Dealing with Employees/H R MANAGEMENT

Advertisement


Question
QUESTION: HR managers should have aseat at the strategic management table, but when they earn it. Discuss.

ANSWER: THE  STATEMENT  IS TRUE.BECAUSE  HRM  AFFECTS   EFFECTS  EVERY ASPECTS  OF THE  BUSINESS.

RESPONSIBILITIES  involves:
•   determining and clarifying strategic and operational problems via consultation
•   identifying problems and seeking solutions
•   reviewing current strategy
•   undertaking research into the industry sector, markets and competitors
•   collecting, analysing and interpreting data and statistics
•   compiling and presenting information verbally, visually and in writing
•   identifying and assessing the pros and cons of possible strategies
•   outlining objectives
•   developing, advising about and implementing agreed solutions
Key skills for strategic management
•   Commercial awareness
•   Good numerical skills
•   Analytical abilities
•   Excellent interpersonal skills
•   Communication skills
•   IT skills

HR Strategic Roles in Modern Organization
he role of human resources management in the modern organization: Making human resources the driver of success.
Staff behavior is a strategic factor in the profit and loss. But frequently HR is not seen as the key driver of organizational results typically seen as a necessary expense protecting profits but not a proactive contributor to profits. Why?
The OPD-theory and system of organizational design was born from the question 'why?' beginning with the background science, developing improved social science tools and then applying those tools to the question of the exact causal link between organization strategy and staff behavior.
The result was the OPD-SHRM system of organization design and management within which HR emerges as a key driver of results.
Applying the processes of OPD-SHRM makes the HR Department the key driver of strategy and business success.
The role of human resources management in the modern organization shows how to restructure the HR Department making it the technical expert on how to increase human performance. The resulting improved HR focus ensures every team leader will seek partnership with HR to produce results the team leader could not achieve on their own

The modern organization is focused on the aggressive growth, bringing innovative products, finding niches in the market and being the top company in the industry. The modern organization designs products and services, which can be sold with the high margin as the organization can keep its competitive advantage. The HR Role in the modern organization is different from the classical (old-time) company. HR is not focused on the administration; HR people are focused on the key business imperatives.
Building competitive advantage as HR Role
Each HR proposal in the modern organization is focused ondeveloping or retaining the competitive advantage. The top management gives HR full responsibility, and it implements improvements in the area of HR Management. It does not ask for the approval of each initiative. It implements improvements to make the organization work better with employees.
HR actively searches gaps in the organization. It maps gaps and prepares Cost and Benefit analyses of implementing projects to realize the improvement. HR has no administration role. HR is not the advisory department. HR is fully responsible for the development of employees in the organization. HR is fully responsible for the right staffing procedures.
The HR Professionals become responsible for delivering goals at their internal clients. They do not advise managers how to achieve targets. They share the responsibility of achieving targets. It is an enormous difference. The competitive advantage in Human Resources cannot be achieved differently.
Developing and retaining talents as HR Role
The modern organization depends on the quality of its employees. The modern organization invests into the development of employees. Employees build the competitive advantage. HR is responsible for the development of employees. The HR Role is in identification of the best development opportunities of employees.
HR identifies the needs of managers and the organization. HR works with the business strategy and identifies gaps in the organizational design. The employees have to be prepared for the coming challenges, and they have to be trained.
HR is responsible for finding rich sources of talents, and it is responsible for setting talent management programs. The success of HR is measured by the turnover and fluctuation of top talents. The retention of the top talents is not just a task for the line management. HR Role is in preparing right HR tools to retain top talents in the organization.
Leadership Development as HR Role
The leader represents the organization. The leader has a different role than the manager has. HR Role is in developing the future leaders. HR is responsible for the development of the current leader of the organization.
HR is fully responsible for the succession planning in the organization. Managers and leaders  have to identify the potential successors, and they have to cooperate with HR in the leadership development program.
The HR role is in designing processes and programs for the development of the future leaders. HR runs the selection procedures and evaluates programs on the regular basis. The leadership development is the key HR responsibility.
Building Diverse Teams as HR Role
The diversity increases the competitiveness of the organization. The products born from the healthy conflicts are better. The diverse team does not share the common point of view from the beginning. The solution is born from heavy discussions.
HR has to oversee the recruitment process to build the diverse team in the organization. The diversity is not about the number of women in management. The diversity is about the mixture of different personalities.
The role of HR is in finding diverse talents as managers can enrich their teams.
The Importance or Human Resources Management (HRM) In Modern Organizations
Human Resources Management (HRM) is the strategic management of the employees, who individually and collectively contribute to the achievement of the strategic objectives of the organization
Aiming to enable the organization to achieve its strategic goals by attracting, retaining and developing employees, HRM functions as the link between the organization and the employees. A company should first become aware of the needs of its employees, and at a later stage, understand and evaluate these needs in order to make its employees perceive their job as a part of their personal life, and not as a routine obligation. To that end, HRM is very crucial for the whole function of an organization because it assists the organization to create loyal employees, who are ready to offer their best.
The HRM activities in modern organizations are typically performed in communication with the General Management in an effort to provide a variety of views when a decision must be taken. In that way, decision making is not subject to the individual perceptions of the HR or the General Manager, but it becomes the outcome of strategic consensus.
The main goals / responsibilities of HRM are:
•   To retain low employee turnover rate by inspiring people to work for the company
•   To attract new employees
•   To contribute to employee development
To achieve these goals, Human Resources Management trains and motivates the employees by communicating ethical policies and socially responsible behavior to them. In doing so, it plays a significant role in clarifying the organization's problems and providing solutions, while making employees working more efficiently.
Modern organizations can survive in the dynamic, competitive environment of today only if they capitalize on the full potential of each employee. Unfortunately, many companies have not understood the importance of the human capital in successful operations. The recruitment and selection of the best employees is a very difficult obligation. Even companies that are voted in the top-ten places to work at, often endure long periods of hard work to realize that human element is all an organization should care about.
New challenges arise even now for the organization, and it is certain that new challenges will never cease to emerge. Therefore, the use of proper Human Resources techniques is a really powerful way for organizations to overcome these challenges, and to improve not only their quantitative goals but also their organizational culture, and their qualitative, cognitive aspects.


Question:   Discuss how the practices of human resource management can give an organization the competitive advantage, particularly in the area of recruitment, training and diversity management. Discuss the HRM theories, components of HRM, practices of HRM and which practices that gives an organization the "competitive advantage".

STRATEGIC HRM DEFINED
Strategic HRM is an approach to making decisions on the intentions and plans of the organization concerning the employment relationship and its recruitment, training, development, performance management, reward and employee relations strategies, policies and practices. The key characteristic of strategic HRM is that it is integrated.
HRM strategies are generally integrated vertically with the business strategy and horizontally with one another. The HRM strategies developed by a strategic HRM approach are essential components of the organization's business strategy.
Concerns of strategic HRM
Strategic HRM is concerned with the relationship between human resource management and strategic management in the firm. Strategic HRM refers to the overall direction the organization wishes to pursue in order to achieve its goals through people. It is argued that, because intellectual capital is a major source of competitive advantage, and in the last analysis it is people who implement the strategic plan, top managernent must take these key considerations fully into account in developing its corporate strategies. Strategic HRM is an integral part of those strategies.
Strategic HRM addresses broad organizational issues relating to organizational effectiveness and performance, changes in structure and culture, matching resources to future requirements, the development of distinctive capabilities, knowledge management and the management of change. It is concerned with both meeting human capital requirements and the development of process capabilities, that is, the ability to get things done effectively. Overall, it will consider any major people issues that affect or are affected by the strategic plan of the organization. 'The critical concerns of HRM such as choice of executive leadership and formation of positive patterns of labour relations, are strategic in any firm.'
The focus of strategic HRM
Strategic HRM focuses on actions that differentiate the firm from its competitors. It develops declarations of intent which define means to achieve ends, and it is concerned with the long term allocation of significant company resources, and with matching those resources and capabilities to the external environment. Strategy is a perspective on the way in which critical issues or success factors can be addressed, and strategic decisions aim to make a major and long term impact on the behaviour and success of the organization.
The meaning of strategic HRM
Strategic HRM has four meanings:
• the use of planning;
• a coherent approach to the design and management of personnel systems, based on an employment policy and manpower strategy, and often underpinned by a 'philosophy';
• matching HRM activities and policies to some explicit business strategy;
• seeing the people of the organization as a 'strategic resource' for the achievement of 'competitive advantage'.
AIMS OF STRATEGIC HRM
The fundamental aim of strategic HRM is to generate strategic capability by ensuring that the organization has the skilled, committed and well-motivated employees it needs to achieve sustained competitive advantage. Its objective is to provide a sense of direction in an often turbulent environment, so that the business needs of the organization, and the individual and collective needs of its employees, can be met by the development and implementation of coherent and practical HR policies and programmes. Strategic HRM should provide unifying frameworks which are at once broad, contingency based
and integrative.
STRATEGIC HRM MODELS
There are three models: high performance management (high performance working), high commitment management and high involvement management. Within the framework of the concept of strategic HRM, these describe various approaches to its development and implementation.
High performance management
High performance working involves the development of a number of interrelated processes that together make an impact on the performance of the firm through its people in such areas as productivity, quality, levels of customer service, growth, profits, and ultimately the delivery of increased shareholder value. This is achieved by 'enhancing the skills and engaging the enthusiasm of employees' the starting point is leadership, vision and benchmarking to create a sense of momentum and direction. Progress must be measured constantly.
That the main drivers, support systems and culture are:
*decentralized, devolved decision making made by those closest to the customer so as constantly to renew and improve the offer to customers;
*development of people capacities through learning at all levels, with particular emphasis on self-management and team capabilities - to enable and support performance improvement and organizational potential;
*performance, operational and people management processes aligned to organizational objectives - to build trust, enthusiasm and commitment to the direction taken by the organization;
* fair treatment for those who leave the organization as it changes, and engagement with the needs of the community outside the organization - this is an important component of trust and commitment-based relationships both within and outside the organization.
High-performance management practices include rigorous recruitment and selection procedures, extensive and relevant training and management development activities, incentive pay systems and performance management processes.
The strategy may be expressed as a drive to develop a performance culture in an organization, and the following is an example of the performance strategy formulated recently by a large local authority:
The fundamental business need the strategy should meet is to develop and maintain a high performance culture. The characteristics of such a culture are:
*a clear line of sight exists between the strategic aims of the authority and those of its departments and its staff at all levels
*management defines what it requires in the shape of performance improvements, sets goals for success and monitors performance to ensure that the goals are achieved
*leadership from the top which engenders a shared belief in the importance of continuing improvement
*focus on promoting positive attitudes that result in a committed and motivated workforce
*performance management processes aligned to the authority's objectives to ensure that people are engaged in achieving agreed goals and standards
*capacities of people developed through learning at all levels to support performance improvement
*people provided with opportunities to make full use of their skills and abilities
*people valued and rewarded according to their contribution.
High commitment management
One of the defining characteristics of HRM is its emphasis on the importance of enhancing mutual commitment . High commitment management has been described as 'A form of management which is aimed at eliciting a commitment so that behaviour is primarily self-regulated rather than controlled by sanctions and pressures external to the individual, and relations within the organization are based on high levels of trust.'
The approaches to creating a high commitment organization are:
• the development of career ladders and emphasis on trainability and commitment as highly valued characteristics of employees at all levels in the organization;
• a high level of functional flexibility with the abandonment of potentially rigid job descriptions;
• the reduction of hierarchies and the ending of status differentials;
• a heavy reliance on team structure for disseminating information (team briefing), structuring work (team working) and problem solving (quality circles).
job design as something management consciously does in order to provide jobs that have a considerable level of intrinsic satisfaction;
• a policy of no compulsory lay-offs or redundancies and permanent employment guarantees, with the possible use of temporary workers to cushion fluctuations in the demand for labour;
• new forms of assessment and payment systems and, more specifically, merit pay and profit sharing;
• a high involvement of employees in the management of quality.
High involvement management
This approach involves treating employees as partners in the enterprise whose interests are respected and who have a voice on matters that concern them. It is concerned with communication and involvement. The aim is to create a climate in which there is a continuing dialogue between managers and the members of their teams in order to define expectations and share information on the organization's mission, values and objectives. This establishes mutual understanding of what is to be achieved and a framework for managing and developing people to ensure that it will be achieved.
Five high-involvement work practices have been identified:
• 'on-line' work teams;
• 'off-line' employee involvement activities and problem solving groups;
• job rotation;
• suggestion programmes;
• decentralization of quality efforts.
IMPLEMENTING HR STRATEGIES
Because strategies tend to be expressed as abstractions, they must be translated into
programmes with clearly stated objectives and deliverables. But getting strategies
into action is not easy. The term 'strategic HRM' has been devalued in some quarters;
sometimes it means no more than a few generalized ideas about HR policies, at other
times it describes a short term plan, for example to increase the retention rate of
graduates. It must be emphasized that HR strategies are not just programmes, policies, or plans concerning HR issues that the HR department happens to feel are important. Piecemeal initiatives do not constitute strategy.
The problem with strategic HRM is that too often, strategic intentions are not achieved in practice. As seen : 'One principal strand that has run through this entire notes is the disjunction between rhetoric and reality in the area of human resource management, between HRM theory and FIRM practice, between what the HR function says it is doing and how that practice is perceived by employees, and between what senior management believes to be the role of the HR function, and the role it actually plays.' The factors they identify that contribute to creating this gap include:
*
There is a tendency for employees in diverse organizations only to accept initiatives they perceive to be relevant to their own areas.
*
There is a tendency for long serving employees to cling to the status quo.
*
Complex or ambiguous initiatives may not be understood by employees or will be perceived differently by them, especially in large, diverse organizations.
*
It is more difficult to gain acceptance of non-routine initiatives.
*
Employees will be hostile to initiatives if they are believed to be in conflict with the organization's identity, as with downsizing in a culture of 'job for life'.
* The initiative is seen as a threat.
*
There are inconsistencies between corporate strategies and values.
*
The extent to which senior management is trusted.
*
The perceived fairness of the initiative.
*
The extent to which existing processes could help to embed the initiative.
*
A bureaucratic culture that leads to inertia.
Barriers to the implementation of HR strategies
The barriers that can be met by HR strategists when attempting to implement strategic initiatives often result from a failure to understand the strategic needs of the business, with the result that HR strategic initiatives are seen as irrelevant, even counter-productive. This problem is compounded if there has not been an adequate assessment of the environmental and cultural factors that affect the content of the strategies. III conceived and irrelevant initiatives, possibly because they are current fads or because there has been a badly digested analysis of best practice that does not fit the organization's requirements, will not help. Implementation will also be difficult if one initiative is taken in isolation without considering its implications on other areas of HR practice or trying to ensure that a coherent, holistic approach is adopted.
It will be very hard to implement anything if the practical problems of getting the initiative accepted by all concerned, including, importantly, top management have not been dealt with. Inability to achieve ownership among line managers, or to develop the skills they require to play their part in implementation, will be major obstacles. (The key role of line managers in making HR initiatives work is often underestimated.) It is also necessary to ensure that supporting processes for the initiative (such as performance management to support performance pay) and the financial and people resources required are available.
Overcoming the barriers
To overcome these barriers it is necessary to:
1. Conduct a rigorous initial analysis
. The initial analysis should cover business needs, corporate culture, and internal and external environmental factors. The framework could be a SWOT analysis of strengths, weaknesses, opportunities and threats facing the organization, or a PESTLE analysis (the political, economic, social, technological, legal and environmental contexts within which the organization operates).
2. Formulate strategy
. The formulation should set out the rationale for the strategy and spell out its aims, cost and benefits.
3. Gain support
. Particular care needs to be taken to obtain the support of top managers (for whom a business case must be prepared), line managers, employees generally and trade unions. This means communication of intentions and their rationale, and the involvement of interested parties in the formulation of strategic plans.
4. Assess barriers
. An assessment is required of potential barriers to implementation, especially those relating to indifference, hostility (resistance to change) and lack of supporting processes or resources. Unless and until a confident declaration can be made that the initiative will receive a reasonable degree of support (it could be too much to expect universal acclamation) and that the resources will be available, it is better not to plunge too quickly into implementation.
5. Manage change
. Change management processes should be used to gain acceptance for any new initiatives contained in the strategy. The important role of the HR function in managing change cannot be overestimated.
6. Prepare action plans
. These should spell out what is to be done, who does it and when it should be completed. A project plan is desirable which indicates the
stages of the implementation programme, the resources required at each stage, and the stage and final completion dates. The action plan should indicate the consultation, involvement, communication and training programmes that will be required. It should also state how progress will be monitored, and the criteria for measuring success against objectives.
7. Project manage implementation
. This should be conducted by reference to the action or project plan, and would involve monitoring progress and dealing with problems as they arise.
8. Follow up and evaluate
. Nothing can be taken for granted. It is essential to follow up and evaluate the results of the initiative. Follow-up can take place through interviews, focus groups, and desirably, attitude surveys. The evaluation should point the way to action in the form of amendments to the original proposals, the provision of supporting processes, additional support to line managers, intensified communication and training, or getting more resources.
Setting out the strategy
The following is an example of the headings under which a strategy and the plans for implementing it could be set out.
• Basis:
-
business needs in terms of the key elements of the business strategy;
- environmental factors and analysis (SWOT/PESTLE);
SWOT =
strengths, weaknesses, opportunities, threats.
PESTLE=political,economic,social,technology,legal,environment.
- cultural factors - possible helps or hindrances to implementation.
• Content - details
of the proposed HR strategy.
• Rationale - the
business case for the strategy against the background of business needs and environmental/ cultural factors.
• Implementation plan:
-
action programme;
- responsibility for each stage; - resources required;
- proposed arrangements for communication, consultation, involvement, training and change management;
- project management arrangements.
• Costs and benefits analysis - an
assessment of the resource implications of the plan (costs, people and facilities) and the benefits that will accrue, for the organization as a whole, for line managers and for individual employees. As far as possible these benefits should be quantified in terms of value added.
=====================================================================================
HRM AND HRD are outcomes of STRATEGIC HRM.
HRM includes [ you must be aware of it already ]
-HRM
planning
-manpower planning
-recruitment / selection
-training / development
-compensation / benefits
-employee relations/ labor relations
-safety / health
etc etc
--------------------------------------------------------------------------------------
HR DEVELOPMENT includes
-org. learning
-training
-education
-development
-e learning
-management development
-career planning /development.
-orientation
-induction
-performance management
etc etc
======================================
CORPORATE HR STRATEGIC PLANNING.
In most companies, HRM is part of senior management.
HRM makes contribution to the development of
-corporate mission statement
-corporate objectives
-corporate strategy.
Normally the senior management team or TOP management would
consists of
-ceo or managing director
-corporate planning manager
-finance manager
-marketing manager
-manufacturing manager
-sales manager
-supply chain manager
-HR manager
etc.
STEP 1[a]
TOP management would
-evaluate the current [ last 12 months] performance against the
objectives / target set previously, which includes return on investment,
profitability , etc and also the performance of various departments
like marketing, sales, HR, manufacturing, etc etc.
STEP 1 [b]
TOP management will also evaluate the current mission,objectives,
strategies and policies.
-----------------------------------------------
STEP 2[a ]
CEO or MD will take the summary of the evaluation of the current
performance to the board for review.
STEP 2 [ b ]
Based on the review plus the external environmental factors,
the board will make decisions on
-new mission statement
-new corporate objectives
-new corporate governance
-------------------------------------------------------------
STEP 3 [ a ]
TOP management will scan and assess the company's
external environment --political/ economic/social/ technology.
to determine the strategic factors that pose as
OPPORTUNITIES / THREATS.
STEP 3 [ b ]
TOP management will scan and assess the company's
internal environment --structure/ culture/resources etc
to determine the strategic factors that pose as
OPPORTUNITIES / THREATS.
STEP 3[ c ]
TOP MANAGEMENT will analyze the the strengths / weaknesses
of the organization and pinpoint the problems areas that needs
attention and the strengths that could be exploited.
STEP 4
Based on the above analyses, TOP management will generate,
evaluate, and select the best strategic factors.
STEP 5
TOP management will review and revise [ if necessary ] the
mission statement and corporate objectives.
STEP 6
TOP management will generate and evaluate strategy alternatives
and objectives.
STEP 7
This final corporate mission statement, objectives and strategies
becomes the foundation information for the various departments
to work out their departmental objectives/strategies/plans.
STEP 8
After working out their respective objectives/strategies/plans
and the budgets , the departmental managers send their
respective information to the TOP management for
approval.
STEP 9
On receiving the approved package from the TOP management,
the departmental managers develop the implementation plan.
STEP 10.
NOW you have mission/objectives/strategies/plans/budget/schedules.
======================================================
IN case of HR, which is a department by itself,
This final corporate mission statement, objectives and strategies
becomes the foundation information for the HR department
to work out your departmental objectives/strategies/plans.
STEP A
Discuss with the various other departments like sales/ production/
distribution/accounting/ IT etc about their requirements
-for manpower
-recruitments
-replacements
-training
etc etc
Once you get their departmental requirements, HRM develops
-recruitment /selection plans / programs/ procedures/ priorities
-training plans / programs/ procedures/ priorities
-rewards plans / programs/ procedures/ priorities
-development plans / programs/ procedures/ priorities
-payroll plans / programs/ procedures/ priorities
- performance management plans / programs/ procedures/ priorities
-staff/organization communication plans / programs/ procedures/ priorities
etc etc
-HR POLICIES
-HR PROCEDURES
-HR PRACTICES.
@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@
BUSINESS PARTNER MODEL
PRIORITY AND FOCUS: Becoming more strategic and building strategic relationships.
DESCRIPTION: The model  defines the basic role of HR into four areas (service delivery, employee commitment, change management and strategic actions); the business partner model is the next step in HR evolution after the traditional "personnel" or generalist’s model; the strategy is interpreted by many to emphasise strategic initiatives and to de-emphasise transactions; when it is effective, HR becomes more important and earns a seat at the executive table.
LIKELY STRATEGIC IMPACT: Moderate because the strong strategic relationships might not be enough to directly impact employee productivity or profit.
APPROPRIATE FOR: Medium and large businesses that need to move away from the "personnel" model.
ADVANTAGES/ BENEFITS: Strong interpersonal relationships and high visibility with executive management; fast response time to major corporate problems; smaller sized HR with lower headcount
DISADVANTAGES/RISKS: De-emphasis on transactions minimizes customer interactions; many HR professionals evolving from the personnel model may not be capable of becoming strategic; the emphasis on outsourcing may mean reduced HR headcount; the emphasis on corporate strategic issues can make the cadre of generalists feel "isolated" from corporate; the highly centralised corporate unit can become averse to taking risks and may evolve into a "meeting culture"; the minimal use of metrics makes it difficult to prove economic value during budget reductions; there is no emphasis on rewarding great people management
STRUCTURE AND ORGANISATION: The strategic elements of HR are centralised and while there are a moderate number of generalists, their responsibilities are generally non-strategic; this model generally has a top-heavy senior HR management staff.
LARGEST BUDGET/TIME ALLOCATION: Strategic consultants, high-level corporate HR staff, outsourcing, legal compliance.
LOWEST BUDGET/TIME ALLOCATION: Payroll, transactions, workforce planning, metrics.
LINE MANAGEMENT PARTICIPATION: Medium
USE OF TECHNOLOGY: Medium, mostly reliant upon standard  enterprise suites.
------------------------------------------------------------






BEFORE  YOU  GO  INTO   DEVELOPING   HR  STRATEGIES,
YOU  SHOULD  REVIEW ,

-company  vision  statement.
-company  mission  statement.
-company  objectives
-company  strategies

THEN  YOU  SHOULD  ALIGN   THE  HR  STRATEGIES
WITH  THE  COMPANY  OBJECTIVES/  STRATEGIES.

WHILE  DEVELOPING  FUTURE  HRM  STRATEGIES,  CONSIDER
THE  FOLLOWING

1.Goals  A firm’s goals should reflect its strategy and highlight the few unique circumstances that will affect its future most deeply.
2.Competitive Differentiation  .In a competitive marketplace, winning requires that a business serve some set of customer needs better than its competitors.  Differentiation is what gives a firm its competitive edge.  
3.Customer Strategy  .  the adage that no two customers are exactly alike is especially apt. A firm’s competitive differentiation depends on its ability to fully meet the specific business and individual needs of certain customers. This makes the question “Who are our target clients?” both critical and complex.

4.Geographic Strategy  .The strategic decisions surrounding a  firm’s target clients are bound up in issues of geographic strategy as well as customer differentiation

5.Client Value Proposition  .The true value proposition to the  co's  client is all-inclusive, encompassing both the comprehensive service they  provide and the process with which they  provide it. In addition, because it is the entire experience of working with a  finance  co. that matters to the client, the  finance  co. firm’s value proposition has a personal element as well. This personal value element is critical to the person using  the  financial   service.  
6. Business Line Strategy  . One aspect of value proposition is identifying the lines of business in which  the     company  engages .
7.Service Strategy  .When clients purchase a  service , it includes a certain level of attention as well as a particular kind of capability from the firm.
8.Pricing Strategy  .How the  firms price their services is a critical strategic issue for two reasons: it helps define the client value proposition (value at a price), and it drives the firm’s economics.

IF   THE  COMPANY  OBJECTIVES  WERE  THEN,

•   "EXPAND our customer base and enhance the franchise by pursuing multimedia opportunities.
•   DELIVER an award-winning level of journalistic excellence, building public interest, trust and pride.
•   PROVIDE vigorous community leadership and support.
•   INSTILL an environment of internal and external excellence in customer service.
•   EMPOWER and recognize each employee's unique contribution.
•   ACHIEVE the highest standards of quality.
•   IMPROVE financial strength and profitability."



HUMAN RESOURCES  OBJECTIVES / STRATEGY

A Recruitment and Retention
HR Strategic objective: To recruit and retain  staff of  quality and
high quality support staff
HR  STRATEGY
-to  develop  a  competency  based  recruitment /  selection  system.
DEVELOP   AN   ACTION PLAN.
---------------------------------------------------------
B Reward and Recognition
HR  STRATEGIC OBJECTIVE: To reward staff appropriately and selectively to aid
recruitment and retention
HR  STRATEGY
-to develop  a  system  to  pay  market  oriented/ pay for  performance  system.
DEVELOP   AN   ACTION PLAN.
---------------------------------------------------------------
C Training, Learning and Development
HR  STRATEGIC OBJECTIVE: To enable all staff to reach full potential for the benefit
of the COMPANY  and their own development
HR  STRATEGY
-to  provide  all  employees  a  minimum of   4  days  training  annually.
DEVELOP   AN   ACTION PLAN.
-------------------------------------------------------------------------
D Equality, Diversity and Culture
HR  Strategic objective: To value and recognise the diversity of the company  staff; and to
attract a more diverse intake wherever possible
HR  STRATEGY
-to install  a  program  to  educate  the  employees  the  benefits
of  diversity  to  the  organization  and  to  the employees.
DEVELOP   AN   ACTION PLAN.
--------------------------------------------------------------------------
E Action to tackle poor performance
HR  STRATEGIC  OBJECTIVE: TO  ESTABLISH  A  SYSTEM TO  MANAGE
THE  POOR PERFORMANCE  STAFF.
HR  STRATEGY
-to develop  and  implement  the  performance  management  system,
which  will  include  1]  annual  appraisal  system 2] individual  development  plan.
DEVELOP   AN   ACTION PLAN.
----------------------------------------------------------------------
F Staffing needs
HR  STRATEGIC  OBJECTIVE: TO  ESTABLISH  A  SYSTEM  TO
IDENTIFY  THE  STAFFING  NEEDS FOR THE SHORT/LONG TERM NEEDS.
HR  STRATEGY
-to  conduct  an   HR  audit.
-to  develop   an   HR  PLANNING/  MANPOWER  PLANNING.
DEVELOP   AN   ACTION PLAN.
===================================================
@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@


HUMAN RESOURCE MANAGEMENT PRACTICES:

Human Resource is the most important asset for any organization and it is the source of achieving competitive advantage.
Managing human resources is very challenging as compared to
managing technology or capital and for its effective management,
organization requires effective HRM system. HRM system should be backed up by sound HRM practices.

HRM practices refer to organizational activities directed at managing the pool of
human resources and ensuring that the resources are employed towards the fulfillment of organizational goals.

HRM practices get affected by
external and internal factors and directly or indirectly affect other variables such as employee’s attitude, employee employer
relations, financial performance, employee productivity etc. and ultimately contribute to overall corporate performance

Human Resource Management Practices:



Human resources are the source of achieving
competitive advantage because of its capability to convert the other resources (money, machine, methods and material) in to output (product/service). The competitor can imitate other resources like technology and capital but the human resource are
unique.

It is important factors providing flexibility and adaptability to organizations. one needs to bear in mind that people (managers), not the firm, are the adaptive mechanism in determining how the firm will respond to the
competitive environment.
that managing people is more difficult than managing technology or capital.
However those firms that have learnt
how to manage their human resources well would have an edge over others for a long time to come because acquiring and
deploying human resources effectively is cumbersome and takes much longer


The effective management of human resources requires sound Human Resource Management systems. defines HRM as a distinctive approach to employment
management which seeks to obtain competitive advantage developed showing how HRM practices leads to overall
corporate performance.

A Comprehensive Review
through the deployment of a highly committed and skilled workforce, using an array of techniques.
HRM can help firms improve organizational behavior in such areas as staff commitment, competency and flexibility, which
in turn leads to improved staff performance .
In order to develop a sound HRM system , the organization should have effective Human Resource Management practices.HRM practices refer to organizational activities directed at managing the pool of human resources and ensuring that the resources are employed towards the fulfillment
of organizational goals .

HRM practices may differ from one organization to another and from one country to another.

The relationship between HRM practices and other important organizational variables is then presented including the HR best
practices of Indian companies.

Types of HRM Practices
Theories on best practices
or high commitment theories suggest that universally, certain HRM practices, either separately or in combination are associated
with improved organizational performance.

Researchers have also found that those well-paid, well motivated workers, working in an
atmosphere of mutuality and trust, generate higher productivity gains and lower unit costs
Several attempts have been made from time to time by different researchers to identify the type of HRM practices in different sectors.


the following seven practices:
1. Employment security
2. Selective hiring
3. Self-managed teams/team working
4. High compensation contingent on organizational performance
5. Extensive training
6. Reduction in status difference
7. Sharing information

identify an ‘HRM bundle’ of key practices which support service
organizations quality strategies, these being:
1. Careful recruitment and selection, for example, ‘total quality recruitment’, ‘zero defects recruitment’, ‘right
first time recruitment’.

2. Extensive remuneration systems, for example, bonuses
available for staff willing to be multi-skilled.

3. Team working and flexible job design, for example, encouraging a sense of cohesiveness and designing
empowered jobs.
4. Training and learning, for example, front line staff having enhanced interpersonal and social skills.
5. Employee involvement, for example, keeping employees
informed of key changes in the organization.
6. Performance appraisals with links to contingent reward systems, for example, gathering customer feedback to
recognize the work by employees over and above their
expected duties, which in turn is likely to lead to a bonus for staff.

They developed the 3cTER
Framework of HRM practices and identified Training and Development, Employer-Employee Relations, Recognition
through Rewards, Culture building, Career Development, Compensation and Benefits as important HRM Practices.

external and internal factors affecting HR practices differs significantly across countries.Some of the major potential
influences are as follows:
External Factors
external factors affecting HR practices are those pressures on firms that cannot
be controlled and changed in a favorable way in the short run.
These factors include the following:
Economic Changes:  found that as
a result of development of the global economy, the international
dimension of HR practices has become more and more significant
.The focus of HR practices has shifted from traditional topics such as internal selection and rewards to concepts such as
globalization and international competition.

Technological Changes: Technology affects HRM to a greater extent because of high degree of interaction between
technology and HR. Technology changes the way we work, the roles we undertake and the interactions through which work gets
done .

technology facilitates the growth of a multinational enterprise but generates simultaneous problem of “unpluggedness” among a geographically dispersed workforce.
that technology lies at the heart of manufacturing industry. It provides a series of business advantages.

Technological developments alter the context of HR practices and the way they are implemented.

culture has crucial importance in organizations preferences in developing appropriate structure and methods for
HR practices affectivity.


Industry/Sector Characteristics: Organizations can be classified into manufacturing and service organizations for the purpose of analyzing the HRM practices. The idea behind this classification is the fact that different production processes
necessitates different HR practices.

Legislations /Regulations: Legislations and regulations
are frequently cited as having a direct impact on HR practices. Every country has developed a set of regulations for the management of human resources, so, the HRM practices have to be designed or modified according to
these regulations.

Actions of Competitors: There are many ways in which companies can gain a competitive edge or a lasting and sustained
advantage over their competitors, among them being the development of comprehensive human resource practices

Action of Unions:
The presence or absence of unions in organizations is a salient variable known to be associated with some HR.

Globalization : As a result of globalization, the whole world has become a single market, the companies have crossed the boundaries of their country of origin and opened their
operations in other countries. This has created a challenge for the organization in terms of management of human resources,
some companies have tried to transfer the HRM practices from one country to another but it has been found that some practices
can be transferred across nations almost without any change but some must be modified to become workable in another setting and some are more deeply culture-specific and may not always be transferable.
support the argument that multinational companies’ HRM practices are more prone to local cultural influences than are their
overall policies and strategies. Moreover, some of the practices which the company had imported from abroad had to be modified
to make them workable, given its local cultural and non-cultural contexts.

Internal Factors
The Internal environment of organizations strongly affect their HR practices.
. The important internal
factors are as follows:
Organisations Size: evidence suggests that there is a large number of small firms that
do not institute formal HR practices in large organizations , fo each functional level there may a need for a different HR department

Organisational Structure: A firm’s strategy and structure are important in determining HR practices flexibility and
integration. There are important structural differences among firms
that affect the way in which HR practices are designed and implemented.

Business Strategy: To gain competitive advantage, firms use different competitive strategies .These strategies are more
productive when they are systematically liked with human resource management practices Companies can improve their environment
by making efficient choices about human resource practices that
consistently support their chosen strategy

Human Resource Strategy: HR strategy is an important determinant of both intensity and diversity of HR practices
. As a rule HR practices are shaped in
accordance with HR strategy.

History, Tradition and past practices: A number of closely related factors, such as history, traditions and past
practices tend to generate resistance to change in most organizations

Top Management: The influence of top management on HR practices is acknowledged by most writers, even if only
to the extent of advising that top managements support should
be present  in designing and implementing HR policies.


Line Management: Line Management participation in designing and implementing HR activities is the key to organizational success. Since line managers are responsible for creating value, they should integrate HR practices in their work found
that organizational power and politics as exercised by various
constituencies are crucial determinants of HR practices.

Academic and Professional influence on HR Practices:
HR staffs are often involved in the decision making process about HR policies and practices. Their knowledge about
alternative HR practices may represent important variables in their own right .

Various models of HRM have been developed from time to time by different teams of the researchers. All these models
have helped the HR practitioner to effectively manage the human resources. Some of the important models have been discussed as
follows:

Harvard Model
The Harvard model  works as a strategic
map to guide all managers in their relations with employees and concentrates on the human or soft aspect of HRM. It strives at
employee commitment not control. It also works on the premise
that employees needed to be congruent, competent and cost effective.


Michigan Model
The Michigan model  focuses on
hard HRM. It holds that people should be managed like any other
resources and so obtained cheaply, used sparingly, developed and exploited fully. It also emphasised the interrelatedness of
HRM activities. According to this model, selection, appraisal, development and rewards were geared towards organizational
performance.

Guest Model
Guest comparative model  works on the
premise that a set of integrated HRM practices will result to
superior individual and organisational performance. It advocates
a significant difference of HRM from PM. It holds that HRM strategies like differentiation, innovation, the focus on Quality
and cost reduction will lead to practices like better training appraisal, selection, rewards, job designs, involvement, and
security leading to more quality outcomes; commitment and flexibility. It will then affect performance in that productivity will
increase; innovation will be achieved as well as limited absences, labour turnover, conflict or customer complaints.


Warwick Model
This model was developed by Hendry and Pettigrew  at centre for strategy and change, Warwick University in
early 1990s. It emphasizes on analytical approach to HRM. It also recognizes the impact of the role of the personnel functions
on the human resource strategy content. The researcher focused
their research on mapping the context, identifying the inner
(organizational) and external (environmental) context.

HRM Practices and other Variables
HRM practice directly or indirectly affects several other variables in the organization. The following relationships have
been identified .

HRM Practices & Competitive Advantage
HRM practices help the organizations to achieve competitive advantage. According to the resource based view
of the firm (competitive advantage
can be developed and sustained by creating value in a way that is rare and difficult for competitors to imitate and the quality the
human resource within is difficult to imitate.

HRM Practices & Employee-Employer Relationship
Employee-employer relations can be made improved if the organization implements effective HRM practices.
The result of the  study  indicated a positive and significant influence of
empowerment, organizational communication and procedural justice as determinants of employees trust in their managers. The
result also indicated that procedural justice mediates the impact of employee development on their trust in their managers. The HRM practices help the organization to increase mutual understanding between the employees and the employer.

HRM Practices and Trust
employee trust in the whole organization is connected to perceptions of the fairness and functioning of HRM practices.
Such practices can therefore be used in order to build the impersonal dimension of Organizational trust

HRM Practices & Effective utilization of employees
Employees often perform below their potential.  HRM practices may
have an influence on employee skills and motivation. HRM practices influence employee skills through the acquisition and
development of a firms human capital. Recruiting procedures and
selection regimes will have an influence over the quality and type of skills new employees possess.

HRM Practices & Service Quality
Researches provide evidence to show that HRM practices help the organization to improve the quality of services
There is the relationship among
human resource management practices, service behavior and service quality in the tourist hotels. The results indicated that
HRM practices had partially a direct effect on customer perceptions of service quality and an indirect effect through
employees’ service behavior. This means that service behavior only partially mediates the relationship between human resource
management practices and service quality.

HRM Practices and Employee Commitment
The implementation of HRM practices in the organization leads to enhanced employee commitment.
suggests that the district health officials do not share a strong emotional bond with their department. The state needs to reform
its Human Resource Management practices to effectively strengthen the functioning of the health system. The study also
suggests that investing in development of multiple strategies for the growth and career development of health professionals
in required.  that in the separatist faculty decentralization, compensation,
training/development, positional tenure and career mobility have
significant effects. Age, organizational tenure, level  of autonomy, working hours, social involvement and personal importance
significantly affect the employees’ organizational commitment in the hegemonist faculty. Participation, social interactions and
Research

job level are factors that are important in both faculties.
The study also aimed at assessing how much of commitment in the two industries can be attributed to HRM
practices. HRM practices were found significantly different in two organizations and mean scores on various HRM practices
were found more in the fashion organization. Regression results showed that various HRM practices were significantly predicting
organizational commitment in both organizations and also when
they were combined. Performance appraisal and ‘attitudes towards HRM department’ were the significant predictors of organizational
commitment in both the organizations.In an another study,
impact of HR practices on permanent
employee’s organizational commitment and their intention to stay and found that organizational commitment was positively affected by person-organization fit, remuneration, recognition, and an
opportunity to undertake challenging employment assignments.
Intention to stay was significantly related to person-organization
fit, remuneration recognition, training and career development.
HRM Practices and Organizational Performance
HRM practices enhances organizational performance.
the relationship between
HRM practices, workplace climate and perceptions of organizational performance, in a large sample of Canadian nursing
homes and found that nursing homes, which had implemented
more ‘progressive’ HRM practices and which reported a workplace
climate that strongly valued employee participation, empowerment
and accountability tended to be perceived to generally perform
better on a number of valued organizational outcomes.


HRM systems affect organizational performance
.They found that hotel performance is positively associated with
hotel category and type of hotel and hotel performance is positively related to the HRM systems of recruitment and
selection, manpower planning ,job design ,training and development ,quality circle, and pay system.
it has been found that HRM practices contributes to the enhanced
banks performance. Further, the result indicated that HRM
practices like training, employee participation in decision making was found significantly related with banks performance. Further,
HR practices in a company does indeed have a major impact
towards a firm’s performance. The findings also show that HR
practices have an impact of nearly 50 percent on firm performance.

HRM Practices & Financial Performance
evaluate the link between systems of High Performance work practices and firm
performance and found that these practices have a statistically
significant impact on intermediate employee outcomes (turnover
and productivity) and short and long term measures of corporate
financial performance. examined the impact of HRM practices on firm profitability. They found that little support
for a positive relationship between HRM practices and firm profitability.



HRM practices can substantially help a firm perform better.
Further, different HRM practices for managerial and nonmanagerial
employees are found to be significantly related with firm performance.

examined SHRM (Strategic
Human Resource Management) practices in China to assess the
impact of these practices on firm performance and employee
relation climate and found that SHRM practices have direct and
positive effects on financial performance, operational
performance, and the employee relations climate.


HRM Practices and Employees Productivity
working in teams, greater discretion and autonomy in the
workplace and various employee involvement and pay schemes,
do motivate workers and generate higher labor productivity Employees’ involvement in
terms of delegation of responsibility and systems of collecting
proposals from employees may have a positive impact on
productivity . Cross functional teams,
job rotation, quality circles and integration of functions may all
contribute positively to labor productivity.
HRM activities providing informal and formal training as well as
recruitment and selection have also shown to have an impact on
productivity and market value
HRM practices (training, selection, career
planning, employee participation, job definition, compensation,
performance appraisal) were correlated positively with the
Human Resource Management Practices: A Comprehensive Review
employee performance. Further respondents gave highest
importance to performance appraisal and then to compensation
among individual HRM practices.


HRM Practices and Effective Management of Employees
the IT companies sampled, institute such HRM practices that
are complex in nature and a majority of the IT companies do
follow such HRM practices which can be termed as adaptive in
nature. They suggested that offering job plus education referral
recruitment, online and open house tests (in case of recruitment
& selection), flexible training choice, skills & project centric
training (in case of training & development) and lastly,
transparent appraisal systems, above average salary, more nonsalary
benefits, flexi timing and opportunity for growth are some
of the selective practices which, if followed with rigor, would
help managing enhance human resources of an IT company.

HRM Practices and Growth and Innovations
HRM has a more significant influence on growth / innovation
indices as opposed to financial performance.

examined the relationship between HRM, technology innovation
and performance in China and found that employee training,
immaterial motivation and process control have positive effects
on technological innovation, while material motivation and
outcome control have a negative influence on technological
innovation. It is also found that technological innovation is
positively related with performance.
Research


HRM Practices & HRD Climate
It has been found that the HRM practices help the
organization to develop better HRD climate in the organization.

employee’s perception of HRD
practices, to explore whether ISO certification leads to any
improvement in HRD climate and examined the role of HRD
practices on employee’s developmental climate and quality
orientation in the organization. They found that ISO certified
companies obtained higher means on some HRD variables as
compared to others. Organizations with better learning, training
and development systems, reward and recognition, and
information systems promoted a favorable HRD climate. Quality
orientation was predicted by career planning, performance
guidance and development, role efficacy and reward and
recognition system.

HRM Practices and Technology
HRM practices and Technology affects each other. On
one side HRM practices affects implementation of the technology
because the success of information technology (IT) projects is
highly dependent upon the end-users’ behaviour. Whether endusers
are able and willing to work with newly introduced software
applications is fundamental. Hence, a key issue is supporting
targeted employees of newly introduced software applications in
their proper utilisation.HRM practices have the potential to
provide such support .
On the other side argued
that with the growth of information technology, much of the
administrative aspects of human resource management can be
accomplished through technology solutions hosted by the
company or outsourced. As technology frees up HR from some
of its routine tasks, there is a greater opportunity for HR
professionals to become a strategic partner


HRM Practices and Job Satisfaction
HRM practices also affect the level of job satisfaction
of the employees the
relationship between HRM practices and workers overall job
satisfaction and their satisfaction with pay. The result indicated
that several HRM practices raise workers overall job satisfaction
and their satisfaction with pay.


HRM Practices and Employees Intention to Leave
Employee turnover is a major challenge for the
organization but the companies implementing effective HRM
practices can reduce the rate of the employee turnover.
empirically evaluated six HR practices
(realistic job information, job analysis, work family balance, career
development, compensation and supervisor support) and their
likely impact on marketing executives intention to leave (MEIL)
The framework indicates how external and internal factors affect HRM practices and how these HRM practices
generate into certain benefits for the organization and ultimately
lead to overall corporate performance.
The review of various studies conducted on HRM practices shows that there are several factors in side and outside
the organization that affect HRM practices and the HR mangers should carefully analyze these factors while designing the HRM
practices. The following things should in particular be kept in
mind according to the findings of our literature survey.
1. Due consideration should be given to link the HRM
practices with the long term objectives and the strategies of the
organization.
2. The HRM practices should be evaluated from time to
time by conducting a survey among the employees and the
provisions should be made to incorporate changes from time to
time.
3. The traditions of the organization and the past practices
should be kept in mind while designing and implementing HRM
practices.
4. The top management should provide fullest possible
support (financial as well as moral) to the HR department in
designing and implementing the HRM practices.
5. The HR managers should keep themselves up to date
with state of art HRM practices.
6. The HRM practices differ from one country to another
and from one organization to another, so due consideration
should be given to the organization and the country’s specific
environment.
7. The line managers should be involved in the process of
the design of the HRM practices because line managers are the
people who deal with the employees in their department and
they can provide valuable insights.
8. There is a need to critically examine the actions of the
competitors because it directly or indirectly affects the
organization.
9. The power centre and the politics that is prevailing in
the organization should be properly studied.
10. If trade unions exist in the organization, then the proper
opportunity of representation should be given to them.
#######################
 


---------- FOLLOW-UP ----------

QUESTION: As a chief executive officer of an agro based industry prepare adraft for yourspeech in the forthcoming Annual General body meeting highlighting your company"s achievements and growth and future plan.

Answer
2-As a chief Executive officer of a Agro based company, prepare a draft for your speech in the forth coming Annual general Body Meeting highlighting your company's achivements , growth and future plan etc?


Chairman Speaks – 2014    
I have great pleasure in welcoming you to the 103rd Annual General Meeting of your Company.
A NEW GOVERNMENT: NEW HOPES & ASPIRATIONS
In the best traditions of democracy, a new Government was recently elected with a resounding mandate. Shri Narendra Modi's clarion call for Development through Good Governance touched a special chord in the hearts and minds of people. His vision and persona has ignited new optimism among almost all sections of society. There is renewed hope that a new resurgent India will be built over time, bringing pride and dignity to all. The spirit embodied in "Sabke Saath, Sabka Vikas" indeed holds a promise of inclusive and participatory growth.
This is potentially a turning point in history and an opportunity to collectively script a new destiny for our nation. As a Company deeply rooted in India's soil, ITC is committed to realising the Vision of a dynamic, prosperous and self-reliant India. It is your Company's avowed mission to be a world-class Indian enterprise serving national priorities. This is manifest in your Company's determination to go beyond the confines of business to create enduring value for the larger Indian society. It is with this strength of conviction in your Company's Values and Vitality that I once again pledge ITC's fullest support to the new Vision for fulfilling our shared goal of a new India of our dreams.
It is indeed heartening that, despite the constraints of time and a challenging economic environment, the Finance Minister Shri Arun Jaitley, has presented a comprehensive maiden Budget addressing key reforms with a welcome focus on physical and social infrastructure. This should lay the foundation for long-term growth whilst meeting some of the critical needs of the weakest in our society.
ITC: TRIPLE BOTTOM LINE PERFORMANCE
As in earlier years, let me first share some of the highlights of your Company's triple bottom line performance. Amidst a challenging economic context, your Company recorded yet another year of strong performance. Gross Income registered a new high at Rs.48,176 crores, while Net Profit increased by 18.4% to Rs.8,785 crores. The segment net revenue, other than cigarettes, has grown 16-fold since 1996 to Rs.21,845 crores. As a result, almost 59% of net segment revenue of your Company is now from businesses other than cigarettes.
Rs Crs
ITC  Financial Highlights 1996-2014
   1996   2014
Gross Income   5,188   48,176
Net Segment Revenue
(other than Cigarettes)   1,363      21,845
PBIT   536   12,662
Profit After Tax   261      8,785
Net Assets Employed   2,584      39,229
Market Capitalisation*   5,571      2,84,307
CAGR in Total Shareholder Returns in the period 1996-2014 : 25.9%
*As on 25th July, 2014
This year, the FMCG industry in India witnessed a marked slowdown. Notwithstanding such an adverse operating environment, your Company's new FMCG businesses recorded a robust growth of 16%, crossing the Rs.8,000 crore mark. The FMCG-Others Segment also recorded its maiden profit with a PBIT of Rs.22 crores representing a positive swing of Rs.103 crores. Your Company's relentless effort to build world-class Indian brands, backed by cutting-edge Research & Development and innovation, will continue to drive performance in the years ahead.
ITC's commitment to superior triple bottom-line contribution is manifest in its globally acknowledged initiatives that create impactful societal value. Your Company has sustained its position as the only enterprise in the world of comparable dimensions to be carbon positive, water positive and solid-waste recycling positive for several years now. Your Company's sustainable business models today support around 6 million livelihoods across the country. ITC's Sustainability Report has been published for the 11th year now. The latest edition is in accordance with the new G4 guidelines of the Global Reporting Initiative. Your Company is one of the foremost in India to report at the highest "Comprehensive" level, well ahead of the global deadline.
THE CHALLENGE - CREATING GROWTH WITH EMPLOYMENT AND EQUITY
We live today in challenging times. The economy continues to be in a tailspin with a second successive year of sub-5% growth. Persistent Inflation, high Fiscal, Trade and Current Account deficits have severely curbed the growth potential. The cutback in investments and piling-up of stalled projects also contributed to the dismal performance. The consequent de-growth of 0.7% in Manufacturing is therefore not surprising. Agriculture was the lone performer at 4.7%, though it continues to be at the mercy of vagaries of nature. The impending impact of the El Nino looms  large with a threat of destabilising the critical agricultural sector. Though Fiscal and Current Account deficits have been reined in somewhat, it has been at the cost of productive expenditure and dependence on a weak Rupee for exports. The new Government therefore has truly an unenviable task of resurrecting the economy, whilst ensuring that growth is equitable and can spur more than commensurate employment.
Foremost among the priorities is the need to find longer-term solutions to deal with Inflation, the Twin Deficits and Unemployment. It is a matter of concern that the country is yet to achieve international competitiveness in several segments crucial to the Indian economy. This is evident in the composition of India's trade basket. Imports are of high value-added goods and services, while exports are largely at the commodity end with relatively lower-value added products and services. Consequently, the value addition in the domestic economy is of a much lower order impacting the scale and quality of jobs. In the interest of longer-term macro-economic stability, it is desirable that the trade account gets balanced on the strength of export competitiveness rather than on capital flows to finance the deficit. The vulnerability on the external front is further accentuated by the build-up of accumulated international debt that is far ahead of the foreign exchange reserves. As a result, the ratio of foreign exchange reserves to India's total external debt has declined from about 114 % to 69% over the last 5 years.
Sizeable investments are required to take the economy to a higher growth trajectory and to build competitiveness of the Indian economy. Domestic savings alone will not be adequate to fuel high levels of economic growth. It is therefore crucial to attract and facilitate both domestic and foreign investment to invigorate the economy. This must be done in a manner that encourages international players to create the fullest value addition within the shores of the country enabling a multiplier effect on job creation.
Unfortunately, the ease of doing business and setting up enterprises in India is a major constraint that deters investment. The plethora of procedural clearances from local bodies, municipalities, district administration, state and central governments makes it virtually impossible to speedily implement projects. I was recently saddened by media reports that high net-worth Indian nationals in a position of leadership have invested significantly large capital in real estate assets overseas. This is symptomatic of the fact that even Indian capital has to seek lucrative opportunities abroad given the difficulty of investing profitably in the domestic economy, quite apart from perhaps a serious deficit in patriotic fervour. Efforts to eliminate the extensive procedural logjam will obviously take time. In the interim, value and job creating investments will need to be supported by incentives to reward the patient and the perseverant.
Compounding the situation are lacunae in policies that have unfortunately contributed to widening the twin deficits besides restricting the job-creating potential. In my address today, based on ITC's intimate engagement with the consumer market and the rural economy, I will dwell on a few areas where a balanced policy framework can lead to larger value capture for the Indian economy and stimulate a job multiplier of a significant order.
THE INDIAN GLOBAL MARKET : DOMINANCE OF INTERNATIONAL BRANDS
India's billion plus population represents potentially a huge consumption market. With rising disposable incomes and a growing middle as well as affluent class, there is a substantial growth momentum in the consumption of higher-end value-added products and services.
Over the years, India has progressively allowed free competition leading to the establishment of a growing Indian global market. Dating back to pre-Independence days and more so postliberalisation, brands owned by foreign enterprises have held sway over this expanding market.
Today, almost all the well-known international players market their brands in India. Consequently, a dominant part of the upper-end consumer spend has been captured by these brands. These range from high-end luxury products, white goods, consumer electronics, computers and branded software to items of daily consumption, including soaps, shampoos, tea, coffee, burgers, sanitary napkins, diapers, baby food, potato chips and many more. The list is unending and includes even packaged "idli" and drinking water. In comparison, the share of domestic brands is modest and largely confined to markets characterised by lower-income consumer groups with relatively much lower value addition.
JOBLESS CONSUMPTION GROWTH
Many of the international companies operating in India rely, in part or full, on their global supply chains to service the Indian market. This is primarily due to the difficulties faced in establishing competitive manufacturing units in India. Therefore, their ready access to well-developed supply chains overseas facilitated further by lowered import duties makes international sourcing more attractive. As a result, the country's consumption basket has a large share of imports either as finished products, sub-assemblies or components. Therefore, despite the presence of multinational entities in India, a substantial part of the value created remains outside the country. This is one major reason for the jobless consumption growth witnessed in recent times.
For a developing country like India, with millions in poverty and a young demographic profile that adds nearly 12 million to the job market every year, creation of sustainable livelihoods is a crying priority. From 2005 to 2012, only 2 million jobs were added annually, which is well below the asking rate. It is unfortunate that commensurate employment opportunities could not be created despite the high levels of growth witnessed in the economy during this period. The large growth in the consumption market was therefore unable to unleash an equivalent opportunity to reap India's Demographic Dividend.
Multi-National Corporations possess the unique competitive ability to switch supply chains globally depending upon currency fluctuations as well as opportunities arising from labour arbitrage. This does not always make for a stable employment opportunity and value addition in the domestic economy. International enterprises must therefore be encouraged to create supply chains in India that enable larger value capture in the domestic economy. This can be stimulated by  widespread reforms that progressively create conditions for the competitiveness of enterprises operating in India supported by a combination of tariffs and incentives to make value-addition in India commercially compelling.
LACUNAE IN ROYALTY POLICY
The problem of jobless consumption growth coupled with the widening twin deficits got further aggravated by a change in policy regime in 2009 permitting limitless repatriation of royalty to overseas holding companies. It has been reported that such payouts have increased by 70% since then to reach nearly Rs 40,000 crores. This outflow is equivalent to about 20% of India's annual Foreign Direct Investment. This transfer attracts a much lower withholding tax of around 10%, given India's bilateral agreements across the globe, thus rendering infructuous the 25% tax imposed in the Budget 2013 as a remedy.
With consumption expenditure expected to grow from the current level of USD 1 trillion to USD 3.6 trillion in 2020, such unrestrained outflows can assume even more alarming proportions. The lower rates of withholding tax on royalty payments will entail a considerable loss to the Indian exchequer as this method of profit repatriation escapes the full income tax rate that Indian companies are subjected to. Consequently, the revenue deficit will have to be ultimately borne by domestic industry through higher taxes, placing them at a competitive disadvantage.
International enterprises compete with other global and domestic players for a larger pie of the attractive Indian global market. Consequently, in their enlightened self-interest, they bring in brands, technology and know-how to continuously enhance their competitiveness, market standing and profits. Therefore, there is really no justification whatsoever to allow royalty, let alone limitless payouts, by the Indian subsidiaries to their overseas holding companies. This policy can thus become an instrument of tax avoidance causing considerable injury to the exchequer and the Indian economy.
Royalty payments should therefore be permitted only between unrelated parties based on purely commercial considerations, with little or no governmental intervention. This will facilitate Indian enterprises in accessing intellectual capital to compete effectively with international players in the Indian global market. Such a policy framework will go a long way in creating a level playing field for Indian enterprises besides ensuring that the twin deficits do not get further aggravated as India's private consumption market grows.
THE POTENTIAL IN FOOD PROCESSING & AGRO-FORESTRY
The Government has rightly identified employment generation and control of food inflation as issues of utmost priority. In this context, I would like to highlight today the potential of two sectors relating to the rural economy, namely food processing and agro-forestry. To my mind, supportive  policies in these areas can significantly contribute to job creation, enhance rural incomes, help manage food inflation and promote sustainable agriculture.
Food Processing
It is well acknowledged that the control of food inflation rests primarily on the management of supply-side constraints that fuel its growth. Even though India produces enough food, consumer prices are high due to enormous wastages that also result in lower farmer incomes. Such wastages can be as high as 40% in the case of perishables. India processes only 2% of its agri-produce compared to 40% in countries such as Malaysia and Thailand. A big push to India's Food Processing sector will be a force multiplier in creating large-scale employment, enhancing farm incomes and combating agri-wastages. Given that supply chains in this sector tend to be predominantly local and regional, jobs created will be largely in Small and Medium Scale Enterprises contributing to regionally balanced employment.
Unfortunately, high prices of processed food restrict demand and are a key constraint in the growth of this sector. This is primarily due to the cascading effect of taxation along the value chain. Fiscal policies have subjected processed foods to taxes, even though food itself is generally not a taxed commodity. Consequently, there is lower demand for processed food leading to low investments in this very important sector.
A paradigm change can take place if demand for processed food products is substantially increased by lowering prices through a zero-tax regime on this industry. This will help in paring down prices, enhancing demand thus making it attractive for investment. A conducive policy can help create over 9 million jobs in the food processing sector, 60% of which can be in the rural and semi-urban areas. Over time, growth in the processed food sector will drive investment in the agri value chain and lead to productivity enhancement and waste reduction. This will also stimulate creation of infrastructure such as cold chains, storage and modern logistics. Together with other reforms related to agriculture such as the Model APMC Act, improved access to quality inputs like seed, fertiliser, finance, irrigation and extension services, this would enhance farm incomes and unclog the supply side bottlenecks to eventually control food inflation in a sustainable manner.
Your Company's extensive engagement with Rural India that has empowered over 4 million farmers is an example of the transformational potential of the processed food sector. The ITC e-Choupal has helped in raising rural incomes and productivity by developing competitive value chains linked to ITC's Foods businesses and by promoting sustainable agriculture. This gives me the confidence to reiterate that a concerted policy impetus to develop India's food processing sector through a zero-tax regime can bring about dimensional change by creating jobs, enhancing rural incomes and containing food inflation.
Agro-Forestry
The second area of immense potential linked to India's Agriculture relates to Agro-Forestry that effectively addresses the traditional conflict over land-use for food, fuel, fodder, fibre and forests. By synergising tree-growing with crop production, both food and wood security can be ensured, thereby contributing to the conservation of precious natural resources. Farmers get multiple benefits by using their scarce land resources to maximise returns through both agriculture and tree-planting, considerably enhancing their incomes. Unfortunately, the enormous potential of agro-forestry has been thwarted by a myopic policy that has prevented job creation in India whilst promoting avoidable imports.
India currently imports USD 5 billion worth of wood and wood-based products such as furniture, construction timber, pulp & paper, packaging, plywood and so on. Many of these imports attract duties as low as nil to 5%. The tariff policy, as it stands today, makes imported wood more attractive than growing trees in India. This prevents livelihood creation in the country and "exports" jobs to countries that grow trees and sell wood-based products. At the same time, these imports contribute to enlarging the Current Account Deficit.
Conducive policies ought to be crafted to boost India's natural advantage in agro-forestry and promote employment-generating wood-based industries. I am given to understand that agroforestry has the potential to create over 15 billion person-days of employment. To give a fillip to this sector, agro-forestry must be extended all the benefits available to agriculture including long term institutional credit and unrestricted movement of such produce within India. In addition, raising import duties on wood and wood-based products to an appropriate level will encourage growing of trees, thereby enhancing employment as well as supplementing green cover. In addition, R&D must be promoted for the evolution of improved wood species that are disease and climate resistant. This could be further supplemented by suitable fiscal and financial incentives. Access to competitive sourcing of wood locally will stimulate related crafts and industries on a much larger scale. Agro-forestry is also an important source of carbon-neutral biomass energy which can substantially reduce dependence on fossil fuels. Besides, it is an ideal source for distributed energy systems which can effectively meet the needs of smaller rural communities.By providing a crucial policy foundation, the entire wood-based value chain can substantially support the nation's quest for sustainable and inclusive means of growth.
As you are already aware, your Company's extensive Social and Farm Forestry Programme has greened over 1,60,000 hectares, creating over 70 million person-days of employment. An innovative agro-forestry initiative has further enhanced farm incomes supporting sustainable livelihoods and maximising productive land-use. Your Company's experience is a pointer to the tremendous opportunity that can be unleashed by conducive policy in this sector.
BUILDING WORLD-CLASS BRANDS FOR A DEVELOPED INDIA
In my address to you last year, I had emphasised that tomorrow's world will belong to those who create, nurture and own intellectual property. Such assets indeed form a superior basis for sustaining competitive advantage over the long run. Ownership of Intellectual Capital will be the springboard that will propel India from a Developing Economy to a Developed Nation. It will transform the country from a provider of labour, commodities and relatively lower value-added goods & services to a position of leadership in innovation, thereby earning global respect.
For a country with proven intellectual prowess, creative capability and entrepreneurial ability, it is a sad augury that the nation is bereft of globally competitive Indian brands. As a result, the country is rendered poorer by its inability to service even its own home market effectively. It is mission critical today to create National Champions who will build world-class Indian brands through ownership of intellectual property. It is only then that a virtuous cycle of innovation and investment will create new opportunities for growth with the generation of higher order sustainable livelihoods.
The Hon'ble Prime Minister has articulated the Government's resolve to revive Brand India on the strength of 5 Ts – Tradition, Talent, Tourism, Trade and Technology. To that I humbly add another T – for Trademarks – Indian Trademarks that are manifest in worldclass Brands and built on the strength of superior intellectual property. A successful global brand is a badge of honour for the country it belongs to, and a sustained source of wealth creation. Popular brands reflect the innovative capacity of the countries of their origin. When a country's institutions build world-class brands, they enrich their economies, enabling sustainable growth and higher-income livelihood opportunities.
I have confidence that Indian enterprises truly have the mettle to create world-class brands. Not very long ago, countries like Japan and Korea had a similar dream amidst every adversity. Today, their brands have conquered the world and earned global respect. Admittedly, building winning brands is not an easy task. Successful global brands have been steadfast in nourishing their consumer franchise through ongoing innovation and remaining well ahead on the learning curve. Therefore, the challenge of building brands in competition with such established players is no mean task. The countries that have accomplished this seemingly impossible mission have done so through close collaboration between the governments and their companies over the long haul.
Indian companies, on their part, must invest in cutting-edge R&D to build intellectual capital. The Government can provide the right signals by refocussing the incentives to more result-oriented outcomes. Currently, weighted tax deduction on R&D expenditure is based merely on inputs without any linkage to outcomes in the form of consumer franchise. Such incentives are best linked to revenue generation through the sale of branded products. For instance, a percentage of sales of the Indian brands could be an effective basis for crafting the incentive.
Your Company has tirelessly endeavoured to build world-class Indian brands. In a relatively short span of 10 years, a vibrant architecture of popular brands has been crafted organically. Some of them are already clear market leaders in their segments. In aggregate, these new consumer brands currently represent an annualised consumer spend of over Rs.10,000 crores. Going forward, your Company's foray into the Dairy and Beverages segments will further enrich this portfolio.
Your Company is committed to investing in India's future. You would be happy to know that 65 projects involving a built-up area of 28 million sq. ft with an outlay of over Rs.25,000 crores are currently under implementation or in an advanced stage of planning. These projects are distributed across a majority of States and will create livelihood opportunities all over India. The shareholders present here today would be pleased to know that West Bengal has a high share of these projects with an outlay of over Rs.3500 crores, encouraged by the conducive policies of the State. Such assets will impart substantial strength to your Company's competitive capacity. Therefore, it is my belief that your Company can aim for a revenue of Rs.1,00,000 crores from the new FMCG businesses alone by the year 2030 and realize its vision of being the No.1 FMCG player in India.
It is a matter of pride that your Company's brands have anchored the development of competitive value chains benefitting some of the poorest regions of the country. In conjunction with your Company's social investment programme for integrated rural development, these brands have enabled the empowerment of millions of disadvantaged in India's villages by generating sustainable livelihoods. Your Company's CSR programme includes farmer empowerment through the globally acclaimed ITC e-Choupal, large-scale Watershed Development, Social Forestry, Animal Husbandry, Women's Empowerment and Primary Education which together have transformed rural lives, winning global acclaim and recognition.
CREATING NATIONAL CHAMPIONS
India's challenges require a quality of growth that creates, captures and retains larger value in India. It requires organisations to consciously strengthen value chains that extend to the country's rural areas and backward regions empowering the weakest. Winning Nations across the world, especially from emerging economies, have supported the creation of National Champions who are prime drivers in creating sustainable wealth and livelihoods. Global winning brands such as Sony and Samsung are the fruits of that visionary support. It is time that India takes bold steps to create, nurture and support many a National Champion who will create enduring value for the country with passion.
Your Company is privileged to be able to pursue a path less travelled to create multiple drivers of growth supported by winning brands and an abiding vision to put Country before Corporation. It is our collective aspiration that your Company should be one such National Champion in the  service of the Nation. In this journey, I draw strength from Team ITC and from their dedication and commitment.
As I conclude, may I on behalf of the Board and the employees of your Company once again thank you, our valued shareholders, for your continued support and encouragement.
Thank you, Ladies & Gentlemen.
For a country with proven intellectual prowess, creative capability and entrepreneurial ability, it is a sad augury that the nation is bereft of globally competitive Indian brands. As a result, the country is rendered poorer by its inability to service even its own home market effectively. It is mission critical today to create National Champions who will build world-class Indian brands through ownership of intellectual property. It is only then that a virtuous cycle of innovation and investment will create new opportunities for growth with the generation of higher order sustainable livelihoods.
The Hon'ble Prime Minister has articulated the Government's resolve to revive Brand India on the strength of 5 Ts – Tradition, Talent, Tourism, Trade and Technology. To that I humbly add another T – for Trademarks – Indian Trademarks that are manifest in worldclass Brands and built on the strength of superior intellectual property. A successful global brand is a badge of honour for the country it belongs to, and a sustained source of wealth creation. Popular brands reflect the innovative capacity of the countries of their origin. When a country's institutions build world-class brands, they enrich their economies, enabling sustainable growth and higher-income livelihood opportunities.
I have confidence that Indian enterprises truly have the mettle to create world-class brands. Not very long ago, countries like Japan and Korea had a similar dream amidst every adversity. Today, their brands have conquered the world and earned global respect. Admittedly, building winning brands is not an easy task. Successful global brands have been steadfast in nourishing their consumer franchise through ongoing innovation and remaining well ahead on the learning curve. Therefore, the challenge of building brands in competition with such established players is no mean task. The countries that have accomplished this seemingly impossible mission have done so through close collaboration between the governments and their companies over the long haul.
Indian companies, on their part, must invest in cutting-edge R&D to build intellectual capital. The Government can provide the right signals by refocussing the incentives to more result-oriented outcomes. Currently, weighted tax deduction on R&D expenditure is based merely on inputs without any linkage to outcomes in the form of consumer franchise. Such incentives are best linked to revenue generation through the sale of branded products. For instance, a percentage of sales of the Indian brands could be an effective basis for crafting the incentive.
Your Company has tirelessly endeavoured to build world-class Indian brands. In a relatively short span of 10 years, a vibrant architecture of popular brands has been crafted organically. Some of them are already clear market leaders in their segments. In aggregate, these new consumer brands currently represent an annualised consumer spend of over Rs.10,000 crores. Going forward, your Company's foray into the Dairy and Beverages segments will further enrich this portfolio.
Your Company is committed to investing in India's future. You would be happy to know that 65 projects involving a built-up area of 28 million sq. ft with an outlay of over Rs.25,000 crores are currently under implementation or in an advanced stage of planning. These projects are distributed across a majority of States and will create livelihood opportunities all over India. The shareholders present here today would be pleased to know that West Bengal has a high share of these projects with an outlay of over Rs.3500 crores, encouraged by the conducive policies of the State. Such assets will impart substantial strength to your Company's competitive capacity. Therefore, it is my belief that your Company can aim for a revenue of Rs.1,00,000 crores from the new FMCG businesses alone by the year 2030 and realize its vision of being the No.1 FMCG player in India.
It is a matter of pride that your Company's brands have anchored the development of competitive value chains benefitting some of the poorest regions of the country. In conjunction with your Company's social investment programme for integrated rural development, these brands have enabled the empowerment of millions of disadvantaged in India's villages by generating sustainable livelihoods. Your Company's CSR programme includes farmer empowerment through the globally acclaimed ITC e-Choupal, large-scale Watershed Development, Social Forestry, Animal Husbandry, Women's Empowerment and Primary Education which together have transformed rural lives, winning global acclaim and recognition.
CREATING NATIONAL CHAMPIONS
India's challenges require a quality of growth that creates, captures and retains larger value in India. It requires organisations to consciously strengthen value chains that extend to the country's rural areas and backward regions empowering the weakest. Winning Nations across the world, especially from emerging economies, have supported the creation of National Champions who are prime drivers in creating sustainable wealth and livelihoods. Global winning brands such as Sony and Samsung are the fruits of that visionary support. It is time that India takes bold steps to create, nurture and support many a National Champion who will create enduring value for the country with passion.
Your Company is privileged to be able to pursue a path less travelled to create multiple drivers of growth supported by winning brands and an abiding vision to put Country before Corporation. It is our collective aspiration that your Company should be one such National Champion in the  service of the Nation. In this journey, I draw strength from Team ITC and from their dedication and commitment.
As I conclude, may I on behalf of the Board and the employees of your Company once again thank you, our valued shareholders, for your continued support and encouragement.  

Dealing with Employees

All Answers


Answers by Expert:


Ask Experts

Volunteer


Leo Lingham

Expertise

Questions include managing work situation, managing work relations, managing your boss, personal problems, career planning, career development, training, coaching, counseling etc

Experience

18 years working managerial experience covering business planning,
strategic planning, management services, personnel administration etc

plus

24 years of management consulting in business planning, strategic planning, human resources development, training, business coaching,
etc

Organizations
BESTBUSICON Pty Ltd -- PRINICPAL

Education/Credentials
MASTERS IN SCIENCE

MASTERS IN BUSINESS ADMINISTRATION

©2016 About.com. All rights reserved.