Strategic Human Resource Management

Transcription

1

2 2 Strategic Human Resource Management... Strategic Human Resource Management (A New Perspective for Steel Industry) Dr. P.K. Mohanty MUMBAI NEW DELHI NAGPUR BENGALURU HYDERABAD CHENNAI PUNE LUCKNOW AHMEDABAD ERNAKULAM BHUBANESWAR INDORE KOLKATA GUWAHATI

3 Role of Strategic Human Resource Management (SHRM): Key to... 3 Author No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording and/or otherwise without the prior written permission of the publishers. First Edition : 2014 Published by : Mrs. Meena Pandey for Himalaya Publishing House Pvt. Ltd., Ramdoot, Dr. Bhalerao Marg, Girgaon, Mumbai Phone: / , Fax: himpub@vsnl.com; Website: Branch Offices : New Delhi : Pooja Apartments, 4-B, Murari Lal Street, Ansari Road, Darya Ganj, New Delhi Phone: , ; Fax: Nagpur : Kundanlal Chandak Industrial Estate, Ghat Road, Nagpur Phone: , ; Telefax: Bengaluru : No. 16/1 (Old 12/1), 1st Floor, Next to Hotel Highlands, Madhava Nagar, Race Course Road, Bengaluru Phone: , , , Hyderabad : No , Lingampally, Besides Raghavendra Swamy Matham, Kachiguda, Hyderabad Phone: , Chennai : 8/2 Madley 2nd street, T. Nagar, Chennai Mobile: Pune : First Floor, "Laksha" Apartment, No. 527, Mehunpura, Shaniwarpeth (Near Prabhat Theatre), Pune Phone: / ; Mobile: Lucknow : House No 731, Shekhupura Colony, Near B.D. Convent School, Aliganj, Lucknow Phone: ; Mobile: Ahmedabad : 114, SHAIL, 1st Floor, Opp. Madhu Sudan House, C.G. Road, Navrang Pura, Ahmedabad Phone: ; Mobile: Ernakulam : 39/104 A, Lakshmi Apartment, Karikkamuri Cross Rd., Ernakulam, Cochin , Kerala. Bhubaneswar : Phone: , ; Mobile: Station Square, Bhubaneswar (Odisha). Phone: , Mobile: Indore : Kesardeep Avenue Extension, 73, Narayan Bagh, Flat No. 302, IIIrd Floor, Near Humpty Dumpty School, Indore (M.P.). Mobile: Kolkata : 108/4, Beliaghata Main Road, Near ID Hospital, Opp. SBI Bank, Kolkata , Phone: , Mobile: Guwahati : House No. 15, Behind Pragjyotish College, Near Sharma Printing Press, P.O. Bharalumukh, Guwahati , (Assam). Mobile: , , DTP by : Asha Printed at : M/s. Aditya Offset Process (I) Pvt. Ltd., Hyderabad. On behalf of HPH.

4 4 Strategic Human Resource Management... Dedicated to SRI SRI SHIRDI SAI BABA

5 Role of Strategic Human Resource Management (SHRM): Key to... 5 FOREWORD Globalization of business has changed the scenario of management in the country. The times are changing and there is an increasing need to cope with the ever changing forces of competition, the technological onslaught and the growing realization of knowledge management. The new economic environment has compelled the leaders and managers of organizations to look forward to understand the rules of survival in their business and beyond mere survival to set their organizations on the path of prosperity and growth. Today, the HR function has a more strategic role. A changing business environment can influence the outcome of current operations, stakeholders and corporate strategy as a whole. Since 1990, there has been an increased focus on strategic role of Human Resource Management (HRM) and now HRM has become strategic in nature. Strategic Human Resource Management (SHRM) is concerned with the relationship between HRM and Strategic Management in an organization. This book brings to light the strategic human resource approaches, which are needed to cope with the changing business environment. It also helps to bring overhauling organizational excellence by identifying pitfalls and timely attributing corrective measures through need-based HR strategy. This book emphasizes on post-liberalization effects and performance of SAIL and TATA STEEL from 1991 till date with focus on HR initiatives and other turnaround strategies to make organization as profitable and competitive as possible. The true insights of free and frank opinions of more than two hundred employees of SAIL and TATA STEEL, captured by the author about the implementation of various turnaround business alignment strategies in this book is found interesting and praiseworthy. I believe that this book SHRM A New Perspective for Steel Industry will serve as professional companion to management students, researchers and HR managers. Dr. K.K. Ray Professor, IIM, Raipur

6 6 Strategic Human Resource Management... PREFACE Liberalization and Globalization has changed the scenario of management in the country. Today, we look forward to competition at global market. It is not enough to just manage an organization but need of the hour is to manage any organization with effectiveness and efficiency. Today, Human Resource Management should be viewed as strategic function not as routine function. It can facilitate achievements of goals of the organization as HR strategy is linked with business objectives of the organization. Every business organization must adopt a corporate strategy to operate in a global business environment if it wants to survive. No company, either big or small, will be able to continue its successful operation with a secluded business philosophy in the years to come. Hence, only way to go ahead is to adopt a strategic management philosophy for a global market. The liberalization of 1991 has exposed the Indian companies, which were under protection for over four decades, to a process of globalization. Now, global companies are very much here in India putting forward a strong competition. Evidently, Indian companies have no option but to change their outlook, philosophy, programmes, priorities, perspectives and their business strategies. They have to accept the new challenges and improve their efficiency and quality to suit the global standard and extend their operational canvas to other nations. The book Strategic HRM A New Perspective for Steel Industry is exclusively focusing post-liberalization effect on India s steel industry, with special emphasis on SAIL and TATA STEEL as well as their HR strategies, business policies and strategic planning perspective. This book is organized into eight chapters. Chapter I, focuses on strategic role of Human Resource Management (HRM) and how HRM has become strategic in nature after globalization of business. Chapter II introduces the global scenario of steel business and Indian steel industry after liberalization. Chapter III emphasises on TATA Steel and SAIL s endeavor during post-liberalization period. Chapter IV focuses on the scope and methodology of the study.

7 Role of Strategic Human Resource Management (SHRM): Key to... 7 Chapter V describes performance of Indian Steel Industry during pre-liberalization period from 1985 to 1990 with specific study on performance of SAIL & TATA STEEL. Chapter VI emphasizes on post-liberalization effects and performance of SAIL & TATA STEEL from 1991 till date. Executive study is being done on modernization process, performance management, HR initiatives, other turnaround strategies with reference to literature survey, analysis of corporate plans, in-house journals and manuals, etc. This Chapter also includes a case study of turnaround story of Rourkela Steel Plant (RSP). The study is based on major turnaround and implementation strategies adopted by the CEOs to make the organization as profitable and competitive. Chapter VII is the main theme of the book, where the opinions of executives and workmen of SAIL & TATA STEEL are analyzed with questionnaire form and statistical analysis are being made to know the accuracy of study. Major focus is given on global HR and IR issues, global business policies, new HR policies, restructuring of manpower, HR strategies linked with business philosophy, vision and mission, strategic human resource perspectives, Knowledge Management, Compensation, Recognition system, Training and Development, Recruitment and Promotion policies, and impact on IR issues. Further, the hypotheses are tested through statistical methods to establish the effectiveness of the statement adopted for the above study purpose. Chapter VIII deals with findings of the study and conclusion, focused on process of liberalization changes in SAIL & TATA STEEL that constitutes useful learning for managing their respective futures. Based on results of analysis, the conclusions show the direction of change process initiatives adopted by SAIL & TATA STEEL are positive and growth-oriented. At last, some suggestions and recommendations are given to accelerate the change initiatives of both the organizations (SAIL & TATA STEEL) and make them consistent result-oriented. This book is intended for all HR Professionals, Management Students and Researchers and Steel Industry Personnel. I believe, it can serve as an effective guide and reference to them for implementation of HR strategies aligned with business goals of respective organizations. Dr. P. K. Mohanty

8 8 Strategic Human Resource Management... ACKNOWLEDGEMENTS I express my gratitude to Dr. P.K. Mohanty, Professor, Department of Business Administration, Utkal University and Dr. K.M. Sahoo, Ex-Professor, Department of Personnel Management & Industrial Relations, Utkal University for their guidance and support. My sincere thanks to Mr. Avinas Prasad, Ex-VP (IR), Mr. Nadeem Kazim, Head (Management Development), Mr. R.N. Mishra, Head (IR Legal), TATA STEEL, Mr. S.N. Patnaik, DGM (Industrial Engineering), Mr. Rehaman Khan, DGM (Town Admn.), Mr. P.K. Mohanty, Mr. A.K. Bose of Rourkela Steel Plant for their valuable support and help during my visits for data collection. My sincere thanks to SAIL Management (RSP, BSP, Bokaro Steel Plant, DSP, Salem Steel Plant, CMO and Corporate Office) and TATA STEEL Management for their constant support and help provided me during my frequent visit to their respective organizations. I thank all the respondents who participated in this study. Without their cooperation, this study could not have been completed. I appreciate my friend, Dr. P.K. Das, Reader in Chemistry, GM College, who has contributed some suggestions to improve my quality of work. I am particularly thankful to Mr. Ghanashyam Parida, Senior Asst., OPTCL for his personal interest in rendering service of typing and computer graphics for this book. Special thanks are due to Mr. Rabindra K. Maharana, Mr. Trinath Das, Mr. Bireswar Pati, Mr. Gaurav Das, Dr. Himansu Sekhar Nanda, Mr. Himansu Patnaik and Mr. Joga Jeeban Sahoo for their continuous support and suggestions while editing the book. I am grateful to Mr. Anil Sehgal, Director, Amtek Group of Companies for his unstinting support, encouragement and inspiration throughout the preparation of this book. I am thankful to Mr. P.C. Panigrahi, Director (Personnel), Mahanadi Coalfields Ltd (MCL) for his valuable guidance while preparation of this book.

9 Role of Strategic Human Resource Management (SHRM): Key to... 9 I am grateful to Mr, Niraj Pandey. Director and Mr. Bijoy K. Ojha, Manager and Staff of Himalaya Publishing House Pvt. Ltd. for their keen interest in publishing this book. I am indebted to my parents, who have been providing me continued love and inspiration to achieve success in life. At last but not least, I express my heartfelt gratitude to my wife, Dr. Banalata Mohanty, Reader in Zoology, Dhabaleswar College of Science and Technology, Odisha who has been the driving force and inspiration behind the completion of this book. Dr. Prabodh Kumar Mohanty

10 10 Strategic Human Resource Management... CONTENTS 1. Role of Strategic Human Resource Management (SHRM): Key to Organizational Excellence Global Scenario of Steel Business and Indian Steel Industry after Liberalization TATA STEEL & SAIL s Endeavour during Post-liberalization Period Scope and Methodology of Study Performance of Indian Industry during Pre-liberalization Period from 1985 to 1990 with Specific Study on SAIL & TATA STEEL Post-liberalization and Performance of SAIL & TATA STEEL (1991 to 2013) Executives & Workmen s Opinion Poll (SAIL & TATA STEEL) and Statistical Analysis of Results Findings of the Study and Conclusion Appendices

11 Role of Strategic Human Resource Management (SHRM): Key to LIST OF TABLES Table No. Subject Page No. 2.1 World s Largest Economies (GDP in US$ Billion) County-wise Crude Steel Production County-wise Crude Steel Production ( ) Overview of Indian Steel Industry (Crude Steel Production ) 2.5 Import of Finished (Carbon) Steel during to Production of Pig Iron and Finished (Carbon) Steel since to Net Profit of TATA STEEL (2009 to 2013) A Picture of the Central Government Public Sector Performance of the Top 15 Public Sector Undertakings of the Central Government 5.3 Employment in the Public Sector of India in Comparison with the Private Sector 5.4 Thrust Activity ( ) Directors Workshops Savings on Techno-economic Parameters Strategic Thrust Areas Production Capacity of SAIL after Expansion the Present Annual Capacity of Rourkela Steel Plant 6.5 Manpower Trend Post-expansion of Production Plants RSP Post-expansion Production Plant (in Million Tons per annum) 6.8 TATA STEEL s SGA Performance in TATA STEEL s Suggestion Management Performance for Scores given by World Steel Dynamics to 12 Worldclass Steel Makers (Score of 1 on a Parameter is

12 12 Strategic Human Resource Management... Lowest and 10 Highest) 7.1 Statistical Analysis of Questionnaires (SAIL & TATA STEEL Executives) 7.2 Statistical Analysis of Questionnaires (SAIL & TATA STEEL Executives) 7.3 Statistical Analysis of Questionnaires (SAIL & TATA STEEL Executives) 7.4 Statistical Analysis of Questionnaires (SAIL & TATA STEEL Executives) 7.5 Statistical Analysis of Questionnaires (SAIL & TATA STEEL Executives) 7.6 Statistical Analysis of Questionnaires (SAIL & TATA STEEL Executives) 7.7 Statistical Analysis of Questionnaires (SAIL & TATA STEEL Executives) 7.8 Statistical Analysis of Questionnaires (SAIL & TATA STEEL Workmen) 7.9 Statistical Analysis of Questionnaires (SAIL & TATA STEEL Workmen) 7.10 Statistical Analysis of Questionnaires (SAIL & TATA STEEL Workmen) 7.11 Statistical Analysis of Questionnaires (SAIL & TATA STEEL Workmen) 7.12 Statistical Analysis of Questionnaires (SAIL & TATA STEEL Workmen) 7.13 Statistical Analysis of Questionnaires (SAIL & TATA STEEL Workmen) 8.1 Performance Related to Pay (Ref: Vicky Wright)

13 Role of Strategic Human Resource Management (SHRM): Key to LIST OF FIGURES Figure No. Subject Page No. 1.1 Components of SHRM Recommended Model of SHRM HRM Strategic Model Model of SHRM Factors Influencing Global Business Crude Steel Production in The Big League in Steel Production Capacity (in Million Tons) 5.1 Production Highlights (Million Tons) ( to ) 5.2 Profit ( to ) (in ` Billion) Year-wise Profit ( ) Production ( to ) Overview of SAIL (Figures in Bracket are Crude Steel Production Capacity in Million Tons) 6.4 Production Performance of Saleable Steel of SAIL (MT) 6.5 Manpower Productivity Sales Turnover Exports (Million Tons) Steel Consumption in India Framework for Unlearning and Relearning Crude Steel Production of RSP Organization Set-up of RSP Labour Productivity Year-wise Profit RSP Samskar Model AVG Converter Life in SMS-I AVG Converter Life in SMS-II TATA STEEL at the Strategic Inflection Point in

14 14 Strategic Human Resource Management Vision-2007 of TATA STEEL TATA STEEL: Building Blocks to Excellence Pathway to Business Excellence through the Malcolm Baldridge Model 6.21 TPM at TATA STEEL Various Phases of Knowledge Management at TATA STEEL 6.23 Year-wise Profit (TATA STEEL) Corporate Governance of Tata Group Process Innovation across the Entire Supply Chain Potential Impact of e-commerce Year-wise Production of TATA STEEL Strategic Human Resource Perspective The Performance Management Model (Ref. Pam Pocock) 7.3 Values Underlying Organizational Change (Ref: David Packard) 7.4 Leadership Mission Model Changing Role of HR (Ref: Ashok Chanda and Shila Kabra) 8.2 HR Strategy House Model (Ref: Ashok Chanda and Shila Kabra)

15 Role of Strategic Human Resource Management (SHRM): Key to Chapter 1 Role of Strategic Human Resource Management (SHRM): Key to Organizational Excellence Learning Outcomes: When you finish this chapter, you should: Be able to differentiate between HRM and Strategic HRM Know about need of SHRM. Understand linkage of HR Strategy into business strategy. Envisage outsourcing and co-sourcing. Be familiar through various SHRM models for organizational excellence. Know internalization of Human Resource Management a learning outcome for strategic perspectives. ROLE OF STRATEGIC HUMAN RESOURCE MANAGEMENT (SHRM): KEY TO ORGANIZATIONAL EXCELLENCE With increasing competition and changing economic and business environment, many CEO s have recognized people s capabilities as a competitive advantage and therefore, HR has become an important and a critical business function. Since 1990, there has been an increased focus on the strategic role of Human Resource Management (HRM) and now HRM has become strategic in nature. Strategic Human Resource Management (SHRM) is concerned with the relationship between HRM and Strategic Management in an organization. Strategic Human Resource Management is an approach which relates to decisions about the nature of employment relationship, recruitment, training and development, performance management, reward and employee relations.

16 16 Strategic Human Resource Management... Wright and Mc Mahan (1992) defined SHRM is the pattern of planned human resource deployment and activities intended to enable the firm to achieve its goals. Need of SHRM To ensure the availability of a skilled, committed and highly motivated workforce in the organization to achieve sustained competitive advantage. To provide direction to the organization so that both the business needs of the organization and the individual and collective needs of its workforce are met. This is achieved by developing and implementing HR practices that are strategically aligned. Four Components of SHRM 4. Clear cut & meaningful people activities, policies & procedures to achieve organizational excellence 1. HR primary source of competitive advantages SHRM 3. Patterns & plans, HR Strategy Integration into a Business Strategy. 2. Activities of HR Programmes and practices. Fig. 1.1: Components of SHRM Because of relentless process of Globalization, companies face similar problems in the market place. In order to be successful, they must adopt similar solutions to these common problems. HR is becoming more strategic on two counts. First, HR is a risk manager and second, HR facilitates the growth of engagement capital,

17 Role of Strategic Human Resource Management (SHRM): Key to both of which have a huge impact on franchise valuation. Traditional engagement approaches provide a readymade solution but the lack of long-term benefits and perspectives which ignores up to 70% of the reasons why employees disengage. Today s HR professionals contribute to creating engagement capital to improve employee effort, retention and key business outcomes. As we balance short-term improvements with engagement drivers that sustain engagement overtime, there is a greater alignment of the HR function to an organization s strategic needs. One of the key pieces in franchise risk management is smooth succession. An effective succession management strategy by HR overcomes four risks. 1. Vacancy risk in critical positions. 2. Readiness risk among designated successors. 3. Transition risk as new leaders move into roles 4. Portfolio risk from poor deployment of leaders across the organization. Linkage of HR Strategy into Business Strategy Effective links of the HR strategy would ultimately lead to the desired result of profitability and customer satisfaction. It is for this reason that some HR professionals advocate that successful efforts in HR strategy begin with the identification of strategic business needs. The internal and external environments are intermittent variables, which are linked with action plans for each year and consequently the HR systems leading to the strategic business needs. Further, other strategies such as marketing, finance, production, system, etc., integrate with HR strategy as a part of corporate strategy of the organization to meet the business requirements. Now, HR strategy evolution has brought a change effect in all aspects of HR outlook, systems, belief, structure as well as the expectations of business from this strategic function. HR is now the architecture for change. The success of the HR strategy lies in its effective links with the business strategy. It is clear that HR, over a period of time has emerged as one of the key strategic decision-making areas, what are some of the factors internal and external that have contributed to the strategic aspect of the human resources function. With capital and technology in abundant supply, there is very little differentiation in the marketplace. The only true differentiation turns out to be people. It is the workplace that creates a credible, long-term relationship with the customer base. HR is the key enabler in moving all people vectors in the right direction. HR is also accountable for creating long-term employee value proposition. The best

18 18 Strategic Human Resource Management... HR organizations engage its thoughtful discussions to collect data and test assumptions to implement an authentic employment value proposition that is a source of competitive advantage. Evolution of SHRM Businesses have had strategies since the earliest days of commerce. Early strategic thinking focused on medium and long-term planning. Michael Porter (1999) in competitive strategy explained that every firm competiting in an industry has a competitive strategy, whether explicit or implicit. The strategy may have been developed explicitly through a planning process or it may have evolved through the activities of the various functional departments of the firm. After liberalization of economy in 1990s competition in Indian Industry started relentlessly to maintain high standards quality, cost and customer friendly products at par excellence with global organizations through unified strategy, comprehensive and integrated plans aligned to organizational objectives with focus on HR strategy. Indian companies now rank amongst the list of Fortune 500 companies and many successful global organizations. An exponential growth, competitive edge over peers, innovative at every level and effective leadership-companies in India Inc that have stood out and made a distinct mark for themselves (with these attributes) fall in a new category of companies driven to excel. Bill Gates had a dream of making Microsoft the number one software organization in the world. Gates displayed an acute business acumen and a very insightful vision to software field through strategic planning in a continuous basis and developed user-friendly packages which were unheard of before. Competitive Leadership a Long-term Business Strategy Today, competitive leadership is perceived as an effective business imperative that resourcefully drives everything; the organization does each day at all level. In today s era, it is critical for companies to never take their eyes off building long-term capability platforms. Sustainability of the organization crucially depends on how long-term value addition is sustained through an environment of engaging new ways thinking in every segment of the organization and this is the essence of the fast catching on trend of thought leadership.

19 Role of Strategic Human Resource Management (SHRM): Key to Thought leadership is about believing in a powerful idea and giving it shape through conviction and executing it to deliver value to the business. Organizations who believe in thought leadership provide opportunities for generating new ideas, innovative solutions and doing things differently. In the context of thought leadership, a leader cuts across a clutter and evaluates an idea purely from its power of helping the business. In today s world, which can be easily called an era driven by the power of ideas, the organizational leaders should breed thought leadership in the organization and encourage employees to reinvent and innovate at the same time. as said Ramesh Bawa, MD & CEO, IL&FS Financial Sources. D. Sundaram, Vice-Chairman and MD, TVS Capital Funds Limited is of the opinion that thought leadership in many ways focuses on the long-term horizon of the company and contributes significantly to drive market and cost leadership. Thus, thought leadership is a long term business strategy that drives everything the organization does each day and at all levels. A thought leader is an innovator in a very specific niche and customers in that niche recognize value and most importantly are willing to pay for that leadership position. Outsourcing & Co-sourcing With the process of outsourcing having its roots in the Industry for a long time, another similar concept of co-sourcing has begun to emerge slowly to take its place by offering additional benefits and advantages. Co-sourcing is a process wherein a function or task is not completely outsourced but is instead kept partially within the domain of the company and partially handed over to an external vendor. Every company today seeks a certain control of all its departments and functions, so as to keep a check on the performance levels and at the same time, retain the knowledge and experience gained by carrying out those functions. As a result, the concept of co-sourcing is taking companies by fire and is grabbing their attention. Therefore, co-sourcing or outsourcing both have their pros and cons. But, it is vital for organizations to identify which form fits the bill aptly and complements organizational goals. Impact of Technology on HRM New skills required: As new technologies are developed and implemented, there is an urgent need to upgrade existing employee skills and knowledge if the organization wants to survive and flourish in a competitive world. Additionally there will be growing demand for

20 20 Strategic Human Resource Management... workers with more sophisticated training and skills especially in emerging hot sectors like telecommunications, hospitality, retailing, banking, insurance, biotechnology and financial services. For example, service-sector employee requires different skills than those utilized in manufacturing. They need strong interpersonal and communication skills as well as the ability to handle customer complaints in a flexible way. Downsizing: New Technologies have decimated many lower end jobs with frustrating regularity. Increased automation has reduced employee head counts everywhere. The pressure to remain cost effective has also compelled many a firm to go lean, cutting down extra fat at each managerial level. The wave of merger and acquisition activity, in recent times has often left the new, combined companies to downsize operations ruthlessly. The positions that have been filled up with workers possessing superior technical skills and knowledge has also tilted the poser base (in many emerging industries) from management to technical workers. It is not uncommon today for managers to have limited understanding of the technical aspects of their subordinates work. Managing the expectations of knowledge workers is going to be major area of concern for all HR Managers in the years ahead. Why? Consequences? Managing Survivors of downsizing Automation Restructuring Mergers Acquisitions Competitive pressures Cuts payroll expenses Eliminates extra layers Improves functioning if firm s product and service profiles is good Shocks those left out Shattering impact on employee motivation and morale if not managed properly Bitterness, anger disbelief and shock need to be handled properly Give information as to why the action had to be taken Tell how it is going to help the firm and employees in the longrun.

21 Role of Strategic Human Resource Management (SHRM): Key to Collaborative work: Technological change has resulted in hierarchical distinctions being blurred and more collaborative teamwork where managers, technicians and analysts work together on projects. Team-based incentive plans have also made it necessary for all classes of employees to work in close coordination with each other. Telecommuting: The rapid advance in technology has led to the relocation of work from the office to the home. Telecommuting has become the order of the day where employees work at home, usually with computers and use phoned and the Internet to transmit letters, data and completed work to the home office. Companies have been able to increase their applicant pool through this mode and employees have also been able to live further away from cities and gain considerably due to savings in rents, transportation, etc. Internet and intranet revolution: Internet and information technology have enabled companies to become more competitive by cutting costs. Manufacturers, bank, retailers, and you name anything have successfully harnessed computer technology to reduce their costs and deliver want satisfying goods and services to customers at an amazing speed. Even in HR, internets and intranets are being used to handle training, benefit administration, performance management and out placement functions, in recent times. The cumulative impact of new technology is so dramatic that at a broader level, organizations are changing the way they do business. Use of the internet to transact business has become so commonplace for both large and small companies that e-commerce is rapidly becoming the organizational challenge of the new millennium. Managing virtual corporations and virtual workers in this technology-driven world is going to pose tough challenges for HR Managers in the years ahead. Role of HR in a virtual organization: A virtual organization is network of companies or employees connected by computers. Virtual workers work from home, hostel, their cars, or wherever their work takes them. The human resources function plays a unique role in a virtual organization: 1. Psychological fit: The lack of face-to-face interaction in virtual organization virtually compels HR professionals to determine the psychological fit between different units initially. 2. System alignment: Given the lack of physical proximity, it becomes even more critical that the organization s mission, vision and measures be aligned and that all parties are familiar with these issues, the HR function can play an important role in this task.

22 22 Strategic Human Resource Management Reconsider rewards: In a virtual unit, very few permanent exits. In many cases, the organization will be staffed with workers having different motivational forces. So rewarding each entity in an effective way becomes an important job. 4. Reconsider staffing needs: In a virtual organization, most employees work on a contractual basis. Finding people with requisite skills, knowledge and motivation levels become an important activity. 5. Build partnerships: Virtual, teams have to be built from scratch paying attention to their unique requirements. The concept of employment needs to be replaced by the concept of partnership especially when most tend to work independently away from the permanent employees or owners of the organization. 6. Develop leaders: Leaders become the major forces for building trust, creating a mission and instilling a sense of belonging to the organization HR can play a major role in ensuring that leaders assume these responsibilities and meet them in an effective away. Creating a Strategy Oriented HR System Creating a strategy oriented HR system requires new skills on the part of HR professionals. They must have the competencies required to create HR systems that produce strategically relevant employee behaviors. They need to understand the strategy formulation process. They must be adept at identifying the workforce implications and requirements of the new strategy and at crafting HR policies and practices that produce those workforce requirements. They must have a sufficiently wide breadth of business knowledge to be able to understand how the company creates value, and to see how the firm s HR system can contribute to that value-creation process. The HR professional has to understand how business operates. Just understanding the details of recruiting selecting and training is no longer sufficient. In today s competitive environment, the manager cannot leave the nature of the HR system, the actual HR policies and practices to change. Managers usually try to create High-Performance Work Systems (HPWS). The HPWS is a set of HR policies and practices that maximize the competencies, commitment, and abilities of firm s employees in practice. This means that each HPWS HR activity produces measurable superior results. It is to be noted that the high-performing companies structure their recruiting activities so as to produce qualified recruits,

23 Role of Strategic Human Resource Management (SHRM): Key to much more extensively. Also high-performing firms hire employees based on selection tests and provide training to new employees much more extensively. The bottom line is that management cannot leave their HR systems unmanaged. A research program with over 2,800 corporation firms that use HPWS policies and practices do perform at a significantly higher level much more extensively than those that do not. The evidence suggests that a high performance HR practices, particularly combined with new technology, produce better productivity, quality, sales, and financial performance. For example, the high performing firms generally emphasize placing employees in self managing, cross functional teams. In fact, the whole thrust of the HPWS firm s are superior in recruiting, screening, training, and other HR practices are required to build the sort of highly trained, empowered, self governing and flexible work force that companies today need as a competitive advantage. The need for HPWS became apparent as global competition intensified in the 1990s. Companies needed a way to better utilize their human resources as they strove to improve quality, productivity and responsiveness. The HR manager needs a way to translate the firm s new strategy into specific, actionable HR policies and practice. Management formulates a strategic plan. That strategic plan implies certain workforce requirements, in terms of the employee skills, attributes, and behaviors that HR must deliver to enable the business to achieve its strategic goals. For example, Employees must dramatically improve the level of customer service, more computer literate employees needed to run new machines getting installed. Given these workforce requirements, HR management formulates HR strategies, policies, and practices aimed at achieving the desired workforce skills, attributes and behaviors. These may take the form of new selection, training, and compensation policies and practices. Ideally, HR management then identifies Scorecard metrics; it can use to measure the extent to which its new HR initiatives are supporting management s strategic goals. Internationalization of Human Resource Management a Learning Outcome for Strategic Perspectives It is important to note that the companies which wish to internationalize can do so only if they have the required core competencies such as operational capability, managerial skills, ability to work with foreign partners and/or in foreign countries and so forth.

24 24 Strategic Human Resource Management... Once a company has gone international in one form or other, what HRM policies and practices should it adopted in a foreign country? The answer depends on the form of internationalization and the extent and depth of the company s involvement in the local market. The HRM related issues in a foreign country are relevant only if the company recruits and manages people in that country. Importing, exporting, franchising, licensing and portfolio investment do not involve employee management as part of a foreign operation in the host country. Recommended models of SHRM for Organizational Excellence Environment of Global Human Resource Management Unions Global Environment External Environment United States Internal Environment Society Marketing Operations Human Resource Management Finance Safety and Health Other Functional Areas Customers Competition Labor Market Fig. 1.2: Recommended Model of SHRM Ref: Global Human Resource Management (Prentice Hall Publication)

25 Role of Strategic Human Resource Management (SHRM): Key to HRM Strategic Success Model Set-up Organization Design Work Flow Core Competencies Business Process Job Design Human Capital Philosophy Organization s Reason for Being Purpose of Business for Market Reinforcing Organizational Culture Functions that support Purpose Developing the Leadership Mind Personal commitment to Excellence Customer Service Ethics Action Propel Vision Organization Development Embrace Change HR Business Strategy Excel at Management Competency Modeling Strategize and Measure Performance Management Exhibit Leadership Training and Development Realize Potential Executive Coaching Fig. 1.3: HRM Strategic Model Model of SHRM External Environment Employee Separation Laws Regulating Employment Staffing Corporate Strategy Business unit Strategy HR Strategy Training HRIS Performance Management Internal Environment Compensation Labor relations Fig. 1.4: Model of SHRM

26 26 Strategic Human Resource Management... Need of Industry Academia Collaboration There is no doubt that Industry-Academia collaboration is one of the successful ways to fight skill shortage. Candidates are now expected to demonstrate initiative and confidence to take on business challenges, and to portray a positive brand image that is necessary while facing a customer. Whatever the route, the onus of helping students keep pace with the dynamic business environment lays with the academia. Modification of academic curriculum and its implementation is traditionally a long process involving careful research, curriculum design, customization and delivery. Limitations of SHRM Many organizations have not adopted SHRM due to following reasons: 1. Focus on short-term performance: Most organizations determine compensation on the basis of current performance and they do not consider long-term investment in people. 2. Lack of organizational processes: Even today, many HR professionals do not understand the whole organizational processes and they are unable to link HR strategies to organizational strategies. 3. HR role lacks strategic perspective: HR in many organizations is still doing administrative functions and stereotype personnel management functions. So they fail to adopt unified HR strategy, linked with business objectives of the organization. 4. Difficulty in quantifying HR functions: Many HR managers are still finding difficult to quantify the costs and benefits of HR activities. 5. Less importance to employees training: Many organizations are yet to adopt employees training as learning process to adopt technological changes. Most employees resist changes in technology and do not co-operate with their leaders. CONCLUSION HR is seen as an integral part of corporate strategy of SAIL and TATA STEEL both the organizations have corporate plans to substantially raise production introduction of large scale modernization and automation through HR interventions and strategies.

27 Role of Strategic Human Resource Management (SHRM): Key to Today, the HR function has a more strategic role. A changing business environment can influence the outcome of current operations, stakeholders and corporate strategy as a whole. The HR function plays an important role in viewing and integrating business opportunities, stimulating employees, developing employee strengths and creating corporate teams that share the company s vision and translate this concern into profit. Mr. C.S. Verma, Chairman, SAIL reiterated that steel industry directly contributes around 2 per cent to India s Gross Domestic Product (GDP) and its weight in the Index of Industrial Production (IIP) is 6.2 per cent. The future of steel plants would be beneficiated by iron ore replacement to crude iron to increase productivity and reduce the consumption of fuel, use of latest technology, innovations driven by energy and environment conservation with competitive strategic HRM policies to make India as pioneer in global steel market. REFERENCES 1. Narang Unnati (2012), Time to Strategise, Ascent, The Times of India, January, Chevalwal Arshie (2012), Thought Leadership a Long-term Business Strategy, Ascent, Times of India, January Chanda Ashok & Kabra Shilpa (2002), Human Resource Strategy, Response Books, pp Haberberg Adrian & Rieple Alison (2008), Strategic Management Theory and Practice, Oxford Publication, pp Agarwal Tanuja (2008), Strategic Human Resource Management, Oxford University Press, pp