UNIT - I INTERPERSONAL RELATIONS:

Interpersonal relationships are social associations, connections, or affiliations between two or

more people. They vary in differing levels of intimacy and sharing, implying the discovery or
establishment of common ground, and may be centered around something(s) shared in common.
The study of relationships is of concern to sociology, psychology and anthropology.An
interpersonal relationship is a strong, deep, or close association/acquaintance between two or
more people that may range in duration from brief to enduring. This association may be based on
inference, love, solidarity, regular business interactions, or some other type of social
commitment. Interpersonal relationships are formed in the context of social, cultural and other
influences. The context can vary from family or kinship relations, friendship, marriage, relations
with associates, work, clubs, neighborhoods, and places of worship They may be regulated by
law, custom, or mutual agreement, and are the basis of social groups and society as a whole.
Interpersonal relationships are dynamic systems that change continuously during their existence.
Like living organisms, relationships have a beginning, a lifespan, and an end. They tend to grow
and improve gradually, as people get to know each other and become closer emotionally, or they
gradually deteriorate as people drift apart, move on with their lives and form new relationships
with others.Develops and maintains effective relationships with others; relates well to people
from varied backgrounds and in different situations; shows understanding, courtesy, tact,
empathy, concern, and politeness.
Key Behaviors
Relates to people in an open, friendly, and professional manner.
Cooperates and works to gain support and commitment from others when performing
tasks.
Discusses subjects in a constructive manner, with all levels of staff.
Fosters cooperation, collaboration, and communication to facilitate consensus and
accomplish tasks.
Demonstrates diplomacy by approaching others about sensitive issues in non-threatening
ways.
Fosters an environment conducive to open, transparent communications among all levels.
Notices and accurately interprets what others are feeling, based on their word choices,
voice tones, facial expressions, and other nonverbal behavior.
Presents oneself in a professional manner to maintain image and credibility.
Close relationships are sometimes called interpersonal relationships. The closest relationships are
most often found with family and a small circle of best friends. Interpersonal relationships
require the most effort to nurture and maintain. These are also the relationships that give you the
most joy and satisfaction. An interpersonal relationship is an association between two or more
people that may range from fleeting to enduring. This association may be based on inference,
love, solidarity, regular business interactions, or some other type of social commitment.
Interpersonal relationships are formed in the context of social, cultural and other influences. The
context can vary from family or kinship relations, friendship, marriage, relations with associates,
work, clubs, neighborhoods, and places of worship. They may be regulated by law, custom, or
mutual agreement, and are the basis of social groups and society as a whole. A relationship is
normally viewed as a connection between individuals, such as a romantic or intimate
relationship, or a parentchild relationship. Individuals can also have relationships with groups
of people, such as the relation between a pastor and his congregation, an uncle and a family, or a
mayor and a town. Finally, groups or even nations may have relations with each other. When in a
healthy relationship, happiness is shown and the relationship is now a priority.

Interpersonal relationships are dynamic systems that change continuously during their existence.
Like living organisms, relationships have a beginning, a lifespan, and an end. They grow and
improve gradually, as people get to know each other and become closer emotionally, or they
gradually deteriorate as people drift apart, move on with their lives, and form new relationships
with others. An interpersonal relationship is the nature of interaction that occurs between two or
more people. People in an interpersonal relationship may interact overtly, covertly, face-to-face
or even anonymously. Interpersonal relationships occur between people who fill each other's
explicit or implicit physical or emotional needs in some way.
Strong Interpersonal Relationships
Strong interpersonal relationships exist between people who fill many of each other's emotional
and physical needs. For example, a mother may have strong interpersonal relationships with her
children, because she provides her child's shelter, food, love and acceptance. The extent of needs
that a mother fills is greater than the extent of needs that are filled between, for example, you and
the cashier at the grocery store.
Weak Interpersonal Relationships
Mild interpersonal relationships exist when people fill modest needs. For example, if the extent
of your relationship with the clerk at the grocery store is that he scans your items and you give
him money, that is a weak interpersonal relationship. You need to go through him to get your
items at the store, and he needs to collect money from you.
Enhancing Interpersonal Relationships
Interpersonal relationships occur between people who fill each other's needs in some way.
According to Marriage Builders, needs that occur between married couples include affection,
sexual fulfillment, physical attractiveness and conversation. You can control the strength of your
interpersonal relationships by acting or neglecting to act on the needs of the people that you
interact with. For example, find out what your significant other expects from you on birthdays or
other special occasions. You can enhance or weaken the relationship by either filling those needs
or neglecting to fill them.
Problems
Interpersonal relationships become problematic when one or more of the participants has needs
that are not met within the relationship. Someone who wishes to end a relationship may
intentionally neglect the needs of the other person, but sometimes needs change and people fail
to keep up with those changes. For example, a spoiled child may have a strong relationship with
his parents only when his needs are met, but problems arise when the child does not get the toy
he wants. A mother may try to fill safety needs for her son by advising against his desire for
travel or adventure, although his need for safety may not be as strong has his need for freedom
and exploration.
MANAGING AND DEVELOPING A CREATIVE ORGANIZATION
Innovation means more than just new products or services. It means improving the process of
creating those products, or selling them, or experiencing them, or even improving the ways we
manage the people who do all of the above. Perhaps my favorite definition of innovation is Scott
Berkuns: Innovation is significant positive change. That change can apply to products and
processes, or it can apply to people.
Recently, the Institute for Corporate Productivity published a study surveying some of the top
companies and people in the fields of management and innovation. They examined some of the
best people management practices at organizations known for innovation and found several ways
that those companies develop and manage their human capital. In summarizing their findings,
here are 10 human capital practices that drive innovation:
1. Use Technology to Collaborate and Share Knowledge. Collaboration drives creativity
and innovation, and social media and conferencing technologies can help bring people
together (or virtually together) more often for that collaboration.
2. Promote Innovation as an Organizational Value. The most innovative companies didnt
just luck into hiring creative people; they placed creative and even average people into
creative cultures.
3. Include Innovation as a Leadership Development Competency. Part of building an
innovative culture is having leaders who value creativity, and are creative themselves.
4. Tie Compensation to Innovation. The jury is still deliberating the influence of incentives
on creativity, but their use in organizations sends a signal that innovation is valued. That
signal is an important part of culture building.
5. Develop an Idea-finding Program. As weve discussed elsewhere, its not enough to
have great ideas. Innovative companies build a system that taps into the collective
knowledge of everyone and lets everyone promote good ideas.
6. Fund Outside Projects. It might sound counterintuitive to allow funding to develop
projects that are technically outside your organization, but as market boundaries continue
to blur, strategic innovation partnerships become even more important.
7. Train for Creativity. Creativity isnt innate. Creative thinking skills can be developed
and the most innovative companies fund training programs to develop them.
8. Create a Review Process for Innovative Ideas. Even the best ideas dont come fully
formed. There is a process to refining, developing and identifying the ideas with the most
market potential. Creating a review process allows this to happen and signals that
innovative ideas are valued.
9. Recruit for Creative Talent. Especially at the undergraduate and graduate levels. The war
for talent is slowing shifting its focus from quantitative minds to creative ones.
10. Reward Innovation with Engaging Work. Research demonstrates that companies that are
able to identify their most creative employees can enhance their creative ability by
providing them autonomy to work on projects that are naturally interesting to them.
UNIT - II ALTERNATIVE STRATEGIES FOR BUSINESS SUCCESS
Many organizations fail to achieve their desired growth targets in revenue and profitability.
Most businesses fall short of achieving their growth objectives for revenue and profitability. In
fact, studies report success rates as low as 20%.
Achieving growth: Recommendations for increasing the probability of success
1. Strengthen the execution infrastructure by investing in safe bets.
Regardless of which growth strategy is selected, a firms infrastructure must be up to a standard
that supports successful execution. An on-going commitment to creating such an infrastructure is
a safe bet. Achieving this requires (1) eliminating departmental or regional silos, (2) utilizing
leading indicators and performance drivers that align with the strategy and (3) growing leaders at
all levels managerial and non-managerial.
2. Initiate a process to identify strategies with a high probability for success.
Three customer growth strategies are presented below: (1) Growing the core business, (2)
Growing by sub-segmenting customers and (3) Growing adjacent opportunities. It is
recommended that the senior leaders begin the process by considering the growth potential
within the present core business and/or the opportunities and growth potential associated with
creating innovative value propositions for underserved customer groups. As the senior leadership
group moves through this process, it will become clear if and when adjacent growth options
should be considered.
Customer-Focused Growth Strategies
1. The process of identifying profitable growth opportunities most often begins with the Core
Business
1
, that is, the products, services, customers, channels and geographic areas that generate
the largest proportion of revenue and profits. In-depth conversations with the senior leaders on
the topic, What is our core business?, is the preferred starting point.
An evaluation of the overall performance of the core business follows. This involves measuring
and benchmarking profitability, rate of revenue growth and the firms reputation with its most
important customers.
Such an assessment will raise a number of questions. For example:
In what direction is each of these key indicators headed and why?
Who are and who are not the core customers? Why?
What is the firms key competitive market differentiator? How can it be strengthened?
Is the core business under major threat?
Are there attractive growth opportunities within the core?
When considering these questions, input from external stakeholder groups is very helpful,
particularly from loyal and even not-so-loyal customers.
The overall process need not take a great deal of time, but can yield significant returns. These
include:
A renewed commitment to operational excellence within the core business,
Insightful conversations on the growth potential of the core business, or conversely,
An urgent need to make significant changes to the core or even a plan for abandoning the
present core and exploring more profitable growth options.
Acklands-Grainger Inc., a leading Canadian industrial supply company, initiated such a process.
Prior to doing so, Acklands-Grainger was described as a stodgy Canadian supply
companycomplacent and one with a 4% growth rate. In less than 12 months it had been
transformed to an exciting place to work with (close to) a 20% growth rate and higher
profitability.
2
How did such a dramatic change occur?
The starting point was winning the commitment of key employees at all levels, individuals who
were willing to step forward and lead.
Processes were created to help refocus on the core business. Key elements included (1) defining
three market platforms on which the core business is based Industrial, Fleet and Safety, (2)
eliminating products and markets that did not fit on these platforms, (3) adding new products to
augment the core and (4) strengthening market coverage with significant investments in the two
major channels sales depots and the firms website.
2. A second customer-focused growth strategy is based on the firms existing customers. This
strategy involves creating High I mpact Value Propositions for new customer sub-segments.
Underpinning this strategy is the willingness to view customers through a different set of lenses.
A process can be created to assist both managers and specialists at the customer interface gain
fresh insights into customer needs and preferences. This is a necessary first step in discovering
underserved customer groups and hidden growth opportunities. (Senior leaders who frequently
interact with customers can make a significant contribution to this process.)
Key elements of this process include (1) sub-segmenting existing customer groups based on
newly discovered needs, buying patterns and contribution to profits and/or revenue, (2) creating
innovative and high-impact value propositions for the most attractive sub-segments, (3) field-
testing the new value propositions and (4) scaling-up based on the results of field tests.
3

In addition, some firms choose to focus on lower end customer sub-segments. These are usually
groups of customers for which the cost of supplying and servicing exceeds the revenue the
customer generates. In such cases, value propositions can be designed which will move the
customer to a profitable position or at least minimize the losses. For example, direct sales calls
can be replaced with on-line ordering systems and non-essential product/service features can be
eliminated. These actions not only lower the costs of serving customers but often also lower the
customers cost. After the initial shock, many customers welcome the new lower-value
proposition.
3. A third customer-focused strategy is to enter businesses that have strong strategic links to the
core adjacent businesses
1
. This is a particularly appealing alternative when the core business is
approaching its full potential, operates efficiently and generates surplus cash for reinvestment. It
is also an important option when it is clear that the cores future growth potential is weak.
Many leaders prefer to start this process by focusing on current customers. A series of meetings
with the most innovative customers can be a valuable source of opportunities. Alternative
channels, new products or services or even new joint ventures may be suggested as well as
entering new geographic markets, serving different customer segments and redesigning the
customers value chain.
Another alternative is to consider the non-core businesses of the firm. Is there the potential to
leverage present positions into attractive growth opportunities?
When considering adjacent growth alternatives, the relationship to the core business requires
special consideration specifically an assessment of the major strategic differences and
similarities with the core. Too many differences can overly tax the organizations capabilities. To
minimize this risk, business leaders may wish to test their organizations capacity by piloting
adjacent growth initiatives in stages, one or two degrees of strategic difference at a time.
Some leaders choose to look at adjacent growth options in an opportunistic manner as one-offs.
This often results in disappointment. Initial successes with one or two close customers can soon
fade under the onslaught of strong established competitors. To prevent this, leaders are advised
to organize to suit the new business as much as the core
Executing growth strategies
The three Customer-Focused Growth Strategies described above require a supporting
infrastructure to increase the chances of successful implementation. Lack of an adequate
infrastructure is the second reason cited for not achieving growth objectives.
A supportive infrastructure includes (1) organization capabilities that are valued by customers,
(2) a management-performance system and scorecard which focuses on leading indicators and
the drivers of growth and (3) strong leadership practices at every level of the organization.
1. Organization capabilities are processes that are strategic and deliver a high level of value to
customers. For example, a firm may have the capability to:
Successfully entering new markets,
Create excellent new products or services which appeal to customers, or
Provide an outstanding level of customer service.
Each of these capabilities is rooted in processes that move across the organization and require the
expertise and commitment of various individuals and departments.
Its widely accepted that an organizations success is rooted in its competitive-edge,
organizational capabilities. Therefore, a major challenge that senior managers face is to clarify,
assess and continually strengthen their organizations strategic capabilities.
An important aspect of the clarifying and assessing process requires that senior managers step
outside their organization and evaluate both their firm and their competitors through the eyes,
mind and heart of the customer. The following guidelines will help with such an assessment. The
capability should be:
1. Highly visible to key individuals within the customer organization, and acknowledged as
providing exceptional value.
2. Difficult for present and potential competitors to replicate.
UNIT III Management And Quality Control
Quality control (QC) is a procedure or set of procedures intended to ensure that a manufactured
product or performed service adheres to a defined set of quality criteria or meets the
requirements of the client or customer. QC is similar to, but not identical with, quality assurance
(QA). QA is defined as a procedure or set of procedures intended to ensure that a product or
service under development (before work is complete, as opposed to afterwards) meets specified
requirements. QA is sometimes expressed together with QC as a single expression, quality
assurance and control (QA/QC).
In order to implement an effective QC program, an enterprise must first decide which specific
standards the product or service must meet. Then the extent of QC actions must be determined.
After this, corrective action must be decided upon and taken. If too many unit failures or
instances of poor service occur, a plan must be devised to improve the production or service
process and then that plan must be put into action. Finally, the QC process must be ongoing to
ensure that remedial efforts, if required, have produced satisfactory results and to immediately
detect recurrences or new instances of trouble.
Quality
Assurance
Quality Control
Definition:
QA is a set of activities for ensuring
quality in the processes by which
products are developed.
QC is a set of activities for ensuring
quality in products. The activities
focus on identifying defects in the
actual products produced.
Focus on:
QA aims to prevent defects with a focus
on the process used to make the product.
QC aims to identify (and correct)
defects in the finished product.
Quality
Assurance
Quality Control
It is a proactive quality process. Quality control, therefore, is a
reactive process.
Goal:
The goal of QA is to improve
development and test processes so that
defects do not arise when the product is
being developed.
The goal of QC is to identify defects
after a product is developed and
before it's released.
Statistical
Techniques:
Statistical Tools & Techniques can be
applied in both QA & QC. When they are
applied to processes (process inputs &
operational parameters), they are called
Statistical Process Control (SPC); & it
becomes the part of QA.
When statistical tools & techniques
are applied to finished products
(process outputs), they are called as
Statistical Quality Control (SQC) &
comes under QC.
What:
Prevention of quality problems through
planned and systematic activities
including documentation.
The activities or techniques used to
achieve and maintain the product
quality, process and service.
How:
Establish a good quality management
system and the assessment of its
adequacy & conformance audit of the
operation system & the review of the
system itself.
Finding & eliminating sources of
quality problems through tools &
equipment so that customer's
requirements are continually met.
Example: Verification is an example of QA
Validation/Software Testing is an
example of QC
Responsibility:
Everyone on the team involved in
developing the product is responsible for
quality assurance.
Quality control is usually the
responsibility of a specific team that
tests the product for defects.
Quality Control (QC) refers to quality related activities associated with the creation of
project deliverables. Quality control is used to verify that deliverables are of acceptable quality
and that they are complete and correct. Examples of quality control activities include inspection,
deliverable peer reviews and the testing process.
concern the specific requirements of the product being developed.
activities
are performed while the product is being developed. In contrast, Quality control activities are
performed after the product is developed.
Quality control, or QC for short, is a process by which entities review the quality of all factors
involved in production. This approach places an emphasis on three aspects:
[citation needed]

1. Elements such as controls, job management, defined and well managed processes,
[1][2]

performance and integrity criteria, and identification of records
2. Competence, such as knowledge, skills, experience, and qualifications
3. Soft elements, such as personnel, integrity, confidence, organizational culture,
motivation, team spirit, and quality relationships.
Controls include product inspection, where every product is examined visually, and often using a
stereo microscope for fine detail before the product is sold into the external market. Inspectors
will be provided with lists and descriptions of unacceptable product defects such as cracks or
surface blemishes
OPERATIONS AND VALUE CHAIN MANAGEMENT
Value chain management capability refers to an organisations capacity to manage the
internationally dispersed activities and partners that are part of its value chain. Value chain
management capability is a higher level capability that draws together a variety of lower level
capabilities. Each of the lower level capabilities are valuable and necessary as such, and they
come together to form a higher level capability that enables a more holistic approach to
management of international value chains.
Definition - What does Value Chain Management (VCM) mean?
Value chain management (VCM) is a strategic business analysis tool used for the seamless
integration and collaboration of value chain components and resources. VCM focuses on
minimizing resources and accessing value at each chain level, resulting in optimal process
integration, decreased inventories, better products and enhanced customer satisfaction. VCM
was introduced in the mid-1980s by Michael Porter, a business strategy authority and longtime
Harvard Business School professor. VCM has evolved into a universally applied business
management strategy, and is a powerful strategic planning tool that extends from organizations
to distribution and supply networks.

VCM requires the following components:
Integrated chain strategy, planning and scheduling
An efficient supply chain
Full and interdependent chain resource management and optimization
Integrated customer insight data and information

The process of organizing the connected group of activities that create value by
producing goods or services from basic raw materials for purchase by a consumer. The
basic objectives of employing value chain management in a business is to integrate
communication and increase cooperation between production chain members in order to
decrease delivery times, reduce inventories and increase customer satisfaction.
The Supply Chain and Operations Management major focuses on process excellence
from both intra-organizational and inter-organizational points of view. Supply chain
management manages the flow of goods, and information and services, in order to deliver
maximum value to the consumer, while minimizing the costs of the flow. Operations
management is responsible for supplying the product or service of the organization and
managing the conversion or transformation process that converts inputs into outputs.

The Supply Chain and Operations Management (SCOM) major examines the integration
of all key business processes from original suppliers through end users and provides
products, services, and information that can add value for customers and stakeholders.
The supply chain portion of the curriculum examines the supply, storage, movement of
materials, and finished goods within an organization while the operations function relates
to the efficient and most effective use of personnel, machines, and other resources.

SCOM majors will explore a variety of topics within the curriculum that include
technology and product development, lean operations, six sigma, as well as ERP and
mass customization.

DESIGN ADAPTIVE ORGANIZATIONS
An adaptive enterprise (or adaptive organization) is an organization in which the goods or
services demand and supply are matched and synchronized at all times. Such an organization
optimizes the use of its resources (including its information technology resources), always using
only those it needs and paying only for what it uses, yet ensuring that the supply is adequate to
meet demand.
The adaptive enterprise is said to have several advantages over enterprises that are less adaptive.
In traditional businesses, large inventories may be built up, tying up capital. Conversely, lack of
foresight can result in spot shortages. Adaptive enterprises strive to eliminate unproductive or
redundant labor, information, and materials. Cash flow is improved. Sudden crises, caused by a
cutoff in the supply of a single item or resource, rarely occur. Adaptive enterprises adjust
operations quickly and smoothly to meet rapid changes in the market, the introduction of new
technologies, and shifting business priorities. Over time, this attracts and keeps a loyal client or
customer base. In the long term, adaptive enterprises evolve with changes in the global economy
so that their products or services never become obsolete.
UNIT V BUSINESS PROCESS OUTSOURCING
BPO is the process of hiring another company to handle business activities for you.
BPO is distinct from information technology (IT) outsourcing, which focuses on hiring a third-
party company or service provider to do IT-related activities, such as application management
and application development, data center operations, or testing and quality assurance.
In the early days, BPO usually consisted of outsourcing processes such as payroll. Then it grew
to include employee benefits management. Now it encompasses a number of functions that are
considered "non-core" to the primary business strategy.

Now it is common for organizations to outsource financial and administration (F&A) processes,
human resources (HR) functions, call center and customer service activities and accounting and
payroll.
These outsourcing deals frequently involve multi-year contracts that can run into hundreds of
millions of dollars. Often, the people performing the work internally for the client firm are
transferred and become employees for the service provider. Dominant outsourcing service
providers in the BPO fields (some of which also dominate the IT outsourcing business) include
US companies IBM, Accenture, and Hewitt Associates, as well as European and Asian
companies Capgemini, Genpact, TCS, Wipro and Infosys.
Many of these BPO efforts involve offshoring -- hiring a company based in another country -- to
do the work. India is a popular location for BPO activities.
Frequently, BPO is also referred to as ITES -- information technology-enabled services. Since
most business processes include some form of automation, IT "enables" these services to be
performed.
An offshoot of BPO is KPO -- knowledge process outsourcing. Considered by some to be a
subset of BPO, KPO includes those activities that require greater skill, knowledge, education and
expertise to handle. For example, whereas an insurance company might outsource data entry of
its claims forms as part of a BPO initiative, it may also choose to use a KPO service provider to
evaluate new insurance applications based on a set of criteria or business rules; this work would
require the efforts of a more knowledgeable set of workers than the data entry would. The
current definition of KPO encompasses R&D, product development and legal e-discovery, as
well as a number of other business functions.
Also coming into use is the term BTO -- business transformation outsourcing. This refers to the
idea of having service providers contribute to the effort of transforming a business into a leaner,
more dynamic, agile and flexible operation.
Business process outsourcing (BPO) is a valuable strategy for companies seeking new ways to
achieve high performance by controlling costs, reducing risk, fostering collaboration and
increasing transparency.
Business process outsourcing (BPO) is a subset of outsourcing that involves the contracting of
the operations and responsibilities of specific business functions (or processes) to a third-party
service provider. Originally, this was associated with manufacturing firms, such as Coca Cola
that outsourced large segments of its supply chain.
[1]

BPO is typically categorized into back office outsourcing - which includes internal business
functions such as human resources or finance and accounting, and front office outsourcing -
which includes customer-related services such as contact center services.
BPO that is contracted outside a company's country is called offshore outsourcing. BPO that is
contracted to a company's neighboring (or nearby) country is called nearshore outsourcing.
Often the business processes are information technology-based, and are referred to as ITES-
BPO, where ITES stands for Information Technology Enabled Service.
[2]
Knowledge process
outsourcing (KPO) and legal process outsourcing (LPO) are some of the sub-segments of
business process outsourcing industry.
In 2010, the Philippines surpassed India as the largest business process outsourcing industry in
the world.
[3][4]

After growing 20 per cent in 2012, the BPO industry of the Philippines is estimated to gross
revenue of upwards to $25 billion by 2016. By these estimates, the Philippines' BPO industry
will account for approximately 10 per cent of the nation's GDP.
[5]

In the past decade, the growth of the Indian BPO industry has been instrumental in
defining Indias extraordinary growth story.
The industry in India as well as our key global destinations has seen a significant shift since its
inception, as a primary low-cost destination for data entry and voice-based roles.

With close to a million people in India building rewarding careers with the BPO industry, the
dynamic economic climate is expected to fuel further demand for the industry to not only deliver
cost savings and but to deliver higher level of performance and results in form of innovation and
business advantage thereby strengthening market positioning of the clients the BPO organisation
are serving. Thus outsourcing as a discipline is expected to become even more sophisticated.

Over the last many years, the sector has seen a paradigm shift towards increasingly complex
processes involving rule-based decision making and research and analytical services requiring
informed individual judgement. The clients expect their service providers to create innovative
solutions for their businesses moving beyond the transactional services they provided.
With an increased focus on value added services as against standard back office operations in the
Indian BPO space, there are immense opportunities for the new breed of BPO workforce. As the
industry is looking at new markets for outsourcing servicing and exploring areas where
outsourcing never existed before, it requires its workforce to have a mix of generic and high-end
skills with a creative and solution focused mindset.

Many organisations today are also discovering the power of analytics to out-think and out-
execute the competition. These market-leading companies see their ability to exploit analytics as
their distinctive capabilitythe integrated business processes and capabilities that together serve
customers in ways that are differentiated from competitors. In order to enable this shift, the
hiring in the BPO industry has evolved from mass hiring to a more demand specific, job oriented
recruitment.

As the worlds biggest BPO destination accounting for over 34 per cent of total global sourcing,
India is slated to consolidate its position as the market leader for outsourcing services and would
require an army of skilled professionals with qualifications in array of fields such as medicine,
law, manufacturing, engineering, technology, business administration, chartered accountancy,
pharmacy and actuarial sciences to enable it for the growth ahead.

These professionals will need to be skilled in aspects like foreign language skills, global business
process knowledge, sales and marketing skills, research and business analytics in order to be
successful in the field.

Employees in the BPO industry are increasingly managing complex pieces of work and are
expected to not only deliver outcomes but also offer continuous improvement with a keen eye on
the clients profitability and success. They are also expected to continuously invest in their own
skills and industry knowledge to be able to conceptualise and implement large-scale changes in
their processes.

The new generation of BPO employees needs to have good communication skills, professional
and cultural ethos to be able to collaborate with similar professionals across the globe, deep
industry knowledge and a desire to learn and invest more towards building their careers in the
industry. Over the next few years, the industry will continue to build a voracious appetite for
professionals with deep industry skills and service line knowledge.

As it expands into new unseen fields, the individuals who have razor sharp focus, are flexible
and agile, have genuine interest in bringing about change and are able to use their creativity and
evolve their own and teams capabilities to build, maintain and continuously evolve client
processes enabling client partners achieve market-leading outcomes will become industry leaders
in times to come.
ECONOMIC ENVIRONMENT OF BUSINESS
Economic Environment refers to all those economic factors, which have a bearing on the
functioning of a business. Business depends on the economic environment for all the needed
inputs. It also depends on the economic environment to sell the finished goods. Naturally, the
dependence of business on the economic environment is total and is not surprising because, as it
is rightly said, business is one unit of the total economy.
Economic environment influences the business to a great extent. It refers to all those economic
factors which affect the functioning of a business unit. Dependence of business on economic
environment is total i.e. for input and also to sell the finished goods. Trained economists
supplying the Macro economic forecast and research are found in major companies in
manufacturing, commerce and finance which prove the importance of economic environment in
business. The following factors constitute economic environment of business:
(a) Economic system
(b) Economic planning
(c) Industry
(d) Agriculture
(e) Infrastructure
(f) Financial & fiscal sectors
(g) Removal of regional imbalances
(h) Price & distribution controls
(i) Economic reforms
(j) Human resource and
(k) Per capita income and national income
The state became the encourager of savings and also an important investor and the owner of
capital. Since the state was to be the primary agent of economic change, it followed that private
sector activities had to be strictly regulated and controlled to conform to the objectives of state
policy.
The growth strategy also meant, in the early years of planning, a relative neglect of public
investments in agriculture. This negligence of agriculture sector was supported by the general
view that the increase labour in the developing countries could only be absorbed in the industry,
and that during the early stages of industrialization, it was necessary for agriculture to contribute
in the establishment of modern industry by offering inexpensive work force. A faster
development of industry was the central objective of planning. The above is a thumbnail sketch
of the growth strategy followed by the planners in the past four decades.
These are some of the economic environment factors which affect business
At what stage of the business cycle is the economy
If the economy is going through a recession it is obvious that businesses generally will not be
doing well due to low aggregate demand in the economy. On the other hand, a boom period will
lead to higher business profits and revenue for most of the businesses in the economy.
Inflation rate
High rate of inflation leads to lower purchasing power for consumers resulting in lower demand
for goods and services. Moreover, a higher inflation rate will make business uncompetitive in the
international market leading to lower sales for the business.
Prevailing interest rates
Higher Interest rates will lead to a fall in the aggregate demand in the economy thus leading to
difficulty for business to find customers willing to buy its product. Lower interest rates will lead
to a increase in demand in the economy.
Unemployment level
High level of unemployment in the country can also adversely affect a business. People will not
have enough money to purchase a firms product.
Labor costs
High labor cost will result higher production costs. This will make a firms product more
expensive as compared to other firms affecting its sales and profit margin.
Levels of disposable income and income distribution
High level of disposable income is good for business producing luxury goods. A large disparity
in income distribution will promote businesses dealing in luxury goods as well as inferior goods.
Taxes
High level of taxes will lead to low disposable income and contraction of demand in the
economy. Business will find it difficult to attract consumers.
Tariffs
Tariffs are taxes and imposed on imported goods. If the tariffs are low the domestic market may
be flooded with cheap imported goods and the local businesses will have tough time selling their
products.
Economic Environment are the economic factors that have effects on the working of the
business. It includes system, policies and nature of an economy, trade cycles, economic
resources, level of income, distribution of income and wealth.
POLITICAL AND LEGAL ENVIRONMENT OF BUSINESS
The Impact of Ideological Differences on National Boundaries
History, culture, politics and geography all contribute to the definition of national boundaries.
When a political system collapses, those under the system often fragment into smaller
sociopolitical groups. When operating in a foreign country, it is very important for managers to
understand feelings that could cause political tension and instability.
B. The Political Spectrum
MNEs may be able to operate effectively in both democratic and totalitarian regimes, but
democracies usually offer greater economic freedom and enact more legal statutes designed to
safeguard individual and corporate rights.
1. Democracy. A democracy represents a political system in which citizens participate in the
decision-making and governance process, either directly or through elected representatives.
Contemporary democracies share the following characteristics: freedom of opinion, expression
and the press; freedom to organize; free elections; an independent and fair court system; a
nonpolitical bureaucracy and defense infrastructure; and access to the decision-making process.
Nonetheless, in decentralized democracies (e.g., Canada and the USA) companies may still face
different and sometimes even conflicting laws from one state or province to another.
a. Political Rights and Civil Liberties. Political rights include fair and competitive elections,
the empowerment of elected representatives, the right to organize and the protection of
minorities. Civil liberties include freedom of the press, equality under the law and personal
freedoms. Stability in Democracies. Many democracies that have emerged since the early 1970s
are fragile and unstable. At the same time, confidence in politicians and government has
generally declined in many of the more mature democracies.
2. Totalitarianism. Totalitarianismrepresents a political system in which citizens seldom if
ever participate in the decision-making and governance process; power is monopolized and
opposition is neither recognized nor tolerated. In theocratic totalitarianism, religious leaders are
also the political leaders. In secular totalitarianism, the government usually imposes order
through military power. Variants of totalitarianism include fascism, authoritarianism and
communism.
THE IMPACT OF THE POLITICAL SYSTEM ON MANAGEMENT DECISIONS
A. Political Risk
Political risk reflects the expectation that the political climate in a foreign country
will change in such a way that a firms operating position will deteriorate.
1. Types and Causes of Political Risk. Political actions that may adversely affect a firms
operations would include government takeovers of property, operational restrictions and damage
to property or personnel. In addition, civil unrest and disorder and antagonistic external relations
(including boycotts and other forms of protest) may also negatively impact a firms operations.
2 Micro and Macro Political Risks. Micro political risks are those aimed only at specific
foreign investments (e.g., a particular MNE), whereas macro political risks affect a broad
spectrum of foreign investors.
B.Government Intervention in the Economy
When companies move abroad, management must deal with governments that may have
different attitudes about their roles in their respective economiesattitudes which may be
inconsistent over time. Under an individualistic paradigmthe government believes in minimal
interference in the economy; it may intervene to deal with market defects but generally promotes
marketplace competition. Under a communitarian paradigm, however, whether democratic
(Japanese) or authoritarian (Chinese) in nature, the government defines economic needs and
priorities and partners with business in major ways.
V.FORMULATING AND IMPLEMENTING POLITICAL STRATEGIES
Formulating political strategies may be more complicated than formulating competitive
marketplace strategies. Logical steps include: identifying the issues, defining the nature of the
issues, assessing the potential actions of others, identifying key players, formulating alternative
strategies, assessing the potential impact of particular activities and selecting and implementing
the most appropriate strategy.
VI. THE LEGAL ENVIRONMENT
Managers must be aware of the legal systems in the countries in which their firms operate, the
basic nature of the legal profession (both domestic and international) and the legal relationships
that exist between and among countries. Legal systems differ both in terms of the nature of the
system and the degree of independence of the judiciary from the political process.
A. Kinds of Legal Systems
1. Common Law. Common law originated in the United Kingdom and is based upon tradition,
precedent, custom and usage; therefore, courts play an important role in interpreting the law.
2.Civil Law. Civil law, also known as codified law, originated with the Romans and is based
upon a detailed set of laws that make up a detailed code that includes rules for conducting
business; courts play an important role in applying the law.
3.Theocratic Law. Theocratic law is based upon religious precepts. The best example is Islamic
law, or Shaira. The key for businesses is to adhere to the constraints of ancient Islamic laws
while maintaining sufficient flexibility to operate in a modern global economy.
B Consumer Safeguards
Different legal systems provide varying safeguards with respect to product liability and other
legal issues. For example, access to and assistance from the legal community, legal fees and the
ability to use foreign lawyers all differ across countries.
C The Legal Profession
Although lawyers and law firms vary in terms of how they practice law and service clients,
MNEs must use lawyers for a variety of services, such as negotiating contracts, formalizing
agent-distributor relationships and protecting intellectual property. Just as MNEs have expanded
abroad to take advantage of international business opportunities, law firms have expanded
abroad to service their clients. The key for managers doing business overseas is to choose a law
firm with the needed expertise and overseas connections, whether through the companys own
offices, a merger, or correspondent relationships.
D. Legal Issues in International Business
National laws may affect the business climate both within and beyond a countrys borders and
pertain to both domestic and foreign firms. Areas addressed include health and safety standards,
employment practices, antitrust prohibitions, contractual relationships, environmental practices,
intellectual property, cross-border investment flows, tariffs and non-tariff barriers, to name but a
few. In addition, international treaties among nations may also affect the nature and extent of
business operations.
INTERNATIONAL AND TECHNOLOGICAL ENVIRONMENT
The international business environment can be defined as the environment in different
sovereign countries, with factors exogenous to the home environment of the organization,
influencing decision-making on resource use and capabilities.
The political environment in a country influences the legislation and government rules
and regulations under which a foreign firm operates.
The technological environment comprises factors related to the materials and machines
used in manufacturing goods and services.
Economic factors exert huge impacts on firms working in an international business
environment. The economic environment relates to all the factors that contribute to a
country's attractiveness for foreign businesses, such as monetary systems, inflation, and
interest rates.
The international business environment can be defined as the environment in different sovereign
countries, with factors exogenous to the home environment of the organization, that influences
decision-making on resource use and capabilities. This includes the social, political, economic,
regulatory, tax, cultural, legal, and technological environments (Figure 1).
The political environment in a country influences the legislation and government rules and
regulations under which a foreign firm operates. Every country in the world follows its own
system of law and a foreign company operating within it has to abide by these laws for as long as
it continues to operate there.
The technological environment comprises factors related to the materials and machines used in
manufacturing goods and services. The organization's receptivity and willingness to adopt to new
technology, as well as the willingness of its consumers to do likewize, influences decisions made
in an organization.
As firms have no control over the external environment, their success depends upon how well
they adapt to it. A firm's ability to design and adjust its internal variables to take advantage of
opportunities offered by the external environment, and its ability to control threats posed by the
same environment, determines its success.
Economic factors exert huge impacts on firms working in an international business environment.
The economic environment relates to all the factors that contribute to a country's attractiveness
for foreign businesses.
Businesses rely on a predictable and stable mechanism. A monetary system that
acknowledges countries and economies interdependence and that fosters growth,
stability and fairness at a global level is important for prosperity, and the operation and
growth of companies.
Inflation, interest rates, and the borrowing costs of companies also contribute to a
country's attractiveness. If a country has a high rate of inflation, its central banks will
raise the interest rate, which increases the cost of borrowing for firms. High inflation also
makes the value of the revenue in domestic currency fall, and this exposes firms to
foreign exchange risks. It is even worse if firms produce in countries of high inflation and
then sell products to countries of low inflation, since the input costs are on the rise while
the revenue stays stable.
Absolute purchasing power parity posits that the exchange rate between two countries
will be identical to the ratio of the price levels for those two countries. This concept is
derived from a basic idea known as the law of one price, which states that the real price
of a good must be the same across all countries. As the currency of a country depreciates,
its competitiveness is improved since its goods are cheaper than other countries', helping
companies export more.
Relative purchasing power parity (PPP) is an economic theory used to determine the
relative value of currencies, estimating the amount of adjustment needed on the exchange
rate between countries in order for the exchange to be equivalent to (or on par with) each
currency's purchasing power. It asks how much money would be needed to purchase the
same goods and services in two countries, and uses that to calculate an implicit foreign
exchange rate. PPP rates facilitate international comparisons of income, as market
exchange rates are often volatile; affected by political and financial factors that do not
lead to immediate changes in income, and that tend to systematically understate the
standard of living in poor countries. Another interpretation is that the difference in the
rate of change in prices at home and abroadthe difference in the inflation ratesis
equal to the percentage depreciation or appreciation of the exchange rate so that the
competitiveness of one country could be maintained.
Technology can be defined as the method or technique for converting inputs to outputs in
accomplishing a specific task. Thus, the terms 'method' and 'technique' refer not only to the
knowledge but also to the skills and the means for accomplishing a task. Technological
innovation, then, refers to the increase in knowledge, the improvement in skills, or the discovery
of a new or improved means that extends people's ability to achieve a given task.
technology can be classified in several ways. For example, blueprints, machinery, equipment and
other capital goods are sometimes referred to as hard technology while soft technology includes
management know-how, finance, marketing and administrative techniques. When a relatively
primitive technology is used in the production process, the technology is usually referred to as
labour-intensive. A highly advanced technology, on the other hand, is generally termed capital-
intensive.
Changes in the technological environment have had some of the most dramatic effects on
business. A company may be thoroughly committed to a particular type of technology, and may
have made major investments in equipment and training only to see a new, more innovative and
cost-effective technology emerge.
Indeed, the managing director of a multinational organisation manufacturing heavy machinery
once said that the hardest part of his job had nothing to do with unions, pay or products, but with
whether or not to spend money on the latest technologically improved equipment.
Computer technology has had an enormous impact on education and health care, to name but
two areas affected. The advancements in medical technology, for example, have contributed to
longevity in many societies. In addition, the introduction of robots in many factories has
reduced the need for labour, and the use of VCR's and microcomputers has become
commonplace in many homes and businesses.
Unfortunately, there is a negative side to technological progress. The introduction of nuclear
weapons, for example, has made the destruction of the human race a frightening possibility. In
addition, factories using modern technologies have polluted both air and water and contributed
to various environmental and health-related problems.

Technology is a critical factor in economic development. Because of the advances of
international communication, the increasing economic interdependence of nations, and the
serious scarcity of vital natural resources, the transfer of technology has become an important
preoccupation of both industrialised and developing countries. For many industrialised countries,
the changes in the technological environment over the last 30 years have been immense
particularly in such areas as chemicals, drugs, and electronics. It is vital that organisations stay
abreast of these changes - not only because this will allow them to incorporate new and
innovative designs into their products, but also because it will give them a firmer base from
which to anticipate and counteract competition from other organisations.











PILOT STUDY
A pilot study is a research project that is conducted on a limited scale that allows researchers to
get a clearer idea of what they want to know and how they can best find it out without the
expense and effort of a full-fledged study. They are used commonly to try out survey questions
and to refine research hypotheses.
The term 'pilot studies' refers to mini versions of a full-scale study (also called 'feasibility'
studies), as well as the specific pre-testing of a particular research instrument such as a
questionnaire or interview schedule. Pilot studies are a crucial element of a good study design.
Conducting a pilot study does not guarantee success in the main study, but it does increase the
likelihood of success. Pilot studies fulfill a range of important functions and can provide valuable
insights for other researchers. There is a need for more discussion among researchers of both the
process and outcomes of pilot studies.
A small study conducted in advance of a planned project, specifically to test aspects of the
research design (such as stimulus material) and to allow necessary adjustment before final
commitment to the design. Although not unknown in qualitative research, these are more
common in large quantitative studies, since adjustment after the beginning of fieldwork is less
possible than in qualitative work. Pilot study may refer to a preparatory investigation that is in no
way intended to test the research hypotheses of interest. For example, collecting a small amount
of data, per protocol, in order to assess the cost of operations addresses financial feasibility of the
future full-scale study. Similarly, it is usually the case that a small sample can provide adequate,
approximate information about variances and correlations needed for analysis of power and
sample size for the future full-scale study.










SHR PHILOSOPHY
IT ENABLED RECRUITMENT AND SELECTION PRACTICES
candidates are mostly from Internal Talent plan -internal E-recruitment method -advertises post
in Tesco intranet. external recruitment methods -advertising media, television, radio or
advertising Google or in magazines such as appointment journal -applied online for managerial
positions -Harder to fill or more specialist jobs -for future employee needs the store prepares a
waiting list
E-recruitment, also known as online recruitment, is the practice of using technology and in
particular Web-based resources for tasks involved with finding, attracting, assessing,
interviewing and hiring new personnel.
The purpose of e-recruitment is to make the processes involved more efficient and effective, as
well as less expensive. Online recruitment can reach a larger pool of potential employees and
facilitate the selection process.
The online promotion of an organization as a desirable place to work, through the corporate
website or other venues, is one element of e-recruitment. E-recruitment software and systems are
available as standalone applications, product suites and services. A recruitment management
system is an integrated product suite or portal that streamlines and automates the processes
involved.
E-Recruitment or eRecruitment is the process of personnel recruitment using electronic
resources, in particular the internet.
[1]
Companies and recruitment agents have moved much of
their recruitment process online so as to improve the speed by which candidates can be matched
with live vacancies. Using database technologies, and online job advertising boards and search
engines, employers can now fill posts in a fraction of the time previously possible. Using an
online e-Recruitment system may potentially save the employer time as usually they can rate the
eCandidate and several persons in HR independently review eCandidates. Some recruiting
companies have set up their own systems like Taleo, and even Unicef,
[2]
while also new
companies were created to provide these services like Jobtrain, Ivy Exec, and HireServe.
The internet, which reaches a large number of people and can get immediate feedback has
become the major source of potential job candidates and well known as online recruitment or E-
recruitment. However, it may generate many unqualified candidates and may not increase the
diversity and mix of employees.
[3]

In terms of HRM, the internet has radically changed the recruitment function from the
organisational and job seekers' perspective. Conventional methods of recruitment processes are
readily acknowledged as being time-consuming with high costs and limited geographic reach.
However, recruitment through World Wide Web (WWW) provides global coverage and ease.
Likewise, the speedy integration of the internet into recruitment processes is primarily
recognised due to the internet's unrivalled communications capabilities, which enable recruiters
for written communications through e-mails, blogs and job portals.
By 2005, expenditure on Internet-based recruiting will be $ 7 billion - Forrester Research
Institute. 96% of all companies will use the Internet for their recruitment needs. In the U.S.,
some companies claim 30% of new hires are from the Internet and 77% of Internet use the Net to
do so. A recent survey conducted by Employment Management Association, U.S.A, the cost-per-
hire of print Ads was estimated at $3295 and Online Ads, a mere $ 377. There are over 16
million resumes floating online
METHODS AND RECENT TRENDS IN COMPENSATION MANAGEMENT
Compensation Management is more than just the means to attract and retain talented employees.
In todays competitive labor market, organizations need to fully leverage their human capital to
sustain a competitive position. This requires integrating employee processes, information and
programs with organizational processes and strategies to achieve optimal organizational results.
Virginia Tech is committed to the continued success of the Commonwealth of Virginias
Compensation Plan. The plan enhances the universitys ability to staff core operations and new
initiatives, support employee development, recruit and retain highly qualified employees and
reward them based on their performance and capabilities, and support the achievement of
organizational goals.
Compensation Management programs cover:
Competitive Offers
In-Band Adjustments
Market Data
Overtime (FLSA)
Pay Strategy
Pay Structure
Role Changes
Compensation is the remuneration received by an employee in return for his/her contribution to
the organization. It is an organized practice that involves balancing the work-employee relation
by providing monetary and non-monetary benefits to employees.Compensation is an integral part
of human resource management which helps in motivating the employees and improving
organizational effectiveness.

Components of Compensation System

Compensation systems are designed keeping in minds the strategic goals and business objectives.
Compensation system is designed on the basis of certain factors after analyzing the job work and
responsibilities. Components of a compensation system are as follows:



Types of Compensation

Compensation provided to employees can direct in the form of monetary benefits and/or indirect
in the form of non-monetary benefits known as perks, time off, etc. Compensation does not
include only salary but it is the sum total of all rewards and allowances provided to the
employees in return for their services. If the compensation offered is effectively managed, it
contributes to high organizational productivity.
Direct Compensation
Direct compensation refers to monetary benefits offered and provided to employees in return of
the services they provide to the organization. The monetary benefits include basic salary, house
rent allowance, conveyance, leave travel allowance, medical reimbursements, special
allowances, bonus, Pf/Gratuity, etc. They are given at a regular interval at a definite time.
House Rent Allowance
Basic Salary

Salary is the amount received by the employee in lieu of the work done by him/her for a certain
period say a day, a week, a month, etc. It is the money an employee receives from his/her
employer by rendering his/her services. Organizations either provide accommodations to its
employees who are from different state or country or they provide house rent allowances to its
employees. This is done to provide them social security and motivate them to work.

Conveyance

Organizations provide for cab facilities to their employees. Few organizations also provide
vehicles and petrol allowances to their employees to motivate them.
Leave Travel Allowance

These allowances are provided to retain the best talent in the organization. The employees are
given allowances to visit any place they wish with their families. The allowances are scaled as
per the position of employee in the organization.

Medical Reimbursement

Organizations also look after the health conditions of their employees. The employees are
provided with medi-claims for them and their family members. These medi-claims include
health-insurances and treatment bills reimbursements.
Bonus

Bonus is paid to the employees during festive seasons to motivate them and provide them the
social security. The bonus amount usually amounts to one months salary of the employee.

Special Allowance

Special allowance such as overtime, mobile allowances, meals, commissions, travel expenses,
reduced interest loans; insurance, club memberships, etc are provided to employees to provide
them social security and motivate them which improve the organizational productivity.
Indirect Compensation
Indirect compensation refers to non-monetary benefits offered and provided to employees
in lieu of the services provided by them to the organization. They include Leave Policy,
Overtime Policy, Car policy, Hospitalization, Insurance, Leave travel Assistance Limits,
Retirement Benefits, Holiday Homes.

Leave Policy

It is the right of employee to get adequate number of leave while working with the
organization. The organizations provide for paid leaves such as, casual leaves, medical
leaves (sick leave), and maternity leaves, statutory pay, etc.


Overtime Policy

Employees should be provided with the adequate allowances and facilities during their
overtime, if they happened to do so, such as transport facilities, overtime pay, etc.

Hospitalization

The employees should be provided allowances to get their regular check-ups, say at an
interval of one year. Even their dependents should be eligible for the medi-claims that
provide them emotional and social security.
Insurance

Organizations also provide for accidental insurance and life insurance for employees. This gives
them the emotional security and they feel themselves valued in the organization.
Leave Travel

The employees are provided with leaves and travel allowances to go for holiday with their
families. Some organizations arrange for a tour for the employees of the organization. This is
usually done to make the employees stress free.

Retirement Benefits

Organizations provide for pension plans and other benefits for their employees which benefits
them after they retire from the organization at the prescribed age.

Holiday Homes

Organizations provide for holiday homes and guest house for their employees at different
locations. These holiday homes are usually located in hill station and other most wanted holiday
spots. The organizations make sure that the employees do not face any kind of difficulties during
their stay in the guest house.

Flexible Timings

Organizations provide for flexible timings to the employees who cannot come to work during
normal shifts due to their personal problems and valid reasons.
ongoing compensation trends will affect 2013 choices
Economic conditions stagnated or reduced salaries over the past 3 years. As conditions begin to
improve, companies are realizing that their market competitiveness may have suffered. Many
companies are beginning to reevaluate their existing salaries and the salary structures by
undertaking market studies to determine where they stand.
1. Since some employees may be eager to seek other employment as the labor market opens up,
it is important to understand market positioning in the event that compensation is one of the
main drivers for seeking another job, particularly for recent graduates.
2. Employees are only aware of what their getting (cash compensation, benefits, professional
development, etc.) if their employers tell them so. Total rewards statements are effective in
getting that message across.
3. Concurrent with improvements to the economy is the fact that companies are refocusing on
their strategic plans. Ensuring the total rewards package is properly structured will enable
employees to contribute towards goals that relate to the strategic plan. However, this is a
significant effort that needs to be undertaken by HR.
4. Many companies also want to refocus on pay-for-performance to use their compensation
dollars more effectively. While many companies embrace a "pay-for-performance" concept, this
was somewhat stalled during the recent economic crisis. However, as the market begins to
improve, companies are returning to this concept and looking to reward employees for their
performance.
5. the culture can shift to transition to a merit-based process. Strong communications with a
commitment from the top down is the first step to moving away from entitlement, along with
effective management raining. While turnover may result as part of this transition, most likely it
will be from the poorer performers who have hidden behind across-the-board increases.
Balanced Score Card
A Balanced Scorecard defines what management means by "performance" and measures whether
management is achieving desired results. The Balanced Scorecard translates Mission and Vision
Statements into a comprehensive set of objectives and performance measures that can be
quantified and appraised. These measures typically include the following categories of
performance:
Financial performance (revenues, earnings, return on capital, cash flow)
Customer value performance (market share, customer satisfaction measures, customer
loyalty)
Internal business process performance (productivity rates, quality measures, timeliness)
Innovation performance (percent of revenue from new products, employee suggestions,
rate of improvement index)
Employee performance (morale, knowledge, turnover, use of best demonstrated
practices)
Balanced Scorecards do:
Articulate the business's vision and strategy
Identify the performance categories that best link the business's vision and strategy to its
results (e.g., financial performance, operations, innovation, employee performance)
Establish objectives that support the business's vision and strategy
Develop effective measures and meaningful standards, establishing both short-term
milestones and long-term targets
Ensure companywide acceptance of the measures
Create appropriate budgeting, tracking, communication, and reward systems
Collect and analyze performance data and compare actual results with desired
performance
Take action to close unfavorable gaps
the Balanced Scorecard enables organizations to bridge the gap between strategy and
actions, engage a broader range of users in organizational planning, reflects the most
important aspects of the business, and respond immediately to progress, feedback and
changing business conditions.
the Balanced Scorecard can be a great help used as a strategic tool, a management
methodology or / and a measurement system.
the Balanced Scorecard provides organizations with the ability to clarify vision and strategy and
translate them into action. By focusing on future potential success it becomes a dynamic
management system that is able to reinforce, implement and drive corporate strategy forward.
It provides feedback around both the internal business processes and external outcomes in order
to continuously improve strategic performance and results.
The concept of the Balanced Scorecard has achieved increasing popularity in the business world.
Many businesses had previously built their objectives around financial targets and goals of little
relevance to a long-term strategic vision, thus typically leaving a gap between strategy
development and implementation.
For this purpose the Balanced Scorecard holds four different perspectives from which a
company's activity can be evaluated:
Financial perspective
- return on investment, shareholder value
Customer perspective
- customer satisfaction, our coorporate image?
Process perspective
- in what processes should we excel to succeed?
Innovation perspective
- how will we go on from lessons learned and
sustain our ability to change and improve?
Balanced scorecard methodology is an analysis technique designed to translate an
organization's mission statement and overall business strategy into specific, quantifiable
goals and to monitor the organization's performance in terms of achieving these goals.
Balanced Scorecard
The balanced scorecard is a new management concept which helps managers at all levels
monitor results in their key areas. An article by Robert Kaplan and David Norton entitled "The
Balanced Scorecard - Measures that Drive Performance" in the Harvard Business Review in
1992 sparked interest in the method, and led to their business bestseller, "The Balanced
Scorecard: Translating Strategy into Action", published in 1996.
There's nothing new about using key measurements to take the pulse of an organization. What's
new is that Kaplan and Norton have recommended broadening the scope of the measures to
include four areas:
financial performance,
customer knowledge,
internal business processes,
learning and growth.
This allows the monitoring of present performance, but also tries to capture information about
how well the organization is positioned to perform well in the future.
Kaplan and Norton cite the following benefits of using the balanced scorecard:
Focusing the whole organization on the few key things needed to create breakthrough
performance.
Helping to integrate various corporate programs, such as quality, re-engineering, and
customer service initiatives.
Breaking down strategic measures to local levels so that unit managers, operators, and
employees can see what's required at their level to roll into excellent performance overall.