Tag: University of Mumbai BMS Notes

A private company is owned by either a small number of shareholders, company members, or a non-governmental organization, and it does not offer its stocks for sale to the general public. Instead, its stock is offered, owned, or exchanged privately among a small number of shareholders or even held by a single individual. Private companies are also referred to as privately-held companies, limited companies, limited liability companies, or private corporations, depending on the country where they’re incorporated and how they are structured.

Section 2(68) of Companies Act, 2013 defines private companies. According to that, private companies are those companies whose articles of association restrict the transferability of shares and prevent the public at large from subscribing to them. This is the basic criterion that differentiates private companies from public companies.

The Section further says private companies can have a maximum of 200 members (except for One Person Companies). This number does not include present and former employees who are also members. Moreover, more than two persons who own shares jointly are treated as a single member.

This definition had previously prescribed a minimum paid-up share capital of Rs. 1 lakh for private companies, but an amendment in 2005 removed this requirement. Private companies can now have a minimum paid-up capital of any amount.

Features of Private Companies

• No minimum capital required: There was a minimum paid-up share capital requirement of Rs. 1 lakh previously, but that is omitted now.
• Minimum 2 and maximum 200 members: A private company can have a minimum of just two members (but just one is enough if it a One Person Company), and a maximum of up to 200 members.
• Transferability of shares restricted: Private companies cannot freely transfer their shares to the public like public companies. This is why stock exchanges never list private companies.
• “Private Limited”: All private companies must include the words “Private Limited” or “Pvt. Ltd.” in their names.
• Privileges and exemptions: Since private companies do not freely transfer their shares and involve limited interest by members, the law has granted them several exemptions that public companies do not enjoy.

Privileges of Private Companies

The Companies Act has provided certain privileges and exemptions to private companies that public companies do not possess. These privileges accord them greater freedom in conducting their affairs. Here are some examples of them:

• No need to prepare a report for annual general meetings.
• Only 2 minimum directors required.
• No need to appoint independent directors.
• They can adopt additional grounds for the disqualification of directors and vacation of their office.
• They can pay greater remuneration to their directors than compared to some other types of companies.

Merits

Owning Property

A company being a juristic person, can acquire, own, enjoy and alienate, property in its own name. No shareholder can make any claim upon the property of the company so long as the company is a going concern. The shareholders are not the owners of the company’s property. The company itself is the true owner.

Free & Easy transferability of shares

Shares of a company limited by shares are transferable by a shareholder t any other person. The transfer is easy as compared to the transfer of interest in business run as a proprietary concern or a partnership. Filing and signing a share transfer form and handing over the buyer of the shares along with share certificate can easily transfer shares.

Limited Liability

Limited Liability means the status of being legally responsible only to a limited amount for debts of a company. Unlike proprietorships and partnerships, in a limited liability company the liability of the members in respect of the company’s debts is limited. In other words, the liability of the members of a company is limited only to the extent of the face value of shares taken up by them. Therefore, where a company is limited by shares, the liability of the members on a winding-up is limited to the amount unpaid on their shares.

Borrowing Capacity

A company enjoys better avenues for borrowing of funds. It can issue debentures, secured as well as unsecured and can also accept deposits from the public, etc. Even banking and financial institutions prefer to render large financial assistance to a company rather than partnership firms or proprietary concerns.

Dual Relationship

In the company form of organization it is possible for a company to make a valid and effective contract with any of its members. It is also possible for a person to be in control of a company and at the same time be in its employment. Thus, a person can at the same time be a shareholder, creditor, director and also an employee of the company.

Capacity to sue and be sued

To sue means to institute legal proceedings against or to bring a suit in a court of law. Just as one person can bring a legal action in his/her own name against another in that person’s name, a company being an independent legal entity can sue and also be sued in its own name.

Limitations

No valuation of investment:

Shares of a private company are not listed on stock ex­change. There are no regular dealings in these shares. A shareholder cannot, therefore, know the real value of his investment in a private company.

Lack of public confidence:

Public has little confidence in a private company because its affairs are unknown and it is not subject to strict control under the law.

Smaller resources:

A private company cannot have more than fifty members. Its credit standing is lower than that of a public company. Therefore, the financial and managerial resources of a private company are comparatively limited.

Poor protection to members:

A private company enjoys several exemptions from various provisions of the Companies Act. Minority members may suffer at the hands of the majority members. Dissatisfied members cannot cut off their connection with the company except at a loss.

Lack of transferability of shares:

There are restrictions on the transfer of shares in a private company. As a result a shareholder cannot leave a private company easily and quickly.

Sole trade is the oldest and most commonly used form of business organisation. It is as old as civilization is. Historically, it appears that business first started with this form of organisation. With the development of science and technology the needs of the business also increased and new forms of organisation developed. This organisation is also known as Sole-Proprietorship, Individual-Proprietorship, and Single Entrepreneurship. In sole trade organisation, an individual is at the helm of affairs. He makes all the investments, shares all risks, takes all profits, manages and controls the business himself.

The sole-trader mainly depends up to his own resources, so the business is generally on a small-scale basis. The business is normally run with the help of family members but he may employ persons to look after the day-to-day activities of the business. So far as his liability is concerned, it is unlimited.

Features of Sole Proprietorship:

Individual Initiative:

This business is started by the initiative of a single person. He prepares the blue prints of the venture and arranges various factors of production. He may employ other person for assistance but ultimate authority and responsibility lies with him. All the profits and losses are taken by the single individual.

Management and Control:

The proprietor manages the whole business himself. He prepares various plans and executes them under his own supervision. There may be some persons to help him but ultimate control lies with the owner.

Unlimited Liability:

In sole trade business liability is unlimited. The proprietor is responsible for all losses arising from the business. The liability is not limited only to his investments in the business but his private property is also liable for business obligations.

Business Secrecy:

All important decisions are taken by the owner himself. He keeps all the business secrets only to himself. Business secrets are very important for small business. By retaining business secrets he avoids competitors entering the same business.

No sharing of profits:

A sole trading concern is established and managed by the single person. Profit is not required to share with another. Sole trader individually enjoys the profit and bears the risk by himself.

Limited area of operation:

Since the sole trading concern is invested by the single person, there is less scope for expansion and growth of it. Sole trader individually can’t manage the big size of a business and he can’t manage the big size of a business and he cannot invest for this as well.

Independent Decision:

The sole trader can freely make the decision. He or she does not need to take consent of others while making the decision. Therefore, in this form of business decision making is fast.

Undivided risk and responsibility:

In this business, risk and responsibility can be shared with another person. The sole trader individually takes all kinds of risk. A sole trader is personally responsible for accomplishing all activities of a business.

Objectives of Sole-Trade Business:

Channelise Individual Funds:

Individuals have small surplus funds with them. These funds are not enough to set up big business. People may not like to risk their funds in those businesses where they have no say and control. It is better to set up a small business instead of keeping the funds idle. So sole-trade business provides a channel to make productive use of individual funds.

Serve Consumers:

A small trader comes in direct contact with the consumers. A consumer wants to buy his day-to-day requirements from the nearest place. Sole-traders set up their shops wherever the consumers are available. A consumer saves time by purchasing daily necessities from the nearest retail outlet.

Strengthen Distribution Channel:

Sole-Trade business is generally on a small scale basis. People set up small retail outlets under sole-proprietary organisation. A retailer is an important link in the chain of distribution. He is in direct contact with the consumers. No distribution channel from the producer to the consumer can be successful without the active involvement of sole-traders.

Avoid Concentration of Wealth:

In order to avoid concentration of wealth in a few funds, sole trade business helps in its distribution among large number of people. When large number of people enter into different businesses, may be at a small scale, it helps in distribution of economic wealth.

Help Large Business:

The success of large-scale business is also linked to the help provided by small business units. Small units provide ancillary service to big units. Large units require a number of small components from small units. So sole-trade business provides service to large units by providing them all those things which they do not want to manufacture themselves. In Japan, all large scale units depend upon the supplies from small units.

Disadvantages of Sole Trading Concern

• Limited capital
• Limited managerial ability
• Unlimited liability
• Loss in absence
• Uncertain life
• Limited scope for expansion
• Limited scope for opportunity

Limited managerial ability:

It is managed by a single owner who may not have adequate managerial skills and technical abilities. So, it may face various managerial deficiencies.

Limited capital:

Its capital is limited due to the investment of a single owner. Such limited capital is insufficient for large-scale production and marketing of goods and services.

Unlimited liability:

The sole trader does not have limited liability to his business capital. The owner must pay the liability of his business even by selling his private properties if the assets of the business are not sufficient to meet such liabilities.

Loss in absence:

It may come to close if the proprietor remains absent from his business due to his illness or other reasons. So, if the owner or proprietor is absent, the business may face the loss.

Uncertain life:

Its life is closely connected with the life of the owner. So, it can be terminated any time due to death, lunacy, insolvency or disability of the owner.

Limited scope of expansion:

It has a limited scope for expansion and development. Due to the limited amount of capital and managerial skills, its activities cannot be diversified.

Limited scope for opportunity:

It offers limited opportunities to his employees. Due to the limited scope of expansion and development of business, its employees get limited opportunities for training, higher studies, career development, attractive salaries, and other benefits.

1. Ethnocentric Approach:

Here the MNC simply transfers HR practices and policies used in the home country to subsidiaries in foreign locations. Expatriates from the MNCs home country manage the foreign subsidiaries and the MNCs headquarters maintain tight control over the subsidiaries policies.

2. Polycentric Approach:

In this case, the subsidiaries are basically independent from headquarters. HR policies are developed to meet the circumstances in each foreign location. Local managers in the foreign sites are hired to manage HRM activities.

3. Region-Centric Approach:

This approach represents a regional grouping of subsidiaries. HR policies are coordinated within the region to as much an extent as possible. Subsidiaries may be staffed by manager from any of the countries within the region. Coordination and communication within the region are high, but quite limited between the region and the MNCs headquarters.

4. Geocentric Approach:

In this case, HR policies are developed to meet the goals of the global network of home country locations and foreign subsidiaries. This may include policies which are applied across all subsidiaries, as well as policies adapted to the needs of individual locations depending on what is best to maximize global results.

The firm is viewed as a single international business entity rather than a collection of individual home country and foreign business units. HRM and other activities throughout the MNC are managed by individuals who are most appropriate for the job regardless of their nationally. Thus, one may find a British manager handling HRM activities in the New York office of a Dutch MNC.

Practices of International Human Resource Management

An organization needs to consider the purpose for which it needs to send the employees for international assignments. For example, an organization may send its employees aboard to set up or explore a new market, or prepare them for top management positions. After the purpose of the international assignment is specified, the organization can initiate the process of selecting the best employees for the international project.

The following are the aspects of concern in IHRM:

1. International staffing
2. Pre-departure training for international assignments
3. Repatriation
4. Performance management in international assignments
5. Compensation issues in international assignments.

International Staffing:

International staffing refers to the selection of the most appropriate employees for international operations of an MNC.

The selection of the most appropriate employees can be done by using the following three sources:

• Home Country or Parent Country Nationals (PCNs):

Refer to the citizen of the country in which the headquarters of the MNCs is located. PCNs are not the citizens of the country in which they are working. For instance, an Indian citizen who is posted to an overseas subsidiary of an organization that has its headquarters in India is a PCN. In addition, PCNs are termed as expatriates.

Generally, PCNs are hired to occupy key and top-level management positions because they possess sound knowledge about the operations of parent organization. The knowledge about parent organization helps the PCNs in ensuring proper linkage between foreign subsidiaries and the headquarters. However, hiring PCNs is a costly affair for an organization as it has to bear the relocation cost for them.

• Host Country Nationals (HCNs):

Refer to the employees of an organization, who are citizens of the country in which the foreign subsidiary is located. An Indian manager working in an Indian subsidiary of a US organization is an HCN. For example, IBM normally hires HCNs. In addition, HCNs generally occupy middle and lower management level positions. The recruitment of HCNs is not a costly affair for an organization because it does not need to incur extra cost in cross-cultural training of employees.

• Third Country Nationals (TCNs):

Refer to the citizens of a country, other than the country where the organization is headquartered and the country that is hosting the subsidiary. Staffing is done on the basis of ability and not on the basis of nationalism. For example, a British citizen working in the Indian subsidiary of an organization whose headquarters is located in the US, is termed as a TCN. You should note that a TCN has substantial international experience and exposure that is quite advantageous for an organization.

The approach of internal staffing differs from organization to organization.

Competency management as a business lever for hiring, development, mobility, and promotion started more than 40 years ago. It continues as essential today in the effective management of human capital. To implement competency management to drive employee development and performance excellence, let us align on four key definitions.

1. Competencies are abilities, behaviors, knowledge, and skills that impact the success of employees and organizations. Some common competencies are analytical thinking, communication, flexibility, integrity, and teamwork.
2. A competency model is a set of key competencies, ideally seven to 10, carefully selected in alignment with an organization’s business goals. High-performance models include four types of competencies: core competencies, leadership competencies, functional competencies, and career competencies
3. A competency proficiency scale is a defined rating or measurement that assigns an expected level of competence on a given competency. Leading practice scales have behavioral indicators as their building blocks with related behaviors organized under each competency. Scale ratings range from three to seven mastery levels, with five levels being the most common.
4. Competency management is the set of management practices that identify and optimize the skills and competencies required to deliver on an organization’s business strategy. Competency management provides the foundation to manage strategic talent management practices such as workforce planning, acquiring top talent, and developing employees to optimize their strengths.

Benefits of Competencies

Effective and automated competency management creates a real-time and predictive inventory of the capability of any workforce. By defining and automating job roles and associated competency proficiency, leadership can readily identify strengths and skill gaps. Competency management then informs targeted skills development learning solutions improving individual and organizational performance, leading to better business results.

High-performance organizations describe the following benefits of effective and automated competency management:

• Enriched understanding of expected behaviors and performance. Of course, the quickest path to improving performance starts by knowing the target performance. Organizations that take the time to define the short list of competencies and expected proficiency level for each competency, by job role, essential for the achievement of business goals, have taken the first step toward giving employees and leaders the best shot at performance excellence.
• Improved talent planning. Competency assessment results inform leadership about current and future talent capability. To be assessed as competent, the employee must demonstrate the ability and experience to perform a job’s specific tasks. Data and analytics about employees’ skills and knowledge are essential for performance risk mitigation that leadership would otherwise be blind to.
• Optimized development and mobility strategy. High-performance organizations realize that organizational success depends on how capable their people are. They also recognize that formal training does not necessarily equip employees with the appropriate skills to thrive in the workplace. This is where competency management and competency-based development comes in. Competency-based development is created around the competency standards that have been identified for a specific role in an organization.
• Enhanced talent pipeline. Automated competency management enables on-demand information about employees’ and leaders’ competency mastery and readiness to move into next-level or other critical roles. In this fashion, organizations are better prepared with development planning and, as a result, yield healthier talent pipelines regardless of business cycle or economic conditions.
• Improved operational efficiencies. Competency management automation facilitates business-driven learning and development, eliminates non-value-add training, highlights strengths to be further developed, flags critical skill gaps for mitigation, and generates higher levels of employee and leader satisfaction with their overall experience with the organization.
• Integrated talent processes. Serving as the standard for expected performance by job role, competency management becomes the standard by which the highest-performing organizations talk about and manage all phases of the employee lifecycle: from talent acquisition to development, to retention and reward.

The Competency Based Human Resources Management is an approach that standardizes and integrates all HR activities based on competencies that support organizational goals.

Competency-based HRM is about using the concept of competency and the results of competency analysis to inform and improve the processes of performance management, recruitment and selection, employee development and employee reward. The language has dominated much of HR thinking and practice in recent years.

Competencies are any observable abilities, skills, knowledge, motivations or traits defined in terms of the behaviors needed for successful job performance.

From the competency framework, the main types of competencies are created, and they consist of core, functional and leadership competencies.

Core Competencies, are fundamental to the organizational success and are applied across the whole organization from the board of directors, and middle management, down to fresh graduates and juniors. These competencies decide how organizations want to shape their employees, the company’s image and its professional characteristics. They are one of the company’s strengths, competitive advantage and could affect its profitability and growth.

Competency-based HR is primarily based on the concepts of behavioural and technical competencies as defined in the first section of this chapter. But it is also associated with the use of National and Scottish Vocational qualifications (NVQs/SNVQs) as also examined in the first section. The next five sections of the chapter concentrate on the application and use of behavioural and technical competencies under the following headings:

• Competency frameworks;
• Reasons for using competencies;
• Use of competencies;
• Guidelines on the development of competency frameworks;
• Keys to success in using competencies.

Behavioural competencies

Behavioural competencies define behavioural expectations, ie the type of behaviour required to deliver results under such headings as teamworking, communication, leadership and decision-making. They are sometimes known as ‘soft skills’. Behavioural competencies are usually set out in a competency framework.

The behavioural competency approach was first advocated by McClelland (1973). He recommended the use of criterion-referenced assessment. Criterion referencing or validation is the process of analysing the key aspects of behaviour that differentiate between effective and less effective performance.

Technical competencies

Technical competencies define what people have to know and be able to do (knowledge and skills) to carry out their roles effectively. They are related to either generic roles (groups of similar jobs), or individual roles (as ‘role-specific competencies’). The term ‘technical competency’ has been adopted fairly recently to avoid the confusion that existed between the terms ‘competency’ and ‘competence’. Competency, as mentioned above, is about behaviours, while competence as defined by Woodruffe (1990) is: ‘A work-related concept which refers to areas of work at which the person is competent. Competent people at work are those who meet their performance expectations.’ Competences are sometimes known as ‘hard skills’. The terms technical competencies and competences are closely related although the latter has a particular and more limited meaning when applied to NVQs/SNVQs, as discussed below.

NVQ/SNVQ competences

The concept of competence was conceived in the UK as a fundamental part of the process of developing standards for NVQs/SNVQs. These specify minimum standards for the achievement of set tasks and activities expressed in ways that can be observed and assessed with a view to certification. An element of competence in NVQ language is a description of something that people in given work areas should be able to do. They are assessed on being competent or not yet competent. No attempt is made to assess the degree of competence.

Functional Competencies are the Business’ Front Wheel Competencies, no vehicle can function or move forward without its front wheels; the same goes for business, no organization can perform without its Functional or its Job Specific Competencies. These competencies drive high performance and quality results for each function in the organization. It can be technical or non-technical knowledge, skills, and abilities required to fulfill job tasks, duties or responsibilities.

Leadership competencies are basically leadership skills and behaviors that contribute to superior performance, used to assess an individual’s ability and skills to be a leader. By using a competency-based approach to leadership, organizations can better identify and develop their next generation of leaders.

Finally, applying the Competency Based HRM in any organization is the most effective approach nowadays; as competencies act as an effective benchmark for measuring employees’ qualifications and suitability of filling a specific position.

Applying the approach across the organization, should lead to more fairness in evaluation, proper career development, improve hiring decision, increase operating effectiveness and most important to supporting the achievement of strategic and business goals.

Some of the benefits are:

• Providing feedback more regularly improves communication and employee engagement.
• Potential problems are addressed sooner.
• The time to address performance issues and get them corrected is lessened.

Proactive Approach

HR managers must anticipate the challenges or problems before they arise. Prevention is better than cure.

The proactive approach will save companies considerable time and money in the short and long run. P. F. Drucker (1997) highlighted the importance of a proactive approach very rightly.

He argues,” In a perfect world every startup would take the proactive approach and build their company from the beginning by identifying not only the mission, vision, values, goals, objectives, etc., but will determine where they want to go in the short and long-term and build a holistic, aligned organization beginning at the founder level where they can attract, hire, and retain the top talent to get them where they want to go.”

Human Resource Approach

People are human beings with a lot of potentials and intellectual abilities. It is important to treat people with respect and dignity.

Commodity Approach

People are a commodity. They are viewed as a cog of a machine. People can be hired and fired through money. It is money that matters most. There is a saying, “money is sweeter than honey.” This approach views people as an economic man.

Strategic Approach

People are the strategic asset of an organization. People have core competencies, the basis of competitive advantage.

Human resources are the combination of talent and skills; some of them are inborn and other skills they have acquired through learning and education. The strategic HRM approach focuses on people management programs and long-term solutions.

It stresses organizational development interventions, achieving employee organizational fit, and other aspects that ensure employees add value to the organization.

Management Approach

HRM is a part of general management. Management is nothing but managing people in the workplace. Managers at all levels are responsible for managing their employees or subordinates.

Reactive Approach

It occurs when decision-makers respond to problems. If efforts are reactive only, problems may be compounded, and opportunities may be missed, and organizations may suffer loss.

Companies may lose time and money if they take a reactive approach.

System Approach

A system is a set of interrelated but separate elements or parts working together for a common goal.

For example, HRM is a system that may have parts such as procurement, training, performance appraisal and reward, etc. One part affects and is affected by the other.

Hiring Through Student Competitions

• You get a wider pool of aspirants as opposed to when you might have posted a job description on a single website.
• This pool of aspirants would be much more vibrant and talented. The people willing to take part in a competition to showcase their skills are smarter and more willing to take up initiatives.
• You get the opportunity to sell your brand through such activities. It’s basically killing two birds with one stone, you get the desired recruits and also get great PR.
• You can customize the game levels according to your requirements. There is no one-size-fits-all rule here.

Creating games/competitions for the specific purpose of recruitment is a detailed process. It starts with an assessment of the job in question and the requirement of the organization and goes through several steps before ending with the final result. Instead of spending your time and resources on the same, it is advisable to hire professionals for this job.

The Benefits of Recruiting Contest and Award Winners

There are numerous reasons why you should recruit contest and award winners. Some of the primary reasons include:

• It’s easy. Finding the winners is incredibly easy because the names of the winners and the finalists are almost always published.
• Selection is based on results. Contests focus on results rather than the more prominent screening criteria of education or experience. As a result, when you recruit an award winner, you’re getting someone that has actually produced superior results.
• They’re a great source of ideas. If you run the contest, even if you don’t end up hiring one of the winners, you do get to capture all of the answers and ideas that were generated. Many times, the business value of these ideas far outweighs the cost of the contest.
• It’s also a learning tool. After identifying award and contest winners, the conversations with them can be great learning mechanisms, whether you hire them or not.
• Referrals are another output. Obviously, you can’t hire every award winner, but you can certainly build a relationship with them and use them as a referral source. They might refer mentees, people they know, or even members of their own team that need new experiences or who are in dead-end positions.
• It’s cheap. If the contest is run by someone else, there’s no cost in capturing the names of the winners. If you run the contest, most entries can be done online, so there’s no paper and the administration is easier. For software contests, the entries can even be assessed automatically using software.
• It’s low-volume and high-quality. Most recruiting sources get you high-volume and low-quality candidates and, as a result, sorting is a nightmare. However, when you’re recruiting award winners and contest champions, there are no “turkeys” to screen out. All of them are winners, and often even non-winner participants are also top performers (in the Academy Awards, even the losers for Best Picture are probably outstanding).
• They’re less biased. Because most contests are anonymous and are based on real problems, the process is generally less biased than most face-to-face selection processes.
• It’s global. Because contests can be web-based, it’s possible to get global award winners and thus global recruiting targets without having to get on an airplane.

Some additional examples might further convince you that it’s time for you to catch up and take advantage of this approach.

• Top Coder. Clearly a best practice leader when it comes to running challenges in the software industry. It holds worldwide electronic code writing contests to identify the very best in software engineering for forward-thinking firms like Google, Yahoo, and Microsoft. Not only do top contestants get job offers, but Top Coder figured out how to leverage the contests to produce code that they could, in turn, sell to organizations. Codewalkers provides similar contests in the web application and development area. WizardHunt offers “contestware” for firms.
• Matching problems with problem-solvers. One company, InnoCentive, was recently highlighted in Bill Taylor’s leading-edge “Mavericks” column in The New York Times. InnoCentive’s leading-edge site allows companies to post their latest problems online and provides problem solvers an opportunity to submit solutions. The winning solution gets a monetary prize and the company gets outstanding answers and the names of some outstanding problem-solvers. If you can propose a catalyst system for an improved synthesis of a monoresorcinyl-triazine, your solution could be worth $50,000.
• Professional associations. Nearly every professional association holds both national and local awards and contests. For example, the IEEE holds an annual Robotics Challenge, a prime recruiting event for electrical and mechanical engineers.
• Department of Defense. Even the government has gotten into the contest game, offering prizes for university teams that develop driverless cross-country vehicles. Hanging around the pits at these events will produce candidates who are several levels above those who can be found at most college career centers.
• Quicken loans. This forward-thinking firm has contest plans for the best customer service person and the best salesperson.
• The best wait person. One major hotel chain held a “find the best waitress/waiter contest,” challenging its employees to identify the very best in their city. In essence, this created the world’s first employee referral contest.
• Student challenges. Colleges have been holding “drop the egg from the roof” and “Concrete Canoe” contests for years, and the winners are highly sought after. Similarly, winners of debate contests are sought out as potential salespeople, and photography and film contests make it easy to identify the best students in media.
• Scholarship contests. There is no better way to get detailed information about the best college students than offering a scholarship and then utilizing the application data to identify potential college interns or hires.
• The best nurse. The New York Times recently ran a full-page ad asking individuals around the United States to submit the names and stories of wonderful nurses. Think of the learning, referral, and recruiting value if you could develop a contest or process that captured the names and stories of the best nurses in your region.
• NFL-type draft. National Oilwell Varco holds an internal NFL-style draft for its college hires after they complete their initial rotations. A brilliant approach because competition raises management’s attention, and it also brings out the best in almost all situations.
• The best in HR. Even SHRM holds Jeopardy-type contests among its university chapters. Anyone who wins an Optimas or ERE Recruiting Excellence award is certainly also at the top in his or her field.
• The best salesperson. If you spend a lot of time at the bars of hotels that cater to a lot of company events, just look for those with brand-new Hawaiian shirts or leis around their necks. Invariably, they just won the best salesperson award and thus, a free trip to Hawaii.
• Interactive Brokers Group has an electronic trading Olympiad, the Collegiate Cyber Defense Competition, which helps identify the best at building barriers to hackers. In addition, Legoland California has a contest to find the best model builder, and L’Oreal has its e-Strat challenge.

Employer brand describes an employer’s reputation as a place to work, and their employee value proposition, as opposed to the more general corporate brand reputation and value proposition to customers. The term was first used in the early 1990s, and has since become widely adopted by the global management community. Minchington describes employer brand as “the image of your organization as a ‘great place to work’ in the mind of current employees and key stakeholders in the external market (active and passive candidates, clients, customers and other key stakeholders). The art and science of employer branding is therefore concerned with the attraction, engagement and retention initiatives targeted at enhancing your company’s employer brand.”

Just as a customer brand proposition is used to define a product or service offer, an employer value proposition (also sometimes referred to as an employee value proposition) or EVP is used to define an organization’s employment offering. Likewise, the marketing disciplines associated with branding and brand management have been increasingly applied by the human resources and talent management community to attract, engage and retain talented candidates and employees, in the same way that marketing applies such tools to attracting and retaining clients, customers and consumers.

Growing Importance of Employer Branding

A candidate’s market, combined with new consumer behavior, has led to the rise in importance of employer branding as a Human Resources and Marketing Discipline. The market has shifted since the great recession in favor of candidates given low unemployment. This means that employers are fighting over the same small pool of candidates to fill their open roles, especially in hard to fill areas like data scientist and other STEM based roles.

Moreover, consumer behavior has changed the way that people look for jobs. The candidate journey isn’t simply a job seeker finding your job and applying. This is especially true of the best candidates they want to research a company and build a relationship with it over months before applying for a job. This creates a dynamic where companies who invest in employer branding are seeing lower cost per hire and time to fill.

Employer value proposition (EVP)

An employer value proposition encompasses your organization’s mission, values, and culture, and gives employees a powerful reason to work for you. It’s everything your company can offer as an employer, in exchange for all the skills and experience your employees bring to the table.

An organization benefits from a well-designed EVP, communicated often to both potential and current employees. A strong EVP can attract and retain the best people, help prioritize goals and agendas company-wide (especially in HR and workforce planning), help re-engage a dispassionate workforce, and reduce hiring costs. Most of all, it contributes to a favorable and robust employer brand.

The messaging you use to broadcast your employer brand and value proposition shouldn’t just be a list of the perks and benefits you offer, but these are an undeniable part of the story. An EVP is considered an employee-centered approach because it’s a proposition that’s been discovered, defined, and tested using existing employees. Before you craft your employer brand proposition, your company’s benefits should be well-established, well-defined, and a proven hit with your current employees. And if they’re not, and you’re looking to revamp things, consider what influences a person’s decision whether to accept a job offer or not, including:

• Company values and culture
• Company location(s) and facilities, including accessibility and convenience
• Overall compensation
• Career development
• Management style
• Team caliber and quality
• Quality of work
• Ongoing employee recognition
• Work-life balance, or proportion of work to time off
• Benefits, such as dental insurance and vacation time
• On-the-job perks like lunch, on-site childcare, flextime, and telecommuting
• Non-salary financial perks like commuter credits, bonuses, housing subsidies, relocation, and assistance
• Opportunities for travel and client exposure
• Opportunities to perform community service
• Job security

Employer Branding and Tools

There are now an emerging group of tools that can assist HR and Marketing teams in their employer branding efforts. Some of these tools were originally designed for marketing purposes. Others are existing HRTech that have evolved to have employer branding capabilities such as the newer generation of applicant tracking systems and job boards. There is also a small group of software providers that focuses explicitly on employer branding such.

Employer brand management

Employer brand management expands the scope of this brand intervention beyond communication to incorporate every aspect of the employment experience, and the people management processes and practices (often referred to as “touch-points”) that shape the perceptions of existing and prospective employees. In other words, employer brand management addresses the reality of the employment experience and not simply its presentation. By doing so it supports both external recruitment of the right kind of talent sought by an organisation to achieve its goals, and the subsequent desire for effective employee engagement and employee retention.

Employer brand proposition

As for consumer brands, most employer brand practitioners and authors argue that effective employer branding and brand management requires a clear Employer Brand proposition or Employee value proposition. This serves to: define what the organisation would most like to be associated with as an employer; highlight the attributes that differentiate the organisation from other employers; and clarify the strengths, benefits and opportunities of the employment offer.

Internal marketing

Internal marketing focuses on communicating the customer brand promise, and the attitudes and behaviours expected from employees to deliver on that promise. While it is clearly beneficial to the organisation for employees to understand their role in delivering the customer brand promise, the effectiveness of internal marketing activities can often be short-lived if the brand values on which the service experience is founded are not experienced by the employees in their interactions with the organisation. This is the gap that employer brand thinking and practice seeks to address with a more mutually beneficial employment deal / Psychological contract.

Brand-led culture change

Compared with the more typically customer centric focus of Internal marketing, internal branding / brand engagement takes a more ‘inside-out’, value-based approach to shaping employee perceptions and behaviours, following the lead of the highly influential ‘Built to Last: Successful Habits of Visionary Companies’ study published in the mid-1990s. This sought to demonstrate that companies with consistent, distinctive and deeply held values tended to outperform those companies with a less clear and articulated ethos. While brand-led culture change is often the stated desire of these programmes their focus on communication-led, marketing methods (however, involving or experiential) has been prone to the same failings of conventional internal marketing. As Amazon.com’s founder, Jeff Bezos, asserts: “One of things you find in companies is that once a culture is formed it takes nuclear weaponry to change it”. You cannot simply assert your way to a new culture, no more can you assert your way to a strong brand, it needs to be consistently and continuously shaped and managed, which is one of the primary reasons many organisations have turned from the short term engagement focus of internal branding initiatives to more long term focus of employer brand management.

Use

Strategic in nature with a focus on the whole employee lifecycle from hire to retire, employer branding can also become a medium to hire. It can be used to hire through employee referral or referral recruitment.

How to improve your employer brand

To increase the number of quality, enthusiastic applicants vying for positions at your company, your CEO, leadership, marketing team, and recruiters can all help develop and growth your employer brand. Whether you have a big budget or small, whether you’re a large company or a start-up, there are plenty of strategies you can use to think like a marketer, build deep and meaningful relationships with your staff, and boost your employer brand like a boss.

1. Don’t focus on compensation

Your employer value proposition will be the strongest if you can talk about how a role will be meaningful (personally fulfilling or about a global good) or a superior work experience, over compensation, especially if you want to attract younger candidates. Your EVP should be unique, compelling, and tuned into the deeper motivations of why a person might want to join your team.

2. Start a company blog

If you’re a recruiter with a marketing mindset, you know that content and lots of it can be a great strategy for competing in a noisy marketplace. Job seekers often check out a company’s blog to get to know an organization on a more human level. You can post company news, culture updates, and articles written by your employees or company leaders, all in a personable voice. A blog can also be used to highlight the unique people policies, processes, and programs that show your organization’s commitment to employee happiness.

3. Use rich media

Use high-quality videos, photos, and slideshows to tell your company story, celebrate your diverse employees, and show off beautiful workspaces. A welcome video from your CEO or hiring manager is a great way to make an introduction, as are staff interviews talking about their experiences working for your organization. Plan and budget for these and other marketing costs at the start of each quarter.

4. Hire for diversity

It’s no surprise that who you hire says something about your brand. Having unique thinkers from a diverse range of backgrounds shows you’re not only walking the walk as an equal-opportunity employer, but also extending your brand’s reach (both customer, and employer) into new groups a sound business move, and a key strategy when building a powerful employer brand.

Factors that influence employee engagement are varied and very diverse. While there are some that depend on the prevailing culture within the organisation, there are also common threads for all individuals, and also individual factors that can significantly influence a person’s relationship with colleagues and their organisation. Take a look through our list of factors influencing engagement and see which ones you can apply to your own organisation or your own team members.

Employee engagement refers to an individual’s involvement and satisfaction with his or her work. Engaged employees are emotionally connected to one another and to their work. They are better able to relate to the direction of the company and feel that their roles contribute to the organization’s momentum.

Engaged employees are more productive and profitable, but only 30% of the workforce is actually engaged. What are some contributing factors, and what should you do to improve employee engagement in the workplace?

Quality of relationships with

• COLLEAGUES and peers
• the LINE MANAGER
• the ORGANISATION
• people OUTSIDE THE ORGANISATION (e.g. suppliers, press)

The relationship with the line manager

• How much AUTONOMY does the line manager provide?
• Does the line manager TRUST the employee?
• Does the line managers MICROMANAGE the employee?
• Can the employee MANAGE THEIR OWN WORKLOAD?
• Does the line manage provide OPPORTUNITIES FOR LEARNING?
• Feedback is DESIRED BUT NEVER GIVEN
• Feedback is CRITICAL AND NON-CONSTRUCTIVE

Career

• Lack of opportunities for PROMOTION OR ADVANCEMENT
• Stagnation in LEARNING OPPORTUNITIES both informal and formal

Behaviours

• The extent to which people in the organisation display CITIZENSHIP BEHAVIOURS
• Whether DIVERSITY AND DIFFERENCE create distance or create closeness
• Do people work towards PERSONAL GOALS ONLY OR TEAM GOALS?

Organisation

• The perception of the QUALITY of the products the organisation produces
• Does the employee understand the VISION of the organisation?
• The extent to which the COMPANY VISION TRANSLATES TO WHAT THE EMPLOYEE DOES
• The perception of how much their individual CONTRIBUTION is making a difference
• To what extent is the organisation ADAPTING TO SOCIETAL CHANGES?
• The degree to which staff TRUST SENIOR LEADERS
• The organisation is mature and adept when it comes to SHARING INFORMATION, INCLUDING FINANCIAL INFORMATION

Recruitment

• The job sold at interview DOES NOT GEL WITH REALITY
• The CULTURE is found to be INCOMPATIBLE WITH THE INDIVIDUAL’S BELIEFS OR NEEDS

Reward and recognition

• The perception of FAIRNESS with regard salary and benefits
• Feeling IGNORED OR TAKEN FOR GRANTED

Wellbeing

• The degree to which people have WORK-LIFE BALANCE
• How much the person feels SUPPORTED in their personal needs e.g. family care
• AMOUNT OF WORK does not match of time available
• CHRONIC STRESS due to workload or other factors not managed by the organisation

Personal

• Does the employee TAKE RESPONSIBILITY FOR WORKPLACE PROBLEMS OR BLAME OTHERS?
• The degree of RESILIENCE the employee can call upon
• To what extent does the employee have a GROWTH MINDSET?
• Does the employee TAKE RESPONSIBILITY FOR THEIR OWN LEARNING?

Reasons

Management

Leadership sets the tone for company culture. Leaders are able to influence, produce change and motivate teams. The most effective leaders help employees see the value in their work and how it aligns with business goals and the direction of the company.

When the workplace becomes emotionally charged due to anxieties and unforeseen challenges, management has the ability to address the situation and curb potential conflict. If management is unable to calm employee anxieties and help teams refocus on the work, well … who will?

According to a study conducted by Cornerstone OnDemand and research firm Kelton, the top reason why employees stay in their current positions aside from compensation and benefits is “a good manager I enjoy working for.” Positive attitudes in management impact not only employee engagement, but also retention numbers.

Attitude

Happy employees are better at their work. We popularly believe that hard work and success make us happy, yet Harvard psychology research reveals that happiness brings us success. Employees are responsible for owning their own happiness. If you aren’t happy doing what you’re doing, you may need to look internally and take control of your situation and attitude.

According to another statistic, only 25% of job success is based on IQ, while the other 75% is based on our beliefs, connectedness to others and ability to manage stress.

Positivity impacts the brain significantly. Shawn Achor, author of The Happiness Advantage, found that positivity, or optimism, is the leading predictor of success in entrepreneurs and business leaders because they perceive more opportunities in the midst of challenges.

In many instances, leaders are in a prime position to lead by example. Exude the attitude you would want your employees to possess. Influence the attitudes of those around you. Positivity is contagious.

Health

Sickness and other health issues are a drain on employee productivity. Sick employees tend to call out for fear of infecting coworkers or simply because they feel more comfortable at home.

Tired employees also cost you productivity and money. In fact, fatigue carries estimated losses of more than $136 billion in lost profit, and 84% of the cost is not related to reduced productivity over a sick-related absence.

A remote workplace policy helps alleviate some of these concerns and encourages employees to work when and where they feel most effective. When implemented correctly, remote employees are likely to be as connected and engaged as those who work consistently in the office.

Technology

No matter how positive and engaged your employees are, they may remain unproductive without the right technology.

For example, a sales team in its early stages keeps track of leads using a Microsoft Excel spreadsheet, while a growing sales team needs a more sophisticated system like CRM software [link to CRM post] to manage the sales cycle and leads as they mature. Plus, ease of use through advanced technology keeps employees engaged, while outdated systems and redundant or tedious processes only lead to frustration.

The positive attributes of smart employees are enhanced by the right technology. Look into current processes and see how they might be improved through a technology upgrade. The productivity of your employees and your overall business stand to benefit.

Culture

Because employees feel more engaged when connected, collaboration has been linked to productivity and positivity. Employees who collaborate develop a better sense of how their input and roles play into the company structure. Create a culture that values input from everyone.

Without the proper culture, engagement spirals out of control. Culture – along with collaboration increases connectedness, and employees who feel outside of that connectedness tend to lose focus and underperform.

Recruiting from other countries

Knowing you need to attract talent from overseas to stay competitive is one thing; actually, going about it is quite another. For the University of Exeter this is about ensuring all employees are trained on the importance of collaborating and recruiting globally. “With all our young academics we’re talking to them about our global ambition, getting them involved in trips abroad and collaborating with other organisations. It’s broadening the horizons of everybody,” says HRD Jacqui Marshall. “It’s also really a lot more research on our parts really thinking about which disciplines we want and where they are in the world.”

Communicating well overseas

Liaising with line managers, senior executives and locally-based HR colleagues becomes much harder when you’re separated by thousands of miles. “The biggest challenge is managing a virtual team,” says Amec Foster Wheeler’s group HRD Will Serle. “You can no longer open the door and wander around your team. It requires you to form those relationships initially and then, because you can’t travel to places continuously, you have to put extra effort into maintaining those in a virtual way.”

Encouraging feedback

Being geographically dispersed can mean not only less frequent catch-ups but also a less open, trusting dynamic when you are communicating. Gordon Headley cites a situation at Tullow where standardising compensation and benefits had disgruntled some African employees. While his HR team on the ground were aware of the issue, they didn’t think to tell him as he was the boss. This is why getting out into the country and making it clear you’re open to feedback is so critical, he says.

Getting the HR function structure right

Implementing the best structure globally is a case of getting the balance right between plenty of expertise on the ground and maintaining a good level of central control and consistency, says Serle. “You don’t want your expertise duplicated in every country because then you lose your consistency,” he adds. “But then you have certain businesses which are happy with that; they don’t need things more joined up. There’s no one right way.”

Managing different, culturally influenced, career ambitions

A key challenge for Creditsafe has been inspiring employees in some European countries to aim for management level, while managing the expectations of the typically highly ambitious American staff. “In the UK and US people are very hungry to develop their careers in the way they’re perhaps not in some European countries. At that point it becomes a slightly different proposition in the way you sell it,” says HR and training director Gareth Way, explaining that in the US, by contrast, it’s about creating “more levels so people can still progress vertically and into other departments”.

Maintaining a sense of brand identity and loyalty

Where an organisation operates in many different regions it’s easy for company culture to become diluted. Campus Living Villages combats this with regular secondments and its management development programme Elev8, where modules are held in different territories. “For example, the group who started in 2014 did leadership in Houston, finance in Sydney, HR in Manchester and resident life in Utah. They’ll be doing facilities management in New Zealand next,” says global HRD Jan Wilman.

Ethical grey areas

Anyone who’s ever travelled, never mind headed up a global HR function, knows there are matters you previously held as morally black and white that become much less straightforward once you’ve engaged with another culture’s belief system. Serle says HRDs must know exactly where to draw the line. “It’s probably one of the single biggest challenges that an international business will face,” he says. “In our organisation we have a very clear set of values and behaviours that go with those, and in some countries where we have the opportunity to work we would really struggle to operate without compromising those values. So it’s critically important to know your views as an organisation.”

Compliance and International HRM Issues

As businesses begin to expand into the global marketplace or as they hire employees from diverse geographic and cultural backgrounds, they may have to adapt to new labor laws and tax liabilities. Doing business in Europe, for example, will require the business to pay value added tax. Hiring employees who are non-naturalized US citizens might require HR to apply for work visas and report economic data to the federal government. Compliance with international law can be an issue for the under-educated business owner or HR manager, because these laws tend to be complex and sometimes difficult to implement. Keeping well-informed of the legal requirements for the business’s operations can help alleviate some of this complexity and lessen the chances of landing in legal trouble.

Scope of Human Resource Management

With an increasing number of business operating on an international scale, the impact of globalization on hr can be tricky to navigate. Globalization means various laws, cultures and norms have to be taken into consideration when onboarding and crafting HR regulations. Some countries are more forward thinking where gender is concerned than others, and this distinction can lead to misunderstandings or worse, the loss of key personnel. It really would not be that hard to have a male manager handle the day-to-day operations in an area where female managers are frowned upon, just in case. Understanding the mechanism that makes each culture tick and implementing as little or as much needed so create balance is something to strive for.

Cultural Diversity and Global HR Issues

A salient issue in international HR is understanding and maintaining cultural diversity. Working with people from different locations or from different cultural backgrounds mean adapting the business’s work style to new ideas, new ways of communicating and unfamiliar social practices. If you hire an employee from England, for example, the employee might have different ideas about how to manage employees or on how to run technology processes based on her experiences back home. Being open to new work styles and cultural differences is the hallmark of cultural diversity in HR.

Benefits and Compensation

Benefits and compensation are the backbone of any HR strategy, but in international HR, benefits and compensation are even more important in focusing on the work-life balance of employees. The idea behind work-life balance is to provide employees with programs and initiatives that improve both their personal and professional lives. This is considered part of international HR, because many multinational companies have already implemented programs such as flexible working time, paternity leave, extended holidays and on-site childcare. In fact, many nations around the world, including much of Europe, mandate these programs by law. Implementing them on the local scale is one of the challenges and, ultimately, rewards of international HR.

Training and Development

Related to the idea of benefits and compensation in international HR are training and professional development programs. Training programs typically encompass in-house seminars and meetings designed to give employees on-the-job knowledge of skills that are important to doing business globally. HR might offer language classes, for example. Professional development encompasses the “extra” training that HR provides to its employees, such as allowing them to attend networking events and conferences, global training seminars and other specific competency-based programs. Professional development helps employees to hone their skills in global marketing, international business development and finance trends.