HUMAN RESOURCE MANAGEMENT ( H R M )

Definition 1 Integration HRM is a series of integrated decisions that form the employment relationships; their quality contributes to the ability of the organizations and the employees to achieve their objectives. Definition 2 Influencing HRM is concerned with the people dimensions in management. Since every organization is made up of people, acquiring their services, developing their skills, motivating them to higher levels of performance and ensuring that they continue to maintain their commitment to the organization are essential to achieving organizational objectives. This is true, regardless of the type of the organization government, business, education, health, recreational, or social action. Definition 3 Applicability HRM planning, organizing, directing and controlling of the procurement, development, compensation, integration, maintenance and separation of human resources to the end that individual, organizational and social objective are accomplished.

MEANING OF HRM: HRM is management function that helps managers to recruit, select, train and develop members for an organization. Obviously HRM is concerned with the peoples dimensions in organizations. HRM refers to set of programs, functions, and activities designed and carried out Core elements of HRM People: Organizations mean people. It is the people who staff and manage organizations.

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Management: HRM involves application of management functions and principles for acquisitioning, developing, maintaining and remunerating employees in organizations.

Integration

&

Consistency: Decisions regarding people must be

integrated and consistent. Influence: Decisions must influence the effectiveness of organization resulting into betterment of services to customers in the form of high quality products supplied at reasonable cost. Applicability: HRM principles are applicable to business as well as nonbusiness organizations too, such as education, health, recreation and the like.

OBJECTIVES OF HRM: 1. Societal Objectives: To be ethically and socially responsible to the needs and challenges of the society while minimizing the negative impact of such demands upon the organization. 2. Organizational Objectives: To recognize the role of HRM in bringing about organizational effectiveness. HRM is only means to achieve to assist the organization with its primary objectives. 3. Functional Objectives: To maintain departments contribution and level of services at a level appropriate to the organizations needs. 4. Personal Objectives: To assist employees in achieving their personal goals, at least in so far as these goals enhance the individuals contribution to the organization. This is necessary to maintain employee performance and satisfaction for the purpose of maintaining, retaining and motivating the employees in the organization.

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SCOPE OF HRM: From Entry to the Exit of an employee in the organization Scope of HRM can be described based on the following activities of HRM. Based on these activities we can summarize the scope of HRM into 7 different categories as mentioned below after the activities. Lets check out both of them.

HRM Activities
1. HR Planning 2. Job Analysis 3. Job Design 4. Recruitment & Selection 5. Orientation & Placement 6. Training & Development 7. Performance Appraisals 8. Job Evaluation 9. Employee and Executive Remuneration 10.Motivation 11.Communication 12.Welfare 13.Safety & Health 14.Industrial Relations

7 Categories of Scope of HRM

1. Introduction to HRM 2. Employee Hiring 3. Employee and Executive Remuneration 4. Employee Motivation 5. Employee Maintenance 6. Industrial Relations 7. Prospects of HRM

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ROLE OF HRM
1. Advisory Role: HRM advises management on the solutions to any problems affecting people, personnel policies and procedures. a. Personnel Policies: Organization Structure, Social Responsibility, Employment Terms & Conditions, Compensation, Career & Promotion, Training & Development and Industrial Relations. b. Personnel procedures, procedures, procedures. 2. Functional Role: The personnel function interprets and helps to communicate personnel policies. It provides guidance to managers, which will ensure that agreed policies are implemented. 3. Service Role: Personnel function provides services that need to be carried out by full time specialists. These services constitute the main activities carried out by personnel departments and involve the implementation of the policies and procedures described above. Procedures: training Relating to manpower planning

procedures, recruitment and selection procedures, and employment procedures, appraisal management procedures, development compensation performance

procedures, industrial relations procedures and health and safety

FUNCTIONS OF HRM ALONG WITH OBJECTIVES

HRM Objectives Social Objectives Supporting HRM Functions Legal Compliance Benefits Union Management Relations Organizational Objectives Human Resource Planning Employee Relations

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Recruitment & Selection Training & Development Performance Appraisals Placement & Orientation Employee Assessment Functional Objectives Performance Appraisals Placement & Orientation Employee Assessment Personal Objectives Training & Development Performance Appraisals Placement & Orientation Compensation Employee Assessment

Managerial Functions of HRM

1. Planning: Plan and research about wage trends, labor market conditions, union demands and other personnel benefits. Forecasting manpower needs etc. 2. Organizing: Organizing manpower and material resources by creating authorities and responsibilities for the achievement of organizational goals and objectives. 3. Staffing: Recruitment & Selection

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4. Directing: Issuance of orders and instructions, providing guidance and motivation of employees to follow the path laid-down. Controlling: Regulating personnel activities and policies according to plans. Observations and comparisons of deviations

5.

Operational Functions of HRM

1. Procurement: Planning, Recruitment and Selection, Induction and Placement 2. Development: Training, Development, Career planning and counselling.

3.

Compensation: Wage and Salary determination and administration

4. Integration: Integration of human resources with organization. Maintenance: Sustaining and improving working conditions, retentions, employee communication Separations: Managing separations caused by resignations, terminations, lay offs, death, medical sickness etc.

5.

6.

CHALLENGES OF HRM IN INDIAN ECONOMY OR CHALLENGES OF MODERN MANAGEMENT

1. Globalization: - Growing internationalization of business has its impact on HRM in terms of problems of unfamiliar laws, languages, practices, competitions, attitudes, management styles, work ethics and more. HR managers have a challenge to deal with more functions, more heterogeneous functions and more involvement in employees personal life.

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Corporate Re-organizations: - Reorganization relates to mergers and acquisitions, joint ventures, take over, internal restructuring of organizations. In these situations, it is difficult to imagine circumstances that pose a greater challenge for HRM than reorganizations itself. It is a challenge to manage employees anxiety, uncertainties, insecurities and fears during these dynamic trends.

New Organizational forms: - The basic challenge to HRM comes from the changing character of competitions. The competition is not between individual firms but between constellations of firm. Major companies are operating through a complex web of strategic alliances, forgings with local suppliers, etc. These relationships give birth to completely new forms of organizational structure, which highly depend upon a regular exchange of people and information. The challenge for HRM is to cope with the implications of these newly networked relations more and more, in place of more comfortable hierarchical relationships that existed within the organizations for ages in the past.

2. Changing Demographics of Workforce: - Changes in workforce are largely reflected by dual career couples, large chunk of young blood between age old superannuating employees, working mothers, more educated and aware workers etc. These dynamic workforces have their own implications for HR managers and from HRM point of view is a true challenge to handle.

3. Changed employee expectations: - With the changes in workforce demographics, employee expectations and attitudes have also transformed. Traditional allurements like job security, house, and remunerations are not much attractive today; rather employees are demanding empowerment and equality with management. Hence it is a challenge for HRM to redesign the profile of workers, and discover new methods of hiring, training, remunerating and motivating employees.

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New Industrial Relations Approach: - In todays dynamic world, even unions have understood that strikes and militancy have lost their relevance and unions are greatly affected by it. The trade union membership has fallen drastically worldwide and the future of labor movement is in danger. The challenge before HRM is to adopt a proactive industrial relations approach which should enable HR specialist to look into challenges unfolding in the future and to be prepared to convert them into opportunities.

Renewed People Focus: - The need of todays world and business is the peoples approach. The structure, strategy, systems approach which worked in post war era is no more relevant in todays economic environment which is characterized by over capacities and intense competition. The challenge of HR manager is to focus on people and make them justifiable and sustainable.

4. Managing the Managers: - Managers are unique tribe in any society, they believe they are class apart. They demand decision-making, bossism, and operational freedom. However in the post liberalization era, freedom given to managers is grossly misused to get rid of talented and hard working juniors. The challenge of HRM is how to manage this tribe? How to make them realize that the freedom given to them is to enable them make quick decisions in the interest of the organization and not to resort to witchhunting.

5. Weaker Society interests: - Another challenge for HRM is to protect the interest of weaker sections of society. The dramatic increase of women workers, minorities and other backward communities in the workforce has resulted in the need for organizations to re-examine their policies, practices and values. In the name of global competition, productivity and quality the interests of the society around should not be sacrificed. It is a challenge of todays HR managers to see that these weaker sections are neither denied their rightful jobs nor are discriminated against while in service.

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6. Contribution to the success of organizations: - The biggest challenge to an HR manager is to make all employees contribute to the success of the organization in an ethical and socially responsible way. Because societys well being to a large extent depends on its organizations.

Emerging trends in HR
If we see in practical situation the above definition its just one side of a coin which has limited HRM involvement but HRM today is a different story, it have changed the way we work, and also it helps an organization to survive in recessionary period. Managing and attracting the human resource in todays time is very difficult task. The role of HR manager has changed a lot (Dancing differently on changing tunes of life) from being protector and screener to the role of Saviour who acts as planner and change agent affecting bottom of the pyramid where it is blue collar workers & at the Top & Middle level executives. The trends in human resource industry are dynamic in nature which contributes towards to achievement of organization goals. Over the years, highly skilled and knowledge based jobs have increased while low skilled jobs are decreasing. This calls for Skill mapping through proper HRM initiative. Change is inevitable as said and thats what Indian organizations are witnessing in management cultures, systems and working style. Alignment with global companies has forced Indian organization accept and incorporate change in everyday life which makes role of HRM all more important.

Outsourcing & its HR Dimensions

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In to-days global village, growth is evident and important for survival of any organization. During the 1990s, there has been a movement away from vertical growth strategies toward co-operative contractual relationships with suppliers and even with competitors. These relationships range from outsourcing, in which resources are purchased from outside through long-term contracts instead of being made in house (for example Hewlett- Packard buys all its laser engines from Canon for HPs laser jet printers), to strategic alliances, in which partnerships, technology licensing agreements, and joint ventures supplement a firms capabilities (for example, Toshiba has used strategic alliances with GE, Siemens, Motorola and Ericsson to become one of the worlds leading electronic companies). Outsourcing simply means hiring someone from outside the company to perform tasks that could be done internally. Companies often hire the services of accounting firms, for example, to take care of financial services. They may hire advertising firms to handle promotions, software firms to develop dataprocessing systems, or law firms to handle legal issues. There are several HR concerns with regard to outsourcing, not the least of which is that if employees are likely to lose their jobs when the work is outsourced, morale and productivity can drop rapidly. To minimize problems, line and HR mangers have to work together to define and communicate transition plans, minimize the number of employment options. In the views of HR professionals, the process of outsourcing is different from purchasing, procurement, and subcontracting. According to them outsourcing occurs when a company contracts with a vendor to perform an activity previously performed by the company. In contrast procurement generally means that the company has not performed the activity before. Outsourcing also has a temporal dimension in that some executives view outsourcing as permanent. Whereas subcontracted activity is expected to return to the company at some point, outsourcing is not. Outsourcing should be referred as the performance by outside parties on a recurring basis of HR tasks that would otherwise be performed in house. In some cases, the outside vendors may actually hire the displaced employees. For example, M. W. Kellogg Inc., a petroleum services company based in Houston, recently outsourced its entire clerical staff to the McBer Company, a temporary employment agency. McBer hired most of Kelloggs secretarial staff, EMERGING TRENDS IN HR Page 10 unknowns, and help employees identify their

so even though the people were employed by a different company, their job and locations stayed the same. This process is known as employee leasing. Employee leasing has been growing rapidly. The value of employee leasing lies in the fact that an organisation can essentially maintain its working relationships but shift the administrative costs of health care, retirement, and other benefits to the vendors. The market for providers of outsourced service of all types is growing rapidly. In 1996, American firms spent over $100 billion in outsourced business activities. Globally, outsourcing usage grew by 35 percent for the 12 months during the year 1997. It was estimated that by 2000, expected to increase to $200 billion. According the Hewitt Associates survey of large employers conducted during 1996 found that 93 percent of respondents outsourced some of their HR functions. Another survey conducted by American Management Association (AMA) during 1996 confirms that 77 percent of firms outsourced their HR activities up from 60 percent in 1994. The 1997 survey of Human Resource trend in 1700 organization reported that 53 percent planned to outsource more in the future. HR Departments are facing the classic make or buy decisions that other functional areas confront when considering the outsourcing of services or products. From the review of literature, it has been found that there are five competitive forces that are driving more companies to outsource some or all of their HR activities (1) Downsizing (2) Rapid growth or decline (3) Globalization (4) Increased competition and (5) restructuring. Over the past decade, these factors have significantly altered the strategy and structure of many firms.

The Sourcing Decision

Where a function should be housed? Should it be integrated within the organisation or purchased from an outside contractor? Outsourcing is purchasing from someone else a product or service that had been previously provided internally. DuPont contracts out project engineering and design to Morrison Knudsen; AT & T contracts its credit card processing to Total System Services and Eastman Kodak its computer services to Business land. Outsourcing is becoming an increasingly important part of strategic decisionmaking and an important way to increase efficiency and often quality. Organisations competing in global industries must in particular search worldwide EMERGING TRENDS IN HR Page 11

for the most appropriate suppliers. In a study of 30 organisations, outsourcing resulted on average in a 9% reduction in costs and 15% increase in capacity and quality. We should now discuss outsourcing in the Indian context. About 60 percent by value of a Bajaj vehicle was outsourced. Virtually no components were imported and 70 percent of Bajaj Autos requirement was sourced from within the State of Maharashtra. Compared to its competitors, Bajaj Autos dependence on vendors was relatively low: over 90% of Hero Hondas components, for example, were outsourced. At the same time, the level of outsourcing had begun to creep upwards. According to Arvind Gupta of Bajaj Auto, we used to take 1.9 man-days to make a scooter. Now because of outsourcing it has come down to between 1.4 & 1.5 man-days. Of this reduction, 40% is from off loading and 60% from productivity increases. TI Cycles had set itself an ambitious target of becoming the number two bicycle manufacturer by 2000 with sales of 35 lakhs bicycles in the domestic market while at the same time achieving 40% ROI. TI Cycles singled out a few areas of the value chain for special attention and thrust. The company tied up its outsourcing arrangements with Avon Cycles in Punjab and Hamilton Cycles in Mumbai with a view to expanding its reach in the northern and western markets respectively. With these arrangements, TI reached a stage where its outsourcing was much higher than Hero and Atlas, who were more vertically integrated. In the late 1990s, Philips along with Sony took the outsourcing route. Organisations can benefit from the new concepts of outsourcing by generating maximum return on investment through better productivity. Outsourcing lead to reduction in fixed cost, hence a lowering of break even point on capacity utilisation leading to higher sustainability of the company in recessionary market. This also leads to improved cash flow as the investment in fixed cost on tangible fixed assets is reduced. The outsourcing programme is also being practiced in Public & Private Sector enterprises to raise productivity. Nowadays many companies have outsourced the car-pooling services. Many leading PSEs have outsourced their maintenance activities (for example annual over hauling, major repairs work etc) thus saving huge cost on HR.

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Outsourcing is a fast and flexible approach to cover resource gaps. As expectations continue to rise to higher standards, any business will doubtless continue to benefit from outsourcing technical skill. It is a new coinage of an old decision-making model known as make or buy, but outsourcing has enlarged the dimension of make or buy concept. Quality assurance and cost reductions have become the prerogative for the competitive sustenance in an open international market. Power of outsourcing lies not only, in its capacity to effect a rapid, instant solution to an organisations problems but also in its potential to help the organisation to re-think its entire way of doing business, even its reason for existence. The two terms contracting and outsourcing are used interchangeably but they are not same at all. Contracting is when a company (buyer) purchases goods or services from another company (supplier or vendor). In this situation the buyer has the control over the situation and instructs the vendor to work accordingly but in the case of outsourcing the buyer turns over the control (ownership) or the process to the supplier. The buyer asks the supplier what results it wants and the supplier decides how to achieve that. In outsourcing the supplier has the expertise and the economies of scale. During the year 2002, HP Services the software services arm of Hewlett Packard (HP), got a contract for handling consumers product major Procter & Gambles global IT outsourcing. At $ 3.5 billion and across 160 countries, this was a large and beautifully structured deal. While HP gets the IT services part of the deal. P & G will allot the building and real estate management to another player and employee payroll management and accounts payable to two others. The last three contracts have not been announced as yet. Table-1 provides summary of guidelines for HR Outsourcing using categories that follow a chronology similar to the outsourcing phases identified by Professor Scott Lever.

Making the Outsourcing Decision

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Dont allow sacred cows. Except for core competencies, all other HR activities should be considered as candidates for outsourcing. Determine whether the desire to outsource an activity is driven by its low contribution to core competencies, influences from the external environment, or poor management of the activity. Recognize that performance is more important than low HR department head counts or lower costs. Beware of vendors that supply off-the shelf solutions that do not fit the companys needs. Avoid excessive reliance on vendors. Decide how much control is needed for various HR activities and whether control can be retained with outsourcing. Identify critical personal benefits of outsourcing.

Selecting and Negotiating with Outsourcing Vendors

Assign a high weighting to vendors knowledge of the industry. Perform reference checks of potential vendors. Understand the costs involved in switching vendors for outsourced services.

Managing the outsourcing Transition

Expect the internal HR team to resist outsourcing and develop ways of managing this resistance. Anticipate conflict and develop a plan for resolving it in a manner that supports the relationship with the vendor. Anticipate changes to HR culture and careers.

HUMAN RESOURCES PLANNING & DOWNSIZING

Over the past decade downsizing has been in full swing and reductions in the work force became a fact of life in the world of work. For many organizations, these actions were necessary to improve profitability, eliminate obsolete functions and reduce overstaffed areas. As organizations move to-wards more EMERGING TRENDS IN HR Page 14

strategic workforce management, downsizing will remain part of the work force landscape, but the catalyst for it will change. Downsizing began as the strategy of sickly companies shedding workers in the face of weak demand, but soon strong firms looking to boost shareholder value also adopted the policy. Downsizing can be used as a strategic option that management can exercise in order to boost equity value. Downsizing sometimes called rightsizing refers to the planned elimination of positions, operations or jobs. This programme is often used to implement retrenchment strategies. A good retrenchment strategy can thus be implemented well in terms of re-organizing but poorly in terms of staffing. Voluntary Redundancy & ways of downsizing

Voluntary Redundancy (VR)

Voluntary redundancy (VR) has become widely used as a method of dealing with redundant employees, but what are the advantages of adopting it and under what conditions it will be effective? Does it have any disadvantages of adopting, and what can be done to increase the supply of volunteers if there is a shortfall? The starting point is an investigation into what is meant by voluntary redundancy: neither law nor practice has defined the term precisely (1). There was a time when voluntary retirement used to be the last resort for organizations facing compelling business conditions. But to-day voluntary retirement schemes (VRS) have become an in-thing for surviving in the fiercely competitive market. The ultimate objective is to reduce the total manpower for savings in wage cost to bring down the cost of product or services. If this is the ultimate objective, one has to examine how much the wage cost constitutes as a percentage of the total cost and how much the other factors of production contribute to the total cost of production. Except for highly labour intensive manufacturing or process units, major contributors to the cost of production are basic raw materials and consumables, power and fuel, maintenance and spares, the depreciation charges for plant and machinery and of course the cost of servicing the loans from the banks or servicing the debentures. In many large size organizations, there is no more lifetime employment. Companies have been downsizing through the process of a compensation EMERGING TRENDS IN HR Page 15

package based on Voluntary Retirement Schemes (VRS). VRS is viewed as one of the methods for the turnaround of the company when business cycle is on a declining curve. The symptoms of such decline are seen in gradual decline in profits, reduction of market shares, loss of monopoly, fast emergence of new technology, etc. When these symptoms are round the corner, management must initiate action through strategic planning.

in India and abroad. The major ways of downsizing are as follows: Lay-off Retrenchment Closure Voluntary Retirement

Lay-off
It is a temporary measure to reduce workforce in case the organisation faces problems like shortage of fuel or power, accumulation of raw material and finished stock due to recession, shortage of working capital, breakdown of machinery or natural calamity. The reasons under which employers can lay-off workers are very specific and limited in number. According to Section 25-m of the Industrial Disputes Act, 1947 unless the lay-off is due to shortage of Power or natural calamity no worker can be laid off without the prior permission of the Appropriate Government, in case the number of workers exceeds 100. A well-known manufacturer of textiles, Mafatlal Industries had declared a 35 days lay-off in its spinning, weaving and grey-folding departments which would have affected 1,200 workers. It was aimed at cutting production due to recession in the textile industry and cutting costs. The lay-off was declared illegal by the Labour Department. Another Company, Hindustan Motors, one of the key players in Automobiles, in the recent past entered into a legal course against the order of refusal of permission of lay-off. The issue is still pending before Calcutta High Court. Ashok Leyland, a leading manufacturer of automobiles, decided to shut down its Ennore plant for 12 days EMERGING TRENDS IN HR Page 16

in June, 1998 when stock piled up due to recession, in the commercial vehicle sector. It was done with the cooperation and approval of the union. That period was not treated as lay-off technically and workers were entitled to full wages and allowances except incentives. According to a study of the top 100 Fortune 500 companies by Kenneth, Paul and Thomas (1994) to track their lay-off announcement Motorola and Texas Instruments, both US-based companies adopted different strategies to cope up with recession. Texas Instrument terminated the jobs of several thousand employees and had to rehire, retrain, and motivate the employees when things improved. Motorola adopted a different strategy. The employees were required to work one day less in every two weeks during the recession period. The Philosophy behind this was We are in the boat together.

Retrenchment
Under the Industrial Dispute Act, 1947, an organization can retrench employees for any reason other than termination of employment due to disciplinary action. It does not mean retrenching all the employees due to closure. The employer can prune the workforce using this method and pay them the retrenchment compensation as stipulated in the Act. But the employer has to retrench the junior- most employees even if they are competent based on the LIF (Last in First out) principle. Very recently the Union Cabinet has approved the retrenchment of 218 workers in Hindustan Vegetable Oils Corporation a public unit based in Delhi. The unit was ordered to shut down by the High Court a few years back and it had been incurring a monthly expenditure of Rs.25 lakhs on idle wages (Human capital Oct. 199). In February 1994 113-crore Modern Food Industries was allowed to close down its Ujjain factory and retrenched 126 employees. Such cases of Government approvals in case of large companies are few and far between. Retrenchment is not just a simple means to downsize workforce. It involves a tricky and complex process for identifying the non-performers, who are required to be separated from the organization permanently. At HCL there are no softoptions. With a single minded focus on performance the company firmly believes that what is good for it is the best for its people. Managers are ruthlessly performance-oriented. Every employee is ranked on the merit list. HCL managed the downsizing by identifying three clusters of people whom they call EMERGING TRENDS IN HR Page 17

Yesterdays, Todays and Tomorrows people [YTT]. Yesterdays people are those who are characterised by inflexible attitudes and declining performance. Therefore they are the first to go. Todays people are those who have maintained consistent performance and are recommended for further training to tap their potential. Tomorrows people are the super-achievers at whom the organization throws stretch targets and plum rewards. This technique is applied through the monthly performance reviews for each business unit.

Closure
An employer can close down the whole or part of a unit if the circumstances that lead to closure are beyond the control of the employer. The Government has to be notified at least 90 days before the intended closure, citing reasons there for. Section 2 (cc) of the Industrial Disputes (Amendment) Act, 1982 defines closure to mean the permanent closing down of a place of employment or part thereof. Section 25 (FFF) imposes a liability on the employer who closes down his business, to give one months and pay compensation equal to days average pay for every completed year of continuous service or any part thereof in excess of six months. In case of closure on account of unavoidable circumstances beyond the control of employer, the maximum compensation payable to a workman is his three months salary. The Ghatkapor (Maharashtra) unit of BOC has been given permission by the Maharashtra Government shut down on grounds of continuing losses and poor productivity. The losses were to the tune of Rs. 8 crores in the past seven years (Human Capital, March, 1999). In1994, The Bhandup plant of Hindustan CibaGeigy in Maharashtra was closed down and the employees were offered VRS. Levi Strauss & Co., the renowned manufacturer of Jeans has planned to shut down around 11 of the North American facilities and cut 5900 Jobs by shifting most of its production activities overseas to reduce labour costs (Human Capital March, 1999). One of the most important drawbacks of these methods of downsizing is that they cannot be used at the discretion of the employer in case of large organisations (where the number of employees exceed100). Approval of the Government before lay-off, retrenchment and closure is compulsory. In a country like India, where unemployment is a big problem, the Government is very reluctant to give permission for cutting jobs even if the reasons are genuine. EMERGING TRENDS IN HR Page 18

Very often, long battles are fought in the court of law where the balance may tilt in favour of any one of the parties. Trade Unions also offer stiff resistance. J.K. Synthetics had closed down its fibre plant in Kota. A case was filed against the company and the legal battle continued for 14 years. The Supreme Court eventually declared the closure illegal and ordered the reinstatement of 1,100 workers with full compensation.

Benchmarking Management

VRS

practices

and

Compensation

Having identified the reasons for the present downtrend of the organization and also having decided the probable actions required for rectification, the company must compare its vital data for all the factors with the best company in the same or similar trade. Such benchmarking helps in understanding the level of efficiency at which the company is presently working. For the purpose of preparing VRS, data on inter-firm comparison of wage bill including welfare expenses, particularly with reference to the nearest competitor could be an eye an eye opener for management and collectives. This single datum may decisively go in favour of introducing VRS. In addition to this another datum may be on value added per employee and value added per rupee of wages. The compensation package normally determined on existing salary, past service, future service, types of compensation packages being offered in the industry / region and also the financial situation of the existing company. By and large, the payback period of the compensation package in companies is less than three years. Voluntary retirement is the golden route to retirement and has become one of the more favoured ways of dealing with the redundant workforce in an organization. The most human technique for downsizing the workforce in an organization is the VRS. The golden handshake, as it is often called, is virtually corporate Indias only option today for shedding manpower. The method offers employees a lucrative severance package: they cannot refuse particularly since law makes it tax-free so that they retire of their own volition. Voluntary separations cause less pain and agony. It gives people choice and discretion rather than making them the victims of management decisions. VRS is considered to be a softer option compared to retrenchment because of legal EMERGING TRENDS IN HR Page 19

difficulties, trade union opposition, and obligations under the existing collective agreements and considerations of good industrial relations. Thus, Voluntary Retirement Scheme (VRS) has become one of the ways of dealing with redundant human resources in an organization. As the name implies, opportunity is given to employees to retire voluntarily. As an inducement, higher compensation than is paid under retrenchment /normal retirement is paid along with, in most cases, some allowance for settlement at native place or any place of the persons choice if such settlement/resettlement occurs within a stipulated time. If this is not adequate, some fringe benefits like medical reimbursement/insurance are offered even after voluntary retirement. The VRS is also commonly referred to as voluntary separation Scheme (VSP) or the Golden Handshake Programme (GHP). In this context, INDALS Belgaum Smelter case is a unique success story of dealing with 472 redundant workers when 187 operating pots at Belgaum were de-energised and went off production during 1992. This was the sharp escalation in power costs imposed by KSEB. Power is an important input in aluminium smelting and is considered almost a raw material for the production of the metal world over. In the year the smelter was losing Rs. 6 lakhs. Reflecting its old value system and respect for its people, INDAL handled the situation in a very human and compassionate manner. It is worthwhile to mention that the VRS that the company designed and implemented was unique. Before designing and introducing scheme the company did a lot of preparatory work. A team of senior officers was sent to Bombay to visit some of the well-known companies, namely, Premiere Automobiles, Ciba-Geigy, Hindustan Lever, etc. with a view to collect their VR schemes. The team also studied the strengths and weaknesses, success and failures of the different VR schemes, before developing, designing and implementing their own scheme. The decision to implement the VRS though painful was carried out as the last available alternative to reduce surplus manpower. What was unique about VRS (policy) adopted by the company was that over the benefits payable as per public sector enterprises, the company built in additional incentives based on age-like medical insurance, etc. The scheme was designed to enable the retired employees to identify with the company. It provided adequate medical and insurance coverage for the employees in the post- retirement years. The company also granted education scholarships to the children of retired employees. Entrepreneurial Development Programmes were developed for employees accepting VRS. This covered EMERGING TRENDS IN HR Page 20

counselling, arranging loans, helping them with project profiles, tax and investment planning, organising relevant training, etc.(for details please see the enclosed case on Belgaum Smelter.

Counselling Services
From the very beginning initiation of VRS, it is to be realised that for making the scheme successful, efforts to be made to build a good deal of counselling services. Counselling should be used as a process to communicate effectively with the organisational members so that they realise that the VRS is last resort for the revival and survival of the organisation. A good counselling session must include practical advice about how to use or invest the sum received as compensation under VRS. The retained employees shall also need advice not only on investment but also on income tax implications. It is evident that if a decision is taken for downsizing the organisation, a good amount of planning and preparation is essential. All the issues pertaining to it must be considered concurrently in tandem. Transparency in the management actions and fairness in its dealings are extremely necessary.

Conditions Favouring the Effective Use of VR

The fact that management to use or willing to use VRS is a prerequisite for introduction of the technique, but certain conditions encourage or perhaps are necessary for its deployment (Paul Lewis, 1993) . According to him the facilitating factors comprise: Availability of sufficient finance Favourable workforce characteristics Absence of union opposition of control; and Availability of work for non-volunteers

It seems clear that more money is needed if an individual is to be persuaded rather than forced to leave. Age profiles, length of experience, employment pattern and earnings levels may be relevant to the effective use of VR. An age profile of employees with a high proportion of people in the early retirement age EMERGING TRENDS IN HR Page 21

group means that what is typically the best financial deal is available to a relatively large proportion of workforce. On the other hand, a relatively old workforce, with substantial length of service in individual cases will increase the size of retirement packages because the statutory formula is based on partly upon age and length of service. The question of union attitude towards VR and the extant which a union can prevent its members volunteering it thinks it is necessary to communicate directly to employees in the hope of bringing forth volunteers. If the union has little control over its members, this may prove successful. The initiative for VR may come from the union rather than the employer. VR assumes that work is available for those who want to stay. VR should be applicable to any company for slimming exercise rather than closure.

New trends of HR
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(A) International Human Resource Management (IHRM) 1. Ethnocentric approach 2. Polycentric approach 3. Geocentric approach.

(B) Human Resource Outsourcing: It consists of three types: 1. Application Service Provider 2. Business Process Outsourcing 3. Total HR Outsourcing

(C)Human Resource Information System (HRIS) has three types 1. Strategic HRIS 2. Transformational HRIS 3. Tactical HRIS (D) Use of SIX SIGMA in HR

THE ROLE

OF

HR

IN

ORGANIZATIONS

Boosting Productivity Preparing the Organization for Change Building Employee Commitment and Morale Involvement in Determining and Implementing the Strategic Direction of the Organization

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HR

IN THE

21ST CENTURY

Becoming the employer of choice Winning the war for talent Contributing to the organization as a strategic business partner Cultivating leadership through e-learning and development Recognizing the workforce as a profit centre Thinking globally while complying locally Incorporating flexibility and adaptability into the organization Embracing technology as the underlying facilitator The policies of many companies have become people centric Attracting and retaining of human resource has become difficult as loyalty factor is losing its shine,

Human Resource Outsourcing is the new name in the industry to replace the redundant traditional HR department.

With the increase of global job mobility, recruiting competent people is also Increasingly becoming difficult, especially in India.

COMPETENCIES

FOR

21ST CENTURY HR PROFESSIONALS

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Developing Effective Reward and Recognition Systems Creating and Becoming Transformational Leaders Engaging the Workforce in Continuous Change and Innovation Collaborating in Resolving of Strategic Problems Partnering with Community Groups and Business Organizations Encouraging Real Employee Involvement Coaching and Counselling Individuals and High Performance Teams Empowering and Facilitating Learning, Change, and Decision-making Creating the "Learning" Organization Designing Organizations, Processes, and Performance Systems Keeping Up-to-Date on Technological Advances in HR Applications Maintaining a Global Business Perspective

HR Managers today are focusing attention on the following

a) Policies- HR policies based on trust, openness, equity and consensus. b) Motivation- Create conditions in which people are willing to work with zeal, initiative and enthusiasm; make people feel like winners. c) Relations- Fair treatment of people and prompt redress of grievances would pave EMERGING TRENDS IN HR Page 25

the way for healthy work-place relations. d) Change agent- Prepare workers to accept technological changes by clarifying doubts. e) Quality Consciousness- Commitment to quality in all aspects of personnel administration will ensure success.

HUMAN RESOURCE MANAGEMENT IN A CENTURY OF GLOBALIZATION (IHRM)

APPROACHES TO MANAGING AND STAFFING SUBSIDIARIES 1. Ethnocentric. The home country practice prevails with this approach. Headquarters from the home country makes key decisions, employees from the home country hold important jobs, and the subsidiaries follow the home country resource management practice. 2. Polycentric. Each subsidiary manages on a local basis. A local employee heads a subsidiary because headquarters managers are not considered to have adequate local knowledge. Subsidiaries usually develop human resource management practices locally. 3. Geocentric or global. The company that applies the global integrated business strategy manages and staffs employees on a global basis. For example, Electrolux (the vacuum cleaner company) has for many years attempted to recruit and develop a group of international managers from diverse countries. These people constitute a mobile base of managers who are used in a variety of facilities as the need arises.

In the ethnocentric approach, the cultural values and business practices of the home country are predominant. Headquarters develops a managing and staffing approach and consistently applies it throughout the world. Companies following EMERGING TRENDS IN HR Page 26

the ethnocentric approach assume the home country approach is best and that employees from other parts of the world can and should follow it.

MAJOR

FUNCTIONS

OF

INTERNATIONAL

HUMAN

RESOURCE MANAGEMENT

RECRUITMENT AND SELECTION Recruitment and selection are the processes through which an organization takes in new members. Recruitment involves attracting a pool of qualified applicants for the positions available. Selection requires choosing from this pool the candidate whose qualifications most closely match the job requirements. In companies that function in a global environment we have to distinguish different types of employees. Traditionally, they are classified as three types:

1. Parent country national. The employees nationality is the same as the organizations. 2. Host country national. The employees nationality is the same as the location of the subsidiary. 3. Third country national. The employees nationality is neither that of the organization nor that of the location of the subsidiary.

DEVELOPMENT

AND TRAINING

The overall aim of the development function is to provide that adequately trained personnel in a company are capable to fulfil their goals, as well as to contribute to better performance and growth with their work Creation and transfer of international human resource development programs may be carried out in two ways:

1. Centralized: - With a centralized approach, training originates at the EMERGING TRENDS IN HR Page 27

headquarters and corporate trainers travel to subsidiaries, often adapting to local situations. This fits the ethnocentric model. A geocentric approach is also centralized, but the training develops through input from both headquarters and subsidiaries staff. Trainers could be sent from various positions.

2. Decentralized In a decentralized approach, training is on a local basis, following a polycentric model. When training is decentralized, the cultural backgrounds of the trainers and trainees are usually similar. Local people develop training materials and techniques for use in their own area.

PERFORMANCE

EVALUATION

In companies, the performance evaluation is most frequently carried out for administration or development intentions

REMUNERATION

AND BENEFITS

Remuneration of employees has a key role in acquiring new employees and is important for employees as well as for the employers. Pay is the basic resource of living of the employees, while benefits cover better health care, the possibility of spending holidays in the companys holiday facilities at a favourable price and also other advantages

MANAGEMENT OF EXPATRIATES One of the most challenging tasks for any company operating internationally is to manage its expatriates. The statistics showing their efficiency on that matter are not encouraging. For example, the failure of U.S. expatriates (the percentage who return prematurely, without completing their assignment) is to be in the 20 40% range. In Japan, the failure rate is less than 5% for their expatriates. One

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of the reasons for the difference is that Japanese expatriates receive far more orientation and language instruction than U.S. expatriates do.

1. The reasons for expatriate failure In international companies, it is important to understand the reasons behind expatriates high failure rates so that preventive measures can be taken. Six factors account for most failures, although their relative importance varies by firm.These are: career blockage, culture shock, lack of cross-cultural training, an overemphasis on technical qualifications, a tendency to use international assignments as a way to get rid of problem employees, and family problems. 2. Cross-cultural adjustment Expatriates and their families need time to become familiar with their new environment and to become comfortable living there 3. Expatriate reentry After the expatriate completes his assignment and returns home, he must adjust in the same way as when going abroad.. The disorientation experienced by a returning expatriate is known as reverse culture shock. 4. Selection of expatriates To choose the best employee for the job, management should: Emphasize cultural sensivity as a selection criterion Establish a selection board of expatriates Required previous international experience Explore the possibility of hiring foreign-born employees who can serve as expatriates at a future date Screen candidates spouses and families

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5. Expatriate training expatriates are more successful when their organizations train them to prepare for their life and work abroad. Lack of training is a major cause of expatriate failure. 6.Expatriate evaluation and remuneration The performance evaluation of expatriate managers is particularly difficult. The job a person does abroad can include much more than what he does at home. A manager often steps into the role of counselor, trainer, troubleshooter, or diplomat, in addition to his assigned job responsibilities. With the need for adapting to a new culture, a different way of doing business, and often a new language, many factors influence expatriate performance. An organizations general policy influences expatriate remuneration. Three common approaches are: a home-based policy, a host-based policy and a regionbased policy.With a home-based policy, emloyees remuneration follows the scale of their home countries. The host-based policy sets salaries at the level of the host country, with benefits usually tied to the home country. Finally, region determines the third approach. Remuneration for employees working outside their home countries reflects whether their relocation is within their home region or in another region.

HUMAN RESOURCE MANAGEMENT OUTSOURCING

The use of outside bussiness to perform necessary business activities and process in lieu of internal capabilities. Outsourcing basic human resource services can be the key to achieving a more influential and strategic role for the HR function.

Advantages of outsourcing

Reducing costs: Key determinator in many outsourcing decisions, but should not to be considered in isolation from other costs/ benefits;

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Increasing effectiveness of HR delivery: Experienced outsourcing providers can often deal with HR processes more effectively. For example, recruitment may be undertaken more quickly, reducing employee turnover costs and speeding up the pace of growth; Providing greater expertise: External providers may offer greater levels of specialist knowledge or experience than affordably available in-house; Moving HR up the value chain: Outsourcing human resource administration can lead to a shift in HR focus towards policy and decision making; To aid organizational growth: Fast-growing organizations can lack the HR capacity to deliver business objectives, making HR outsourcing an attractive solution.

HUMAN RESOURCE INFORMATION SYSTEMS

With the changing world and constant new technology that is available, managers need to be aware of the technology that will increase effectiveness in their company. Human resource information systems (HRIS) have increasingly transformed since it was first introduced at General Electric in the 1950s. HRIS has gone from a basic process to convert manual information keeping systems into computerized systems, to the HRIS systems that are used today. Human resource professionals began to see the possibility of new applications for the computer. The idea was to integrate many of the different human resource functions. The result was the third generation of the computerized HRIS, a feature-rich, broad-based, self-contained HRIS. The third generation took systems far beyond being mere data repositories and created tools with which human resource professionals could do much more.

Applications of HRIS
The efficiency of HRIS, the systems are able to produce more effective and faster outcomes than can be done on paper. Some of the many applications of HRIS are\ Clerical applications, applicant search expenditures, risk management, EMERGING TRENDS IN HR Page 31

training management, training experiences, financial planning, turnover analysis, succession planning, flexible-benefits administration, compliance with government regulations, attendance reporting and analysis, human resource planning, accident reporting and prevention and strategic planning. With the many different applications of HRIS, it is difficult to understand how the programs benefit companies without looking at companies that have already benefited from such programs. Human Resources Information Systems (HRIS) is an integration of HRM and Information Systems (IS). HRIS or Human resource Information system helps HR managers perform HR functions in a more effective and systematic way using technology. It is the system used to acquire, store, manipulate, analyze, retrieve, and distribute pertinent information regarding an organization's human resources. The HRIS system is usually a part of the organization's larger management information system (MIS) HRIS can be applied in the following areas of HRM

HR planning Succession planning Work force planning Work force dynamics analysis Staffing Applicant recruitment and tracking Employee data base development Performance management Learning and development Compensation and benefits Pay roll Job evaluation Salary survey International compensation Benefits management Develop innovative Org. Structure Develop IT

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Barriers to the success of an HRIS:

Lack of management commitment Satisfaction with the status quo No or poorly done needs analysis Failure to include key people Failure to keep project team intact Politics / hidden agendas Failure to involve / consult significant groups Lack of communication Bad timing (time of year and duration

SIX SIGMA

IN HRM

Six Sigma is a logical and methodical approach to achieving continuous improvements in areas critical to the success of any manufacturing or serviceoriented business. This process improvement methodology was developed in the 1980s in Motorola's high-volume manufacturing environment. This has contributed to the creation of the general opinion that Six Sigma is only applicable to high-volume, manufacturing processes. Actually, Six Sigma is applicable to both manufacturing and service industries, and to both high- and low-volume production environments. The Six Sigma HR team was established, involving HR process owners, facilitator (Six Sigma Black Belt) and mentor (HR Director). Internal customers were identified as critical stakeholders and their participation was secured through their direct/indirect representation or through feedback communication.

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The analysis started with the development of HR process maps, which effectively revealed shortcomings in the processes with immediate remedies and benefits. Communication, resourcing, rewarding and development were selected as the first process.

Use of SIX SIGMA

Improve
Development and implementation of improvement solutions followed identification of vital input parameters that affect selected process measures of performance (MOPs). Monitoring of improvement actions is realized through implemented HR database. Vital process inputs and process results were monitored and correlation verified. The focus has gradually shifted from monitoring MOPs to measuring and controlling inputs that control MOPs and reporting MPOs Trends.

Control
The key control objective is to sustain and get a continuous improvement process embedded into HR processes. A quarterly HR review report is developed and issued and presented by HR. It contained process analysis results (control charts, histograms, trends and other monitoring charts), conclusions, observations and improvement actions to be completed by the next review and a Six Sigma score chart.

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FINDINGS OF PAPER
The Emerging trends could play a crucial role in Selection of employees requires careful evaluation of the personal characteristics of the candidate and his/her spouse.

Training and development extends beyond information and orientation training to include sensitivity training and field experiences that will enable the manager to understand cultural differences better.

Managers need to be protected from career development risks, re-entry problems and culture shock.

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To balance the pros and cons of home country and host country evaluations, performance evaluations should combine the two sources of appraisal information.

Compensation systems should support the overall strategic intent of the organization but should be customized for local conditions.

Six- sigma uses rigorous analytical tools with leadership from the top and develops a method for sustainable improvement.

Human resource outsourcing is a new accession that makes a traditional HR department redundant in an organization.

RECCOMENDATION

IHRM could be used to improve workforce skills and abilities in order to exploit environmental opportunities and neutralize threats.

Indulge in continuous quality improvement through TQM and HR contributions like training, development, counselling, etc with the use of SIX-SIGMA .

Outsourcing results into cost effective Human Resource activities and utilization of people with distinctive capabilities to create unsurpassed competence in an area.

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HRIS is used to decentralize operations and rely on self-managed teams to deliver goods in difficult times e.g. Motorola is famous for short product development cycles. It has quickly commercialized ideas from its research labs.

Lay off and retrenchment of workers in a smooth way explaining facts to unions, workers and other affected groups.

The most important skills for 21st century HR managers are conceptual and interpersonal, rather than technical.

CONCLUSION

Human resource management (HRM) will be a key area of focus in 21ST century as companies and government organizations put in place strategies to cope with the economic crisis and recovery. The so called "war for talent" is on the backburner as the focus shifts to hiring freezes, benefits and compensation cost management, and workforce reductions in the hardest-hit segments. HRM technology solutions can help savvy human resources (HR) professionals strategically manage through the crisis and prepare as the climate shifts to the

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upside. Trends that we will follow in 21st include managing and developing talent, embracing HRM analytics, Web 2.0 adoption, and HR technology strategy.

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