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UNIT-4
HR in knowledge era:
•HR in knowledge industry,
•HR in virtual organizations,
•HR in mergers and acquisitions,
outplacement, outsourcing
HR functions:
•Employee leasing,
•HR audit-jyothi
•International HRM.
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HR in Virtual Organizations
A virtual organization is a network of corporations
made possible by ICT,which is flexible and comes to
meet the dynamics of the market. In this way virtual
organization gains benefit with regard to the traditional
hierarchical systems. This new form of organization
emerged in 1990,known as modular organization,
network organization or digital organization.
A virtual organization is a social network in which all
the horizontal and vertical boundaries are removed. It
consists of individual working out of physically
dispersed workspaces, or even individuals working from
mobile devices and not tied to any particular workplace.
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HR in Virtual Organizations
IT plays a very important role.ICT-information n
communication technology coordinates the activities,
combines the worker’s skills and resources in order to
achieve a common goal.
Managers spend time coordinating and controlling
external relations with the help of computer links.
Example-Nike,Dell,Puma
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Characteristics of Virtual Organization
Power flexibility
Informal Communication
Flat organization,multi disciplinary teams
Goal orientation
Dynamics
Home work
Customer Orientation
Organizational boundaries are vague
Sharing of information
Communication through electronic communication
systems-WAN, videoconferencing and email
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Characteristics of Virtual Organization
Collaboration and virtual teamwork.
3 primary factors that differentiate virtual organizations
from face to face teams are:
1.Absence of Para verbal and non verbal cues
2. Limited social context
3.Ability to overcome time and space constraints.
The advantages provided by such teams are as follows:
1.It saves time, travel expenses and eliminates lack of
access to experts.
2.Teams can be organized whether or not members are in
reasonable proximity to each other.
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Characteristics of Virtual Organization
3.Firms can use consultants from outside without
incurring expense for travel, lodging and downtime.
4.Employees can accommodate both personal and
professional lives.
5.Dynamic team membership allows people to move from
one project to another.
6.Employees can be assigned to multiple ,concurrent
teams
7.Team communications and work reports are available
online to facilitate swift responses to the demands of a
global market.
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Features of Virtual organization
Technology: has transformed the traditional way of
working. Worlds of Computing and telephony
.Computer Telephony Integration(CTI)
Email Integration: Email and SMS
Office Systems integration: SMS Technology
Voice mail Alert: SMS with Voice mail system
Mobile Data: one can retrieve information through
mobile phone notebook. Mobile data communication
revolutionize where and how work is done. Link mobile
phone to laptop.
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Types of Virtual Organizations
Types Least Virtual Most Virtual
Telecommuters Core Corp. with Completely Virtual
Virtual outsourcing
Employees Combination of Virtual Employees
employees and or
With Virtual Office Virtual Employees, Participants in a
outsourcing,(Virtual completely virtual
office, Virtual organization
production)
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Emerging HR issues in Virtual Org.
Virtual Organizations is a loose web of individuals,
capital and technology.
Project focus collaborative networks uninhibited by time
and space. No defined structure.
There is loose connections of highly proficient ppl who
are left to do their own thing in order to produce
innovative products.
The positive side is that there is greater job autonomy and
more financial stability ,coz of reduced commuting,
lunches and clothing cost.
Less work stress, increase in performance(with more
working hours)
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Emerging HR issues in Virtual Org.
Negative aspects-longer hrs,increase in perceived work
demands, poorer physical working conditions, less social
support from work, poorer social position and few career
opportunities.
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Career Dynamics
In a virtual organization, the following HR issues are a
matter of concern:
Recruitment is conducted under time pressure and
requires high performance expectations.
Human Capital (knowing one’s job)and Social capital
(knowing each other)become extricable linked.
Reputation is a key asset.
The formation of some stability in social relationship is
not very much required.
Work pace is variable. The need for a state of readiness to
be mobilized at any moment is high.
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Career Dynamics
Value of idleness is shown in terms of learning by
watching what others do. Master apprentice
relationship and craft-based techniques become
important.
Job status and project feedback is very short. Therefore
it can be seen that virtual org. require a heavy
investment to create systems and staffing structures.
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Performance management
Define Performance: clear idea of what he is supposed to
do??challenging goals to be set. Appraisal system to be
objective rather than subjective. Measurement of work is
important as theses are distantly located.
Facilitate Performance: eliminate obstacles-inability to
access centrally maintained files and databases from
remote locations.
Provide tools and resources. Here employee has to be self
managed, more autonomous, risk taking in a virtual set
up. Motivate the performance.
Encourage Performance:
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Emerging HR issues in Virtual Org.
Sharing Information
Selection Process: Certain requirements for working in a
virtual organizations are:
Familiarity and comfort ability with the jobs.
Self Motivation, Non requirement of high structure and
detailed instructions in order to work effectively
An effective communication, both orally and in writing
Adaptability
Knowledge about organizational procedures
Technical self sufficiency
Result oriented
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HR in Mergers and Acquisitions
Today Organizations: Development
oriented,agile,fast,consistent in
growth,adaptable,flexible,profitably proactive.
Firms need Merger and Acquisition
Example:Daimler-Chrysler,Chas-J.P.Morgan,Mc
Kinsey-Envision,Nation’s Bank-Bank of America,GE-
Honeywell,
India-chemical,finance,communication,IT sector,BPO
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Mergers and Acquisitions
Mergers: Two Companies come together and create a
new entity
Acquisition: One co. buys the other company and
manages it by implementing terms and conditions
consistent with the acquire's needs.
Size of investment,control,integration reqd,people mgmt
issues
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Why do Mergers and Acquisitions fail??
Attention paid on Strategic and Financial aspect, Human
aspect is neglected.
Key aspects-Retention of good talent, integration of
cultures and communication
Schuler & Jackson gave typical reasons for failure:
1. Expectations are unrealistic
2. Hastily constructed Strategy, poor planning, unskilled
execution.
3. Failure/inability to unify behind a single macro message.
4. Talent is lost and mismanaged
5. Power and politics are the driving force.
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Why do Mergers and Acquisitions fail??
6.Requires an impossible degree of synergy.
7. Culture clashes between 2 entities goes unchecked
8.Trasition Mgmt fails
9.The underestimation of transition cost.
10.Financial drain
11.Defensive Motivation
12.Focus on executives is distracted from the core
business.
13.Cultural differences
14.Ill conceived human resource integration strategy.
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Why do Mergers and Acquisitions fail??
Culture-internalisation of set of
values,feelings,attitudes,expectations and mindsets of
people with in an organization.
2 companies have different cultures-anxiety,anger,low
employee morale, communication issues.
Top Management ignores soft issues-culture clash
“They” rather than “We” feeling.
Example-P&G and Godrej
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Why do Mergers and Acquisitions fail??
Steps in the post acquisition phase to manage the
apprehensions of employees:
Clear communication by the new mgmt to employees
about strategy and performance
Mgmt commitment not to retrench the people of the
acquired company & reach an agreement of
redeployment.
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Stages of Merger and Acquisition
The role/importance of HR in the 3 stages are as follows:
1.Pre Union: Prior to M& A, understand the org. and ppl
process.
a. Identify the reason for M&A
b.Assign a team dedicated on due diligence of all areas of
M&A.
c.Pay attention to Human capital issues-diffrences in HR
functions.
d. Identify key risks and differences, then estimate the
difficulty and expenses of rationalizing and aligning
these practices.
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Stages of Merger and Acquisition
e.Transition team should study options for combining the
two companies. Do culture assessments,HR issues of the
company-Recruitment,manpower
planning,selsction,labour relations,govt
compliance,compensation and benefit
programmes,HRIS,traing and development, safety and
environment issues.
2.In-Process Union: Under this stage, one should have a
smooth integration managing all transaction to address all
the apprehensions of people at work.
Select integration mgr who will lead the process of
integration.-project
mgr,communicator,advisor,advocate,relationship
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Stages of Merger and Acquisition
builder,facilitator,teamwork,negotiator.
Do talent assessment-restructuring process to be faster to
manage the transition psychology of people.
Place structure, manage change process, retain and
motivate employees, communication.
Prepare organizational chart-vacant positions will be
there-as few ppl did not accept the job or lack of
qualified ppl internally.
Prepare severance plan & retention –bonus programme.
Outplacement strategy to be prepared to know the type
of employees being affected and how long will they take
for adjustment.
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Stages of Merger and Acquisition
Finally communicate by assimilating employees in the
org.Individual and group meetings. Educational seminars.
3.Post Union: the structure and staffing patterns need to be
tested in action in terms of value creation in the org.
Culture that emerged in the org due to two organizations
need to be monitored in line with the objective set in for
the organization.-senior mgmt.
HR should see the new teams formed, interpersonal
conflicts, undefined roles and responsibilities.
HR should develop transparent communication channel
to disseminate info to stake holders to satisfy them for
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Stages of Merger and Acquisition
Co. performance
HR policies should be reviewed, created ,implemented
and communicated. Compensation and Benefit
pakages,staffing n manpower planning, training n
development,
HR dept should identify core competencies of
individuals for development and growth.
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Key Communication Principles & tactics
for smooth integration
Maximize face to face presentations
Remember nature abhors a vacuum
Realize that ppl assume the worst
Push information out
Use multiple forms of communication
Watch the informal channel
Believe that repetition counts
Communicate timeliness in general terms
Communicate logic and empathy
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Key to success of M & A
Well thought out goals and objectives
Due diligence on hard and soft issues
Well managed m & A team
Effective leadership
Taking lessons from previous experience
Friendly climate
High commitment to deadlines
Key trained retained
Trust building across all levels of employees
Proper allocation of resources and responsibilities.
Accept the unwilling people and plan for their change.
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Skills and Competencies for HR Prof.
Planning for in process union and post union steps
completed early
Extensive and timely communications to all stake
holders.
Skills & competencies for HR professionals:
Good strategic knowledge to develop and implement the
strategic plan for M & A.
Effective Communication skills
Motivating skills to motivate self and others
Analytical ability to understand and access people
dynamics
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Skills and Competencies for HR Prof.
Thorough knowledge of assessing work culture and
bring about changes
Planning, monitoring and bringing change effectively.
Good mediator having sound negotiation skills.
Effective in selection and retaining people.
Effective trainer and facilitator.
Visionary,dreamer,and good leader who identifies and
embraces new roles.
