Innovative Worldwide HR Practices in the Indian Corporate


Miss. T. Sarunya
Final MBA
M.I.E.T. Engineering College


In the current scenario, globalization has a major impact on the management of human resources in developing Countries like ours. With picking up the velocity of globalization, organizations have to adapt the significant changes and new trends in all aspects of management including the management of human resources. An innovative and effective management of human resources has an imperative role to play in the performance and success of organizations. Moreover, competitive pressures on the organizations have encouraged them to be proactive in diagnosing HR problems and to adopt more innovative HR practices since these were no longer a matter of trend, but rather of survival. Hence the corporate have started formulating and adapting innovative HR strategies in the areas such as attracting and accessing the talented, developing and growing the potential, engaging and aligning the best, transition, etc. In this paper the authors have discussed some of the key HR functions where and how innovative strategies need to be developed for ensuring the organizational excellence.

Key words: competitive advantage, HR out-sourcing, loyalty interview, intellectual capital, re-engineering, etc


Today in this globalised world organizations must tackle with revolutionary trends accelerating product and technological change, globalizes competition, deregulation, demographic changes and trends towards a service society and the information. These trends have dramatically increased the degree of competition in virtually all industries, while forcing firms to cope with unprecedented product innovation and technological change. Companies in such an environment either become competitive high performers or they die. Hence, innovation is recognized vital for firms to remain at the forefront in the situation, where rapidly integrating global economy, technological change and shifting consumer preferences are together increasing competitive pressures for the firms.  The critical dimension in today's world is the speed with which knowledge is transformed into economic activity. Moreover, the global market for the companies increases their potential return from the development of new products and processes.  As a result, the incentive for firms to invest in innovation is much greater than when the focus was on smaller, largely domestic markets. Firms now face greater competitive pressures to make better use of knowledge, technology and human resources to realize benefits from intangible investments and to respond to new demands from suppliers and customers.  Consequently, firms are forced to rethink their business strategies, production processes and management practices to improve their functioning and adapt to a changing business environment in the new economy.  Knowledge-intensive industries face a dynamic and fiercely competitive environment. Products in the high technology industry are more complex, with shorter life cycles that need constant innovation in order to meet changes in market conditions and customer expectations (George, et al., 2001). In high technology firms, technological innovation becomes critical in responding to rapid changes; innovation depends heavily on acquiring new knowledge. An organization must therefore fully utilize its resources and capabilities in order to remain competitive. Individual innovativeness contributes to an organization's renewal, survival and growth in today's turbulent and competitive business environment through the performance of OCB (Amabile 1988). Leveraging intellectual capital as a sustainable competitive advantage depends upon a firm's ability to use existing knowledge and to generate new knowledge. Human resources can be instrumental in meeting the challenges in the formalization of, and access to, experience, knowledge, and expertise that create new capacities, superior performance, and innovation (Beckman, 1999). Human resource practices can play a critical role in supporting and contributing to the creation, integration, and utilization of knowledge.


Innovative HR practices build competencies and capabilities for superior and winning performances today and simultaneously create long term fertility for innovation of business ideas and strategies for future. The innovative strategies are formulated  by  the companies in the following significant functions of HRM such as  Recruitment and selection, Learning and development, Rewards and recognition, Career planning, Compensation and benefits, Performance management, Leadership and development, etc in order to ensure their organizational Excellence.

Some of the areas in the Human Resource Management where challenges are being faced by the managers due to globalization and in which innovations are needed are discussed as follows:

1. Managing diversity of workforce

"Workforce Diversity" refers to policies and practices that seek to include people within a workforce who are considered to be, in some way, different from those in the prevailing constituency. Diversity today not only is referred to a person's gender or ethnic group but also encompasses differences in age, tenure in an organization, educational background, sexual or affectional orientation or preference, physical abilities or qualities and social status, economic status, lifestyle, ethnicity, etc among many other characteristics.

Very few companies in India have started to focus on workforce diversity; however, there is a long way to go to make the workplace more diverse. Managing a diverse workforce is no longer a choice but an imperative. In an age of cultural pluralism, multiculturalism is needed to manage diversity effectively. One of the dangers that must be avoided in grasping a proper understanding of multiculturalism is bashism. Bashism is the tendency to verbally and/or physically attack another person or group based solely on the negative meaning given to group membership due to biological, cultural, political or socioeconomic differences (such as gender, age, race/ethnicity, political party, class, education, values, religious affiliation or sexual orientation) without regard for the individual. The motivating factor for bashism is fear, arising out of ignorance of the other. These differences have the potential of giving rise to conflicts, but if managed well can result in a synergetic unity, where the effect of all working together is greater than the sum total of all the parts working independently. Today's diverse population pool and workforce is simply going to increase. The direction of the future is: 1. Multicultural 2. Multiethnic 3. Multilingual communities

Steps to manage diversity:

Some of the steps to manage diversity in organizations are summarized as follows:

  • Recognition
  • Respect
  • Acknowledgement
  • Valuing the differences among the people
  • Clarifying Motivation
  • Clarifying Vision
  • Expanding Focus
  • Auditing Corporate Culture
  • Modifying Assumptions
  • Modifying System
  • Helping People Pioneer
  • Continue Affirmative Action

2. Managing pressures for more labor rights in third world countries

Political changes, external competitive forces, increased open trade, and frequent moves of MNCs around the world are forces working toward convergence in labor system. Convergence occurs as the migration of management and workplace practices around the world results in the reduction of workplace disparities from one country to another. This occurs primarily as MNCs seek consistency and coordination among their foreign subsidiaries, and as they act as catalysts for change by "exporting" new forms of work organization and industrial relations practices. It also occurs as harmonization is sought, such as for the EC countries, and as competitive pressures in free-trade zones, such as the NAFTA countries, eventually bring about demands for some equalization of benefits for workers. It would appear that economic globalization is leading to labor transnational's and will bring about changes in labor rights and democracy around the world. In East European societies in transition to market economies, for example, newly structured industrial relations systems are being created. Trends in industrial relations, such as the flattening of organizations and decline in the role of trade unions are viewed by many as global developments pointing to convergence in labor systems.

Other pressures toward convergence of labor relations practices around the world come from the activities and monitoring of labor conditions worldwide by various organizations. One of these is the International Labor Organization (ILO) - comprising union, employer, and government representation - whose mission is to ensure that humane conditions of labor are maintained. Other associations of unions in different countries include various international trade secretariats representing workers in specific industries. These include the International Confederation of Free Trade Unions (ICFTU) and the World Confederation of Labor (WCL). The activities and communication channels of these associations provide unions and firms with information about differences in labor conditions around the world. One result of their efforts to provide awareness and changes in labor conditions was the pressure they brought to bear on MNCs operating in South Africa in the late 1980s. The result was the exodus of foreign companies and the eventual repeal of apartheid laws. Now there is a rapidly growing labor union movement there, thanks to the prounion African National Congress- In fact, the AFL-CIO opened an office in Johannesburg and assists the South African unions.
Political and cultural shifts are also behind the new labor law in South Korea, as the country moves from a system founded on paternalism and authoritarianism to one based on more liberal values.

It is highly unlikely that China, for example, would accept Western practices which threaten their political ideology. And in the EU, where states are required to maintain parity in wage rates and benefits under the Social Charter of the Maastricht Treaty, there is still a powerful defense of cultural identity and social systems and considerable resistance by unions to comply with those requirements. Managers in those MNCs also recognize that a considerable gap often exists between the labor laws and the enforcement of those laws - in particular in less developed- countries.

3. Managing a multinational workforce  

Organizations follow a growing strategic trend, thus entering foreign markets and create multinational workforces. The manager faces many issues with multinational workforce, and such issues may affect the organization's ability to adapt in the foreign market. Multinational workforces face many barriers, which include language differences, creating difficulty in communication. Communication difficulties will affect reporting, evaluating, negotiations, and. The employees throughout this multinational organization may find themselves segregated by the language barrier. The issues caused by language barriers has the potential to hinder the success of the organization, therefore, management must use caution when working with those who speak another language.

Another issue faced when managing a multinational workforce is cultural differences. The individual's basic assumptions, values, and behavioral norms often vary across the multinational team. These differences can affect the management's perceptions of the individual's work performance, value in the company and ability to adapt to the organization's needs. The management of the multinational team may show bias towards their own culture, giving higher performance ratings and showing favoritism. This bias can reduce the effectiveness of the manager's ability to lead the team and cause a high turnover rate in employees from a different culture. The manager may also attempt to create a work culture that favors their own culture, which may create difficulty for members of other cultures to adapt.

4. Contracting out and out-sourcing HR functions

Globalization has an effect on employment patterns worldwide. It has contributed to a great deal of outsourcing which is one of the greatest organizational and industry structure shifts that change the way business operates (Drucker, 1998). According to Clot (2004) the basic idea about outsourcing is that if a firm does not specialize in a certain function which it does not consider core, it will outsource the work and therefore be able to offer better cost and quality. Global outsourcing has altered the work in companies. Initially outsourcing was only done for the peripheral services such as janitorial services, but now outsourcing has been extended even to the core functions such as final product assembly, customer service, financial services and technological services (Clot, 2004).

It is an important rationale of out-sourcing that it, on the one hand, enables an enterprise to concentrate on its core competencies, and on the other hand, it makes service work more productive. For example, in the USA, outsourcing of functions in hospitals not directly related to the work of doctors and nurses (care of patients) has substantially increased the productivity of the hospitals, and provided new opportunities for service employees.

Outsourcing is needed not just because of the economics involved. It is required equally because

  • It gives opportunities, income and dignity to service work and service workers
  • Gives more opportunity for more part-time and temporary work (especially among women, the elderly and students)
  • Introduction of new technology
  • Pushing for a more deregulated and flexible labour market 
  • More emphasis on productivity and quality
  • Greater employee involvement in the design and execution of work
  • Shifting the focus of collective bargaining from the nation/industry level to the enterprise level.

5. Changes in organizational design and reward management systems

Globalization is also seen as changing organizational structures where expenses can move up or down as the business climate dictates (Garr, 2001). In terms of organizational design and human resource management, globalization means that there is need for more 'responsive' and 'flexible organizations'. Globalization has led to global division of labor. Most organizations now especially from the Western nations are making new site selection decisions which are driven by business needs and opportunity exploitation.

Companies from the US have especially closed production plants in the US and created offshore professional and operations centers and relocated them to where labor is cheap. For example IT industries have moved to India's Bangalore City popularly known as the Silicon Valley. The employees in India are highly skilled yet they demand pay which is a fraction of what a similarly skilled person in the U.S would demand.

The service sector comprises three different sorts of work: highly skilled, 'professional' and 'knowledge work' (for example, Research and Development experts, investment analysis, dvertising, IT consultancy amongst others). The other group is the traditional professions which include, semi skilled workers who comprise of routine back office work which is heavily reliant on operating IT packages (for example call centre work, data inputting in financial services). The last category is the semi or low-skilled front line customer or client facing work (for example, holiday reps, care workers, hairdressers) which involves a high level of personal skills and emotional labor (Legge, 2005). Globalization has led to the desirability to maintain flexible and lean organizations. Puick (1992) notes that leading edge global competitors, irrespective of their national origin, share one key organizational design characteristic. Their corporate structure is simple and flat rather than tall and complex. Simple structures increase the speed and clarity of communication and allow the concentration of organizational energy and valuable resources on learning rather than controlling, monitoring and reporting.

6. Downsizing the workforce

The spread of economic competition and shareholder activism has motivated large firms to embrace the 'lean and mean' conception of control and thus implement downsizings. A conception of corporate control allows top managers in large firms to control their environments by specifying how such resources such as personnel should be distributed in order to ensure that directives are executed (Flingstein, 1996).

One important response has been the introduction of flexibility in the employment relationship to increase the capacity of enterprises to adapt rapidly to market changes. This has involved measures such as

  • flexible working hours
  • part-time work
  • Different types of employment contracts to the standard ones familiar to collective IR
    flexibility in functions, so that employees who are multi-skilled are not confined to the performance of only one task. They can cover up for absenteeism, and make some jobs redundant.
  • Flexible pay which involves some component of pay being dependent on performance, whether of the company, a group or the individual.

Globalization has, through technology diffusion, substantially increased the introduction of new technology. These, as well as the need for flexible adaptation to market changes, have led to the re-organization of production systems and methods of work, such as the following:
Reduction of narrow job classifications and demarcation lines between managers and workers, accompanied by skills enhancement needed to perform jobs with a broader range of tasks.

  • Increasing areas for worker involvement in the conception, execution and control of work.
  • A greater focus on workplace relations and policies and practices conducive to better motivation and performance such as information-sharing and two-way communication.

The above responses have increased the necessity for employers to make more investments in skills training, to offer incentives to employees to improve their skills, and for workers to take upon themselves some responsibility for their own development. The competition generated by globalization and rapid technological changes accompanied by shorter product life have, while destroying countless jobs in industrialized countries, created opportunities for multi-skilled and easily trainable workers, and for the most significant group of emerging employees - the knowledge worker.  Knowledge and skills have become the most important determinants of investment, employment opportunities, productivity and quality and of flexibility.

--> Article continued on next page, click here -->

Source: E-mail March 19, 2011




Occasional Papers Main Page