills and abilities of individuals, increase in senior management remuneration, and salary increases for junior managers.