Human Resource Management

By Dr. Debashish Sengupta

The New Age HRM

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CHAPTE
R

Human Resource Management

Key Terms

Brand Ambassador
Corporate brand
Effective Communication
Effective Processe
Employee Pride
The 10 E Model

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The nature and scope of human resource

management has undergone a
serious
transformation in the past couple of decades. What
used to be once a purely hire and fire function
mostly executed by administrative people has
changed into treating employees as assets or
resources and managing them in a way so as to
create competitive advantage for the firm and
win-win proposition for both. The purely back-office
personnel function has changed into a strategic
board room game. HRM from being a game-bench
has changed into the new game-changer.

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Customer to Employees: New Age New Roles

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Employees have changed from workers to value-creators.

As a result the role of manager and the CEO have also
undergone a transformation. In the earlier concept of
customer being the king, although the customer had been
given the ultimate tag, however that did not ensure that
the king would end-up on the winning side always. The
new wisdom however ensured that the customer (minus
the decorative tag) always end-up as the winner in the
process, something every business-firm would badly want
today in the era of competition to seal better customer
loyalty and retention. Through this chapter we shall try to
explore why this change has happened in the very fabric of
managing people, what drove that change and what are
the new roles that HR has to don in the changed context.
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New Age HRM Model (Relationship between HR imperatives,

Business Imperatives & Macro-environment)

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The macro-environmental variables like Political

factor, Economic factor, Social Factor, Cultural
Factor, Legal factor and Technological factor
influence the business imperatives of any firm. This
shapes the business strategy of the firm which
consequently shapes the HR imperatives or the HR
strategy. To understand the new age HRM it is
important to understand the dynamics of the New
Age HRM Model.

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Political Factors
Political factors determine how and to what degree a
government intervenes in the economy. Political
factors include areas such as
Tax policy
Labour law
Environmental law
Regional blocks
Trade restrictions & Tariffs
Political stability

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Business Imperatives Driven by Changed Political Climate

Based on the above changes in the political context

the following imperatives have become a part of the
business.
1. A business should understand the political
undercurrents and not just read policy changes. The
example of Tata Nano - Singur case excellently
describes the impact of the undercurrents on business.
2. It is necessary for a business to ensure that the
political neutrality and policy (concrete steps) are
aligned, so that the business runs smoothly.

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HR Imperatives Driven by Political Context

The HR imperatives as a result of the changed
political climate and the business imperatives
necessitated by the same are as follows:
1. Managing Cultural Change
Since now organizations have a diverse workforce its
necessary for businesses to manage the cultural
change happening.
Recruitment: Also now that businesses are
spread across the globe it is necessary that care
be taken while recruiting a diverse workforce and
accepts the culture with an open mind.
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2. Talent Management
Due to the dynamic nature of workforce it is
necessary that organizations have an appropriate
talent management strategy to acquire, develop,
retain and replenish the workforce.
Personal Development: that there is a shift from
collectivism to individualism it is necessary
organizations focus on an individuals career
development, develop future leaders etc.

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3. Structural Change in Organization

With reduced political barriers it is an imperative that
businesses have:

A flat hierarchy
The power distance be reduced
Empowerment of employees
Communication barriers be reduced

Communication should be Instant (decisions be made

quickly and also feedback be provided stantaneously)
and transparent.
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4. Training and Development

With changing business context it is necessary that
employees be trained to sustain in the market with the
changing technology. Also they are provided cross
functional training, so that they can be employed with the
changing business needs.
5. Employee Engagement
For the success of a business it is necessary that the
workforce be highly engaged and therefore it is the need
of every business to keep its employees engaged.
Employee engagement is necessary to make the
employees aware of various business activities, manages
employee turnover and boost business growth.

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6. Increase in Use of Temporary Employment

Practices
Businesses are moving towards a temporary
workforce due to various reasons. They are easy to
hire, flexible to any work timings, though they have
high pay rates and they are low cost to the company
in the long run.
7. Focus on Key Players
Again as already discussed this is a part of the talent
management strategy where the businesses target
the key players rather than the not so important
players and their focus is on retaining them. This will
help the organisation in succession planning.

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8. Increasing use of Technology and Business

Intelligence
Organisations are increasingly looking to technology to
enhance performance and fill skills gaps. As a result HR is
also using technology for organisations advantage. This
can provide the organisation a competitive edge and
lowers the cost of HR operations. The development of HR
technologies is helping to transform HR into a decision
science with a measurable impact on business results. This
creates new roles for HR professionals and the imperative
to develop strong HR technology competencies.

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The wide range of impact of technology on HR can

be clearly viewed on the HR functions such as:
Recruitment
Training & development
Performance management
Payroll & attendance records

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Economic Factors
There have been several changes in the global

economy as compared to earlier centuries. Some

of them are as follows:
1. Globalisation: Globalization refers to the
increasing unification of the worlds economic
order through reduction of such barriers to
international trade as tariffs, export fees, and
import quotas.

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2. Monetary Policies: Monetary policy is the

process by which the monetary authority of a
country controls the supply of money, often targeting
a rate of interest for the purpose of promoting
economic growth and stability. The official goals
usually include relatively stable prices and low
unemployment. Monetary policies
of various
countries change significantly according to the
prevailing economic situation.

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3. Explosion in Stock Markets: With the event of

free trade and globalisation across the world, there
has been a significant change in stock markets of
various countries. Due to availability of capital for
companies due to portfolio investments and FIIs
there is an explosion in stock markets.

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Business Imperatives Driven by Changed Economic Climate

These thrusts of activities are critical to arriving at

stated objectives in the business. These are the drivers
of business and the principles by which the business
acts and thinks, not the actions it takes.
1) Need to Operate across National Boundaries:
With the advent of globalization, a business firm needs
to expand its operations across the national boundaries
in order to gain competitive advantage and sustain its
business.
2) Shift Manufacturing and Service Bases: Outsourcing
of service base as a cost reduction procedure by the
organization is getting increasingly prevalent.
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 3) Cost is a Major Issue and Optimizing Cost is

Very Important: Companies nowadays retain the core

department such as R & D and outsource the non-core
ones such as Customer Service. This again acts as a
cost reduction benefit to the company.
4) Ensuring Presence of Emerging Markets like
China, India, Brazil etc.: Developing markets such
as China, India and Brazil are hot seats for FDIs
and FIIs. Multinational companies are realizing the
market potential of these countries and are expanding
their market base to these nations.

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HR Imperatives Driven by Economic Environment

With the various changes in the macroeconomic variable
there has been significant strategies developed by the
corporate. Any strategy developed makes an impact on the
HR policies and practices. Some of the HR imperatives
are:
1) Increase Focus on Manpower Management: There
has been a significant increase in focus on manpower
management. Practising good manpower management or
Human Resource Management (HRM) enables managers
of an enterprise to express their goals with specificity,
increasing worker comprehension of goals, and provide the
necessary
resources
to
promote
successfully
accomplishment of said goals.
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2) Innovative Flexibility in Work Environment:

Flexibility in work environment brings a culture of
creativity and innovation in the work culture. In
todays competitive environment innovation plays a
major role in bringing a core competency for the
company in market.
3) Increased Focus on Learning Culture: There
has been an increased focus on employees. Due to
this reason organisations are focusing on
development of skills. Training and development is
now an integral part of HR department.

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Social Factors
Social change refers to an alteration in the social
order of a society. This change is facilitated by the
interaction
between
various
other
macro
environment factors. This change can be measured
on the basis of the following criteriaSocial Relations: Social relations focus on the
behaviours and needs, those that primarily concern
themselves with how people organise and make
meaning of their world and their relationships within
it

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Business Imperativ es Driv en-by Changed Social Context

The business imperatives as a result of the social

changes can be captured as:
1. Need to alter offerings (products, services, jobs)
keeping demographic realities in mind.
2. Need to innovate new product designs and
Service offerings.
3. Need to cater to aspirations of middle-class
4. Need to integrate social media in marketing.
5. Need to have flatter and flexible organizations.

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HR Imperatives Driven by Social Context

Companies like IBM having equality policies in their
manual under which homosexuals, third gender and
under-privileged people are treated and recruited
with equal rules and procedures. IBM has even
received awards for respecting the diversity. The
Hispanic, blacks, homosexuals and third gender are
treated with same respect and motivated to
participate more in the organization.

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1. Social Recruiting: The Society for Human

Resource Management (SHRM) reports that
the number of companies using social
networking sites, including Linked in, Face
book and Twitter, to recruit increased from 34%
in 2008 to 56% in 2011. In addition, the number
of companies who dont plan to use social
recruiting dropped from 45% to 21% during the
same time period.

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Cultural Factors
The cultural changes on a broad level may be
described as following:
1. Mindset Change: People have become more
broad minded and more acceptable in nature and
also more tolerant towards different cultures.
2. Woman Participation: The participation of
women is being
encouraged in organizations.
They are taking up important roles and their
contribution is being recognized.

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Business Imperatives Driven-by Changed

Cultural Environment
1. Cross Cultural Management: With multi-cultural
interactions becoming more and more imminent, the
need to understand, appreciate, educate and create
awareness about cross-cultural issues is a business
imperative.
2. Presence on Social Networking Websites: Social
networking websites are the new Communities of
change. Companies are increasingly realizing the
need to connect with people through such sites in
order to appreciate better the cultural nuances.

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HR Imperatives Driven by Cultural Context

1.Decentralised
Policies:
Empowered,
multi-cultural workforce has necessitated the
decentralisation of the policies. Companies are
adapting to policies according to the different
cultures, legality, working hours, e.g., US hourly,
India Monthly, holiday policy

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Legal/Regulatory Factors

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Business Imperatives Driven-by Changed

Legal/Regulatory Climate
In light of the changes in the legal/regulatory
environment businesses face the following
imperatives:
1. Flexible in Corporate Governance and
Expansion: As a result of globalization,
businesses now have the opportunity to expand
beyond their national boundaries and adapt to
the type of regulations followed in that particular
country.

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1. Ease of Trade
The change in legal frameworks regarding
International Trade has led to increased freedom for
countries to look beyond their own boundaries and
form trade relations with each other. Liberalization and
Privatization policies led to increased flexibility in the
trade and labour laws, which in turn encouraged
cross-boundary business. For example in India,
pre-liberalization era mandated about 129 approvals
for the initiation of an Import or Export business,
whereas now the count of approvals required has
come down to a reasonable and convenient number of
just 25, for the same.

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2. Restructuring
of Legal Frameworks

The structure of all legal frameworks, global as well

as domestic, have undergone a transformation with
the aim of making them more direct, organized and
specific. This helps in not only covering loopholes,
but also to make them easier to be followed.
of Business Processes
The business processes too have gone through a
transition making them more organised, better
managed, cost-effective and more adaptable to the
changing legal scenarios universally.

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3. Security
of Privacy

In a world which is getting smaller, preserving

personal space and privacy
of individuals is
becoming a major concern. Countries around the
world are trying to come up with laws to contend
with this problem.
of Agreements
Universally applicable laws have ensured their
uniformity and acceptance around the globe,
hence making agreements and contracts safer.

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4. Parity
for Nations

The WTO has brought all the nations to an equal

platform, irrespective of
them being a Developed,
Transition or Developing Economies. It has provided
the Third World countries with the opportunity to
indulge in trade practices with the more economically
powerful nations of the world.
for Organisations
The legislation of any nation decrees all its laws to be
equally applicable to all businesses within it. The
various Trade and Labour laws are mandatory for
organisations to be part of global trade.

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HR Imperatives Driven by Legal Environment

The HR response in the face of changed

legal/regulatory environment and the altered
business scenario should be1. How to align the organizational strategy with
the regulatory framework?
a. Aligning individual goals to organizational goals.
b. Take necessary steps required in order to
sustain at that point of time.
2. How to tabe proactive measures to adapt to
the dynamic legal/ regulatory environment?

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Technological Factors
The technological environment has perhaps
undergone the greatest and fastest transformation
world-wide. Technology is into everything and firms
that have not been able to keep pace with the same
have been forced to exit the business. Consider this
for an example - EMI pioneered the innovation of
the CT scanner in 1972. Despite a strong market
position in early years, by 1977, EMI was forced to
exit the scanner business.

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Technology Factors

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Innovation Pizza

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HR Imperatives Driven by Technological Context

1. How to connect with Business and

Organizational Strategy?
Consider these two statements:
A. Based on Aon Hewitts research, more the 60% of
HRs time is transactional, administrative in nature.
In addition, HR is often not included.
B. Up to 70 percent of a companys market value
can come from intangibles such as its human capital,
its brand, and its culture.

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Grassroots Innovation

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2. How to Create Non-threatening but Accountable

Systems?
Technology is always leveraged by an innovation culture
in the organization, which in turn is only possible when
people
have
freedom
to
think
radically
and express the same; freedom to differ; freedom to
experiment; freedom to act. Non-threatening but
accountable systems always pull people to

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3. How to Develop and Replenish Contemporary Skill

Inventory?
There is a need to develop and replenish contemporary skill
inventory in employees to
A. Remain in a state of technology readiness always.
B. Create high-performance work systems.
C. Develop expertise that pervades organizational needs.
D. To out-wit the competition, by accelerating speed of
development and execution.

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 4. How to Build Entrepreneurial Environment?

Amazon.com CEO Jeff Bezos said that at Amazon the

entrepreneurial mindset pervades the organization
and he wants each and every employee to fulfill
his/her responsibilities with an entrepreneurial
perspective. We have entrepreneurs at every level.
Everyone must look for and find ways
to do their
work better than its ever been done before and to do
that as often as possible. The
entrepreneurial
mindset means that every employee thinks himself or
herself as an entrepreneur and does things the better
next time, whenever he does that again.

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New Age HRM Roles

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