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MASTER OF BUSINESS ADMINISTRATION SPECIALIZATION: HUMAN RESOURCE MANAGEMENT 3RD SEMESTER ASSIGNMENT

SUBJECT: MU 0013 HR AUDIT ASSIGNMENT NO.: SET 1 DATE OF SUBMISSION AT LEARNING CENTRE: 1st DECEMBER 2011

SET I
Q.1 Discuss the approaches to HR Audit. A1. HR auditing in recent years is not only considered mere instrument of control an but also has become a necessary decision making tool in personnel related matters according to the global objectives of the company. As a result, all of the functions and competencies of HR auditing are being progressively expanded. Approaches to Human Resource Audit by Walker Walker [1998] differentiates between two approaches relative to HR auditing i.e. those centered in the functions internal aspect, and those centered on the external aspect. Internal perspective: From an internal perspective, as in any staff function, there is a trend of valuing its actions as a result of the activities undertaken and its costs. The way of judging departments capability would be on its ability to supply certain services to the organization at the lowest possible cost. According to this approach, the operational measurements traditionally used are those which refer to quantity, quality and reliability, or cost and speed, therefore placing the focus on activities, costs, or productivity ratios. External perspective: From an external perspective, if it is understood that the ultimate appraisal of the effectiveness of HR is based on their impact on the companys results, then the measurements. Should include results obtained outside the function. Common approaches to Human Resource Audit There are five common approaches for the purpose of evaluation of HR in any organization: Comparative approach: In this approach, another division or company that has better practices or results is chosen as the model. The audit team audits and compares the audited firms results with the best practices of the model organization. This approach is commonly used to compare the results of specific activities or programs. The approach is often used with turnover, absence, salary data and staffing levels. It helps detect areas where improvement is needed. It also makes sense to compare where a procedure is being used for the first time. Outside authority: In this approach, standards set by a consultant or taken from published research findings serve as the benchmark for the audit team. The consultant or research findings may help diagnose the cause of problems. Statistical: This approach relies on performance measures drawn from the companys existing information system. From existing records, the audit team generates statistical standards against which activities and programs are evaluated. With the mathematical standards as a base, the team may uncover errors while they are still minor. Often this approach is supplemented with comparative data from external sources such as other firms, or industry association surveys. The information is usually expressed in ratios or formulas that are easy to compute and use. Compliance approach: This approach reviews past practices, to determine if actions taken followed legal requirements and company policies and procedures. The audit team here often examines a sample of employment, compensation, discipline and employee appraisal forms. The purpose of the review is to ensure that the field offices and the operating managers

have complied with internal rules and legal regulations, such as minimum wages and equal employment opportunity laws. By sampling elements of the human resources information system, the audit team looks for deviations from laws and company policies and procedures. The team can then determine the degree of compliance achieved. This concept of HR auditing is based on a legal outlook. According to Antona [1993] the audit of performance or conformity consists of making an inventory of the social situation of the company, considering the labor law norms and regularly verifying the companys compliance with the applicable regulations. Thus, this concept is centered on the verification that the current labor laws are being fulfilled. The audit should verify if the companys policies, practices, and documents regarding employee hiring, retention, discipline, termination, and post-employment are both fair and legal [Higgins, 1997]. These practices and policies must: prohibit discrimination by offering equal employment opportunities; protect the employment seeker from being discriminated against on the basis of age; carry out minimum wages; and contain provisions regarding mental disabilities and reasonable accommodations for disabled workers. Q.2 What are the goals of HR Audit. A.2 An audit is a means by which an organization can measure where it currently stands and determine what it has to accomplish to improve its human resources function. HR audit also helps companies to figure out any gaps or lapses and the reason for the same. The goals of the audit can be of two types i.e. short-term or long-term. Short-term goal can solve any recent problems in the organisation and longterm goals are the objectives that have greater impact on the goodwill of the organisation. The main goal of the HR Audit is to ensure that proper controls, policies and procedures are in place for each of HR functions, and that records, disclosures, and other information are consistent with plan documents and in compliance with applicable laws and regulation. The other important goals can be as follows: 1. To ensure effective utilization of human resources. 2. To review compliance with tons of laws and regulations. 3. To motivate human resource department that it is well-managed and prepared to meet potential challenges and opportunities. 4. To maintain or enhance the organization's reputation in the society. Q.3 What are the different types of interview? A.3 Telephonic Interview: Telephonic interviews give the company a chance to get a feel for your skillset, interests, desired compensation etc., and see if there is a match between their needs and your strengths. If there is enough common ground, then the phone interviews are almost always followed-up by an in-person interview. Phone interviews are generally conducted in two steps. The first step is with a recruiter in Human Resources. The second step is a technical interview, usually with one of the people you would be working with.

Technical phone interviews are usually only conducted for people living outside the geographical region. This is done because the company wants to have some level of confidence in your technical abilities before they decided to spend the money to fly you in for an in-person interview. 1. Direct interview: It is brief but straightforward, face-to-face question-answer session between the interviewer and the interviewee. No in-depth analysis of the candidate ability skills is done. Characteristics or attitudes can be possible find out in such interviews. But if carefully planned, some of these limitations can be avoided. 2. Indirect interview: In this type of interview, no direct questions are asked to the candidate, he is encouraged to express his views about any topics. And how he rates the enterprise and the job applied for him. The interviewer in such cases will be a patient listener either disrupting the thoughts of the candidate. 3. Patterned interview: In this type of interview, a set of standard questions will be framed in advance. Ideal answer will also be framed before itself. Then the answers given by the candidate will be analyzed with the prepared pattern. 4. Stress interview: In this interview, the candidate is analyzed how he reacts to the situation under considerable stress and strain. The candidate should not get irritated or get angry; he should be cool and confident in his answers. 5. Board or Panel interview: In such an interview, there will be many interviewers each would be focusing on certain areas. The candidate is selected or rejected by the combined performance rating of the interviewer. 6. Group interview: In this type of interview, many candidates are interviewed at the same time. A situation will be given to them and all the candidates are asked to participate in the discussions. Q.4 Explain compensation system. A.4 Employee compensation system along with the benefits programs, are one of the most complex HR systems. A reward system should help support the organization's strategic mission, motivate employees, and reward performance. Compensation systems should be both externally competitive and internally equitable. Auditors may want to work with a compensation expert when reviewing this area. A review of the organization's salary administration process is also important to determine how employees are paid throughout their careers, including merit increases, variable performance pay, promotions, bonuses, stock options, and deferred compensation, to name a few. Base salary During the audit, auditors should ensure that: a compensation philosophy has been developed that defines how the organization wants to pay people with respect to its position in the labor market; there are current job descriptions for each position; an effective market analysis has been conducted; a salary structure has been developed to help manage pay, and an appropriate job evaluation system is being used to slot jobs into the salary structure. Auditors should verify controls to ensure that the confidentiality of personnel data is maintained, additions to base pay are appropriately calculated and authorized, full compliance with tax and other

deductions is made, terminating employees' payrolls are processed appropriately, and payroll costs are in line with budgeting objectives. Sales incentives Sometimes past incentive program may be a reason for disappointment to both you and your salespeople. At the time of HR audit, sales incentive program should be crosschecked because a payment less than the worth may lead the sales team to under perform or fail as a result. Corporations use incentive programs to drive behavior and it is a well known fact that what gets rewarded gets done. To ensure that the incentive program at your organisation work, you may use The 80-20 principle Twenty percent of the salespeople make eighty percent of the sales and profits. Too often, sales incentives are geared to the entire sales force. This may seem to be a fair strategy, but a strategist should remember that these 20% people are already motivated. That means that the sales incentives should be good enough to 1. 2. Keep these motivated sales personnel going and Light a fire under the next twenty percent the next logical group

The results have shown that this doubles the business in a more cost efficient manner. Keep it simple: Good salespeople look to simplicity to make things happen. Thus the organisation must keep the incentive program sweet, simple and attainable. There can be no ambiguity. Anything less will result in a lack of interest, as well as a waste of time and money that can sometimes spill over into other departments whose task it is to administer and account. Productivity incentives HR audit should employ meaningful methodologies of productivity measurement to evaluate and monitor the performance of a business operation. Productivity measurements must show a linkage with profitability and should clearly demonstrate how efficiently (or inefficiently) a company is using its resources to produce quality goods and services. The auditor should analyze if a realistic means of measuring progress has been employed or not. More importantly, he should ensure that the organisation has made realistic goals and performance targets that can be reached through productivity improvements. Executive bonus programs In most of the companies, title and seniority mean more when it comes to bonus pay. By granting bonuses according to title and seniority, companies turn them into entitlements, not incentives. Due to this, executives, who do the field work and put in more labor do not get that much of the bonus. HR auditor should ensure that the organization links incentives to performance as the only fair and rationale way to reward employees. Bonus plans by design, should be geared to reward employees for short-term performance. In implementing a bonus program, employers must first establish how the program fits into their overall compensation philosophy as well as set criteria that need to be met for the reward. There are some that believe in paying low salaries and highly aggressive incentives, while others believe the exact opposite. Regardless, the auditor should check if the executive bonus plan fits the uniqueness of the company.

Team based incentives Since in most of the big organizations, a project is assigned to a whole team together and the performance on the project depends on the collective performance of the team, the HR auditor should check if the due reward is being paid to the collective performance of the employees. There are primarily two ways to offer team based incentives, viz. 1. 2. Team based Gain sharing

The auditor should also check if the employees are satisfied by the allocation method employed. The methods of team based incentive allocation are: Equal incentive payments Differential payments based on contribution to goals Differential payment according to base pay Most often than not, the teams like the second one of the above methods of the incentive allocation. At the time of the audit, it should also be checked if the team is being told about the team based incentives entitled to them, and the allocation method involved or not. Exempt and non-exempt status determination This concept is more prominent in USA where the HR auditor should analyze if the finance department has correctly determined whether a salaried associate should be exempt or non-exempt? Exempt status is regulated by the Fair Labor Standards Act (FLSA). When determining exemptions, employers must first consider the way in which the employee is paid (hourly vs. salaried), then they must review the duties and responsibilities of the job. Although, there are a number of unique position that provide for exempt status. The majority of employers must use what is referred to as the white-collar exemption tests to determine exempt status. There are four main exemptions, executive, administrative, professional, and out-side sales, that positions can be placed in based upon the duties and responsibilities of the job. The determination is never, made based upon the jobs title or the manner the position is paid. Overtime computation According to the labor laws in India, when a worker works in an employment for more than nine hours on any day or for more than forty-eight hours in any week, he shall, in respect of such overtime work, be entitled to wages at double the ordinary rates of wages. The labor laws also state that the workers should be given double the normal salary when they work overtime (extra hours, either on working days or weekly offs). But many a company does not do so. They might, for example, not pay the entire double amount and instead replace it with an amount that is definitely higher than the basic, but still less than the double. This will definitely create employee unrest over time and the productivity is bound to suffer. At the time of HR audit, the auditor must make sure that no such practice is being undertaken and the employees are getting their dues properly.

Q.5 Write a note on Audit of HR Function. A.5 Good starting point of audit process is to take some time and reflect on HR functions which need to be audited. Simply listing them is a good first step. For achieving organizational goals, it is very important to carry out various HR functions smoothly. In this step of audit process, we define the various functions which need to be audited. The figure below shows the various human resource functions:

Safety and healthy

Communi -cation

Job analysis and design

Industrial relations

Recruitm -ent and selection

Participa -tive management

HR Functions

Orientation and placement

Motivation and morale

Employee and executive remunerat -ion

Performance appraisal and job

Training and development

Figure showing various HR function In this step consider your areas of responsibility and traditional HR practices covered by the functions, you need to audit. In starting out, it is better to make more general statements and improve from year to year in those areas that you choose to raise the level of performance. For example as an audit manager, you may decide to audit any of following: All human resource functions. Any specific function like recruitment process of your company. Any part of the specific function you have selected for audit like generating applicant pool function of recruitment process,

The main purpose is to study and analyze each one of the specific areas of HRM. The analysis should focus on the planned measures, the method of implementation, and the results obtained. In order to

carry this out, the areas that need to be audited must be identified. A list of the indicators corresponding to the different areas of the HR function could contain some of the following: Description of the staff of the company The complete staff can be described by: hierarchic levels years of service qualification sex nationality the number of permanent and temporary employees, interns and physically or mentally challenged employees indexes of personnel rotation and absenteeism

Job analysis The various indicators of Job analysis are as follows: The number of described posts Occupants per post Degree to which the job description cards have been updated The degree of detail in the job description cards The methods used to analyze and describe the jobs.

HR planning HR planning, as you have studied in unit 7, is an important area of preplanning includes the methods employed to plan personnel needs, the measures adopted to cover future personnel needs, and the temporary planning horizon. Recruiting and personnel selection Main indicators of this are as follows: the number of days required to a vacant post the number of applications received by work place categories the average amount of days between the reception of the application the average cost of recruitment cost of selection per job post the degree to which internal and external sources of recruitment are used the average number of candidates that do not pass the selective tests

Training and development The training indicators are as follows: the procedures followed frequency to which personnel training needs are analyzed the criteria followed in the training programs the evaluation criteria of the efficiency of the training programs the percentage of the HR budget dedicated to training the average number of hours of training per employee The percentage of employees that participate in training programs by work place categories.

Development of professional careers These indicators focus on the vacancies covered internally. These indicators include: the percentage of people promoted per number of employees; The percentage of vacancies covered internally and externally and the average time per employee it takes to receive a promotion.

Q.6 Write a note on design and implementation of competencies model. A.6 During an HR audit, due attention must be paid to find out if the competencies model has been adequately designed and developed or not. There are three ways in which competencies models may be developed: 1. Behavioral Indicators: Behavioral indicators describe the behaviors, thought patterns, abilities and traits that contribute to superior performance. 2. Evaluative Competency Levels: Exceptional competencies of high performers are set as standards for evaluating competency levels of employees. 3. Competencies Describing Job Requirements: This approach is useful for organizations having multiple competency models. Competencies required in a particular job are described. Job specific competency models help in structuring focused appraisal and compensation decisions. To identify role-specific competencies required industry specific, functional and behavioral competencies, which need to be developed for enhanced performance. The approach for developing a competency framework for a particular role is as proposed below: Understand strategic business context of the organizations in term of its structure and environmental variables. Detail role description for positions. Defining and scaling (relative importance and mastery level) of specific behaviors for each identified competency as a measure of performance.

Develop competency framework taking into consideration the core values and the culture of the organizations in addition to specific functional and level requirements. This should gel with the vision and mission of the company. Validate the competency framework through a workshop, which should include functional experts and top management personnel in order to define critical and desirable competencies. And also to substantiate the extent to which the competencies differentiate between high and average performers by validating the content and criteria. The auditor should establish the link between people and roles through effective measuring tools that evaluate the performance of the person in the role. On-the-job performance of the individual is evaluated on the basis of a performance management system. The assessment centre is a powerful tool in the hands of the management for selection and development. As a selection tool it can be used for management promotions, fast tracks schemes, high potential list and change of functional role. As a development tool, it is helpful in succession planning, identifying training needs and career development. Designing and conducting a potential assessment centre should follow basic principles in term of accuracy, fairness, reliability, legality, efficiency, multiple assessors, multiple tests and optimal stress to increase performance. It would involve two types of exercises, i.e., group exercises and individual exercises. Group Exercises For potential assessment, the following group exercises are conducted: Assigned Role Exercises: Used to assess negotiating skills, decision making skills, and risk taking skills; Unassigned Role Exercises: Used to assess ability to handle uncertainty, change orientation, ethical behavior and global orientation; and Team Exercises: Used to assess ability to work in a team and solve problems efficiently. Individual Exercises For potential assessment, the following individual exercises are conducted: In-Basket Exercises: Used to assess ability to plan, organize, decide, manage and delegate; Learning skill Inventory/Psychometric Inventories: Used to assess ability to learn, leverage knowledge and indicate behavioral patterns; and Interpersonal Effectiveness Module: Used to assess interpersonal effectiveness, excommunication skills, patience and interpersonal skills. Inputs for analysis of an individuals potential and behavioral patterns are also collected through multilateral feedback, behavioral event interviews, career aspiration interview, career history, etc. In order to minimize assessors bias and ensure objectivity and uniformity multiple trained assessors for each competencies assessment are used.

The competencies gaps can be found out by comparing the desired competency (proficiency) levels and displayed competency levels as indicated in the Figure below:

5 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 C1 C2 C3 C4 C5 C6 C7 C8 Desired Competency Level Displayed Competency Level

Figure: Competency Gap Based on the above exercises, feedback details for individuals on their strengths and developmental areas are prepared. Positive gaps between desired and displayed competencies indicate areas of improvement; negative gaps indicate strengths. Each gap area needs to be analyzed and prioritized into major and minor gaps. These gaps are to be addressed at the individual, departmental and organizational levels by agreeing on milestones for each individual in terms of projects, job rotations, transfer, training and job enrichment. Setting up a development monitoring cell in HR would help in creating a project plan with deadlines and escalation possibilities with a feedback system for feedback from bosses and individuals. Average assessment results are used to identify strengths and gaps in an organizations capabilities.

MASTER OF BUSINESS ADMINISTRATION SPECIALIZATION: HUMAN RESOURCE MANAGEMENT 3RD SEMESTER ASSIGNMENT

SUBJECT: MU 0013 HR AUDIT ASSIGNMENT NO.: SET 2 DATE OF SUBMISSION AT LEARNING CENTRE: 1st DECEMBER 2011

SET II
Q.1 Write a detailed note on staffing. A.1 Staffing is the process of acquiring, deploying, and retaining a workforce of sufficient quantity and quality to create positive impacts on the organization's effectiveness.
Planning workforce reqruitment

Recruitment

Promotion and transfer

Selection

Performance evaluation

Orientation and Placement

Remuner -ation

Training and develpoment

Figure: Staffing Process Various steps in the staffing process which are explained below: 1. Planning work force requirements Planning work force requirements is the first step in staffing process which involves forecasting and determining the future manpower needs of the organization and thus planning about the number of employees required in any organization. 2. Recruitment In recruitment organizations invites and solicits applications made to the desirable candidates. 3. Selection In selection, screening of applications is done and suitable candidates are appointed as per the requirements. 4. Orientation and Placement Orientation involves induction of employees so that they come to know the working culture of the organization. 5. Training and Development Employees recruited may have many skills but which is required out of them in the concerned organization is important.

6. Remuneration It is a kind of compensation provided monetarily to the employees for the job they performed. This is given according to the nature of job-skilled or unskilled, physical or mental, etc. Remuneration forms an important monetary incentive for the employees. 7. Performance Evaluation In this expected results are compared with actual results 8. Promotion and Transfer Based on the previous step, the decision of promotion and evaluation of the employee is taken up.

Q.2 Discuss conceptualizing of HR Audit. A.2 As the term audit has evolved, it is becoming increasingly specific, until the term functional audit has emerged. The objective of a functional audit is to diagnose, analyze, control, and advise within the boundaries of each functional area of the company. The HR audit is also a functional audit which emphasize on the well being of HR functions in the organisation. Thus, as a first approach, one could say that HR auditing consists of diagnosing, analyzing, evaluating, and assessing future lines of action within the framework of HRM. HR auditing is one of the basic tools for the management of a company. It not only attempts to control and quantifying of results, but also the adoption of a wider perspective that will aid in defining future lines of action in the HRM field. HR auditing must perform two basic functions [Cantera, 1995]. It must be a management information system whose feedback provides information about the situation in order to facilitate the development of managing processes or the development of HR. It must be a way of controlling and evaluating the policies that are being applied, as well as the established processes.

In the above sections, you have already realized that in order to secure the operative efficiency and user or client satisfaction, an appraisal of the results of the HR function is necessary. The results can be valued through their cost (a measurement internal to the function) [Walker, 1998]. This would lead the company to consider some basic points: There are adequate HR policies being developed in the organisation or not. There are the desired results being obtained from HR policies being followed. The extent to which HR policies add value to company

The main objective of this work is to offer a few guidelines for the appraisal of the HR function, which is in itself the basis for the auditing process. The purpose is to set conceptual limits for its content and to present the different approaches with which the HR audit can be presented.

Q.3 Describe How to approach a HR Scorecard. A.3 This mode of scorecard is based on the assumption that competent and committed employees are needed to provide quality products and services at competitive rates emphasizing on the ways to enhance customer satisfaction. The following figure shows the steps in HR Scorecard approach.

ggggg

Formulate the business strategies Define the business strategy Outline companies value chain activities Recognize work force requirements and behavior Formulate HR Policies

Develop HR Audit scorecard Periodically revaluate


Figure: HR Scorecard Approach
The Seven Steps in the HR Scorecard approach to formulating HR policies activities and strategies are as follows: The first step is to formulate business strategies i.e. define the business strategy of the organization so as to be very clear about the way to exploit the human resource towards the achievement of the organizational goal. The next step is to outline the companys value chain activities and identify the strategically required organizational outcomes. Now after the outcomes have been decided clearly, identify the workforce requirements and behaviors expected so as to achieve the desired outcomes. The next step is to formulate HR policies and practices which are strategically relevant such as new training and grievance systems.

After ensuring that all above steps are correctly conducted then develop detailed scorecard. Then design the HR Scorecard measurement system. In order to ensure the productivity, periodically re-evaluate the measurement system.

Q.4 Explain the process of workplace behaviors that support legal compliance. A.4 A safe, dignified, and respectful work environment is not only mandated by the law, but also increases motivation and productivity of the employees. An example of review of business practices used to deal with allegations of harassment safe working environments should be considered especially for the females in the offices so as to make them feel confident and concentrate on work is shown as under: Tailored Reviews can be added to the General Audit

The following example at the end show how in practical world organizations pursue safe working environment for their employees.

1. Ethical trading initiative: promoting conflict resolution in union negotiations Cambodia In November 2005 the Ethical Trading Initiative (ETI) was alerted to allegations of serious interference in union rights in a Cambodian factory. In response, the organisation brought member companies sourcing from the Fortune Garments factory to meet with workers, intermediary suppliers, factory management and International Textile, Garment and Leather Workers Federation (ITGLWF) representatives, in order to seek a solution to the conflict. After negotiations, in May 2006 an agreement was reached by all parties resulting in: payment of compensation to unfairly dismissed workers; entry of the Coalition of Cambodian Democratic Apparel Workers Union into the factory; and acceptance of trade union demands over pay and conditions. 2. Nike, Adidas, Umbro and more: working group with trade unions to promote trade unionism Global The International Trade Union Confederation reported in the lead up to the 2008 Beijing Olympics that sporting apparel companies including Nike, Adidas, New Balance, Umbro and Speedo had formed a joint working group with trade unions and NGOs to explore, amongst other issues, how to promote trade unionism and collective bargaining across the sector. 3. Agreement with UNI property services to ensure rights of workers Global In 2008, G4S, one of the worlds largest international security firms, signed a global agreement with UNI Property Services, a global union, to ensure that all of G4Ss 570,000 employees (spread across more than 110 countries) have the right to organize in a free and fair atmosphere. This is in addition to complying with international standards and national law in its relations with workers. 4. Training internal monitors on freedom of association Global In 2006 Gap Inc. partnered with the International Textile, Garment and Leather Workers Federation (ITGLWF), the global union federation for the apparel and textiles sector, to train its internal monitoring team on freedom of association and collective bargaining issues. In the same year, the ITGLWF provided Gap Inc. with a detailed briefing. Gap Inc. supplemented this training by holding workshops on the Indian subcontinent and in south East Asia with the ITGLWF and local trade union representatives. These workshops aimed to strengthen engagement between Gap Inc.s Vendor Compliance Officers (responsible for inspecting factories and documenting violations) and key worker rights representatives at regional and local levels. 5. General Electric: expanding supplier due diligence to include freedom of association Global In 2008, General Electric (GE) expanded its supplier due diligence program to cover freedom of association, discrimination and harassment/retaliation. To do this it is engaged in benchmarking activities with other companies to determine how they monitored and audited their suppliers in relation to the ILO principles. In addition, it reviewed its on-site assessment tools and guidance materials and developed new training materials. As a result, over 150 suppliers were asked to change their policies with respect to freedom of association. In addition, around 400 suppliers were asked to adopt an employee dispute resolution process. 6. Mod-Style: offering worker empowerment and training to suppliers China Mod-Style, a business sourcing optical frames from Asia, has the majority of its factories in China, where the only government-affiliated All-China Federation of Trade Unions is recognized and trade union rights are severely restricted. In 2000, Mod-Style joined with the Brotherhood of St. Laurence (BSL), an Australian based charity, to implement business standards based on the conventions of the ILO and the

OECD Guidelines for Multinational Enterprises. In the absence of independent trade unions, BSL and Mod-Style have offered worker empowerment training and capacity building in supplier factories to ensure that workers rights can still be adequately voiced and heard. Nonetheless, to date no factories have agreed to this training, with BSL and Mod-Style instead focusing on developing long-term, direct and stable relationships with factory owners and managers. Thus we see that the main aim of the company is to generate sales so Company should not waste its time in building up right work place policies and practices. Q.5 What are the issues in Human Capital Measurement and reporting .Explain A.5 The human capital can be defined as "the knowledge that individuals acquire during their life and use to produce goods services or ideas in market or non-market circumstances." Organisations know that that measurement is a prerequisite for good management. As the popular saying goes, what gets measured gets managed. But in most of the organizations today, the most basic source of wealth creation human capital is not managed properly. This is primarily because most organizations systems of measurement, shaped in part by accounting and reporting requirements, are still overly influenced by measurement concepts that date back to the industrial era when physical capital was the primary source of wealth creation. Expenditures incurred on the development of the employees education and training being perhaps the most prominent are treated as costs although, these expenditures possess the traits of an investment (expenditure at one point in time that is made with the intention of generating an increase in capacity at some future point in time). But this outright focus on costs and cost cutting is not baseless. Often the known costs associated with people and their development, because measurement and accounting practices associated with human capital are remains of the industrial era; the measured costs are only a portion of the total costs. Moreover, because benefits are both uncertain and unknown, a conservative strategy has its merits. And finally, because human capital cannot be owned, spending on the development of people does not meet the traditional accounting concept of an investment, since employers cannot control the asset, i.e., the people in whom an investment is being made. There are genuine arguments in favor of the status quo with regard to measurement, accounting and reporting of human capital development and management. There are, however, also powerful arguments to be made that change is necessary. Human capital represents a huge operating cost that must be managed efficiently because of its absolute scale. At the same time because human capital is also the only asset that cannot be owned it must be managed wisely, but also with humanity. As a result, a strategy that focuses exclusively on efficiency and cost containment can, at best, only be successful in the short-run. This creates a fundamental paradox. Exceptional management in the knowledge era is defined by the ability to resolve this paradox through a both/and, rather than an either/or strategy. The both/and strategy requires a relentless focus on finding ways to cut costs and improve productivity, while simultaneously evoking the passion, creativity, loyalty and best efforts of the people on whom an organization relies.

Q.6 Discuss the auditing for HR professionals. A.6 Competence for HR function is demonstrated by an extensive audit of all its aspects. An audit of HR professionals is essentially an assessment of the extent to which the professionals demonstrate competence for HR function. Such an assessment requires a 360 degree feedback, and, according to Ulrich, usually employs the following five steps: 1. Developing a model of competencies: Before embarking on an assessment of competence, it is necessary to first determine what are the competencies that make a successful HR professional. These competencies usually stem from knowledge of business, knowledge of HR, knowledge of change and finally personal credibility. In addition to determining the competencies that account for a successful HR professional, it is also important to determine the behavioral attributes that reflect these competencies. A model that reflects both these aspects may be said to be a comprehensive model for auditing of HR professionals. 2. Collect data using the model: Several techniques may be employed to collect data about the extent to which an HR professional exhibits the modeled competencies. These include interviews, questionnaires and focused groups. 3. Summarized data and give feedback to the HR professionals: The quantitative and qualitative data collected in the above mentioned ways, need to be synthesized and codified so that specific themes emerge. These themes are then used as aids to help the HR professionals identify his/her strengths and weaknesses. One of the key activities of an HR audit is to give feedback. This needs to be done in a way that protects the confidentiality of the participants. The manner of the feedback should take into account the sensitivities of the receiver. The tenor of the feedback should neither be accusatory nor defensive. In addition, the individual data that is collected may be integrated into an audit for the overall HR function. 4. Create action plans: The HR audit goes beyond defining the competencies and inadequacies of the HR function. It also identifies the measures to develop the competencies at both, the individual and the departmental level. At the institutional level, this may involve doing an HR for HR. At the individual level, the action plan will concentrate on developing a tailored set of trainings, readings, assignments and training opportunities. 5. Continuous improvement: Auditing of HR professionals is not a one time activity but an ongoing continuous process through which HR professionals are able to constantly build on their HR competencies and strengthen the HR functions in the organisation.

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