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TERM PAPER

OF
HUMAN RESOURSE MANAGEMENT

Topic: - Global business environment and Strategic human resource


planning

Submitted to:
Miss. Pooja

Submitted by:
Archit Sharma
Reg. No.10800482
Sec. R1813A12
Acknowledgement
“No man is indispensable but there are certain mortal without whom the quality work there suffers
their guidance becomes important in acquiring quality results”

I am immense grateful to my subject teacher Miss. Pooja who has given me this opportunity to
prepare this term paper and provided their invaluable guidance. I am also grateful to my friends for
their help to prepare this term paper.

Abstract

The transformation of present economy from a manufacturing economy to a primarily


service economy has increased the importance of knowledge in job performance. As people
become the most valuable asset of a firm, there has emerged a new class of highly-skilled
knowledge workers. High demand for knowledge workers coupled with their limited
availability in the work force has created a 'war for talent' among organizations. With firms
competing for skilled workers, employee mobility has increased .Therefore, organizations
have to develop new strategies to attract, retain, motivate and develop employees. The role
and responsibilities of HRM have become more significant with an increase in the number of
knowledge workers, inter-firm competition, changes in technology, and common and
business trends.

Introduction

The shift from a manufacturing economy to a services economy from production of goods to
production of ideas, and from the machine age to the information age has been
accompanied by many transformations. Rather than producing goods, the service firms
produce 'ideas'. Organizations in the 'services era', such as software, financial services, and
biotechnology firms, depend on 'intellectual capital'. People create 'intellectual capital' and
are therefore, the most valuable asset of a firm. Even the environment within which firms
conduct business today is very different and much more complex and dynamic when
compared to the environment fifteen years ago. Firms no longer compete or operate
nationally only. Organizations are no longer governed by the business, legal and political
environment of their own nations only. As the world becomes one global playing field, the
environmental changes in countries other than the home country of a firm affect business
decision and the performance of firms. Several societal and global phenomena have
challenged the management of human resources. Thus, changes in the economic, business,
social and cultural environments have brought about a transformation in the HR function
and the roles and responsibilities of HR professionals.

Some of the significant environmental trends and changes faced by HR managers that pose
major challenges are as follows:

Trends in the business environment


The changing nature of work
Demographic, societal and work-force trends
The changing nature of the employment relationship.

The ICFAI centre for management research state that the global business environment can
be defined as the environment in different sovereign countries, with factors exogenous to
the home environment of the organization, influencing decision making on resource use and
capabilities. This includes the social, political, economic, regulatory, tax, cultural, legal, and
technological environments. The political environment in a country influences the
legislations and government rules and regulations under which a foreign firm operates. The
economic environment relates to all the factors that contribute to a country's attractiveness
for foreign businesses.
Every country in the world follows its own system of law. A foreign company operating in
that particular country has to abide with its system of law as long as it is operating in that
country. The technological environment comprises factors related to the materials and
machines used in manufacturing goods and services. Receptivity of organizations to new
technology and adoption of new technology by consumers influence decisions made in an
organization. As firms have no control over the external environment, their success depends
upon how well they adapt to the external environment. A firm's ability to design and adjust
its internal variables to take advantage of opportunities offered by the external
environment, and its ability to control threats posed by the same environment, determine
its success.

Globalization of Business

A major environmental change that has taken place in the last fifteen years is the
globalization of business. The world has become a global village and business has become
global in character. Organizations are venturing beyond national boundaries in the pursuit
of business opportunities. Toyota Motor Corporation makes cars in USA and India, Mc
Donald's sells burgers in India and hamburgers in China, and Marks and Spencer's sells
products in India. Every other product sold by Wal-Mart stores Inc. is made in India. This is
the time when buildings are conceptualized in the US designed in India and built in China.
Very recently, Ford Motor Co. (Ford) announced its plans to invest $ 1 billion in products
and plants in the Asia-Pacific region in the next few years to maintain its presence in the
fast-growing markets.

Outsourcing has made India a Manufacturing hub, especially for the automobile sector; with
cheap labour providing one of the competitive advantages. Government policy reforms and
growth against an appreciating rupee have also facilitated this trend. Large numbers of
manufacturing assembly jobs that require low skills have moved from the US and Western
Europe to developing countries like China, Thailand, Malaysia, and India. India's
manufacturing and services companies invested $10 billion overseas in 2004. The top 15
Indian IT, software and related companies have invested mostly in developed countries. Like
the IT and automobile industries, domestic hospital chains from India, such as Apollo
Hospitals Group, Fortis Healthcare and Max Healthcare Institute Private Limited, also have
ambitious expansion plans in markets as far away as the US, UK, Mauritius, and South-East
Asia.

Multinational corporations require employees who can adapt to different cultures, customs,
social practices, values, economic and political systems and management approaches, who
can work with other employees from differing backgrounds. This has caused new challenges
for HR managers. The HRM function of a company must develop systems that will help
individuals from different cultural backgrounds to work together. Human resource
managers must ensure that employees with the requisite knowledge, skills, abilities, and
cultural adaptability are available so that they may be successful in global assignments.

Foreign investment is no longer something that flows only from a developed country to a
developing one. Indian companies are on an expansion drive. Indian business houses, like
the Tata Group and firms like Ranbaxy Laboratories Limited (Ranbaxy), Wipro Limited
(Wipro), Sun pharmaceutical Industries Limited, Crompton Greaves Limited, Asian Paints,
and Cognizant Technology Solutions, have struck merger and acquisition deals world wide to
become global players. Acquisitions by Indian companies have now become strategic in
nature, by which they have been able to take leadership positions in Asia. The table 1.1
depicts major Human Resource Challenges faced by modern businesses in the present
scenario.

Another recent change faced by HRM in the present business scenario is that of Mergers
and Acquisitions. Companies today need to be fast growing, efficient, profitable, flexible,
adaptable, and future-ready and have a dominant market position. Without these qualities,
firms believe that it is virtually impossible to be competitive in today's global economy. In
order to gain access to new markets and fresh ideas, companies often choose to grow via
Mergers & Acquisitions (M&A) rather than concentrating their efforts on their own business
activities. Such inorganic growth is often viewed as a faster way to achieve growth for the
company. Especially in technology driven industries, where growth is often accelerated
through increased innovations, and one way for the firms to compete is to align themselves
with those companies that are developing the innovative technology. Such alignment is
achieved through M&A activities. Successful manifestation of such activities involves
complex procedures and processes in order to integrate both organizations and align them
as per a common unified objective.

It has created certain problems for an organization. One of the problems associated with
M&A's is the retrenchment of staff that becomes surplus due to rationalization of
operations. For example, in the financial services sector, M&A activity between 1996 and
2006 caused an aggregate employment decline. Due to M&A, sector experts predicted a loss
of more than 300,000jobs in the banking sector between 1999 and 2002. When negotiations
for M&A are on, employees of the concerned firms are subject to several rumours that
cause insecurity about the future. Thus, HRM is faced with several challenges before, during,
and after the M&A decision.

In the present era, the competitive advantage of organizations is linked to 'knowledge'.


There is a lot of emphasis placed upon dissemination of knowledge, and knowledge workers
within organizations. Therefore, there is an increased focus on management of the
knowledge resource in organization. Thus, in the 21st century, the HRM function has a key
role to play in shaping the competitive position of the organization. To compete effectively
in the knowledge economy, a firm must have what Ulrich calls 'organizational
capabilities'.HRM plays an important role in creating, developing, and managing the
organizational capabilities that are necessary for competing in the knowledge economy.
Human resource mangers have to create effective teams within a diverse workforce; tap
talent throughout the organization by recruiting, retaining, and developing people at all
levels; build and integrate cultures as mergers and acquisitions become common; and
develop employee commitment toward organizational vision. Human resource management
is confronted with major challenges in the present knowledge economy. Thus, HRM is no
longer simply focused on 'managing people' or confined to traditional HR functions rather; it
is now responsible for managing the capabilities within the organization. The Table 1.2 given
below elaborates upon the challenges facing HRM in the knowledge economy.

The four major HRM roles in the Knowledge economy are as:-

Human Capital Steward


Knowledge Facilitator
Relationship Builder
Rapid Deployment Specialist

Challenges facing by HRM

Attracting and retaining knowledge workers, who are intellectual capital of the firm
Obtaining commitment from workers in the context of a changed employer-employee
contract
Ensuring the availability, development, and utilization of human capital to enhance its
value
Motivating Knowledge workers
Ensuring maximum utilization of temporary and contingent employees
Encouraging employees to commit to continuous learning
Facilitating sharing of knowledge within organizations
Facilitating work-life balance
Rewarding Knowledge acquisition and  knowledge sharing
Enhancing cross-functional team work and team identification
Creating a flexible human resource management team that sets and supports the
agenda for change
Coordinating between organizational functions.

To sum up, the business environment affects the HRM. External business environment
includes the political, economical, socio-technological aspects. The impact of external
environment affects the internal environment of an organization which in turn, affects the
decision-making of the organization. Traditionally, the main aim of organizations was to
earn profits. But now modern day organizations have to consider about 'Corporate Social
Responsibility' though not at the cost of earnings because earnings are the main source of
survival in the competitive market. A smooth and congenial external environment will
ensure the smooth functioning of an organization. There is a lot of interdependence
between the two. Since the world is now considered as a global village, the integration of
global and business environment is very important.

Changing global business environment and how effective human resource planning
enables organizations to achieve their strategic objectives.

"Today more than ever, organizations must capitalize on a changing business environment,
improve profitability and overall productivity, formulate and implement a planning process
and make better strategic decisions. Perhaps the most striking change in Human Resource
Management today is its increased involvement in human resource planning, while
developing and implementing the company's strategy (the company's long-term plan for
how it will balance its internal strengths and weaknesses with its external opportunities and
threats to maintain a competitive advantage). The concept of human resource planning
takes an added significance, therefore, in firms that build their competitive advantage
around their people. However, there are several basic trends, which pose a threat to the
accuracy and validity of human resource planning predictions, and which prove to be
important factors in determining the strategic direction of most firms today. The most
obvious of these trends is the globalization of markets. Firms in days gone by, that
competed only with local firms, now face competition from foreign firms. As one expert puts
it, "The bottom line is that the growing integration of the world economy into a single, huge
market place is increasing the intensity of competition in a wide range of manufacturing and
service industries."

Deregulation has reinforced this trend, as nations eliminate the legal barriers that
protected industries from unbridled competition. More globalization means more
competition and more competition means more pressures to improve the quality of the
business sector that is; lowering costs to make employers more productive, and to find new
ways of achieving cost-effectiveness while creating an avenue for doing things in better and
more dynamic ways. Similarly, the Internet and Information Technology have been forcing
and enabling firms to become more competitive. Technology is doing more than merely
reducing costs and opening up new ways to compete; it also changes the nature of work and
creates brand new kinds of jobs. Technology, however, is not the only trend driving the
changes in the business environment, as workforce demographics are also changing? Of
note, the workforce is becoming more diverse, as women, minority group members and
older workers enter the workforce. Today, it is the firm’s workforce that is, its knowledge,
commitment, skills and training, that provides the competitive advantage, for World Class
Companies, like Microsoft, Sony, AOL, and General Electric’s (GE). For this purpose,
increased attention has been given to the Human Resource Planning process: from the input
stage, through analysis, forecasting, and implementation to evaluation and redesign of the
Human Resource Plan."
Global Perspective
Globalisation refers to the process of integrating world economies. And it cannot be
stopped from taking place, No matter what the political, economic or cultural compulsions
are. Also called internationalisation, the momentum of globalisation has been driven by
several developments. Companies seek to take advantage by expanding their operations
into foreign markets in a number of ways; developing economics have huge markets,
multinational companies can locate their subsidiaries in low-wage and low-cost countries.

The effect of globalization is varied, ranging from cultural degradation to the fear of loss of
sovereignty. It directly effects on management practices, wages, jobs, rapidly emerging
concerns with regard to child labour and the employment of women.

Multiculturalism
Culture is understand as the customs, beliefs, norms and value guide the behaviour of
people in a society and that are passed on from one generation to the next . There are
dominant cultures, sub cultures, organisational cultures and occupational cultures.
Multiculturalism means the people from many cultures interact regularly. Global firms are
repositories of multiculturalism. Managing, or cross-cultural management is of considerable
significance and most MNCS tend to have a cultural predisposition towards managing things
in a particular way.

F our predisposition are:- Ethnocentric, Polycentric, Regiocentric and Geocentric.

In a multicultural work environment, not every employee is motivated by the same factors.
Motivational process, approaches and applications reflect the culture of the country directly
or indirectly. What poses a bigger challenge is managing communication across cultures
while ensuring that the global activities such as Leading, Motivating, Decision making,
Problem solving and exchanging information and Ideas are carried out successfully.

Managing multiculturalism is probably the biggest challenge faced by an organisation while


going multinational. And it is clearly driven under the leadership of the top and senior
management of the organisation, with a critical role played by the Human Resource Group.

Nature of IHRM

IHRM refers to HR policies and practices applied by an international firm across all its
subsidiaries located in different countries. The nature of HR functions and activities in an
international context is determined by both the parent company’s policies and practices and
the degree of customisation of the HR polices to local requirements. The HR activities have a
broader perspective with reference to each function of HR, be it human resource planning,
employee hiring, training and development, compensation, preference management or
industrial relations. In brief, IHRM implies more mix of PCNS and HCNS varies and lot more
risk exposure due to exposure due to larger external influences.
HRM policies and processes are impacted by the MNC’s organisational strategy with
references going global at the host locations. The both to globalisation adopted by the MNC
determine the HRM approach to hiring, compensating, training and managing performance
of its employees.

HRM policies and processes are also impacted by the organisational structure that prevails
in an MNC. The decision to centralise core function like marketing, research and
development, HR, finance, production or sales impact the HR policy implementation from a
very centralised completed decentralised workflow.

Strategic IHRM

HR strategic movement process involves action on seven areas: - see the Environment,
Formulate, strategic, identify competitive advantages, define organisational capabilities, link
organisational capabilities, link HR strategy with business strategy and implement the
strategies. HR professionals should not be mere preachers. They should set their own house
on order. They should have their own vision, policies and principles, create an organisation
for their own department; and set goals for themselves; and set benchmarks for ethical
governance.

Staffing of International Business

Staffing or the international organisation is probably the most dynamic activity globally.
Human Resource Planning (HRP), which is understood as the process forecasting an
international organisation’s future demand for and supply of, he right type of people in the
right number, is closely linked to the business plan of the MNC.

The staffing strategies differ based on the phase in the life cycle of the MNC. The three
common issues most reverent in the context of staffing global business are, staffing
orientation, managing expatriates. The recent trends in staffing are Diversity, Searching for
recruiting source, Background checks, Dual career couples, and Outsourcing.

Training and Development

Training strategies bridge the gap between the individual hired and the role/responsibilities
of the job that he/she is being hired for. The training approach depends on firstly making
use of expatriates in short-term or long-term international job assignments; 2ndly the
staffing orientation that is adopted in the subsidiary unit which influences the training
impetus; 3rdly the control and the coordination linkages that the parent unit wishes to
establish with the subsidiary unit which drives the training budget and the strategy, and
4thly the role and responsibilities of the position which determine the extent and content of
training.

In preparing a host country national for the assignment, the training priority is on
knowledge and awareness about the parent company, beginning with the history and
genesis of the organisation, connecting with its mission/vision, goals and the specific
objectives of the subsidiary. All of this is achieved through well planned and budgeted
training and development strategies.

Performance Management

Performance Management comprises such HR activities as assessing performance, providing


feedback and using appraisal data for several purposes. What is needed is that performance
management should be institutionalised because a system. PMS then involves seven
sequential steps. PMS should be aligned with corporate strategy.

Five challenges are unique as they relate to PMS: linking culture with PMS, rewarding
performance managing under performance, rewarding virtual teams and subsidiary
performance.

International Compensation Management

International compensation has objectives like attracting and retaining talent and facilitates
movement of expatriates across subsidiaries. MNCs need to have compensation
philosophies spelling out principles for routine administration. But many MNCs do not have
compensation philosophies.

International compensation is supported by theories-the most relevant one being the


contingency model. Base salaries, incentives, allowances, foreign services premiums,
benefits and taxes are the components of international compensation.

Use of surveys, outsourcing routine activities and like constitute relevant issued in
international compensation.

Ethics and Social Responsibility

Ethics refers to a system of moral principles sense of right or wrong. Ethics derives its base
from religion, culture and legal system. Business must conduct its activities ethically. IF a
society should be ethical, business too should be as a part of society.

IHR manager confronts ethical dilemmas and he or should have a clear policy to resolve the
conflict as and when they arise. Perception of public about the business is that it is generally
unethical. The IHR manger should ensure that his or her company conducts itself ethically.

SR refers to the obligation of decision makes to take such actions that would benefit the
whole society and of themselves too. CSR has both supporters and opponents. Inspite of the
opposition CSR is common in Indian business and in the organisations abroad. IHR manager
faces ethical issues in job discrimination, drug testing, health and safety and similar other
areas. He or she must ensure fairness in these areas. His or her role in CSR is equally critical.

Environmental Trends and Human Resource Challenges


Sr. Environmental Trends Human Resource Challenges
No.
1. Business Environment
Managing a global workforce.
Ensuring availability of employees who have the skills for global
Globalization and increased assignments.
  competition Focusing increasingly on employee productivity to ensure
competitiveness.
Ensuring legal compliance when conducting business abroad. 
Managing employee insecurity.
  Mergers and Acquisitions Ensuring continued employee productivity.
Developing HR initiatives to manage employee morale.
Managing organizational relationship with survivors
Managing morale and commitment of survivors
Providing outplacement services or relocation for employees who lose
  Downsizing
jobs.
Providing personal and family counseling to employees who lose their
jobs.
2. Changing Nature of Work
Managing workforce with flexible working patterns.
Industry and Occupational Focusing on competencies during hiring process.
  shifts Designing incentive based compensation.
Developing proactive employee development programmes.
Managing a virtual workforce.
Managing employee alienation.
Developing training modules and conducting programmes to provide
  Technological Advancements
employees with required skills.
Retraining current employees to mange obsolescence.
Providing work-life balance initiatives.
Manage employee concerns about losing jobs due to outsourcing.
  Outsourcing
Managing employee morale and productivity.
Managing the loss of organizational control over work.
Developing programmes for motivating the flexible workforce.
  Flexible Work Arrangements
Developing ways of ensuring commitment of the flexible workforce to the
firm.
3. Demographic, Societal, and Workforce Trends
  Workforce Diversity
Devising customized HR strategies for hiring, retaining, and motivating
employees belonging to different generations.
  Workforce Composition
Developing life-style driven perks for the new generation employees.
Developing work-life balance programmes.
  Workforce Availability Ensuring the availability of skilled talent to fulfill organizational needs.
Finding replacement for retirees.
Managing the demand-supply gap for qualified managerial talent due to a
large retiring workforce.
Ageing population and Developing mentoring programmes to ensure the skills of experienced
  workforce mangers are passed on to new managers.
Obsolescence training and retaining of older employees.
Managing retirement policies.
Conducting programmes to retain experienced employees.
  Educated and knowledge Ensuring the continued supply of trained manpower.
workforce Training new hires.
Partnering with universities and developing academic initiatives to meet
projected shortage of skilled manpower.
Training employees in computer skills, communication skills, and
customer handling skills.
Emphasizing re-training and development activities.
Strategizing to attract and retain educated and skilled women workers.
  Women in workforce Conducting programmes for women who opt for career breaks.
Providing facilities such as crèches, flexible working hours, etc.
  Changing family structures Developing work-life balance programmes.
Developing diversity training programmes.
Developing HR initiatives directed to workforce diversity.
  Global Workforce Identifying and training expatriate managers for overseas assignments.
Developing equitable pay plans for individuals working in different
countries.
Developing systems to motivate the temporary workforce and elicit
Contingent
commitment from them
  Workforce/workforce
Helping the temporary employees to quickly adapt to the organization to
flexibility
reach their full potential
4. Changing Nature of Employment Relationship
Offering challenging jobs to employees.
Managing rewards for enhancing employee performance.
Providing opportunities for enhancing skills through training,
    development, and educational programmes.
Developing programmes for employee commitment.
Understanding value differences across different employee groups and
customizing HR programmes.
Source: should be institutionalised Agarwala, Tanuja, "Strategic Human Resource Management", Oxford
Publication, 2007.

Levels of Global Competition


Firms differ in the extent to which they participate in global competition. Adler (1991)
categorizes firms as domestic, international, multinational, and transnational, depending on
the level to which they participate in global competition. Understanding the differences
across these categories is helpful to understanding the role of human resources in global
competition and the need for human resource management (HRM) systems commensurate
with the rigors of global competition.

Domestic Most companies begin by operating within a domestic marketplace. This entails
having all of the firm's facilities, employees, and customers within the boundaries of one
country. While employees may differ to some extent in terms of their regional or ethnic
cultural orientations, the pool of employees is relatively homogeneous. Thus, it is important
to note that firms functioning at the domestic level of participation face an environment
very similar with regard to culture, human capital, political/legal systems, and economic
systems, although some variation might be observed across states and geographical areas.

Multinational whereas international firms build one or a few facilities in another country,
firms become multinational when they build facilities in a number of different countries,
attempting to capitalize on lower production and distribution costs associated with different
locations. Multinational firms are sometimes referred to as global because they tend to view
the world as a single market and strive to provide standardized goods or services to meet
the needs of all markets simultaneously. The lower production costs are gained by shifting
production from higher-cost locations to the lower-cost locations. The HRM problems faced
by multinational companies are similar to those faced by international companies, only
magnified. Instead of having to consider only one or two countries' cultural, human capital,
legal, and economic systems, the multinational company must address these differences for
a large number of countries.

These firms have multiple headquarters spread across the globe, resulting in less
hierarchically structured organizations that emphasize decentralized decision-making. These
results in the need for human resource systems that recruit, develop, retain, and utilize
managers and executives who are not only competent transnational but also are competent
in decision-making in flattened, non-hierarchical organizations. In a transnational firm, the
HRM issue is no longer where to find the work force but "`what strategic advantages do our
labour resources give us?' and `what operations should we be planning in order to apply
them most effectively?'

In conclusion, the entry into international markets creates a host of HRM issues that must
be addressed if the firm is to gain competitive advantage. Moreover, these issues become
more complex as the firm increases its level of international involvement. However, these
issues also create an immense potential for a firm's human resources to provide a source of
competitive advantage. In the next section, we use the resource-based view of the firm to
examine the potential for firms to use human resources as a source of sustained
competitive advantage, particularly in an international context. This discussion will provide
the foundation for exploring this role in the special case of the transnational firm.

Effect of Terrorism on the Global Business Environment

Terrorism word is almost worn-out, and its tiredness is accentuated by its reappearance.
Terror, terrorism, terrorist-the dictionary tell us that words are rooted in fear. T (Terror)-
word always affects tremendously the whole world. The sweep of this cruelness has at last
provoked us to recognize the enormity of the threat we face as a nation under attack. It has
sharpened our perception about national security and the reach of the enemy. In ordinary
parlance, it is understood to denote deliberate and systematic acts of murder, maiming of
innocent men, women and children designed to inspired fear and instability in the society
for political or pseudo-religious purpose, terrorism is a menace that requires a global
response. Terrorism came into sharp focus of the world after the terrorist strike at the
World Trade Center on September 11, 2001 in the US. Now US are more aware of the
problems of terrorism faced by country like India. Terrorism is a global scourge with global
effects, its methods are murder and mayhem, but its consequences affect every aspect of
the united agenda – from development to peace to human rights and the rule of law.
Internationally, we are seeing an increasing use of what is call the "T – word" – terrorism to
demonize political opponents. It is broader international agenda need to prevent acts of
terror. Universally, acclaimed fundamental rights such as the eight of self – determination or
statehood for the suppressed populace cannot be shelved by terming- subjugated people to
make room for their own salvation by having recourse to arms. Insurgency and genuine
struggle for emancipation from the burden of the subjugators and the armed struggle of a
bandaged populace can't be equated by any ethical standard. It must be understood in
unqualified terms that brutal force applied to suppress fundamental human rights and
liberty can't be successful in defeating the indomitable spirit of a people fighting for justice,
fair – play and liberty when they are ready to pay any price for it. The danger from dreaded
terrorist, who willing to kill themselves to kill other for what they consider "religiously
ordained" is all real for creating disaster of unprecedented scale and magnitude, where
religious extreme is glorified or globalised and the local forces of terror can at home and
abroad. Terrorist bombs ripped through the commuter train system of India's financial
capital here, business executives said the attack would have little effect on India's buoyant
economy. During the past 35 years, the world has witness nearly 20,000 terrorist incidents.

Terrorism has an adverse effect on the businesses and economies all over the world. It has
no origin in specific nor has its effects upon any single specific nation as such. Rather it is a
plague that tolls a major populace like a disaster with irreparable damages to one and all. It
affects the working of the whole environment of an economy be it the socio-political,
technology, etc environment. It poses a serious threat to the existence of major business
houses. The most startling aspect is that one can control to a great extent, the other
challenges which tend to be firm-specific but in case of terrorism it transcends firm
boundaries (even national boundaries) across the world. In other words, the repercussions
posed by terrorism stretch across nation's business environment.  Thus, it raises major
concern for one and all including individuals, corporates, and nations across the world. It
constricts global expansion of corporates and also mars prospects of the knowledge
workers. Not only this it affects an individual's outlook, his aspirations to think and move
ahead in life. The following view expressed in Table 1.3 captures the insecurity and threat
posed by terrorism for economy.

Threat posed by Terrorism

Blasts on

May 13th Jaipur,


July 26th Ahmadabad,
September 13th Delhi,
November 26th Mumbai,
 What Next?? and
     Where??

Due to terrorism the normal functioning of an organization is disrupted and this, in turn,
affects the prospects of employees therewith (promotions, increments, bonuses, etc.).
Not only this, productivity and morale of the employees become very low. Terrorism,
thus, destroys the organizations in the most adverse manner; every effort to reconstruct
the damage caused is immense and may not be possible. For example, due to attack on
World Trade Centre, the foreign investors would not like to cross their national
boundaries thereby, hampering the developmental prospects of other nations.
Terrorism also affects the interests of not only the employees of an organization but also
the stakeholders and investors. It affects the business of organizations for a particular
time period. With this the requirement for raw material and other resources goes down
and that in turn, affects the business of the entire chain (stakeholders attached). This
further discourages the investors coming in the economy and thereby, reducing the
money inflow and hence, the purchasing power of economy in an adverse way. This
reduces the investment capacity of individuals/groups which, in turn, affects the various
sectors of an economy (such as, stock market, real estate and infrastructure, tourism,
hospitality, etc.).
The destruction is massive – especially of the innocent masses apart from the
destruction of an economy's infrastructural facilities (port, buildings, etc), major sectors
(real estate, tourism, hospitality, etc) getting trapped in the financial and economic
crisis, and image tarnishing of major corporate For instance, due to the 9/11 attacks in
US, an investment bank operating in one of the World trade center lost nearly 650
employees.
In addition to the above, Terrorism has adverse effect on the psychology of individuals of
a nation by creating a sense of insecurity and fear in them. They are terrorized to move
and relocate in any part of the world beyond their home/domestic territory. This
narrows the scope of mobility of labour and knowledge workers which is a necessary
precondition for economic growth and development.
The irreparable destruction following terrorism - the construction delays, security
concerns and public criticism - lead to changes and delays in the process of re-building
and re-structuring the economy. On the flip slide the funds which could be invested for
growth and expansion would now be utilized in the process of restructuring and
recovering the losses and damages caused by terrorism.

Articles

Does HR planning improve business performance?


Industrial Management, Jan-Feb, 2003 by Bill Macaleer, Jones Shannon

For exceptional business performance, it's important that human resources becomes a
strategic partner in the business. The authors explain how human resources planning is
linked to business performance and address misconceptions about the planning process.

For a long time, organization development pundits have maintained that improvement in
business performance is directly tied to good human resources planning and closely linking
this plan to strategic objectives. Most organizations strive to improve--some subtly and
some with aggressive strategic plans designed to take the organization to the next level. The
process to improve in specific areas is ever present within most organizations, although not
always recognized as affecting overall business performance.
Based on decades of surveying countless businesses in all sectors of all sizes over many
years. The Gallup Organization identified those factors that determine the most successful
organizations from the rest. What they describe is a clear value chain that links sustainable
growth and profits to engaged customers who are linked to engaged employees. Inside
those organizations that have a record of sustained growth and profitability are employees
who are committed to their work. It is this commitment and involvement that drives
customer loyalty and engagement. In addition, Gallup found that successful organizations
had great managers who were very good at selecting employees with the right strengths for
the role to be filled, establishing clear performance expectations, developing employees
with those strengths in mind, and creating the right motivational environment.

Effective human resources planning has become even more important in the highly
competitive, global business environment of the 21st century. Organizations are evolving
into more complex but non-traditional structures in order to be competitive and attract and
retain the key individuals upon which success depends. Yet there does not seem to be a
rush or increased interest in human resources planning. Often misunderstood and relegated
to a task-driven, bureaucratic role, human resources is not always able to be the strategic
business partner.

Crisis management in today's business environment: HR's strategic role


HR Magazine, Dec, 2005 by Nancy R. Lockwood

Today's business environment requires a robust, enterprise-wide plan to deal with


unexpected crises. Company reputation and brand, as well as the trust and loyalty of
stakeholders, are all critical factors in the background of crisis management. At the helm, HR
leaders play a strategic role in organizational sustainability to contribute tangible
deliverables through advance preparation, including safety and security initiatives,
leadership development, talent management and solid communication plans to support
crisis management.

"A commitment to planning today will help support employees, customers,


the community, the local economy and even the country. It also protects
your business investment and gives your company a better chance for
survival."

Never before has crisis management been more important. As recent events have shown,
the business community, as well as communities at large, is vulnerable to disruptions that
can be extremely costly. Examples of recent crises that resulted in lost lives, displaced
families and communities, shutdown businesses and damaged economy are hurricanes Rita
and Katrina, the London bombings, the South Asia tsunami, the Northeast blackout and the
September 11 terrorist attacks. Other serious events, such as financial failure from poor
business management, workplace violence, fires, cybercrime, computer viruses, product
tampering or union strikes, can also lead to substantial damage and loss.

The SHRM 2005 Disaster Preparedness Survey Report indicates that as a result of the
September 11 terrorist attacks 56% of organizations created or revised their disaster
preparedness plans but 45% of organizations did not. (2) In view of today's risk
environment, these findings are cause for concern. Companies continue to think "it will not
happen here"

Potential Roles of the Human Resource Management Professional in the


Strategic Planning Process

Journal article by Robert W. Rowden; SAM Advanced Management Journal, Vol. 64, 1999

Organizations must consider many critical factors as they face the future. Technology is advancing at a
frenetic pace, especially in relation to the transfer and accessibility of information and the increasing
ease of establishing communication-networking facilities. The continuing removal of trade barriers and
tarrifs, the consequent globalization of markets, the volatility of consumer demands within existing
markets, currency fluctuations, and political upheaval are by now familiar characteristics of an
environment in flux. The capability of people to cope and manage within such an environment is a vital
element in the success of any business. The new business context is prompting managements to take a
greater interest in the utilization of their organizations' human resources.

HR must begin this transformation by understanding the company's business direction. This
understanding includes what the company's product is capable of doing, the typical consumer of the
product, and the company's competitive position in the marketplace. Also, the HR function must change
from a staff function that delivers prepackaged HR services to a service that helps managers create
customized strategic plans to influence the effectiveness of company performance.

A key factor in the process of integrating strategic planning with HR is ensuring that the HR staff
recognize their roles as change agents and strategic business partners. This may be particularly difficult
in a rapidly changing organization where the lack of stability tends to leave people with the feeling that
they are victims of change rather than champions of it. However, one key to creating a successful HR
function is to organize the chaos caused by change. This can be accomplished by forging ahead with
innovative strategic plans that add value to the company instead of retreating into comfortable,
traditional roles that will not effectively improve a company's bottom line (Cipolla, 1996).

These changes are dominated by the shrinking world, as telecommunication, travel, information,
ideologies, partnerships, and businesses are becoming global. As a result, businesses, regardless of size,
must become global in their thought processes to compete in a worldwide marketplace. As globalization
continues, businesses will find it increasingly necessary to compete for scarce resources, requiring
business managers to function in a global financial arena instead of local or regional ones. Another issue
of globalization is the uncertainty in politicization of global markets. No longer will Western rules apply
in countries where power can be influenced by religion, revolution, and single or dominant political
parties.).

STRATEGIC MANAGEMENT OF HUMAN RESOURCES FOR GLOBAL COMPETITIVE ADVANTAGE.

Journal of Business Strategies

| March 22, 2001 | McWilliams, Abagail; Van Fleet, David D.; Wright, Patrick M. |
This article extends the literature on the role of human resources in global competitiveness by focusing
on the ability of transnational firms to create a sustainable competitive advantage through the strategic
management of their work force. We focus on the ability of managers to strategically draw from
multiple human resource labor pools, creating a competitive advantage for transnational firms vis-a-vis
domestic and multinational firms. A model, which extends the resource-based view of the firm, is
developed.

Strategic Management of Human Resources for Global Competitive Advantage

One of the keys to successful competition in the global market is the effective deployment of human
resources to achieve a competitive advantage. The role of the remainder of the firm's work force in
achieving competitive advantage in the global marketplace has received much less attention. The
purpose of this paper is to explore how human resources, defined as the entire pool of employees,
constitute a potential source of sustainable competitive advantage for transnational firms.

In order to achieve this aim, we first distinguish transnational firms from multinational and domestic
firms. We then use the resource-based view of the firm to examine how human resources can form a
source of sustainable competitive advantage for domestic firms (Peteraf, 1993; Barney, 1991;
Wernerfelt, 1984). Building on this discussion, we explore the additional ways in which the human
resources of a transnational firm can constitute a source of sustained competitive advantage. Finally, we
discuss the managerial implications of our analysis.

Conclusion

Today, organizations all over the world operate in a hyper-turbulent change-intensive


environment. They use various change processes, such as outsourcing, downsizing, and
reengineering, to ensure the continued success of the firm. Some of the changes are
reactive (natural disasters, terrorism, market crash, etc) and others can be proactive (like
Mergers & Acquisitions, Downsizing, Outsourcing, etc). An organization in its effort to adapt
to these environmental changes faces the problem of adjusting and controlling the reactive
changes especially terrorism. There is little that firms could do to consolidate their position
in the face of such an uncertainty. So, reconstituting and reassuring the workforce through
proper communications with a sense of security and stability is necessary for organizations.

References
http://www.workinfo.com/ 

http://www.accessmylibrary.com/

http://findarticles.com/p/articles/mi_hb3081/

Greer, C. R. 2002, Strategic Human Resource Management: A General Managerial Approach, 2 nd


edition, Pearson Education, New Delhi.
Lengnick-Hall, M.L. and C.A. Lengnick-Hall 2003, Human Resource management In the Knowledge
Economy: New Challenges, New Roles, New Capabilities, Berrett-Koehler Publishers, Inc., San
Francisco, pp. 36-43.

Aswathappa k, Dash Sadhna 2008, International Human Resource Management, 2 nd edition, Tata
Mcgrew-Hill, New Delhi 110008.

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