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STRATEGIC HUMAN RESOURCE MANAGEMENT

HR SUBJECT SPECIALIZATION – MBA 934-18
MBA Batch 2018 – 2020 (MBA 4th semester – 2nd/Final Year)

Prepared by SHAMMI BHATIA

UGC-NET, MBA-HR&Operations
Head of Department
S.A.S.I.I.T&R Mohali
www.sasiitmohali.com
+91 9876614199
[email protected]

Strategic Human Resource Management is a subject offered with/under HR

Specialization, to be studied by all in MBA 4 th semester. The subject is quite
general, easy to grasp, still easier/est to write in examination; giving huge space to
attempt guess work. The subject infact does not require a rigour preparation and
only expects basic understanding of vocabulary.
Knowledge of subject glossary will suffice the purpose.

3 important Things in this subject to be kept in mind:-

 Knowledge of the subject glossary/key terms will be important
 Good command over writing skills; presentation & content writing will
be important
 Writing the whole pages will be the only key to success

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Subject Syllabus (University Scheme):-

Unit –I Strategic HRM: Introduction to business and corporate strategies; Integrating HR

strategies with business strategies, Analyzing HR Practices followed by different firms-Human
Resource System-HR as a Strategic Partner. Strategic HRM: Scope and process of strategic
HRM, traditional vs. strategic HR, typology of HR activities, best fit approach vs best
practice approach, the role of national context, sectoral context and organizational context in
HR strategy and practices, external and internal analysis for strategic HR management.

Unit –II Strategic role of HR systems - Strategic staffing, strategic appraisal, strategic
executive appraisal, strategic design of reward system, performance management strategies,
integrating HR strategy and business strategy, HR strategies and practices in Indian industries
and service sector, HR as distinctive competitive advantage, reward and compensation strategies,
retrenchment strategies, downsizing strategies. Human Resource Environment- Technology,
structure; Workforce diversity; Demographic changes, Temporary & contract labour;
Recruitment & Retention strategies, training & development strategies.

Unit –III Human aspects of strategy implementation: behavioural issues in strategic

implementation - matching culture with strategy, leadership factor in strategy and implementing
strategic change, HR strategy evaluation and control, IT and future directions in HR
strategy, HR strategy in workforce diversity, employee engagement strategies, talent
management and retention strategies

Unit –IV Global HRM: Role of global HRM in successful MNC strategy, HR planning for
global demand and diversity at workplace, global staffing approaches - polycentric,
ethnocentric, geocentric and region centric, recruitment and selection of human resources for
global assignments, training and development imperatives for global workforce, expatriate
problems and culture shock, repatriation issues, performance and compensation management for
global workforce, global employee relations

*Highlighted/Underlined Topics are very important; Prepare them well!

5 Major / Most Important Topics:-

1. Strategic HRM Concept, Meaning, Definition; Process; Traditional HRM Vs
Strategic HRM
2. Integrating / Aligning HRM Strategy with Business Strategy
3. HR Strategy in/for workforce diversity
4. Global Staffing Approaches
5. Expatriate & Repatriate Issues/Problems

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Subject Glossary / Key-Terms

 Strategic HRM
 HR Strategy
 Strategic Partner
 Strategic design
 Workforce Diversity
 Recruitment/Retention Strategies
 Best Fit Approach
 Best Practice Approach
 Retrenchment Strategies
 Downsizing Strategies
 Retention strategy
 Workforce diversity
 Strategic Appraisal/Strategic Executive Appraisal
 Leadership
 MNC Strategy
 Polycentric
 Ethnocentric
 Geocentric
 Region centric
 Expatriate
 Repatriate

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UNIT - 1
STRATEGIC HRM:-
(Meaning, Definition, Concept, Scope)
Strategic human resource management is the process of linking the human resource function with
the strategic objectives of the organization in order to improve performance. Attracting and keeping
talented and skilled employees is one of the most important challenges organizations face in today's
dynamic business world.
Strategic human resource management refers to the process of developing practices, programs and
policies that help achieve of organizational objectives. What is essential is that     these programs, policies
and practices need to be aligned with organizational strategies.
Strategic human resource management is the connection between a company’s human resources
and its strategies, objectives, and goals. The aim of strategic human resource management is to:
 Advance flexibility, innovation, and competitive advantage.
 Develop a fit for purpose organizational culture.
 Improve business performance.
In order for strategic human resource management to be effective, human resources (HR) must
play a vital role as a strategic partner when company policies are created and implemented.
Strategic HR can be demonstrated throughout different activities, such as hiring, training,
and rewarding employees.
Strategic HR involves looking at ways that human resources can make a direct impact on a
company’s growth. HR personnel need to adopt a strategic approach to developing and retaining
employees to meet the needs of the company’s long-term plans.
HR issues can be a difficult hurdle to cross for many companies, there are all kinds of different
components that can confuse business owners and cause them to make ineffective decisions that
slow down the operations for their employees as well as their business.
To ensure that you never have to worry about being lost on HR related issues again, click the
download button below for your  one-page document of the 7 steps to strategic human resource
management.
Why is strategic human resource management important?
Companies are more likely to be successful when all teams are working towards the same
objectives. Strategic HR carries out analysis of employees and determines the actions required to
increase their value to the company. Strategic human resource management also uses the results
of this analysis to develop HR techniques to address employee weaknesses.
The following are benefits of strategic human resource management:
 Increased job satisfaction.
 Better work culture.
 Improved rates of customer satisfaction.
 Efficient resource management.
 A proactive approach to managing employees.
 Boost productivity.

Seven steps to strategic human resource management

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Strategic human resource management is key for the retention and development of quality staff.
It’s likely that employees will feel valued and want to stay with a company that places a
premium on employee retention and engagement. Before you implement strategic human
resource management, you will need to create a strategic HR planning process using the steps
below:
1. Develop a thorough understanding of your company’s objectives
2. Evaluate your HR capability
3. Analyze your current HR capacity in light of your goals
4. Estimate your company’s future HR requirements
5. Determine the tools required for employees to complete the job
6. Implement the human resource management strategy
7. Evaluation and corrective action
Specifically, strategic human resource management involves that-
1. Human resource management is fully integrated with the strategy and the strategic needs of the firm;
2. Human resource policies cohere both across policy areas and across hierarchies;
3. Human resource architecture of the firm results in its above-average financial performance. HR
architecture is composed of the systems, practices, competencies and employee performance behaviors
that reflect the development and management of the firm’s human resource; and
Basically any strategic process can be broken down into two phases:
1. Strategy formulation
2. Strategy implementation
Strategy HRM Major/Core issues/concerns:-
 Embrace Change in Global Technology & Analytics
 Knowing how the company succeeds
 Stay focused on people
 Aligning compensation strategy with business growth
 Be ready for a new work force-cross / global Culturalization issues
 Meet and maintain abreast with compliance issues
 Updated with knowledge, information and skill set

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The following are some questions that HRM should be prepared to answer in this new world: David
Ulrich, Delivering Results (Boston: Harvard Business School Press, 1998).
Competence: To what extent does our company have the required knowledge, skills, and abilities to
implement its strategy?
Consequence: To what extent does our company have the right measures, rewards, and incentives in
place to align people’s efforts with the company strategy?
Governance: To what extent does our company have the right structures, communications systems, and
policies to create a high-performing organization?
Learning and Leadership: To what extent can our company respond to uncertainty and learn and adapt to
change quickly?
Key Differences Between HRM and SHRM
The differences between HRM and SHRM can be drawn clearly on the following grounds:
 The governance of manpower of the organisation in a thorough and structured manner is called
Human Resource Management or HRM. A managerial function which implies framing of HR
strategies in such a way to direct employees efforts towards the goals of an organisation is known
as SHRM.
 The process of HRM is reactive in nature. On the other hand, SHRM is a proactive management
function.
 In human resource management, the responsibility of manpower lies with the staff specialists,
whereas in strategic human resource management, the task of managing the workforce, is vested
in the line managers.
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 HRM follows fragmented approach, which stresses on applying management principles while
managing people in an organisation. As against this, SHRM follows an integrated approach,
which involves lining up of business strategy with the company’s HR practices.
 Human resource management emphasizes on employee relations, ensuring employees motivation,
and also the firm conforms to the necessary employment laws. Conversely, SHRM focuses on a
partnership with internal and external constituent groups.
 HRM supports short-term business goals and outcomes, but SHRM supports long-term goals and
results of business.
 In human resource management, the human resource manager plays the role of change follower,
i.e. he/she responses to change, hence pursues transactional leadership style. As opposed to
SHRM, the human resource manager is a change leader, i.e. an imitator, thus seeks
transformational leadership.
 The primary element in HRM is the capital and products, but people and their knowledge are the
building blocks of SHRM.
 If we talk about accountability, a conventional HRM is a cost centre. Unlike a strategic HRM
which is an investment centre.
 In human resource management, stringent control over employees is exercised. As against this, in
strategic human resource management, no such control is imposed, rather the rules for managing
manpower is lenient.

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BEST FIT APPROACH VS BEST FIT STRATEGY :-

At the most general level, best fit is a contingency approach while best practice is a
universal approach. Best fit is based on the premise that picking the most effective HR policies
and practices depends on matching them appropriately to the organization's environment.

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Best practice approach

The best practice approach claims that certain bundles of HR activities exist which universally support
companies in reaching a competitive advantage regardless of the organizational setting or industry
(Redman and Wilkinson 2009). Best practice models imply a close connection between HR practices and
organizational performance and are often associated with high commitment management (Paauwe &
Boselie 2003). Empirical research in the best-practice field shows similar groups of HR polices which are

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especially suitable for maximizing performance irrespective of market and product strategies (Peffer
1998, Guest 2000). Best practice bundles of activities are characterized as mutually compatible HR
activities which forge high levels of workforce competence, encourage motivation and introduce a work
design boosting employee commitment (Maloney and Morris 2005). Based on concepts from expectancy
theory (Vroom 1964, Lawler 1971) best practice HR will result in higher levels of quality, productivity
and low rates of absenteeism and wastage (Guest 2000).
The best practice approach suffers from a series of limitations. Firstly, when implementing best practice
standards organizations run risk of introducing mutually prohibitive combinations like team working and
compensation based on individual performance resulting in a deterioration of employee collaboration
through over exaggerated competition (Delery 1998 in Redman and Wilkinson 2009). Secondly, high
commitment management systems are generally a complex undertaking requiring large inputs of planning
and top level management commitment. Thirdly, critics like Milkovich and Newman (2002) argue that
best practice HR lacks direct linkages with organizational strategies and is minted by the belief that
outstanding high performing human resources will influence strategy. By making HR policy precede
corporate strategy an organization risks prescribing standardized sets of “one size fits all” best practice
approaches which will not support the particular needs of employees and be detrimental to overall
strategic objectives (Maloney and Morris 2005). Fourthly, discussions with regard to the appropriate
choice of best practice measures resulting from an insufficient research methodology and theoretical
definition exist (Marchington and Grugulis 2000 in Redman and Wilkinson 2009).
Best fit approach:-
The best-fit model is considered as a variant from precedent models of Harvard, Michigan and York and
is called “matching model” for HRM (Sparrow and Hiltrop 1994). It is based on developing HRM
policies according to business strategy. Strategy involves planning future activities, performances
objectives, and policies towards reaching the corporate aims. HRM strategy should be designed and
applied to support the given corporate strategy (Lawler 1995). The “best-fit” approach questions the
universality assumption of the best-practice perspective. It emphasizes contingency fit between HR
activities and the organization’s stage of development, an organization’s internal structures and its
external environment like clients, suppliers, competition and labour markets (Redman and Wilkinson
2009). HR policy should be minted by the appropriate context of individual employees and therefore
support the overall competitive strategy. Aligning HRM practices to strategies can enable companies to
create potential competitive advantages (Schuler and Jackson 1987 in Redman and Wilkinson 2009).
The best fit approach is also subject to sever criticism. Firstly, Boxall and Purcell (2003) criticizes that in
a changing business environment companies and their strategies are subject to multiple alternating
contingences and that it is merely possible to adjust entire HR systems to new challenges frequently.
Secondly, as companies move through their life-cycle HR practices have to be aligned which leads to an
alternating treatment of employees which can have a demotivating effect and show inconsistency in
corporate culture (Boxall and Purcell 2003).

UNIT II
ALIGNING HR STRATEGY with BUSINESS STRATEGY :-

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Strategic planning is the process of determining the organization's long-term objectives and establishing
the goals necessary to achieve them. The process involves an in-depth analysis of current and anticipated
conditions that may affect the organization's ability to achieve its mission.
A business strategy is a future-oriented plan for creating and maximizing competitive advantages to
accomplish the organization's mission. To successfully execute that strategy, each function within the
business needs to align its departmental strategy with the overall business strategy.
However, it is easy for functional and departmental leaders to slip into a narrow "silo" perspective of their
strategy. After all, each function has distinct areas of responsibility - finance and accounting, sales and
marketing, operations, HR, information technology and production. But aligning individual departmental
strategies with the overall business strategy helps the business plan to be executed efficiently.
The HR function, more than other functions, is involved in and affects the operation and execution of all
the other business functions. This is identified most readily in HR's enterprise-wide staffing
responsibility, but extends to the entire life-cycle of employment. The HR function intersects and affects
the other business functions in the following areas:
 Talent acquisition;
 Performance management;
 Training and development;
 Employee retention and engagement;
 Employment law compliance;
 Compensation and benefits; and
 Safety and security.
Therefore, properly aligning the HR strategy with the organization's business strategy is critical to
achieving the organization's mission.
Alignment is the connection of strategy and execution through communication. Aligning strategies
requires HR to:
 Understand the business strategy;
 Assess current conditions;
 Plan and implement the HR strategy; and
 Measure and evaluate results and adjust as needed.
Communication within the HR department and with leaders of the other business functions is key to
accomplishing the following steps.
Step 1: Define success
In order to have a place at the decision-making table, HR must understand the business’s broad strategic
goals and direction. If these aren’t clear to all parties involved, not only is it an obstacle for the business,
but it’ll be difficult for HR to align and support those objectives. Consider asking key business
stakeholders like your CFO, CEO, and other members of your C-suite some of the following questions:
 “What is the organization’s key business KPI?”
 “How can HR play a role in helping to drive those KPI?
 “What’s the best way for HR to support the C-suite?”
The responses to those questions should arise clear directives for HR, such as:
 Reduce cost
 Increase productivity
 Go green
Step 2: Align & set your HR goals
Once you’ve clearly defined success in your organization, it’s time to articulate the goals of HR. If this is
your first time doing this, you might need to make an educated guess about what’ll be successful, and test
that hypothesis to find out if you’re right. For example:
Business Objective HR Hypotheses/Objective
 Decrease turnover/increase retention
Reduce costs
 Reduce vendor and/or labor costs

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Increase  Evaluate the efficacy of your onboarding process

productivity  Automate admin work with software tools
 Organize volunteer opportunities
Go green
 Go paperless and conserve
These HR hypotheses could be great ways to align with the specific business objectives of your C-suite.
However, they remain abstract and nebulous—how exactly are you going to decrease turnover? Now is
the time to test out some specific actions.
Step 3: Formulate specific actions to hit those goals
“We’re going to increase retention!” is a statement, not a plan of action. Without any strategy or way to
measure it won’t give you true alignment (and it won’t prove what you’re doing is really working, either).
Instead, create specific, targeted actions that actualize your objectives. For example:
HR Objective Action
 Create and distribute employee satisfaction surveys to take the temperature
of your employees. Include questions like:

o What’s the most difficult part of your job?
Decrease o How can the company improve?
turnover/increase o Rate your satisfaction with your compensation.
retention  Use the data from this survey to implement specific retention-reducing
tactics. For instance, if very few are satisfied with their compensation, you
could talk to your C-suite about this pain point. If many people are saying
that the culture needs to be improved, you could begin a culture club to
address the issue.
 Go digital with onboarding: get all of your new hire paperwork online and
Evaluate the efficacy completed before their first day.
of your onboarding  Also, include and inform new hires of structured milestones for the first
process few months to track and ensure onboarding is moving quickly and
efficiently.
Step 4: Get everyone to buy in
In order to achieve true alignment, you need to get everyone at the table more than once. Once you’ve
created your HR game plan complete with specific actions, that you return to your business leaders, get
them involved and make sure they feel your plan truly aligns.
Step 5: Measure
Whether this is your first or fifteenth time aligning your HR goals with your business, it’s of the utmost
importance to measure your progress. If you want to definitively demonstrate the ways in which your HR
is supporting your business, you need to have the data to back it up. While this may seem obvious, only
25% of organizations have relevant HR data available to necessary stakeholders.
Here’s some examples of the type of measurement that can be helpful to stakeholders:
Action Measurement
Employee  Conduct employee satisfaction surveys at set intervals (e.g., every quarter or
Satisfaction year). Compare the surveys to previous ones in order to see if any progress
surveys was made and where.
Digitize
 Compare time and cost for onboarding before and after digitizing to see
onboarding
where savings have been made.
paperwork
Aligning HR goals and business goals doesn’t need to be an overwhelming task if you break it down into
steps, set clear goals, and measure along the way. So, why aren’t more HR departments taking these
steps?
According to Aberdeen, nearly half of organizations feel that HR is bogged down with administrative
tasks. The reality is if HR professionals are too busy filling out paperwork, or answering benefits
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questions, they’ll never have the time to do the crucial tasks necessary for true alignment. Having  one
tool that decreases all of this repetitive work is an efficient and smart way to free your HR owner to focus
on more strategic tasks. Without HR fully at the table, your company is missing out on perspectives and
strategies that are necessary for success.
So, ready to take action?
Are you where you need to be to realize these steps? Our quiz can help you determine the places where
you can boost your efficiency and improve the alignment between your HR initiatives and business goals.

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Downsizing Overview:-
Downsizing rarely achieves its intended level of cost savings. In fact, the National Human Resources
Association reports that reducing employees by 7.7 percent reduces labor costs by just 1.1 percent
because of compensatory measures the company must take to get the word one. For example, downsizing
often leads to more overtime pay for remaining employees. Secondary consequences that leave their
marks on employees and the organization's culture can further offset cost savings. Downsizing reduces
costs most effectively when it serves as one of an arsenal of tactics in an overall cost-reducing strategy.
Downsize Decision
Human resource managers should weigh in on several factors that influence downsizing decisions. First,
identify the specific problems downsizing is expected to solve, then assess the resources that can be
devoted to it right now. Also consider how downsizing will affect the company in the longer term. For
example, the manager must determine if and how strong performers with unique skills be replaced when
things improve, and what risks are involved in losing those individuals.
Retrenchment Strategies:-

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The effects of retrenchment on employees are usually listed among the strategic negatives. Just closing
stores or product lines is negative for all the employees who suddenly find themselves jobless. Other
employees have to deal with the fear they'll be next or cope with an expanded workload. For example, a
company that saves money by centralizing HR or customer-experience staff may saddle the central staff
with a lot more work.
Managers who have to tell employee after employee they've been downsized may come to dread their
job. Staffers who jump ship before they can be downsized may cost the company key people. Any
company that plans to retrench needs to think about ways to minimize the impact on corporate staff
Communication is vital; if the corporation doesn't tell employees what's going on, the office rumor mill
will make it up. One simple step is for managers to ask what they'd want to know if they were in the
employees' shoes. Use that insight as the basis of internal communications during the retrenchment.

STRATEGY IMPLEMENTATION :-
Selection Criteria Be fair when determining who to layoff. Ensure that the selection process is
transparent and based on a measurable and objective criteria. The selection should be based on the
employees’ productivity and reviews to cancel out any favoritism. Employers should avoid keeping their
favorites instead of their most productive employees.
Choose an Appropriate Timing Employers should be quick in handling situations when there is a hint
of trouble before it gets out of control. The recommended time to announce the news is the early part of
the week such as Tuesday. This allows employers to deal with any reactions or situations that arise after
the announcement is made. It also allows employees to engage with any support services that may have
been provided to them in this difficult time. If the news is announced on a Friday, employers will lose the
opportunity to quickly deal with any situations that will arise over the weekend.
Do It Face-to-Face It is important to ensure that all affected employees hear the news personally.
Nothing is worse than having to know the retrenchment news through other means. Doing it face-to-face
also allows for an open discussion between the employer and employee for the information being
received and any concerns. Effective communication is extremely important during any retrenchment
exercise. Miscommunication will only add on to the already difficult situation, making it worse.
Embrace All Outcomes Be compassionate with the emotional turmoil! If someone becomes upset,
angry or accusatory, do not respond to the content of their anger. Instead, be considerate and embrace all
outcomes. During retrenchment, every move and action by the organization is observed and followed
closely by everyone. The way in which the organization treats their affected employees are viewed
vicariously by others on how it may eventually treat those who remain.. or even those who may join in the
future.
Provide Accurate Facts & Figures Bad news should be conveyed in a way that is factual, truthful and
in unvarnished terms. It is also important to prepare a letter to clarify what the next steps are moving
forward. This letter should indicate important information such as their last day, the amount of severance

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they will be paid, how it will be paid, all career transition assistance to be provided and any other vital
information.
Career Coaching One of the great ways to soften the blow of a layoff is to provide the best support to
those who are leaving to help increase their chances of finding a new job. Offering career coaching to
affected employees during this difficult time not only allows them to be quicker and more effective in
achieving a successful career transition, it also creates an opportunity for positive relationships to be
forged between the employees and the organization even after they are no longer employed under the
organization.
Apart from the above 6 steps, employers could also offer severance packages and outplacement assistance
programs to affected employees.

UNIT III
HR STRATEGY IN WORKFORCE DIVERSITY:-
7 Tips to deal with challenge all successfully:-
 Stop Thinking of Diversity as a Buzzword
HR is full of buzzwords these days, but diversity isn’t one of them — nor should it be treated as one. Too
many organizations fall prey to superficial efforts to increase diversity. Programs and initiatives can be
great tools, but they’re ultimately temporary.
Instead, remember that building a diverse and inclusive organization is something you must work on
every day, just as your sales team hustles for leads and your accounting team keeps the books in order.
 Make Diversity Part of Your Hiring Process
Building a diverse organization from the ground up takes time. Try auditing your hiring process to ensure
that you’re interviewing a diverse slate of candidates. “Mandate that before a requisition can be closed,
you have to be shown that you had a diverse slate,” says Amy Cappellanti-Wolf, chief human resources
officer at Symantec.
Taking this actionable step is small, but it ensures that hiring officers aren’t simply hiring people who
remind them of themselves. “It starts at the hiring process,” Cappellanti-Wolf says. If you want to show
that you’re serious about building a more diverse organization, you have to look critically at how you
assess and hire candidates.
 Build Connections to Create Talent Pipelines
It’s enormously important to build internal talent pipelines for your organization, and ensuring that you
have standards in your hiring process for interviewing diverse candidates is an important step toward
creating a more inclusive business and culture.
But in order to create truly diverse pipelines companies need to look outside their walls, says  La’Wana
Harris, diversity and inclusion consultant and author. Harris recommends that companies reach out
externally to organizations devoted to promoting diversity in the workplace, as well as educational
institutions such as historically black colleges and universities. You’ll find plenty of talented candidates,
and also will expand your hiring base.
 Make Sure Leadership Is Aligned with Your Goals
Managing a diverse culture can be challenging at times. But without buy-in from leadership from the very
beginning, it may be a lost cause.
As you look to address issues of diversity in your organization, be sure that leadership is briefed and on
board with your plans. “If you don’t have leadership support, these things fail,” Cappellanti-Wolf says.
Additionally, leadership’s behavior and actions will serve as examples for all levels of the organization,
and set the tone for what’s expected of employees.
 Examine Your Policies to Fight Systemic Inequality

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Creating a more inclusive organization takes effort. But no matter what actions an organization takes, it
must also be aware that its policies may be promoting systemic inequality. “Workplace policies, systems
and processes can disproportionately impact historically marginalized populations,” Harris says.
To counter this, audit your policies. Ensure that your family-leave policy is supportive of LGBTQ parents
as well as traditional couples. “Remote-work policies are another point of consideration for building a
truly inclusive work environment,” Harris says. “Remote work can open up opportunities for individuals
with visible and invisible disabilities.”
 Create a Culture of Empathy and Forgiveness
Just as with any process within your organization, there will be hiccups with diversity and inclusion. But
both Cappellanti-Wolf and Harris say that’s OK — and it’s no big deal. “We’re all struggling with the
same challenges,” Cappellanti-Wolf says.
Leaders need to admit to mistakes, and to encourage others to do the same. Harris says that one way
leaders can do this is by adopting a servant leadership mindset. “How do you bring out the best in
someone else?” she says. “I’m a proponent of leaders making it their No. 1 goals to mine their employees:
mine for the genius, mine for their power, mine for their brilliance.”
Ultimately, it’s about unlocking the potential in your employees. By tailoring your leadership
philosophies to meet their needs, you’ll be better able to empathize with them, and when hiccups occur,
they’ll understand that an honest mistake was made.
Find Your Blind Spots
Leaders must have the self-awareness to know that they’ll have certain blind spots when it comes to their
employees and their employees’ experience. For example, maybe a leader doesn’t know the pronouns an
employee prefers.
But what’s most important in these situations is that leaders be aware of their blind spots — and that they
work to solve them. “I like to look at it as mirrors, windows and doors,” Harris says. “You look in the
mirror and that’s self-awareness. You look out the window and you get perspectives from others to try to
get a clue about your blind spots.”
TALENT MANAGEMENT & RETENTION STRATEGIES:-
Employee retention is the act of retaining employees to work in the organization on a long-term basis. In
fact, every organization grooms new employees into skilled personnel and hence, wants to retain them for
a long time.
Employee retention undertakes different measures so that an individual continues to work in an
organization for maximum period of time. It fosters long-term effective association between the
employees and the management representing the organization.
It avails the organization with skilled and experienced workforce which is useful for increasing the
productivity of the organization. Organization with poor employee retention culture seldom grow as
desired.
Creating effective retention strategies is one of the most important jobs as a manager in an organization.
Hence, there is a need to understand the causes that make the employees leave the organization
Reasons Why Employees Leave an Organization
 Work not as per expectation.
 Low salary.
 Lack of growth prospects and career opportunity.
 Absence of motivation in the organization.
 Lack of a congenial work environment.
 Unregulated work timings.
 Unwanted interference.
 No respect for employees’ personal life.
 Physical strain and stress.
 Lack of trust among the employees and between the employees and the management.
Strategies of Employee Retention

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 Recruit the right person at the right time and place in the ladder of the organization.
 Fulfill all promises or benefits to the employees in time.
 Make employees realize their value in the organization.
 Treat employees as assets instead of liability.
 Train and develop employees for next challenges.
 Give timely and proper feedback of their performance and support them.
 Always keep them motivated.
 Create healthy environment, and good and effective work culture.
 Design good incentive policy to retain high employee morale.
 Provide bonus to employees.
 Draw a positive career graph of each employee and update it with their new skills and
qualifications.
Major Factors Involved in Employee Retention
 Compensation − It includes salary, advance, bonus, rewards, health insurance, and retirement
benefits.
 Environment − Organizational environment motivates employees to perform better. Positive
environment creates positive energy.
 Growth − Every employee needs growth in his/her career, and most employees look for growth
within the organization.
 Support − Support culture helps employees grow professionally and they perform better in their
job. Organizations need to support employee financially and emotionally so that they perform
better, and feel secured.
1. Pair them with effective mentors
In Homer’s Odyssey, Mentor was the trusted advisor of Odysseus who conveyed life-changing wisdom.
Today, we commonly use that word to mean a more experienced person who can advise and teach us.
Corporate environments have taken notice of this talent-management concept and have started
implementing more structured mentoring programs. These can be a very powerful tool in acclimating
employees to your corporate culture and values.
Remember, mentoring can be enormously valuable for retaining high-performing employees who thrive
on interaction with influential colleagues. The difficulty lies in finding that perfect match between a
seasoned employee with the willingness and openness to mentor someone, and a high-potential employee
who respects that mentor and is eager to incorporate their knowledge. But when that is achieved, it can be
a great employee-retention approach.
2. Give them high-visibility assignments
Giving your top-performing employees highly visible and meaningful assignments is key to keeping them
engaged. This can take on many different forms. Think about handing over stretch assignments that are
pivotal to the organization’s success. While this may frighten some managers, it’s important that these
employees be given challenging opportunities that are outside of their comfort zones.
They may make mistakes along the way, but that’s a necessary part of their employee development. Other
things you may want to explore include:
 Rotating an employee to a supplier or partner
 Swapping positions
 Coaching/mentoring
The idea is to give high-potential employees opportunities to develop and gain visibility, depth, and
experience.
3. Openly communicate with them
This may seem like it’s stating the obvious, but if a high-potential employee has a concern or an idea, it’s
in the organization’s best interest to listen. Give them the one-on-one attention they deserve with all
levels of management and foster their creativity.
You may also want to consider communicating that you believe they are high-potential, and, as such,
enormously valuable to the organization. Some managers may worry that this will cause the employee to

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develop a sense of entitlement, but the more likely scenario is that it will boost their desire to work
toward fully realizing their potential.
4. Invest in their learning and development
Think about other types of learning and employee-development opportunities that you could offer beyond
certifications or employee-training programs. This group yearns for dynamic and ever-changing tasks. Is
there an opportunity for an employee to be sent overseas for an extended period of time? Is your
organization large enough that it can implement special “tracks” for high-performing employees?
Many organizations are coming up with talent-management programs that allow employees to touch
many facets of the organization, from sales to marketing to customer service. For those employees who
thrive on constantly learning, what better opportunity than to have assignments in all of these different
roles? Remember that if you implement something like this, the employee must be empowered to actively
participate in the planning of their career development.
5. Measure progress quarterly
Given that companies measure themselves on a quarterly basis, wouldn’t it make sense to take your high-
potential employees and measure them the same way? If you’re not thinking that way today, you should
start. By exposing this group to mentors, new and high-visibility projects, position swapping, etc., you are
putting them in unfamiliar territory.
Instead of waiting until the end of the year for the performance review, implement a proactive quarterly
review that provides them with more immediate feedback. In turn, this feedback can be used to improve
the employee’s performance in the short-term, thus improving overall performance and communication at
all levels.
Regardless of where your organization stands at the moment, it’s imperative that deliberate talent-
management strategies be put into place in order to grow and retain your high-performing employees.
Combining the right strategies with the right people is one powerful way for you to orchestrate your
company’s success.
Retaining high-performing employees starts with recruitment
Before you can retain a high-performing employee, you have to find one. With expert recruiting advice
and the latest hiring trends, Monster Hiring Solutions helps employers like you find and retain the
employees that can take your business to the next level.
STRATEGIES:-
1. Hire the right people. Retainable employees show a clear commitment to contribute their skills
and best efforts to your organization for the long term. Seek out people who are intrinsically
motivated and interested in developing their skills and careers. Those only seeking money and
power are classic turnover risks. Clearly establish expectations when you hire so that
disappointments on both sides can be avoided. It's also important to understand your company
culture and how potential hires fit into it.
2. Have a good system for evaluating performance. Both the company and the employee benefit
from knowing exactly where they stand in relation to each other's expectations. By monitoring
and sharing results, it becomes clear which employees are meeting (or not meeting) performance
expectations. Evaluation gives middle market companies the chance to recognize and reward
excellence, a key aspect of employee retention. Employees expect feedback and will leave if
they're not getting enough.
3. Track your levels of retention/turnover and overall employee satisfaction. This allows you
and your employees to know where problems are so you can solve them. Having an employee
satisfaction survey, and then acting upon it, can decrease turnover. Questions you'll need to
include: Are your people happy with compensation and benefits? With how they are managed?
With the challenges the company offers them? With the training opportunities? Collecting this
information will help support your ongoing retention efforts.
4. Train managers and supervisors in good communication skills so that expectations between
employees and managers can be openly established. Evaluation of performance begins with
clear, measurable expectations that both manager and employee agree to and track. Giving
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managers better skills in offering important (sometimes sensitive) feedback is crucial. Employees
generally don't quit on the company, they quit on their managers. Having managers who
communicate feedback well and behave professionally is perhaps your best retention strategy.
5. Offer employees a career path and a career development plan. This will allow your
employees to have a better long-term vision of their evolving role inside the company. It will also
allow the company to show its commitment to developing its talent, which benefits both the
company and the employee. If employees have gaps in their skills or experiences, a career
development plan (created by the manager, the employee, and HR working together) lets the
employee realize that the company wants to close that gap and prepare the employee for the next
step. Thus, employees don't feel "stuck" and without growth potential in the company, problems
that are major drivers of turnover and low morale. For more research from the NCMM on this
issue of training as a retention strategy, see a full report here.
6. Have a recognition program that celebrates employees with excellent performance. It's not
just the high achievers who deserve recognition, but anyone who goes above and beyond the call
of duty. Reward good examples, and you create a culture where everyone wants to be a good
example. This is also a culture that retains people. In addition, managers should seek out
opportunities to recognize or appreciate employees informally, perhaps over lunch or during
water cooler conversations. These are moments employees remember: Employees who feel
valued generally reciprocate by offering their loyalty to the company.
7. Customize benefits and work expectations for individual employees as much as
possible. This will take a lot of time and effort because it requires companies to better understand
the particular needs of their employees. Different employees want different things, so offering the
same benefits package and working conditions to all will inevitably create dissatisfaction. This is
a turnover risk. While it may be inconvenient to offer more flexible working hours or a
customizable menu of benefits, such practices boost employee satisfaction and loyalty.

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UNIT IV

Expatriate Concept and Issues:-

Expatriate is an employee who is working with the company in host/parent nation where the company
belongs to; and is being/has been sent to foreign location on some special/specific assignment.

Common problems expats face are loneliness, cultural differences, sorting out healthcare, cost of living,
finding proper schools for children, learning the language, and relationship problems

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GLOBAL STAFFING APPROACHES:-

1. Ethnocentric approach
Countries with branches in foreign countries have to decide how to select management level
employees. Ethnocentric staffing means to hire management that is of same nationality of parent
company.
When a company follows the strategy of choosing only from the citizens of the parent country to work in
host nations, it is called an ethnocentric approach. Normally, higher-level foreign positions are filled with
expatriate employees from the parent country. The general rationale behind the ethnocentric approach is
that the staff from the parent country would represent the interests of the headquarters effectively and link
well with the parent country. The recruitment process in this method involves four stages: self-selection,
creating a candidate pool, technical skills assessment, and making a mutual decision. Self-selection
involves the decision by the employee about his future course of action in the international arena. In the
next stage, the employee database is prepared according to the manpower requirement of the company for
international operations. Then the database is analysed for choosing the best and most suitable persons for
global assignments and this process is called technical skills assessment. Finally, the best candidate is
identified for foreign assignment and sent abroad with his consent.
The ethnocentric approach places natives of the home country of a business in key positions at home and
abroad. In this example, the U.S. parent company places natives from the United States in key positions in
both the United States and Mexico.
2. Polycentric approach
When a company adopts the strategy of limiting recruitment to the nationals of the host country (local
people), it is called a polycentric approach. The purpose of adopting this approach is to reduce the cost of
foreign operations gradually. Even those organizations which initially adopt the ethnocentric approach
may eventually switch over lo the polycentric approach. The primary purpose of handing over the
management to the local people is to ensure that the company understands the local market conditions,
political scenario, cultural and legal requirements better. The companies that adopt this method normally
have a localized HR department, which manages the human resources of the company in that country.
Many international companies operating their branches in advanced countries like Britain and Japan
predominantly adopt this approach for recruiting executives lo manage the branches."
The polycentric approach uses natives of the host country to manage operations in their country and
natives of the parent country to manage in the home office. In this example, the Australian parent
company uses natives of India to manage operations at the Indian subsidiary. Natives of Australia manage
the home office.
Indians popular choice for senior roles at Asian companies
 ET Bureau| Jul 10, 2018
Nikon and Sony have appointed Indians to lead their local operations, which were earlier managed by the
Japanese. Asian consumer electronics makers are increasingly placing their trust on Indian executives,
especially at a time when several of them are struggling in their home turf, or finding the going tough in
the largest markets, and are expecting India to play a bigger role when they are expanding to emerging
markets. The number of expats in senior roles in the Indian arms of Sony, Panasonic, Hitachi and Daikin
too has come down, while Samsung too now has Indian executives in their global think tank. At Daikin
India, Indian executives have replaced expats in seven critical functions like deputy plant head, senior
vice president (tech support) and general managers for service, HR (factory) and R&D. In Panasonic,
expats in mid-to senior roles are now 20%, compared with 40% three years ago
Hitachi Air Conditioning India said overseas entities have begun to realise that business is best
understood by locals and have started handing over major roles to them. The overseas entities send in
their representatives from various departments to share best practices being followed by various entities
all over the globe. The process is laid down between local entity and global teams and then those
processes are monitored and administered. Empowering domestic leaders helps companies to understand

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the pulse of the market, aids in faster decision making to facilitate growth, gets the best of local
knowledge to promote R&D and deliver customized products for local customers.
3. Geocentric approach
When a company adopts the strategy of recruiting the most suitable persons for the positions available in
it, irrespective of their nationalities, it is called a geocentric approach. Companies that are truly global in
nature adopt this approach since it utilizes a globally integrated business strategy. Since the HR
operations are constrained by several factors like political and ethnical factors and government laws, it is
difficult to adopt this approach. However, large international companies generally adopt the geocentric
strategy with considerable success.
For international recruitment, especially on foreign soil, organizations generally use manpower agencies
or consultants with international connections and repute to source candidates, in addition to the
conventional sources. For an effective utilization of the internal source of recruitment, global companies
need to develop an internal database of employees and an effective tracking system to identify the most
suitable persons for global postings.
The geocentric approach uses Ihe best available managers for a business without regard for their country
of origin. In this example, the UK parent company uses natives of many countries at company
headquarters and at the U.S. subsidiary.
4. Regiocentric Approach:-
Geocentric Approach is one of the methods of international recruitment where the Multi National
Companies recruit the most suitable employee for the job irrespective of their Nationality.
The regiocentric approach uses managers from various countries within the geographic regions of
business. Although the managers operate relatively independently in the region, they are not normally
moved to the company headquarters.
The regiocentric approach is adaptable to the company and product strategies. When regional expertise is
needed, natives of the region are hired. If product knowledge is crucial, then parent-country nationals,
who have ready access to corporate sources of information, can be brought in.
One shortcoming of the regiocentric approach is that managers from the region may not understand the
view of the managers at headquarters. Also, corporate headquarters may not employ enough managers
with international experience.
The regiocentric approach places managers from various countries within geographic regions of a
business. In this example, the U.S. parent company uses natives of the United States at company
headquarters. Natives of European countries are used to manage the Italian subsidiary.

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REPATRIATE ISSUES:-
Everyone expects expats to have an adjustment period when moving to a new host country, but what
about when they return home?  Most expatriates underestimate the potential challenges to readjusting to
life in their home country after an international assignment.  However, studies have shown that
repatriation is often the most challenging phase of an expatriate experience.  Many people face both
work-related and personal repatriation challenges:
Work-related                                                                    
 loss of visibility and isolation
 changes in the home workplace
 adjusting to the re-entry position
 others devaluing the international experience
Personal                                                                
 making assumptions of how quickly you will fit back in
 unrealistic expectations of life at home and how it has changed
 social readjustment as friend and family relationships have changed
 difficulty supporting family members experiencing reverse culture shock
Even more distressing is the fact that most companies do not sponsor repatriation programs to help
assignees and their families adjust to their move back home. 
To make repatriation a more positive experience, follow these tips:
 Keep up with current events and trends back home so that you will be up-to-date with what is
going on when you move back. 

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 Be sure to keep in touch with your family and friends while away to maintain healthy
relationships.  Email or write them often so that they will be familiar with what you have
experienced in your time away from home. 
 Have a mentor or an associate in the old office who keeps you informed and keeps your name in
circulation while you are on your assignment.
 Make sure your new position at re-entry is clearly defined: review expectations and clarify
misconceptions.
 Make a list of what to take care of before departing your host country and also what you need to
do once you arrive back home. 
 Relax! Anticipate an impact and be prepared for the unexpected.
2 CORE CONCERNS:-
 The Stages of Re-Entry Shock
Repatriation problems and reverse culture shock are likely to plague you for a while. The effects of
reverse culture shock are rather similar to the phases of culture shock you went through when you slowly
became accustomed to living abroad. At first, during the honeymoon phase, you are simply happy about
returning to a place you used to call home.
Then, however, comes the inevitable rejection – the sudden and persistent home-sickness for the
expatriate lifestyle. Ideally, this should be followed by recovery and adaptation to your “new old” home.
Unfortunately, this might take years for some.
 Saying Farewell to Your Host Country
Most expatriates will mainly focus on the hands-on issues that come with moving back to their home
country – packing boxes, cancelling the rental agreement, sorting out flight tickets. Unfortunately, they
often neglect emotional and intellectual preparations, often causing severe repatriation problems.
KEY COMPONENTS OF COMPENSATION - INTERNATIONAL HRM:-
Designing and developing a better compensation package for HR professionals for the international
assignments requires knowledge of taxation, employment laws, and foreign currency fluctuation by the
HR professionals. Moreover, the socioeconomic conditions of the country have to be taken into
consideration while developing a compensation package. It is easy to develop the compensation package
for the parent country national but difficult to manage the host and third country nationals. When a firm
develops international compensation policies, it tries to fulfills some broad objectives: The compensation
policy should be in line with the structure, business needs and overall strategy of the organization.
The policy should aim at attracting and retaining the best talent.
It should enhance employee satisfaction.
It should be clear in terms of understanding of the employees and also convenient to administer.
The employee also has a number of objectives that he wishes to achieve from the compensation policy of
the firm He expects proper compensation against his competency and performance level. He expects
substantial financial gain for his own comfort and for his family also. He expects his present and future
needs to be taken care of including children’s education, medical protection and housing facilities. The
policy should be progressive in nature.
7 Key Components of an International Compensation
1. Base salary
2. Foreign Service inducement/hardship premium:
3. Allowances:
4. Education Allowances for Children:
5. Relocation Allowances and Moving:
6. Tax Equalization Payments:
7. Spouse Assistance:
Components of an international compensation package, in addition to the normal salary and benefits
offered in the home country, frequently include the following. These components are discussed below:
Components:-

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1. Base salary:
This term has a slightly different meaning in an international context than in a domestic one. In the latter
case, it denotes the amount of cash compensation that serves as a benchmark for other compensation
elements like bonus, social benefits. For the expatriate, it denotes the main component of a package of
allowances directly related to the base salary and the basis for in-service benefits and pension
contributions. Base salary actually forms the foundation block of the international compensation.
For expatriates, the term base salary means the primary component of a package of allowances which are:
(a) Foreign service premium,
(b) Cost-of-living allowance,
(c) Housing and utility allowance,
(d) Basis for in-service benefits and pension contributions.
Base salary may be paid in home or local currency or in some hard currency like pound or dollar.
2. Foreign Service inducement/hardship premium:
This is a component of the total compensation package given to employees to encourage them to take up
foreign assignments. This is with the aim to compensate them for the possible hardships they may face
while being overseas. In this context, the definition of hardship, the eligibility criteria for premium and
the amount and timing of this payment are to be carefully considered. Such payments are normally made
in the form of a percentage of the salary and they vary depending upon the tenure and content of the
assignment. In addition, sometimes other differentials may be considered. For instance: if a host country’s
work week is longer that of the home country, a differential payment may be made in lieu of overtime.
Parent-country nationals often receive a salary premium as an inducement to accept a foreign assignment
or as compensation for any hardship caused by the transfer. Such payments vary depending upon the
assignment, actual hardship, tax paid to foreign governments and length of the assignment.
3. Allowances:
One of the most common kinds of allowance internationally is the Cost of Living Allowance (COLA). It
typically involves a payment to compensate for the differences in the cost of living between the two
countries resulting in an eventual difference in the expenditure made. A typical example is to compensate
for the inflation differential. COLA also includes payments for housing and other utilities, and also
personal income tax. Other major allowances that are often made are:
 Home leave allowance
 Education allowance
 Relocation allowance
 Spouse assistance (compensates for the loss of income due to spouse losing their job)
Thus, multinationals normally pay these allowances to encourage employees to take up
international assignments to make sure that they are comfortable in the host country in
comparison to the parent country.
Various allowances are paid to expatriates depending upon the assignment. They include:
(a) The cost-of-living allowance (COLA):
It involves a payment to compensate the differences in expenditures between the home country and the
foreign country.
(b) Housing allowance:
Implies that employees should be entitled to maintain their home-country living standards (or, in some
cases, receive accommodations)
(c) Home leaves and travel allowances:
Is given to cover the expense of trips (usually once in a year) back home. These trips allow the expatriates
the opportunity to renew family and business ties, thereby helping them to avoid adjustment problems
when they are repatriated.
BENEFITS:-

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The aspect of benefits is often very complicated to deal with. For instance, pension plans normally differ
from country to country due to difference in national practices. Thus all these and other benefits (medical
coverage, social security) are difficult to imitate across countries.
Thus, firms need to address a number of issues when considering what benefits to give and how to give
them. However, the crucial issue that remains to be dealt with is whether the expatriates should be
covered under the home country benefit programmes or the ones of the host country. As a matter of fact,
most US officials are covered by their home country benefit programmes. Other kinds of benefits that are
offered are:
Vacation and special leaves
Rest and rehabilitation leaves
Emergency provisions like death or illness in the family
These benefits, however, depend on the host country regulations.
4. Education Allowances for Children:
Education allowances are given towards fees for the education of expatriates’ children. Education
allowances include items such as tuition, language class tuition, books, transportation and uniforms.
5. Relocation Allowances and Moving:
Relocation allowances usually cover moving, shipping; temporary living expenses, and down payments
or lease-related charges.
6. Tax Equalisation Payments:
Many international compensation plans attempt to protect the expatriate from negative tax consequences
by using a tax equalisation plan. Under this plan, the company adjusts an employee’s base income so that
the expatriates will not pay any more or less tax than if they had stayed in the home country.
7. Spouse Assistance:
To help guard against or offset income lost by an expatriate’s spouse as a result of relocating abroad.
Multinationals generally pay allowances in order to encourage employees to take up international
assignments.
5. Incentives
In recent years some MNC have been designing special incentives programmes for keeping expatriate
motivated. In the process a growing number of firms have dropped the ongoing premium for overseas
assignment and replaced it with on time lump-sum premium. The lump-sum payment has at least three
advantages. First expatriates realize that they are paid this only once and that too when they accept an
overseas assignment. So the payment tends to retain its motivational value. Second, costs to the company
are less because there is only one payment and no future financial commitment. This is so because
incentive is separate payment, distinguishable for a regular pay and it is more readily for saving or
spending.
6. Taxes
The final component of the expatriate’s compensation relates to taxes. MNCs generally select one of the
following approaches to handle international taxation.
Tax equalization: – Firm withhold an amount equal to the home country tax obligation of the expatriate
and pay all taxes in the host country.
Tax Protection:- The employee pays up to the amount of taxes he or she would pay on remuneration in
the home country. In such a situation, The employee is entitled to any windfall received if total taxes are
less in the foreign country then in the home country.
7. Long Term Benefits or Stock Benefits
The most common long term benefits offered to employees of MNCs are Employee Stock Option
Schemes (ESOS). Traditionally ESOS were used as means to reward top management or key people of
the MNCs. Some of the commonly used stock option schemes are:
Employee Stock Option Plan (ESOP)- a certain nos. of shares are reserved for purchase and issuance to
key employees. Such shares serve as incentive for employees to build long term value for the company.

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Restricted Stock Unit (RSU) – This is a plan established by a company, wherein units of stocks are
provided with restrictions on when they can be exercised. It is usually issued as partial compensation for
employees. The restrictions generally lifts in 3-5 years when the stock vests.
Employee Stock Purchase Plan (ESPP) – This is a plan wherein the company sells shares to its employees
usually, at a discount. Importantly, the company deducts the purchase price of these shares every month
from the employee’s salary.
Hence, the primary objective for providing stock options is to reward and improve employee’s
performance and /or attract / retain critical talent in the Organization.
MUILTINATIONAL PERFORMANCE MANAGEMENT Introduction to Concept:-
It is the process of assessing an individual's performance in a systematic way. ... IHRM is a process “that
enables the multinational to evaluate and continuously improve individual, subsidiary unit and
corporate performance, against clearly defined, pre-set goals and targets”.

PERFORMANCE APPRAISAL OF INTERNATIONAL EMPLOYEES :-

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SHRM/MBA 4th sem Designed by Shammi Bhatia