ABOUT

RELIANCE
COMMUNICATIONS

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Reliance Communications started its operations in 1999 and is under the Anil
Dhirubhai Ambani Group (ADAG) of companies. The company Reliance
Communications Limited has been set up with the aim of providing
communication and information to people at affordable price.

The company Reliance Communications business includes the whole range of

services related to the telecom sector such as fixed line telephones and mobiles.
The business of the company also includes services like broadband, data services,
international and national long distance services. Reliance Communications also
provides to its customers a wide range of value added applications and services.
The company is able to provide such a vast range of services to its customers for it
has a high- capacity, reliable, convergent, and integrated digital network.

The Company Reliance Communications Limited in order to provide the best

quality of services to its customers laid down 60,000 kilometers of optic fiber all
across India. The company launched the Reliance Mobile services in December
2002 and this has helped to increase the subscriber base of the company. The
company Reliance Communications Limited's subscriber base has increased a lot
over the years and at present stands at 38 million. The company provides
telecommunication services to individuals and enterprises. Reliance
Communications Company has become the leading telecommunication integrated
company in India and the chairman of the company is Anil Ambani.

Reliance Communications Company's total revenue amounted to Rs.35, 260

million in 2005- 2006 and the next year, this figure stood at Rs.45, 785 million.
The net profit of the company amounted to Rs.7, 023 million and the next year,
this figure increased to Rs.13, 046 million. This shows that the company Reliance
Communications Limited's total revenue and net profit has registered a significant
growth in one year. The company is listed on the Bombay Stock Exchange and
National Stock Exchange. The company Reliance Communications Limited added a
record number of subscribers in December 2006thatis1.4million.

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The company Reliance Communications Limited's market capitalization reached
the top with Rs.1 lakh crore on the Bombay Stock Exchange in February 2007. The
company has bagged the E- Governance project of the West Bengal government
in May 2007. The company Reliance Communications has won the Frost and
Sullivan Market Leadership Award in October 2005 and also the CDMA Industry
Achievement Award for International Leadership in October 2004. This shows that
Reliance Communications has been doing very good work that has been
recognized by the industry. And this is the reason that the company has received
so many awards.

Reliance Communications Limited further plans to expand its operations and also
plans to upgrade its technology. This is sure to help the company serve its
customers better and will also increase its subscriber base. The Company Reliance
Communications Limited should always try to provide the best quality of services
to its customers for this would lead to customer satisfaction and loyalty. And this
will in turn help the company to grow and prosper even more

HISTORY OF THE COMPANY

The second son of a school teacher, Dhirubhai was born in 1932 in the village of
Chorwad in Gujarat in circumstances that can best be described as modest. Driven
by hardship and want, he had to drop out of school early. In 1949, at the age of
17, he went to Aden (now Yemen) in search of opportunity, and worked as a
dispatch clerk for A. Besse & Co. A couple of years later, the company became a
distributor for Shell products and Dhirubhai was promoted to manage the
company’s oil-filling station at the port of Aden. It was here that he dreamed of
setting up and owning a refinery, which he later realized with his petrochemicals
venture. He returned to India in 1958 to launch his first business venture, a spice
trading company named Reliance Commercial Corporation.

In 1962, Dhirubhai identified an emerging opportunity in yarn trading and shifted

to the new business. Three years later, he changed the name of his company to

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[Link] 1966, he purchased land in Naroda, Gujarat, to set up
a textile mill. In 1975, a technical team from the World Bank recognized the
Naroda mill as one of the best composite textile mills in India and certified it as
‘excellent even developed country standards’. shareholders rapidly gave
Dhirubhai an iconic status in the Indian financial markets.

In 1977, the company went public. At the time of the Reliance

Textiles IPO, participate on in the Indian capital markets was largely limited to a
small but influential elite which dabbled in a handful of stocks. The great majority
of India’s middle class chose to stay away. Dhirubhai’s decision to prefer the
capital markets over banks as the primary source of funding for his ambitious
expansion plans was as daring as it was unprecedented. In the event, The Reliance
IPO was an unlikely success. Against all odds, Dhirubhai managed to convince a
sufficiently large number of skeptical middle class investors to put their money,
and faith, in what was then a small, relatively unknown company. The subsequent
growth and success of Reliance and its philosophy of generously rewarding
shareholders rapidly gave Dhirubhai an iconic status in the Indian financial
markets. Under Dhirubhai’s charismatic leadership, the Annual General Meetings
(AGM) of Reliance took on the character of large public spectacles. Typically held
in large public arenas, and attended by thousands of adoring shareholders, the
Reliance AGM became a day to remember in the annual corporate calendar of
India. In 1986, the Reliance AGM held in Cross Maiden, Mumbai, was attended by
as many as 30,000 stockholders—a record in India’s corporate history.

In the early 80s, he had taken the first important step in strategic
backward integration for Reliance with the commissioning of the Patalganga plant
which initially manufactured polyester filament yarn and polyester staple fibre.
But Dhirubhai was never one to rest on his [Link] the mid-80s, Dhirubhai had
become something of a living legend, widely hailed by peers and critics alike as
one of the greatest corporate visionaries in the history of post-Independent India.

In 1986, Mr. Dhirubhai Ambani underwent a massive stroke and became paralytic.
After that the major operations were handled by Mukesh. In 1991-92 he was
promoted as the RIL’s Vice Chairman and Anil became the Joint–Managing
Director. In 1992 – 93 Mukesh was further promoted as the Chairman of Reliance
Petroleum. This move actually made it very apparent to the media, public and
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mostly to Anil Ambani that his elder brother was most likely the heir apparent
while he saw himself as the righteous successor as much as Mukesh Ambani saw
himself.

There was a lot of distance created between the two brothers because several
“outsiders” like Anand Jain. A bitter feud resulted between Anil Ambani and Mr.
Jain over issues like the “persons in contracts”. These “persons in contract” (as
they were mentioned in the shareholders list) are nothing but 251 odd investment
firms (as every company has) or ‘benamis’ as they are called in India. They protect
the companies from takeover tycoons, from the prying eyes of the government,
from tax and they also influence the share prices of the company. The fact that his
elder brother had found a confidante in Mr. Anand Jain, sidelining him, about such
a confidential matter was not taken lightly by Mr. Junior Ambani. These and many
other incidents gave this conflict a final boost.

Mr. Dhirubhai Ambani was a street fighter. For over decades, until his first
paralytic stroke in 1986, Dhirubhai had fought to create a near-monopoly in
petrochemicals and ensure that Reliance was miles above its competitors. The
fighter’s instincts of the legendary patriarch, imbibed in the genes of his sons an
“intention” to fight for their floor space i.e. to divide the Reliance pie and get the
best share for themselves. If there was one similarity between the two brothers it
was this that both saw themselves as the perfect descendent of their father’s
empire. This comprised the major ‘intention’ for ensuing conflict. The behavior
stage includes the statements, actions and reactions made by the conflicting parties.
These conflicting behaviors are usually overt attempts to implement each party’s
intentions. This is the stage where “conflicts become visible”. Dhirubhai left for
his heavenly abode on July 6, 2002

After Dhirubhai Ambani’s death in 2002, there was an acute tension between his
two sons. But it was in 18th November 2004, that the veil was lifted and the conflict
became public news. This happened at a business bash organized by CNBC-TV
18.

‘For years, the media had believed this myth that Mukesh was an MBA from
Stanford B-School. In all his official documents, CVs, loan applications and in the
company’s dealings with Indian and foreign stock exchanges, there was always
this one line about Mukesh graduating from Stanford. It was the Microsoft CEO,

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Steve Balmer, who blew the whistle on this one during his trip to India in
November [Link] the bash, Mukesh sang praises of the Microsoft chieftain and
told everyone present that they were classmates in Stanford. Steve Balmer
confirmed this fact but he also added that in their class there were two students
who dropped out at the end of the first year - Mukesh and himself. Mukesh was
visibly shaken after this revelation. Within minutes, he walked out, only to run into
a journalist who was waiting to get some innocuous information from him. She
told him that they weren’t going live on camera and hence, he could say whatever
he wished to. His reply was a stunning public revelation of what was going on
behind the scenes within the Ambani family. It was the first time any of the family
members openly admitted there was a problem between the brothers’.

In the years to come, the conflict between the brothers intensified and they used the
media as a vehicle to promote their respective camps. There were rumors that
Reliance Mutual Fund, which is under Anil, pumped in money (Rs 39.62 Cr) into
media, to run campaign against Mukesh Ambani. However, this was never proved
and it turned out to be the work of a bunch of amateurs. In March 2005, Anil
alleged his phones were being tapped. He even wrote letters to the Prime Minister
and the Home Minister asking them to check this. The contents of the letters were
leaked to the media. Both brothers met Sonia Gandhi, albeit for different reasons.
During this time, Anil resigned from IPCL, a former public sector unit that was
purchased by the Ambanis. He wrote a stinging resignation letter, addressed to his
elder brother, attacking Mukesh’s aide Anand Jain. Anil’s sole intention was to
estrange Jain from his elder brother .He acutely detested Jain, and blamed him for
the present state of affairs. This was also largely played by the media. Nita
Ambani’s active participation in Infocomm’s marketing campaigns was seen a
threat by Anil who commented on it as “unprofessional”.

The action-replay interplay between the conflicting parties results in consequences.

In the case of the Ambanis, the end of the battle led to the division of empire as
follows:

ž Mukesh Ambani got: IPCL and Reliance Industries Ltd - Oil and gas,
petroleum refining and marketing, petrochemicals, textiles; main subsidiary
Reliance Retail Limited and Reliance Industrial Infrastructure Limited.

ž Anil Ambani got: ADAG (Reliance Communications, Reliance Capital,

Reliance Power, Infrastructure, Big Entertainment, Reliance Health, NIS
Sparta, Mudra Communications and Reliance BPO & KPO).

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ABOUT ANIL AMBANI

Anil Ambani (born June 4, 1959) is an Indian business baron and chairman of
Reliance Anil Dhirubhai Ambani Group Anil's elder brother, Mukesh Ambani, is
also worth more than 28 billion dollars, and owns another company called Reliance
[Link] of 2010, he is the fourth richest Indian with a personal wealth of
$13.7 billion, behind Mukesh Ambani,Lakshmi Mittal and Azim Premji.

He is a member of the Board of Overseers at the Wharton School of the University

of Pennsylvania. He is also the member of the Board of Governors of the Indian
Institute of Technology Kanpur: Indian Institute of management,Ahmedabad.| He
is a member of the Central Advisory Committee, Central Electricity Regulatory
Commission. In March 2006, he resigned. He is also the Chairman of Board of
Governors of [Link].

Career

Ambani joined Reliance,the company founded by his late father Dhirubhai

Ambani, in 1983 as Co-Chief Executive Officer and is credited with having
pioneered many financial innovations in the Indian capital markets. For example,
he led India's first forays into overseas capital markets with international public
offerings of global depositary receipts, convertibles and bonds. He directed
Reliance in its efforts to raise, since 1991, around US$2 billion from overseas
financial markets; with a 100-year Yankee bond issue in January 1997 being the
high point, after which people regarded him as a financial wizard He along with his
brother, Mukesh Ambani, has steered the Reliance Group to its current status as
India's leading textiles, petroleum, petrochemicals, power, and telecom company.\

He has been linked with several starlets in his long career including his
current wife of more than 15 years. He is a close friend of movie star Amitabh
Bachchan and Subrata Roy. One of his major achievements in the entertainment
industry is the takeover of Adlabs, the movie production to distribution to
multiplex company that owns India's only dome theatre and the recently announced
joint venture worth US$ 825 million with Steven Spielberg.

He has been embroiled in a dispute with his brother, Mukesh Ambani, over
the supply of gas from the latter's KG basin.
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 He recently topped Business Sheet's "world's biggest loser" list of business
leaders who lost money in the Late 2000s recession, losing $32.5 billion in 2008,
which brought him out of the top ten list to number 34 in 2009.

A DREAM COME TRUE

 

The late Dhirubhai Ambani dreamt of a digital India — an India where the common
man would have access to affordable means of information and communication.
Dhirubhai, who single-handedly built India’s largest private sector company virtually
from scratch, had stated as early as 1999:
“Make the tools of information and communication available to people at an
 
affordable cost. They will overcome the handicaps of illiteracy and lack of
mobility.”

It was with this belief in mind that Reliance Communications (formerly Reliance
Infocomm) started laying 60,000 route kilometres of a pan-India fibre joptic backbone.
This backbone was commissioned on 28 December 2002, the auspicious occasion of
Dhirubhai’s 70th birthday, though sadly after his unexpected demise on 6 July 2002.
  
Reliance Communications has a reliable, high-capacity, integrated (both wireless and
wireline) and convergent (voice, data and video) digital network. It is capable of
delivering a range of services spanning the entire infocomm (information and
communication) value chain, including infrastructure and services — for enterprises as
well as individuals, applications, and consulting.

Today, Reliance Communications is revolutionising the way India communicates and

networks, truly bringing about a new way of life.
 

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Think big. Think different. Think ahead.
 
Dhirubhai preached — and personally practised —
one mantra throughout his life: Dream with
conviction. He built the Reliance empire from scratch
and, in a short span of 25 years, it catapulted to
become one of the top Fortune 500 corporations of
the world — an achievement unparalleled in history.

He was deeply rooted in traditional Indian values,

and at the same time, Dhirubhai possessed a very
modern outlook - truly that of a 21st century person.
His corporate philosophy was short, simple and
 
incredibly effective: “Think big. Think different.
Think fast. Think ahead. Aim for the best.” This was
clearly reflected in his passion for mega-sized
projects, as well as his fascination for cutting-edge
technology and desire to always achieve the highest
possible productivity. At Reliance, Dhirubhai was a
pillar of inspiration for one and all. By practicing
what he preached, he inspired and encouraged
everyone to surpass the best in the world

.
     
Dhirubhai fully realised that true empowerment of the people is possible

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only and through education. Being an effective communicator, he continued to inspire,
guide, educate motivate everyone through his communications. He was a firm believer in
the power of information and communication, and how it can be utilised and turned to the
advantage of one and all, by making time and distance irrelevant.

He would always say that if a telephone call could be made cheaper than
a postcard, it would transform every home, empower every Indian, remove every obstacle
to opportunity and growth, and tear apart every barrier that divides Indian society. He
was convinced that infocom could energise enterprises, drive governance, and render
learning an interesting experience, apart from making life [Link] his
conviction as our credo, Reliance Communications is committed to transform
Dhirubhai’s dream into a reality.

VISION

 “We will leverage our strengths to execute complex global-scale projects to facilitate
leading-edge information and communication services affordable to all individual
consumers and businesses in India.

We will offer unparalleled value to create customer delight and enhance business
productivity.

We will also generate value for our capabilities beyond Indian borders and enable
millions of India's knowledge workers to deliver their services globally.”

Looking back, looking forward

Reliance – Anil Dhirubhai Ambani Group, an offshoot of the Reliance Group founded by
Shri Dhirubhai H Ambani (1932-2002), ranks among India’s top three private sector
business houses in terms of net worth. The group has business interests that range from
telecommunications (Reliance Communications Limited) to financial services (Reliance
Capital Ltd) and the generation and distribution of power (Reliance Infrastructure
Limited).

Reliance – ADA Group’s flagship company, Reliance Communications, is India's largest

private sector information and communications company, with over 100 million
subscribers. It has established a pan-India, high-capacity, integrated (wireless and
wireline), convergent (voice, data and video) digital network, to offer services spanning
the entire infocomm value chain.

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Other major group companies — Reliance Capital and Reliance Infrastructure — are
widely acknowledged as the market leaders in their respective areas of operation.

ABOUT

HUMAN RESOURCE

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 Human resources is a term used to describe the individuals who
comprise the workforce of an organization, although it is also applied in labor
economics to, for example, business sectors or even whole nations. Human
resources is also the name of the function within an organization charged with the
overall responsibility for implementing strategies and policies relating to the
management of individuals (i.e. the human resources). This function title is often
abbreviated to the initials HR'.

Human resources is a relatively modern management term, coined in

the 1960sThe origins of the function arose in organizations that introduced 'welfare
management' practices and also in those that adopted the principles of 'scientific
management'. From these terms emerged a largely administrative management
activity, co-ordinating a range of worker related processes and becoming known, in
time as the 'personnel function'. Human resources progressively became the more
usual name for this function, in the first instance in the United States as well as
multinational corporations, reflecting the adoption of a more quantitative as well as
strategic approach to workforce management, demanded by corporate management
and the greater competitiveness for limited and highly skilled workers

BACKGROUND

The use of the term 'human resources' by organizations to describe the workforce
capacity available to devote to the achievement of its strategies has drawn upon

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concepts developed in Industrial/Organizational Psychology and Systen Theory
Human resources has at least two related interpretations depending on context. The
original usage derives from political economy and economics, where it was
traditionally called lobour one of four factors of production – although this
perspective has shifted as a consequence of further ongoing research into more
strategic approaches. This first usage is used more in terms of 'human resources
development' of the individuals within an organization, although the approach can
also be applied beyond the level of the organization to that of industry sectors and
nations.

HISTORY OF HR

The early development of the function can be traced back to at least two distinct
movements. One element has its origins in the late 19th century, where
organizations such as Cadburys at its Bournville factory recognised the importance
of looking after the welfare of the workforce, and their families. The employment
of women in factories in the United Kingdom during the [[] lead to the introduction
of "Welfare Officers". Meanwhile, in the United Kingdom the concept of human
resources developed as a reaction to the efficiency focus of Taylorism or "scientific
management" in the early 1900s, which developed in response to the demand for
ever more efficient working practices within highly mechanised factories, such as
in the Ford Motor [Link] 1920, psychologists and employment experts in the
United States started the human relations movement, which viewed workers in
terms of their psychology and fit with companies, rather than as interchangeable
parts.

During the middle of the last century, larger corporations, typically those in the
United States that emerged after the Second World War, recruited personnel from
the US Military and were able to apply new selection, training, leadership, and
management development techniques, originally developed by the Armed
Services, working with, for example, university-based occupational psychologists.
Similarly, some leading European multinationals, such as Shell and Phillips
developed new approaches to personnel development and drew on similar
approaches already used in Civil Service training. Gradually, this spread more
sophisticated policies and processes that required more central management via a
personnel department composed of specialists and generalist teams.

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The role of what became known as Human Resources grew throughout the middle
of the 20th century. Tensions remained between academics who emphasized either
'soft' or 'hard' HR. Those professing so-called 'soft HR' stressed areas like
leadership,cohesion, and loyalty that play important roles in organizational
success. Those promoting 'hard HR' championed more quantitatively rigorous
management techniques in the 1960s.

In the later part of the last century, both the title and traditional role of the
personnel function was progressively superseded by the emergence, at least in
larger organizations, of strategic human resources management and sophisticated
human resources departments. Initially, this may have involved little more than
renaming the function, but where transformation occurred, it became distinguished
by the human resources having a more significant influence on the organizations
strategic direction and gaining board-level representation

Human resources purpose and role

In simple terms, an organization's human resource management strategy should

maximize return on investment in the organization's human capital and minimize
financial risk. Human Resources seeks to achieve this by aligning the supply of
skilled and qualified individuals and the capabilities of the current workforce, with
the organization's ongoing and future business plans and requirements to maximise
return on investment and secure future survival and success. In ensuring such
objectives are achieved, the human resource function purpose in this context is to
implement the organisation's human resource requirements effectively but also
pragmatically, taking account of legal, ethical and as far as is practical in a manner
that retains the support and respect of the workforce

KEY FUNCTIONS

Human Resources may set strategies and develop policies, standards, systems, and
processes that implement these strategies in a whole range of areas. The following
are typical of a wide range of organizations:

 Recruitment, selection, and onboarding (resourcing)

 Organizational design and development
 Business transformation and change management
 Performance, conduct and behavior management

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  Industrial and employee relations
 Human resources (workforce) analysis and workforce personnel data
management
 Compensation, rewards, and benefits management
 Training and development (learning management)

Implementation of such policies, processes or standards may be directly managed

by the HR function itself, or the function may indirectly supervise the
implementation of such activities by managers, other business functions or via
third-party external partner organizations.

Human resources management trends and influences

In organizations, it is important to determine both current and future organizational

requirements for both core employees and the contingent workforce in terms of
their skills/technical abilities, competencies, flexibility etc. The analysis requires
consideration of the internal and external factors that can have an effect on the
resourcing , development, motivation and retention of employees and other
workers.

External factors are those largely out-with the control of the organization. These
include issues such as economic climate and current and future labor market trends
(e.g., skills, education level, government investment into industries etc.). On the
other hand, internal influences are broadly controlled by the organization to
predict, determine, and monitor—for example—the organizational culture
underpinned by management style, environmental climate, and the approach to
ethical and corporate social resoposbilities.

MAJOR TRENDS

To know the business environment an organization operates in, three major trends
must be considered:

1. Demographics: the characteristics of a population/workforce, for example,

age, gender or social class. This type of trend may have an effect in relation
to pension offerings, insurance packages etc.
2. Diversity: the variation within the population/workplace. Changes in society
now mean that a larger proportion of organizations are made up of "baby

15
 boomers" or older employees in comparison to thirty years ago. Advocates
of "workplace diversity" simply advocate an employee base that is a mirror
reflection of the make-up of society insofar as race, gender, sexual
orientation, etc.
3. Skills and qualifications: as industries move from manual to more
managerial professions so does the need for more highly skilled graduates.
If the market is "tight" (i.e., not enough staff for the jobs), employers must
compete for employees by offering financial rewards, community
investment, etc..

INDIVIDUAL RESPONSE\

In regard to how individuals respond to the changes in a labour market, the

following must be understood:

 Geographical spread: how far is the job from the individual? The distance to
travel to work should be in line with the pay offered, and the transportation
and infrastructure of the area also influence who applies for a post.
 Occupational structure: the norms and values of the different careers
within an organization. Mahoney 1989 developed 3 different types of
occupational structure namely craft (loyalty to the profession), organization
career (promotion through the firm) and unstructured (lower/unskilled
workers who work when needed).
 Generational difference: different age categories of employees have certain
characteristics, for example their behaviour and their expectations of the
organization.

Framework

Human Resources Development is a framework for the expansion of human capital

within an organization or (in new approaches) a municipality, region, or nation.
Human Resources Development is a combination of training and education, in a
broad context of adequate health and employment policies, that ensures the
continual improvement and growth of both the individual, the organization, and the
national human resourcefulness. Adam Smith states, “The capacities of individuals

16
depended on their access to education”. Human Resources Development is the
medium that drives the process between training and learning in a broadly
fostering environment. Human Resources Development is not a defined object, but
a series of organised processes, “with a specific learning objective” (Nadler,1984
Within a national context, it becomes a strategic approach to intersectoral linkages
between health, education and employment.

Structure

Human Resources Development is the structure that allows for individual

development, potentially satisfying the organization’s, or the nation's goals.
Development of the individual benefits the individual, the organization—and the
nation and its citizens. In the corporate vision, the Human Resources Development
framework views employees as an asset to the enterprise, whose value is enhanced
by development, “Its primary focus is on growth and employee development…it
emphasises developing individual potential and skills”(Elwood, Olton and Trott
1996) Human Resources Development in this treatment can be in-room group
training, tertiary or vocational courses or mentoring and coaching by senior
employees with the aim for a desired outcome that develops the individual’s
performance. At the level of a national strategy, it can be a broad intersectoral
approach to fostering creative contributions to national productivity

Training

At the organizational level, a successful Human Resources Development program

prepares the individual to undertake a higher level of work, “organized learning
over a given period of time, to provide the possibility of performance change”
(Nadler 1984). In these settings, Human Resources Development is the framework
that focuses on the organizations competencies at the first stage, training, and then
developing the employee, through education, to satisfy the organizations long-term
needs and the individuals’ career goals and employee value to their present and
future employers. Human Resources Development can be defined simply as
developing the most important section of any business its human resource by
attaining or upgrading employee skills and attitudes at all levels to maximise
enterprise effectiveness The people within an organization are its human resource.
Human Resources Development from a business perspective is not entirely focused
on the individual’s growth and development, “development occurs to enhance the
organization's value, not solely for individual improvement. Individual education
and development is a tool and a means to an end, not the end goal itself”.(Elwood
F. Holton II, James W. Trott Jr). The broader concept of national and more

17
strategic attention to the development of human resources is beginning to emerge
as newly independent countries face strong competition for their skilled
professionals and the accompanying brain-drain they experience.

Recruitment

Employee recruitment forms a major part of an organization's overall resourcing

strategies, which identify and secure people needed for the organization to survive
and succeed in the short to medium-term. Recruitment activities need to be
responsive to the ever-increasingly competitive market to secure suitably qualified
and capable recruits at all levels. To be effective these initiatives need to include
how and when to source the best recruits internally or externally. Common to the
success of either are; well-defined organizational structures with sound job design,
robust task and person specification and versatile selection processes, reward,
employment relations and human resource policies underpinned by a commitment
for strong employment trading,employer branding and employee engagement and
onboarding strategies.

Internal recruitment can provide the most cost-effective source for recruits if the
potential of the existing pool of employees has been enhanced through training,
development and other performance-enhancing activities such as performance
appraisal, succession planning and development centres to review performance and
assess employee development needs and promotional potential.

Increasingly, securing the best quality candidates for almost all organizations
relies, at least occasionally if not substantially, on external recruitment methods.
Rapidly changing business models demand skill and experience that cannot be
sourced or rapidly enough developed from the existing employee base. It would be
unusual for an organization to undertake all aspects of the recruitment process
without support from third-party dedicated recruitment firms. This may involve a
range of support services, such as; provision of CVs or resumes , identifying
recruitment media, advertisement design and media placement for job vacancies,
candidate response handling,shortlisting, conducting aptitude testing, preliminary
interviews or reference and qualification verification. Typically, small
organizations may not have in-house resources or, in common with larger
organizations, may not possess the particular skill-set required to undertake a
specific recruitment assignment. Where requirements arise, these are referred on an
ad hoc basis to government job centres or commercially run employment agencies.

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Except in sectors where high-volume recruitment is the norm, an organization
faced with sudden, unexpected requirements for an unusually large number of new
recruits often delegates the task to a specialist external recruiter. Sourcing
executive level and senior management as well as the acquisition of scarce or
‘high-potential’ recruits has been a long-established market serviced by a wide
range of ‘search and selection’ or ‘headhunting’ consultancies, which typically
form long-standing relationships with their client organizations. Finally, certain
organizations with sophisticated HR practices have identified there is a strategic
advantage in outsourcing complete responsibility for all workforce procurement to
one or more third-party recruitment agencies or consultancies. In the most
sophisticated of these arrangements the external recruitment services provider may
not only physically locate, or ‘embed’, their resourcing team(s) in the client
organization's offices, but work in tandem with the senior human resource
management team in developing the longer-term HR resourcing strategy and plan.

Despite its more everyday use terms such as "human resources" and similarly
"human capital" continue to be perceived negatively and maybe considered an
insulting of people. They create the impression that people are merely
commodities, like office machines or vehicles, despite assurances to the contrary

Modern analysis emphasizes that human beings are not "commodities" or

"resources", but are creative and social beings in a productive enterprise. The 2000
revision of ISO 9001 in contrast requires identifying the processes, their sequence
and interaction, and to define and communicate responsibilities and authorities. In
general, heavily unionised nations such as France and Germany have adopted and
encouraged such approaches. The International Labour Organization also in 2001
decided to revisit, and revise its 1975 Recommendation 150 on Human Resources
Development. One view of these trends is that a strong social consensus on
political economy and a good social welfare system facilitates labor mobilityl and
tends to make the entire economy more productive, as labor can develop skills and
experience in various ways, and move from one enterprise to another with little
controversy or difficulty in adapting. Another view is that governments should
become more aware of their national role in facilitating human resources
development across all sectors.

An important controversy regarding labor mobility illustrates the broader

philosophical issue with usage of the phrase "human resources": governments of
developing nations often regard developed nations that encourage immigration or
"guest workers" as appropriating human capital that is more rightfully part of the
developing nation and required to further its economic growth.

19
Over time the United Nations have come to more generally support the developing
nations' point of view, and have requested significant offsetting "foreign aid"
contributions so that a developing nation losing human capital does not lose the
capacity to continue to train new people in trades, professions, and the arts.[9].

In the very narrow context of corporate "human resources" management, there is a

contrasting pull to reflect and require workplace diversity that echoes the diversity
of a global customer base. Such programs require foreign language and culture
skills, ingenuity, humour, and careful listening. These indicate a general shift
through the human capital point of view to an acknowledgment that human beings
contribute more to a productive enterprise than just "work": they bring their
character, ethics, creativity, social connections, and in some cases pets and
children, and alter the character of a workplace. The term corporate culture is used
to characterize such processes at the organizational level.

HUMAN RESOURCE MANAGEMENT

Human resource management (HRM) is the strategic and coherent approach to

the management of an organization's most valued assets - the people working there
who individually and collectively contribute to the achievement of the objectives
of the business. The terms "human resource management" and "human resources"
(HR) have largely replaced the term "personal management" as a description of the
processes involved in managing people in organizations. In simple words, HRM
means employing people, developing their capacities, utilizing, maintaining and
compensating their services in tune with the job and organizational requirement.

FEATURES

Its features include:

 Organizational management
 Personnel administration
 Manpower management
20
  Industrial management

But these traditional expressions are becoming less common for the theoretical
discipline. Sometimes even employee andindustrial relations are confusingly listed
as synonyms,although these normally refer to the relationship between
management and workers and the behavior of workers in companies.

The theoretical discipline is based primarily on the assumption that employees are
individuals with varying goals and needs, and as such should not be thought of as
basic business resources, such as trucks and filing cabinets. The field takes a
positive view of workers, assuming that virtually all wish to contribute to the
enterprise productively, and that the main obstacles to their endeavors are lack of
knowledge, insufficient training, and failures of process.

Human Resource Management(HRM) is seen by practitioners in the field as a

more innovative view of workplace management than the traditional approach. Its
techniques force the managers of an enterprise to express their goals with
specificity so that they can be understood and undertaken by the workforce, and to
provide the resources needed for them to successfully accomplish their
assignments. As such, HRM techniques, when properly practiced, are expressive of
the goals and operating practices of the enterprise overall. HRM is also seen by
many to have a key role in risk reduction within organisations. Synonyms such as
personnel management are often used in a more restricted sense to describe
activities that are necessary in the recruiting of a workforce, providing its members
with payroll and benefits, and administrating their work-life needs. So if we move
to actual definitions, Torrington and Hall (1987) define personnel management as
being:

“a series of activities which: first enable working people and their employing
organisations to agree about the objectives and nature of their working
relationship and, secondly, ensures that the agreement is fulfilled" (p. 49).

While Miller (1987) suggests that HRM relates to:

".......those decisions and actions which concern the management of employees at

all levels in the business and which are related to the implementation of strategies
directed towards creating and sustaining competitive advantage" (p. 352).

Academic theory

21
The goal of human resource management is to help an organisation to meet
strategic goals by attracting, and maintaining employees and also to manage them
effectively. The key word here perhaps is "fit", i.e. a HRM approach seeks to
ensure a fit between the management of an organisation's employees, and the
overall strategic direction of the company (Miller, 1989).

The basic premise of the academic theory of HRM is that humans are not
machines, therefore we need to have an interdisciplinary examination of people in
the workplace. Fields such as psychology,industrial relations, industrial
engineering,sociology,economics, and crirtical theories: [Link]-
structuralism play a major role. Many colleges and universities offer bachelor and
master degrees in Human Resources Management or in Human Resources and
Industrial Relations.

One widely used scheme to describe the role of HRM, developed by Dave Ulrich ,
defines 4 fields for the HRM function

 Strategic business partner

 Change management
 Employee champion
 Administration

However, many HR functions these days struggle to get beyond the roles of
administration and employee champion, and are seen as reactive rather than
strategically proactive partners for the top management. In addition, HR
organisations also have difficulty in proving how their activities and processes add
value to the company. Only in recent years have HR scholars and professionals
focused on developing models that can measure the value added by HR.

Business practice

Human resources management involves several processes. Together they are

supposed to achieve the above mentioned goal. These processes can be performed
in an HR department, but some tasks can also be outsourced or performed by line-
managers or other departments. When effectively integrated they provide
significant economic benefit to the company.

 Workforce planning
 Recruitment(sometimes separated into attraction and selection)
 Induction,Orientation and Onboarding

22
  Skills management
 Training and Development
 Personnel administration
 Compensation in wage or salary
 Time management
 Travel management (sometimes assigned to accounting rather than HRM)
 Payroll (sometimes assigned to accounting rather than HRM)
 Employee benefits administration
 Personnel cost planning
 Performance appraisal
 Labor relations

HRM strategy

An HRM strategy pertains to the means as to how to implement the specific

functions of HRM. An organization's HR function may possess recruitment and
selection policies, disciplinary procedures, reward/recognition policies, an HR
plan, or learning and development policies, however all of these functional areas of
HRM need to be aligned and correlated, in order to correspond with the overall
business strategy. An HRM strategy thus is an overall plan, concerning the
implementation of specific HRM functional areas.

An HRM strategy typically consists of the following factors:

 "Best fit" and "best practice" - meaning that there is correlation between
the HRM strategy and the overall corporate strategy. As HRM as a field
seeks to manage human resources in order to achieve properly
organisational goals, an organisation's HRM strategy seeks to accomplish
such management by applying a firm's personnel needs with the
goals/objectives of the organisation. As an example, a firm selling cars
could have a corporate strategy of increasing car sales by 10% over a five
year period. Accordingly, the HRM strategy would seek to facilitate how
exactly to manage personnel in order to achieve the 10% figure. Specific
HRM functions, such as recruitment and selection, reward/recognition, an
HR plan, or learning and development policies, would be tailored to achieve
the corporate objectives.

23
  Close co-operation (at least in theory) between HR and the top/senior
management, in the development of the corporate strategy. Theoretically,
a senior HR representative should be present when an organisation's
corporate objectives are devised. This is so, since it is a firm's personnel
who actually construct a good, or provide a service. The personnel's proper
management is vital in the firm being successful, or even existing as a going
concern. Thus, HR can be seen as one of the critical departments within the
functional area of an organisation.

 Continual monitoring of the strategy, via employee feedback, surveys, etc.

The implementation of an HR strategy is not always required, and may depend on

a number of factors, namely the size of the firm, the organisational culture within
the firm or the industry that the firm operates in and also the people in the firm.

An HRM strategy can be divided, in general, into two facets - the people strategy
and the HR functional strategy. The people strategy pertains to the point listed in
the first paragraph, namely the careful correlation of HRM policies/actions to
attain the goals laid down in the corporate strategy. The HR functional strategy
relates to the policies employed within the HR functional area itself, regarding the
management of persons internal to it, to ensure its own departmental goals are met.

There are both generalist and specialist HRM jobs. There are careers involved with
employment, recruitment and placement and these are usually conducted by
interviewers, EEO (Equal Employment Opportunity) specialists or college
recruiters. Training and development specialism is often conducted by trainers and
orientation specialists. Compensation and benefits tasks are handled by
compensation analysts, salary administrators, and benefits administrators.

Professional organizations

Professional organizations in HRM include the Society for Human Resource

Management, the Australian Human Resources Institute (AHRI), the Charted
Institute of Personnel Development(CIPD), the International Public Management
Association for HR (IPMA-HR), Management Association of Nepal (MAN) and
the International Personnel Management Association of Canada (IPMA-Canada),
Human Capital Institute. National Human Resource Development Network in
India.

Functions

24
The Human Resources Management (HRM) function includes a variety of
activities, and key among them is deciding what staffing needs you have and
whether to use independent contractors or hire employees to fill these needs,
recruiting and training the best employees, ensuring they are high performers,
dealing with performance issues, and ensuring your personnel and management
practices conform to various regulations. Activities also include managing your
approach to employee benefits and compensation, employee records and personnel
policies. Usually small businesses (for-profit or nonprofit) have to carry out these
activities themselves because they can't yet afford part- or full-time help. However,
they should always ensure that employees have—and are aware of—personnel
policies which conform to current regulations. These policies are often in the form
of employee manuals, which all employees have.

Note that some people distinguish a difference between HRM (a major

management activity) and HRD (Human Resource Development, a profession).
Those people might include HRM in HRD, explaining that HRD includes the
broader range of activities to develop personnel inside of organizations, including,
e.g., career development, training, organization development, etc.

There is a long-standing argument about where HR-related functions should be

organized into large organizations, e.g., "should HR be in the Organization
Development department or the other way around?"

The HRM function and HRD profession have undergone major changes over the
past 20–30 years. Many years ago, large organizations looked to the "Personnel
Department," mostly to manage the paperwork around hiring and paying people.
More recently, organizations consider the "HR Department" as playing an
important role in staffing, training and helping to manage people so that people and
the organization are performing at maximum capability in a highly fulfilling
manner.

Human Resource Planning

Definition of Human Resource Planning, Objectives of Human Resource Planning,

Human Resource Planning at Different Levels, The Process of Human Resource
Planning, Assessing Current Human Resources and Making an Inventory,
Forecasting, Matching the Inventory with Future Requirements, Managing the
25
Forecasted Demand/ Surplus, Managing Future Demand, Managing Future
Surplus, Dealing with Surplus Manpower, Growing Importance of Human
Resource Planning, Current Trends

Chapter Summary

HRP is the process by which an organization ensures that it has the right number
and kinds of people, at the right places, at the right time and that these people are
capable of performing their tasks effectively and efficiently. This helps the
organization to achieve its overall objectives. Two major ways in which societal
trends affect employment is through consumer markets, which affect the demand
for goods and services, and labor markets, which affect the supply of people
needed to produce goods and services.

Maintaining a flexible workforce is the major challenge of the HR department and

HRP helps it handle this challenge. HRP is done at different levels – corporate,
intermediate, and operations levels and for short-term activities. A proper human
resource planning exercise should utilize the inputs of all the departments in the
organization and enjoy the support of the top management.

A human resource professional would be better equipped for human resource

planning if he has a good understanding of the market dynamics, changes in the
economy, organizational processes and technological developments. The process
of HRP involves three key steps – assessing and making an inventory of the
current human resources, forecasting the organization's human resource needs and
matching the demand and supply of human resources.

Forecasting the overall human resource requirements involves studying the factors
affecting the supply and estimating the increase or decrease in the external and
internal supply of human resources. New hires, transfers-in, individuals returning
from leave etc. increase the internal supply of human resources, while retirements,
dismissals, transfers-out of the unit, lay-offs, voluntary quits, sabbaticals,
prolonged illness, and deaths reduce the supply.

The matching of supply and demand can help the HR department to identify areas
in which shortages and surpluses exist. When there is a need for downsizing,
organizations opt for retrenchment using several techniques such as lay-offs,
outplacements, leave of absence without pay, loaning, work-sharing, reduced work

26
hours, early retirement and attrition to reduce the number of employees. Effective
HRP reduces the pressures on the management and employees, as both
employment and retrenchment would be well planned and phased out over a
comfortable time span, avoiding unpleasant consequences.

Steps in the Human Resource Planning Process

Designing the Management System

1. A crosscutting issue in human resource planning is to ensure that a proper system is in
place to handle the process. The overall aim of this system is to manage human resources
in line with organizational goals. The system is in charge of human resource plans,
policies, procedures and best practices. For example, the system should track emerging
human resource management trends, such as outsourcing certain non-core functions,
adopting flexible work practices and the increased use of information technology, and, if
appropriate, implement them.

Environmental Analysis
2. The first step in the human resource planning process is to understand the context of
human resource management. Human resource mangers should understand both internal
and external environments. Data on external environments includes the following: the
general status of the economy, industry, technology and competition; labor market
regulations and trends; unemployment rate; skills available; and the age and sex
distribution of the labor force. Internal data required include short- and long-term
organizational plans and strategies and the current status of the organization's human
resources.

Forecasting Human Resource Demand

3. The aim of forecasting is to determine the number and type of employees needed in the
future. Forecasting should consider the past and the present requirements as well as future
organizational directions. Bottom-up forecasting is one of the methods used to estimate
future human resource needs by gathering human resource needs of various
organizational units.

Analyzing Supply
4. Organizations can hire personnel from internal and external sources. The skill inventories
method is one of the techniques used to keep track of internal supply. Skill inventories

27
 are manual or computerized systems that keep records of employee experience, education
and special skills. A forecast of the supply of employees projected to join the
organization from outside sources, given current recruitment activities, is also necessary.

Reconciliation and Planning

5. The final step in human resource planning is developing action plans based on the
gathered data, analysis and available alternatives. The key issue is that the plans should
be acceptable to both top management and employees. Plans should be prioritized and
their key players and barriers to success identified. Some of these plans include employee
utilization plan, appraisal plan, training and management development plan and human
resource supply plan.

Competencies for HRD Practitioners

There are five fundamental skill that need to be mastered by Human Resource
Development (HRD) practitioners:
(1) needs assessment
(2) program design, development, and evaluation (including individual evaluation)
(3) marketing of HRD program
(4) cost/benefit analysis
(5) facilitation of learning.

[Link] ASSESSMENT:- HRD practitioners must be proficient in designing and

conducting needs assessments prior to designing and developing the learning
programs and training activities. There are four reasons for this: (1) to identify
specific problem areas in the organization; (2) to identify specific learning
deficiencies to serve as the bases of programs and activities; (3) to determine the
bases of future learner evaluations; and (4) to determine the costs and benefits of
the programs and activities in order to get organizational support.

[Link] DESIGN, DEVELOPMENT, AND EVALUATION:-

At the heart of all learning programs and training activities is their design, a
blueprint from which to construct all learning in the organization. Without a
properly designed program, learning will not be consistent, nor will desired results
become evident. HRD practitioners wise enough to develop the competencies and
28
skills they need will design and develop effective programs and activities and will
be able to evaluate outcomes accurately.

3,MARKETING OF HRD PROGRAMS:- Many HRD programs are severely

reduced during financially difficult periods. Often they are eliminated altogether.
HRD practitioners should therefore develop a clear understanding of and
appreciation for marketing. By doing so they can improve the overall image of the
program, the field, and its practitioners and help position HRD as a serious and vital
component of the organization's strategic future.

[Link] BENEFIT ANALYSIS:- Cost-benefit analysis is often used as a means

of justification or evidence of impact. It provides upper management with
information they understand and moves the evaluation of HRD effectiveness from
qualitative to quantitative.

[Link] OF LEARNING:- HRD practitioners need to develop

teaching skills and an ability to facilitate learning in a variety of settings. They must
also understand how adults learn and know how to evaluate learning and behavioral
change.

29
 TALENT
MANAGEMENT

30
Talent management refers to the process of developing and integrating new
workers, developing and retaining current workers, and attracting highly skilled
workers to work for a company. Talent management in this context does not refer
to the management of [Link] term was coined by David Watkins of
Softscape published in an article in 1998 The process of attracting and retaining
profitable employees, as it is increasingly more competitive between firms and of
strategic importance, has come to be known as "the war for talent."

Talent management is a process that emerged in the 1990s and continues to be

adopted, as more companies come to realize that their employees’ talents and skills
drive their business success. Companies that have put into practice talent
management have done so to solve an employee retention problem. The issue with
many companies today is that their organizations put tremendous effort into
attracting employees to their company, but spend little time into retaining and
developing talent. A talent management system must be worked into the business
strategy and implemented in daily processes throughout the company as a whole. It
cannot be left solely to the human resources department to attract and retain
employees, but rather must be practiced at all levels of the organization. The
business strategy must include responsibilities for line managers to develop the
skills of their immediate subordinates. Divisions within the company should be
openly sharing information with other departments in order for employees to gain
knowledge of the overall organizational objectives. Companies that focus on
developing their talent integrate plans and processes to track and manage their
employee talent, including the following:

 Sourcing, attracting, recruiting and onboarding qualified candidates with

competitive backgrounds
 Managing and defining competitive salaries
 Training and development opportunities
 Performance management processes
 Retention programs

31
  Promotion and transitioning

Talent management is also known as HCM (Human Capital Management), HRIS

(HR Information Systems) or HRMS (HR Management Systems), and HR
Modules.

Human capital management

Companies that engage in talent management (Human Capital Management) are

strategic and deliberate in how they source, attract, select, train, develop, retain,
promote, and move employees through the organization. Research done on the
value of such systems implemented within companies consistently uncovers
benefits in these critical economic areas: revenue, customer satisfaction, quality,
productivity, cost, cycle time, and market capitalization The mindset of this more
personal human resources approach seeks not only to hire the most qualified and
valuable employees but also to put a strong emphasis on retention. Since the initial
hiring process is so expensive to a company, it is important to place the individual
in a position where his skills are being extensively utilized.

The term "talent management" means different things to different organizations.

To some it is about the management of high-worth individuals or "the talented"
whilst to others it is about how talent is managed generally - i.e. on the assumption
that all people have talent which should be identified and liberated. From a talent
management standpoint, employee evaluations concern two major areas of
measurement: performance and potential. Current employee performance within
a specific job has always been a standard evaluation measurement tool of the
profitability of an employee. However, talent management also seeks to focus on
an employee’s potential, meaning an employee’s future performance, if given the
proper development of skills and increased responsibility.

The major aspects of talent management practiced within an organization must

consistently include: performance management

 leadership development
 workforce planning/identifying talent gaps
 recruiting

This term "talent management" is usually associated with competency-based

human resource management practices. Talent management decisions are often
driven by a set of organizational core competencies as well as position-specific

32
competencies. The competency set may include knowledge, skills, experience, and
personal traits (demonstrated through defined behaviors). Older competency
models might also contain attributes that rarely predict success (e.g. education,
tenure, and diversity factors that are illegal to consider in relation to job
performance in many countries, and unethical within organizations).

Talent marketplace

A talent marketplace is an employee training and development strategy that is set

in place within an organization. It is found to be most beneficial for companies
where the most productive employees can pick and choose the projects and
assignments that are most ideal for the specific employee. An ideal setting is where
productivity is employee centric and tasks are described as “judgment-based
work,” for example, in a law firm. The point of activating a talent marketplace
within a department is to harness and link individuals’ particular skills (project
management or extensive knowledge in a particular field) with the task at hand.
Examples of companies that implement the talent marketplace strategy are
American Express and IBM.

Special Features of TM

• An overall picture of the profi led group’s current managerial abilities.

• An individual picture of each manager detailing a list of strengths, as
well as areas for improvement.
• An analysis of managerial talent readiness for career advancement.

• A tool for optimized succession planning.

Some of the talent management challenges

1. Attracting and retaining enough employees at all levels to meet the needs of
organic and inorganic growth. All three companies are facing a talent crunch.
Essar, for example, has grown from 20 thousand employees to a staggering 60
thousand in the past 3 years. Fifty-five percent of their employees have less than
two years of tenure.

2. Creating a value proposition that appeals to multiple generations. With four

generations in today's workplace, most companies are struggling to create an
employee experience that appeals to individuals with diverse needs, preferences
and assumptions. The Gap, for example, has 153,000 people in its workforce. The
33
stores have a high percentage of Gen Y employees, while corporate roles and
leadership ranks are primarily made up of Gen X'ers and Boomers. How does one
create a compelling employee value proposition for the organization?

3. Developing a robust leadership pipeline. I believe one of the biggest potential

threats to many corporations is a lack of a robust talent pool from which to select
future leaders. This is in part a numbers issue—the Gen X cohort is small and
therefore, as I like to say, precious. But it's also an interest issue—many members
of Gen X are simply not particularly excited about being considered for these roles.
There was wide agreement among the panelists that a lack of individuals ready to
move into senior client manager and leadership roles is a critical challenge.

4. Rounding out the capabilities of hires who lack the breadth of necessary for
global leadership. It's relatively straightforward to identify and assess experts in
specific functional or technical arenas, but much more difficult to determine
whether those individuals have the people skills, leadership capabilities, business
breadth, and global diversity sensibilities required for the nature of leadership
today. Increasingly, the challenge of developing these broader skill sets falls to the
corporations. Essar has formed an academy specifically to develop and groom its
own leaders.

5. Transferring key knowledge and relationships. The looming retirement of a

significant portion of the workforce challenges all companies, but particularly
those who are dependant on the strength of tacit knowledge, such as that embedded
in customer relationships, a key to Mercer's business success.

6. Stemming the exodus of Gen X'ers from corporate life. A big threat in many
firms today is the exodus of mid-career talent—people in whom the organization
has invested heavily and in whom it has pinned it hopes for future leadership. For
example, developing talent management practices and programs calibrated to
leverage technology and create greater work/life balance has been a priority for
Mercer over recent years.

7. Redesigning talent management practices to attract and retain Gen Y's. The
challenge of calibrating talent management practices and programs to attract and
engage our young entrants is critically important to all firms and particularly so for
firms that depend on a strong flow of top talent, such professional service firms
like Mercer. All three panelists agreed that making the business infrastructure more
attractive to Gen Y is a high priority.

34
8. Creating a workplace that is open to Boomers in their "second careers."
Age prejudice still exists, but smart companies are looking for ways to incorporate
the talents of Boomers and even older workers in the workforce. In many cases,
this requires rethinking roles and work relationships.

9. Overcoming a "norm" of short tenure and frequent movement. Some

industries, such as specialty retail, are known for having a very disposable view of
talent. Companies intent on changing that norm, such as The Gap, must address
both external influences in the marketplace and an internal mindset. The Gap
believes retaining employees in roles for 3+ years will be a key to their future
earnings growth.

10. Enlisting executives who don't appreciate the challenge. Many talent
executives complain that business leaders still believe that people are lined up
outside the door because of the power of the company's brand. The challenge of
enlisting the support of all executives for the transition from a talent culture that
has traditionally operated with a "buy" strategy to one that places more emphasis
on "build" is widely shared.

Talent management practices that

matter

Becoming a well rounded talent requires continuous learning and development of

knowledge and skills. Organizations that want to succeed in flat world
competition better be creating enriching workplace experiences if they wish to
attract and retain the high-caliber talent they need. Organizations know that they
must have the best talent in order to succeed in the hypercompetitive and
increasingly complex global economy. Along with the understanding of the need to
hire, develop, and retain talented people, organizations are aware that they must
manage talent as a critical resource to achieve the best possible [Link], if any,
organizations today have an adequate supply of talent. Gaps exist at the top of the
35
organization, in the first- to midlevel leadership ranks, and at the front [Link]
is an increasingly scarce resource, so it must be managed to the fullest
[Link] the current economic downturn we may experience a short ceasefire
in the war
for talent, but we’re all seeing new pressures put on the talent running our
organizations. Are today’s leaders able to do more with less? The A-players can,
and there should be a strategic emphasis on keeping those leaders—and developing
their successors. Many organizations are reducing their workforces, but let’s be
careful not to cut so deep that talent is scarce when the economy rebound. The idea
of managing talent is not [Link] or five decades ago, it was viewed as a
peripheral responsibility best relegated to the personnel department. Now, talent
management is an organizational function that is taken far more seriously.

Best Practice #1: Start with the end in mind—talent strategy must be tightly
aligned with business strategy.

Effective talent management requires that your business goals and strategies drive
the quality and quantity of the talent you need. Procter & Gamble, for example,
views “business decisions and talent decisions as one.”And research put forth by
the Aberdeen
Group showed that best-in-class organizations are 34 percent more likely to
connect succession management strategies with organizational strategies. Below
are statements made by organizations whose specific business goals and strategies
drive their talent needs:

> “We acquired one of our largest competitors and have redundant talent. How will
we ensure we retain the best? Who will oversee the integration? What is the right
management team for our new company?Who will help us focus on quality and
cost containment, while pursuing new markets?And which employees will best fit
the
new culture?”

> “We are a global automobile manufacturer that has steadily lost market share.
What sort of talent are we going to need to shake up the status quo, rejuvenate our
brand, and give us the action-orientation required to turn things around?”

> “We are introducing a ‘blockbuster’ drug that requires us to double our sales
force in the next eight months. In addition to sheer numbers, we also need to add
the right kind of talent—sales reps who take a consultative approach with
physicians.”The real scenarios described above represent clear-cut examples of
36
why matching talent to business needs is so [Link] organizations all hold
a common belief that business success hinges on having the right talent in place—
at the right time. Each of the organizations described aboveis proactively
addressing its talent [Link] far too often, the connection between talent and
business strategy is considered long after strategic plans are inked.

Best Practice #2: Talent management professionals need to move from a seat at
the table to setting the table.

When we gather groups of HR professionals for events, we often ask them who
owns talent management. They point to senior management Many have a seat at
the table, where they’re involved in discussions about business and leadership
strategies that were previously held behind closed boardroom doors. But securing
the right to listen in is not enough. Talent managers need to own parts of the
process and serve as partners,guides, and trusted advisors when it comes time to
talk talent. Research shows this is no easy feat. In fact, it looks as though neither
HR nor senior leader is at the helm of the talent managementship. DDI regularly
takes the pulse of leadership practices around the world. In the most recent report,
the Global Leadership Forecast 2008/200912, leaders were asked to rate the
overall quality of HR. Only a quarter offered a very good or excellent rating, and
just 30 percent of CEOs viewed HR as a strategic partner. On the flipside, those
critical CEOs face challenges of their own. Top corporate leaders,
such as former General Electric CEO Jack Welch, report spending about 50
percent of their time on their people.13 They got involved in recruiting top talent,
groominghigh-potentials, and reviewing talent pools. Speaking on the topic of
talent management, Campbell’s CEO Doug Conant tells us, “I would say CEOs, on
average, understand and appreciate talent more than the everyday person because
they know they can’t do their jobs without it.” Yet, we find evidence in our Global
Leadership Forecast14 research that not all CEOs share this mindset. We asked
both CEOs and HR professionals how often CEOs are actively engaged in four
distinct talent management activities. Though half of CEOs took credit for or
mentoring other executives, ratings from both CEOs and HR were startlingly low
in all other categories, as illustrated in Figure 1.

37
FIGURE 1: CEO Involvement in Talent Management

If talent management is a core part of any organization—if it can be hard-wired

into the fabric and operations of an organization’s most essential functions—HR
and senior leadership must work [Link] most successful initiatives are driven
by HR with active and enthusiastic support from the CEO and other senior leaders
—who provide the resources, the budget,the communication and support necessary
for [Link] HR needs to step up and play a critical role—more so than in the
past. One wouldn’t question who owns the marketing process, or the financial
oversight of an organization—that’s clearly the domain of the top marketing or
financial officer and their teams. Likewise, HR needs to own and put in place
professional talent management processes. And they need to get closer to the
business. One way to do this: Work with line managers to develop business plans
that integrate talent plans, including advice on the ability to meet the business goal
with the talent on board. When gaps exist, talent management professionals need to
offer solutions to close them. In short,talent management professionals have to be
trusted business advisors that execute the organization’s talent management
process.
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Best Practice #3: You must know what you’re looking for—the role of Success
ProfilesSM.

Numerous studies show that companies with better financial performance are more
likely to use competencies as the basis for succession management, external hiring,
and nside promotions. Research highlights include:

> The Aberdeen Group found 53 percent of best-in-class companies have clearly
defined competency models, compared to just 31 percent of other organizations
(which post less impressive performance).15

> Aberdeen research also shows that best-in class organizations are 45 percent
more likely to have models for key positions16 and 64 percent more likely to have
models for all levels of their organizations than other organizations.

> Research from the Hewitt Group illustrates that top global companies
consistently apply their competency models across the organization, and their
competencies are significantly more aligned with overall business strategies.
Eighty-four percent of top global companies demonstrated alignment, compared to
just 53 percent of other organizations.18
The power of competencies broadens when organizations use what we call
“Success
ProfilesSM.” There are two reasons this approach is more effective than mere
competency
models. First and foremost, Success ProfilesSM are designed to manage talent
inrelation to business objectives—they should reflect key plans and priorities as
well as change with new strategies. Additionally they go beyond just competencies
to include four complementary components:

> Competencies: A cluster of related behaviors that is associated with successor

failure in a job.

> Personal Attributes: Personal dispositions and motivations that relate to

satisfaction, success, or failure in a job.

> Knowledge: Technical and/or professional information associated with

successful
performance of job activities.

39
> Experience: Educational and work achievements associated with successful
performance of job activities.

The end result: detailed definitions of what is required for exceptional performance
in a given role or job. Success Profiles can be used across the entire spectrum of
talent management activities—from hiring and performance management to
development.

Best Practice #4: The talent pipeline is only as strong as its weakest link.

Many organizations equate the concept of talent management with senior

leadership succession management. While succession planning is obviously
important, our belief is
that talent management must encompass a far broader portion of the employee
population.
Value creation does not come from senior leadership alone. The ability of an
organization to compete depends upon the performance of all its key talent, and its
ability to develop and promote that talent. Many people know this as a Leadership
Pipeline. Figure 2 illustrates DDI’s
approach to managing talent using a
Leadership Pipeline strategy

FIGURE 2: DDI’s Leadership Pipeline Model

40
The Aberdeen Group19 found evidence to support the importance of a Leadership
Pipeline approach in a 2008 report on succession management. They found the
bestin-clas organizations they studied are 40 percent more likely than all other
organizations to focus on developing a Leadership Pipeline across all levels of the
organization.A more encompassing approach to managing talent is also essential to
proactively manage career transitions. Each level in our model has different, but
overlapping,Success Profiles, as well as its own set of
transitional challenges. Effective talent management requires not only developing
people
for their current roles, but also getting them ready for their next transition. For
example, individual contributors being considered for frontline leadership positions
must make a critical transition from defining success based on their own
performance to the performance of the team they manage. Similarly, the
operational leader being groomed for a strategic leadership position must shift
from a business unit or functional perspective to that of an enterprise guardian.A
planned approach to transitions is especially important as organizations place more
emphasis on “growing their own leaders” rather than making often risky outside
hires.
The bad news is that few organizations have proactive succession processes in
place at

41
lower leadership levels. Our Global Leadership Forecast study revealed that only
28 percent of the companies we surveyed have a system in place for key individual
contributors and just 38 percent have one for frontline leaders.20

Best Practice #5: Talent Management is not a democracy.

Bank of America has a philosophy: Invest in the Best. Many companies do the
opposite,and make a mistake by trying to spread limited resources for development
equally across employees. We’ve found that organizations realize the best returns
when promising individuals receive a differential focus when it comes to
development dollars. So who should get these benefits? Two major categories:
high-potential leaders and individuals who create value for their organizations.
For example, Sunoco places special emphasis on mid-level plant managers because
these leaders are, for the first time,managing multiple functions. Extra
development increases their success in these pivotalroles. 21 Countless other
organizations minetheir mid-level ranks for leaders with the potential to advance
into strategic or senior roles. And some companies focus on value creators such as
engineers or sales associates whose results are most beneficial for their employers.
These groups are most likely to return the most on any investment in their
development.

Best Practice #6: Potential, performance and readiness are not the same thing.

Many organizations understand the idea of a high-potential pool or a group of

people who receive more developmental [Link] sometimes, they fail to
consider the differences between potential, performance and readiness,An
excellent analogy to consider when examining the differences between
potentialand readiness is the early career of an [Link] stars of today’s fields,
courts, pools,rinks, and every other venue you can think
of are ready. They’re ready to compete, andequipped to win. But they achieved
theirsuccess through years of practice, with attention from coaches or trainers and
countless hours of preparation and practice. One can assume they’ve had excellent
performance at each level of competition—however good performance on a high
school team may fall woefully short at the college level and good performance at
one level of competition is no promise that the athlete can keep up at the next level.
Early on in that athlete’s career, it’s likely that someone somewhere likely
recognized his or her potential. The young athlete may still be learning the correct
way to hold a bat or throw a ball, but coaches can see innate talent
that signals a star athlete—with years of practice and coaching, of course.

42
Taking a leader from potential to readiness is an equally long process. It takes, on
average,10 years for a high-potential leader to advance into a senior position and
along the way, that individual needs mentoring, stretch
assignments, personalized development plans, and development activities to build
key skills. In short, it’s a lot of work. And it’s work, we’ve found, that
organizations are not doing. The Global Leadership Forecast reports that only
about half of the world’s organizations identify high potentials. Even fewer (39
percent) have programs to accelerate development.22 If organizations—like
athletics—don’t scout for talent and then prepare individuals for top performance,
how can they expect to have a winning team in the future?

Best Practice #7: Talent management is all about putting the right people in
the right jobs.

The late Douglas Bray, Ph.D., a reveredthought leader in the field of industrial and
organizational psychology, devoted much of his career to one of the most famous
and respected studies ever done on talent management:The AT&T Management
Progress Study. Bray followed AT&T managerial talent throughout their 30-plus-
year careers, marking changes in their skills and motivations over time. More than
a decade ago, he made a statement that stuck with one of the authors of this white
paper: “If you
have only one dollar to spend on either improving the way you develop people or
improving your selection and hiring process, pick the latter.” Why should an
organization place the higher priority on selection rather than
development?

> Not everything can be developed. Many elements of Success Profiles are
impossible,or at least very difficult, to [Link] people to improve their
judgment,learning agility, adaptability—all core requirements for most of the talent
hired today—is difficult, if not impossibleLack of motivation for a specific role or
a poor fit between employees’ values and those of the organization leads to poor
performance, and no classroom experience
or learning activity will change this fundamental mismatch. But you can get a read
on these areas during a well-designed hiring/promotion process.

> Hiring for the right skills is more efficient than developing those skills. What
about the areas that are developable, like interpersonal skills, decision-making, or
technical skills? Assessing those areas at the time of hire is likely to cost less than
developing them later.

43
Best Practice #8: Talent management is more about the “hows” than the
“whats.”

Organizations have many “whats” relative to talent management, including

executive resource boards, software platforms, ninebox grid comparing potential to
performance, development plans, and training, training and more training. These
“whats” promise nothing on their own. Guarantees
come from “hows” instead. Our five realization factors for sound execution are:

> Communication—Links the talent management initiative to the business

drivers,puts foward a vision the organization can rally around, and sets
expectations for what will happen in the organization.

> Accountability—Role clarity so that each individual in the talent management

initiative knows what is expected of them.

> Skill—Developing the right skills and providing coaches and mentors for
support.

> Alignment—Must align talent management initiatives to the business drivers but
also need the right kinds of systems to identify high potentials, to diagnose for
development, to link to performance management, and to do development that
really changes behavior.

> Measurement—You can’t manage what you don’t measure. It creates the
tension,and objectives become clearer to help execute a talent strategy. The most
effective measurements go beyond mere statistics to quantify what’s working in
talent management,why those initiatives are effective,and what impact they have
on the [Link] part of our Global Leadership Forecast research23 we
compared the effectiveness
of organizations’ leadership development efforts and how well they used the five
factors of realization. Organizations with the most effective leadership
development programs in place also used the realization
factors most effectively to execute development strategies—outperforming
organizations with the least effective development programs by 28-62 percentage
points!

Best Practice #9: Software does not equal talent management.

44
Claiming a piece of software can provide a full talent management system is a bit
like a food processor will produce a five-star meal. food processor will produce a
five-star [Link] tools are valuable in support of a good plan or recipe. The
right tools clear the path for smoother execution and may improve the end product.
But tools mean nothing without the right expertise and the right ingredients behind
them. A recipe for five-star talent management includes a potent blend of content,
expertise, and technology. It takes best-in-class content to drive the assessment and
development of
people, and a system constructed by knowledgeable experts who have seen a range
of implementations—they should know what works, and what doesn’t. Software
should support the process, but it can’t stand alone.

THE VALUE OF PLANNING

Talent management has never been more of an immediate concern than it is right
now. But in the rush to fill a perceived talentmanagement void, organizations must
be careful not to rush into implementing initiatives or programs that are more about
taking action than about implementing a
well-crafted [Link] planning, culminating in a sound talent strategy that
is tightly connected to the organization’s overall business strategies and business
needs, is required for talent managementto become ingrained in an
organization’sculture and practices. Only when this happens is it possible for talent
management to be both effective and sustainable

WHAT’S DRIVING THE CURRENT EMPHASIS ON TALENT MANAGEMENT?

Organizations have been talking about the connection between great employees
and superior organizational performance for decades. So, why the current emphasis
on managing talent?

There are several drivers fueling this emphasis:

1. There is a demonstrated relationship between better talent and better

business performance. Increasingly, organizations seek to quantify the return on

45
their investment in talent. The result is a body of “proof” that paints a compelling
picture of the impact talent has on business
performance. To highlight just a few:

> A 2007 study from the Hackett Group3 found companies that excel at managing
talent post earnings that are 15 percent higher than peers. For an average Fortune
500 company, such an improvement in performance means hundreds of millions of
dollars.

> A study from IBM found public companies that are more effective at talent
management had higher percentages of financial outperformers than groups of
similar sized companies with less effective talent management.4

> Similarly, a 2006 research study from McBassi & Co.5 revealed that high scorers
in five categories of human capital management (leadership practices,employee
engagement, knowledge accountability, workforce organization, and learning
capacity) posted higher stock market returns and better safety records—two
common business goals that are top of mind for today’s senior leadership.

2. Talent is a rapidly increasing source of value creation. The financial value of

our companies often depends upon the quality of talent. In fact, the Brookings
Institution found that in 1982, 62 percent of an average company’s value was
attributed to its physical assets (including equipment and facilities) and only 38
percent to intangible assets (patents,intellectual property, brand, and, most of all,
people). By 2003, these percentages
nearly flip-flopped, with 80 percent of value attributable to intangible assets and 20
percent to tangible assets.6

3. The context in which we do business is more complex and dynamic.

Hyper-competition makes it more difficult than ever to sustain a competitive

advantage long term. New products—and new business models—have shorter life
cycles, demanding constant [Link] enables greater access to
information and forces us to move “at the speed of business.” Global expansion
adds to these challenges—a single company
may, for example, have its headquarters in Japan, its R&D function in China,and
its worldwide sales operations based in [Link] as we mentioned already,
the recent economic downturn following years of

46
rapid economic growth adds a whole new dimension to how we manage
[Link] layoffs, lower engagement,and less opportunity for advancement all
present additional challenges to managing talent.

4. Boards and financial markets are expecting more. Strategy + Business

magazine once described CEOs as ““the world’s most prominent temp workers” In
2007, CEO turnover was 13.8 percent, and the median tenure for a CEO who left
office was six years.8 Boards and investors are putting senior leaders under a
microscope, expecting them to create value. This pressure, most visible at the CEO
level but generally felt up and
down the org chart, drives a growing emphasis on the quality of talent—not
just at the C-level, but at all levels.

5. Employee expectations are also changing. This forces organizations

to place a greater emphasis on talent management strategies and practices.

Employees today are:

> Increasingly interested in having challenging and meaningful work.

> More loyal to their profession than to the organization.

> Less accommodating of traditional structures and authority.

> More concerned about work-life balance.

> Prepared to take ownership of their careers and development.

Responding to these myriad challenges makes it difficult to capture both the

“hearts” and “minds” of today’s [Link], it’s critical to do so, as
research from IBM and the Human Capital Institute highlights.9 Their July
2008 study showed that 56 percent of financial performers understand and
address employee engagement. This is just one piece of a large body of evidence
that illustrates how the cultures built within our organizations are crucial to
attracting and retaining key talent.

6. Workforce demographics are [Link] wage a new “war for

talent” these days. Today, 60 percent of workers over the age of 60 are electing to
postpone their retirement due to the financial crisis, according to a 2009 survey by
CareerBuilder.10 Many hold top positions, squelching the opportunity for lower-
47
level talent to advance and leaving younger workers feeling stuck (and potentially
looking for opportunities
with other organizations). At all levels, each deferred exit from the workforce is
one less new hire in an already depressed job market.

48
49
[edit] Current application of talent management

In current economic conditions, many companies have felt the need to cut
expenses. This should be the ideal environment to execute a talent management
system as a means of optimizing the performance of each employee and the
organization. However, within many companies the concept of human capital
management has just begun to develop. “In fact, only 5 percent of organizations
say they have a clear talent management strategy and operational programs in
place today.”[10]

Use talent management strategies and technology to build a great workforce

The term “talent management” refers to managing the entire employee lifecycle,
from attracting and hiring to promoting and finding a successor upon retirement.

50
Talent management is increasingly a part of the corporate strategy for most
organizations. You don’t have to look very far to see articles about attracting,
developing, and retaining talent. Forecasts abound on retirements, labor shortages,
quality of new hires, and lack of future leaders. All point to the need for
organizations to act now or risk losing competitive advantage.

To maintain a competitive advantage and to meet the demands of business,

organizations need to identify, select, and develop their employees in a way that
both supports the company’s business goals and provides employees with a clear
career path. In other words, organizations must become deliberate and strategic in
their programs for managing their talent.

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