1. If you are creating a business beyond your area of expertise take care to furiously background check those being hired as superiors or consultants. Just because someone was involved with numerous startups does not mean they were useful or capable. Perhaps they were worthless or maybe they can juggle knives while writing a business plan. You can find these things out by calling their previous employers. One call can save you months of pain.
2. While interns can be a great source of free labor and youthful ideas you shouldn't start your entire workforce under the guise of “internships”. Our first work crew was entirely interns, ten to be exact. Those ten were whittled to 3 and then we were hired. Ten in a small space, fumbling around with one boss can lead to much confusion and way too many lunches to buy. Not to mention you shouldn't offer internships unless you can offer knowledge.
3. Don't hire and immediately step away. It's in your best interest to get to know everyone who is with you from the ground up. You'll never know what people are fully capable or incapable of doing. The more space between you and your employees, the less you'll really know for sure what is going on. Convoluted information is not helpful in any business.
4. Try to share as much information as you can. There were months where coworkers and I would be left alone while bosses and investors would disappear behind closed doors. We'd continue on like drones, not improving anything because we had no clue how. Expectations weren't clear. As time went by sheets were demanded from us asking what we did and for how long. Talk about mixed emotions. We weren't trusted yet had no clue how to gain trust.
5. See how your employees are and ease in asking about their progress. Our owner still has a funky habit of demanding what we are doing for him. There are few decent answers to questions like that particularly when you are spending company money on something needed. It takes a wordsmith at times to keep from being backed into a corner, even if the boss is joking.

Written very simply:

1. Research everything, including potential management hires.
2. Don't abuse the power of interns or offer internships that won't afford learning.
3. Don't assume your company will immediately function as you please on autopilot.
4. Don't leave your employees in the dark.
5. Allow room for your employees to grow on their own, without whips and chains.

Remember, common sense and venture capitalists are all you need.

The second reason (and probably the most important one) why an applicant approaches a particular company for employment is because of the company's reputation. If a company was able to build a reputation of treating employees well and has a reputation of providing opportunities both for personal and professional development towards their employees, that company will find it increasingly easy to attract talents to accept positions in their organization. This principle is very academic, why would an applicant apply in a company with a reputation of maltreating employees? Employers' good reputation is actually a good selling point when inviting applicants to join their company and candidates usually bite into these feature.

However, companies usually face certain predicaments when too many applicants flock to their premises for employment. One of which is how to turn-down unqualified candidates. Poor handling of these candidates might back-fire on the reputation of the company. Turned-down applicants might bad-mouth the company to other applicants, friends, relatives, or to his existing co-workers. He or she will also stop from patronizing your company's products or services. No individual will look down on himself; rejection from a potential employer will never be taken lightly by the applicant. It will take a long time before he or she forgives the company for rejecting him/her from joining the company.

Given these scenarios, companies must consider the following when handling unqualified applicants:

1. Always respond to applications. Whether an application was received by snail mail or e-mail, the employer must acknowledge the application either by sending a letter or an e-mail. For unqualified curriculum vitae, the content of the “rejection” letter must be polite and should not be “too” direct to the point. Thanking the applicant for considering the company is a must. Responding to applications may entail additional cost to the company in terms of postage, but which is more important? The cost of the stamps or the cost of losing your good reputation?
2. Stop using the phrase “we will call you”. Applicants are so oriented with that phrase. If they hear those words, it means the end of the story. If the interviewer realizes that the applicant he is interviewing is not qualified (or over qualified) for the position, the interviewer should know how to end the interview gracefully. It's like breaking-up, you know someone will be hurt, but the rule is “less pain, the better”.
3. Do not make empty promises. During the interview, the employer must never promise the stars just to attract the applicant to join the organization. Interviews are just the tip of the iceberg, you cannot foretell whether the applicant is 100% qualified or not. Finish the entire recruitment process (including the training process) before promising something like salary increases, bonuses, etc.
4. Put your feet on the ground. Companies overwhelm themselves when they receive tons and tons of applicants on a regular basis. They usually feel proud and superior. These companies tend to developed the “come and catch me” syndrome. They'll hide and you'll seek them. In economics, there is the supply and demand curve, the higher the supply (applicants) the lower the price (salary offer). However, this behavior should not be tolerated and time will come this will back fire on the company's future operations… or reputation.

When recruiting an applicant, companies should look at all candidates as customers. They have needs and wants that you have to satisfy. And once you have satisfied them, you will be assured of loyal, hard-working, and productive employees.

• Files all property tax forms with the state and federal government.
• Helps you properly set up your business in the beginning.
• Ensures you're allocating your expenses correctly.
• Correctly handles the depreciation schedule.
• Assists with the disbursement if you have partners or investors involved.
• Writes off repairs and depreciates the major improvements.
• Knows your long-term plans for each investment property.

Like anyone else you hire, request clients' names and telephone numbers so that you can call for references. One of the most important things is that you feel comfortable with his or her approach, background, and ability to take care of the accounting of and taxes for your rental properties.

The hiring process is a minimum of one month, and worse, even an experienced replacement will take three to six months to become productive.

Oh yes…this is the third person to leave this year, taking your turnover rate to 27%.

Is this a training and orientation issue? Is your staff leaving because they don't understand or know how to do their jobs? Perhaps? Or, was this person in the wrong job to begin with?

Even when you are under pressure to quickly fill an open position, you'll save yourself a lot of trouble and money if you take the time in advance to get very clear picture of the “right person.”

A recent study conducted by Harvard University indicates that eighty percent of staff turnover is due to hiring mistakes. A fifteen-year survey of more than 20,000 hiring executives found that roughly fifty-six percent of newly hired executives fail within two years of starting new jobs. At that rate, when hiring leaders for your company, you'd be better off flipping a coin.

Some managers still attempt to motivate through intimidation, with an attitude of, “If you can't get the job done, I'll find someone that can.” If that owner knew how much staff turnover really cost him, he'd work a little harder to make that employee productive… Or, he'd work a little harder on the hiring process and place the right person the first time.

Finding and hiring the right employee can make or break a company. Companies that do it well tend to perform better financially, have lower turnover rates and have stronger reputations within their market.

DePaul University conducted a study in 2007, which found that one quarter of businesses surveyed had over twenty percent turnover per year. (Turnover is defined as non-voluntary terminations.)

What's the True Cost of a Bad Hire?

According to a study by the Corporate Leadership Council, hiring the wrong executive can cost an organization as much as three times that person's annual salary. A Right Management survey found that a “bad hire” cost up to five times their annual salary.

With a real cost of as much as five times annual compensation, making the right hiring decision is important to your company's health.

How Do You Determine True Turnover Cost?

• Direct Hiring Cost
• Training Cost
• Reduction in Productivity
• Quality Costs
• Benefit Administration
• Increases in Unemployment Insurance Rates
• Severance Costs
• Recruiter Fees
• Notifying Unsuccessful Candidates
• Management Costs
• Resume Handling Costs
• Drug Screens
• Background Checks
• Security Investigation
• Reference Checks
• Customer Satisfaction Impacts
• Employee Satisfaction Impacts
• Coworker/Supervisory Informal Training Impacts
• Payroll Administration
• Computer Security
• ID cards
• Business Cards
• Email Accounts
• Security Modification
• Leasing Costs
• Position Vacancy Costs
• And what about just the Aggravation Factor?

What Does a Bad Hire Look Like? How Do You Identify a Bad Hire?

In the industrial economy, a company's worth was asset based. Now that we are solidly in the Information economy, a company's value is based more on intellectual property, systems and teams. With that shift, employee alignment is now more important than ever.

Employee alignment is the concept of matching a worker's skills and characteristics with positions that require those same skills and characteristics.

Makes sense, doesn't it? Although it appears to be common sense, application of this concept is quite uncommon. Corporate America has a long history of forcing round pegs (employees) into square holes (their jobs.)

Recent research by Cornell University studying employee alignment found that thirty-three percent of employees don't match their company's corporate culture. Thirty-three percent of employees were not in the proper job, and fifty percent were not trained for the future.

Employee alignment recognizes that different people have different thinking and decision-making styles or tendencies. Likewise, jobs and tasks require different skill sets and are more effectively, and efficiently completed by people with similar skills.

For example, although you may be right handed, you may still be able to write with your left hand. It may be awkward, uncomfortable, or illegible, but you can do it. Although you know and understand accounting principles, you may feel awkward, uncomfortable and inadequate with the structure and requirements of an accounting role. Likewise, the accountant might have a difficult time in the customer service call center, or with the responsibilities of the sales manager.

A person in an inappropriate job must work harder just to compensate for requirements that are unnatural for them. Their productivity and creativity is stymied. Employee alignment addresses these inherit differences we all have, and seeks to put the right people, in the right place, doing the right things.

So How Do I Correct This?

Start with a Job Description. Most businesses don't have a job description at all. The ones that do are typically working from a perception of what is required to be successful in a particular job. For example, Joe is a star performer…. so let's hire someone exactly like Joe. Without any understanding of why Joe is successful.

Of all the decisions an executive makes, none are as important as the decision about people. Because they ultimately determine the performance capacity of the organization.”

Peter Drucker

For example, describe the “typical” salesperson. Most will say, extrovert, gregarious, not detail oriented. Would it surprise you to learn that many introverts are quite successful as sales people (some believe it's because they listen better.)? So, is the successful sales person successful because they are gregarious and a good talker, or is it because they are good at “communicating?”

What are Your Needs?

The first step in the hiring process is to determine your needs. List the duties, responsibilities, skills, expertise needed, experience, education and training required for the position. Prioritize these needs and develop a picture of the person you need.

To really quantify these needs and develop a template you can use to manage the hiring process, assessments are used to build the profile of qualities and characteristics required for a successful candidate. How do you do this? Profile the studs and the duds. By profiling only the star performers you build an incomplete picture. Profile the sub-par performers as well to identify undesirable characteristics.

The alignment profile is a simple and effective way to help you understand, identify and then measure for, the core competencies required for success in any position in your organization. The profiling process will allow you to capture the knowledge needed to develop an in-depth understanding of what the job requires, who might be best to perform that job, and how.

By developing an alignment profile you are able to identify and measure how a candidate or employee will most likely act in both normal and stressful situations. The profile will also identify a person's natural skills, qualities, traits and characteristics. Combining those innate abilities with a supportive external environment is crucial to realizing a person's full potential.

With this template in hand, you can now write a job description. A good job description serves as an important guide for hiring as well as for performance appraisals later. What is the jobholder supposed to do? What are they not supposed to do? How much decision-making authority do they have? …On what type of decisions? The more specific you can be, the better job you will do screening candidates. You will also have guidelines to manage by, once the new-hire is on the job.

You've determined what the good hire looks like. You know what qualities you are looking for. The Profiling Assessment is now the key to making your interview more productive. It allows you to develop a list of all the right questions for the interview. But more importantly…. it helps you determine the right answers to those questions?

The Most Common Hiring Mistake: Relying Too Much on the Interview, Trusting Your “Gut” Too Much

The interview is an important part of the hiring process, but it's only one part. Most managers tend to put too much weight on the interview. They are looking for that feeling in their gut that tells them, “This is the one.” Unfortunately when it comes to hiring most “gut feelings” fail miserably.

A University of Michigan study measured the usefulness of the interview in overall success on the job. It was found that the typical interview chose the best candidate less than two percent of the time. Again, flipping a coin would improve your odds of hiring the right person. But, this time it would be 48% better.

It's Not The Interview, It's Your Gut

The problem is not the interview; it's your gut. Most managers ask good questions, but they don't spend any time up front determining the best answers or what they mean. Without an understanding of what a good response would be, the interviewer judges a candidate only on rapport and communication skills by default.

Go back to the Job Description where you determined the skills and qualities that you'd like to be displayed in an answer to each of your interview questions. Ask for an example of how they handled a hypothetical situation in the past and look for those qualities. Count how many of the requirements they used. Put a number to it.Then put a value or a weight to the number, relative to the priority of the skill listed in your job description.

If possible, arrange a group or panel interview. Or, multiple interviews with other managers or employees in the position's peer group. The team approach will help negate the “charm” factor of an experienced interviewer and build consensus toward the candidate's fit within the company culture.

Another Common Hiring mistake is Not Checking References

Most companies, large or small never check references. Calling references and verifying credentials may be the written policy, but for whatever reason, in a large majority of the cases the check is never made. Couple this with the fact that as many as thirty percent of job applications and resumes present false information, and you've got the recipe for a problem employee.

Thoroughly check references before you make a job offer. Some companies use the checks as a screening system for applicants, but by saving this step until after the interview, you will have an opportunity to verify information discussed in the interview. With the profile in hand you also have specific behaviors to ask about.

Remember, an interview only tests the candidate's ability to interview well. A profile of the job's requirements may be the single most important step of the selection process, by identifying exactly what qualities the job requires. Then also, showing you what your candidate will tend to do in stressful and non-stressful situations, and how they will tend to do them.

What Will A Profile Tell Me?

The appropriate assessment will determine or access the high performers for desired traits. It will assess sub-optimal performance for non-desired traits. And build a High Performance Hiring profile of behaviors and skills for each specific job.

It is recommended that companies assess all potential new hires, and compare their profiles to the job description profile. It is also recommended that current employees be assessed, especially sub-optimal performers, to determine a potential better fit and to match skills and traits for each job function. You've got greater leverage with the investment in you current employees.

This Sounds Like A Lot of Fluff . . . What Will This Mean To My Bottom Line?

Obviously, The higher your turnover rate, the larger the potential savings. High Performance Hiring will enable you to hire candidates that match your company's culture, are well suited for the position, and will contribute to your organization. These HPH metrics have proven to provide Return on Investment of five to six times the investment.

In a well-documented example, Media24, a South African publishing conglomerate, achieved a reduction in turnover of over eight percent in the first year by utilizing performance metrics in their hiring process. Savings in direct costs alone were in excess of 500% and expected to improve in future years.

In addition to greatly reducing employee turnover, proper employee alignment will directly lead to a high performance workforce, improve employee moral and satisfaction.

Once you hire the right person, the profile is then used for company and employee growth. Thehigh performers in your organization are evaluated to determine favorable traits. Training needs or personnel realignments are determined by evaluating the sub-optimal performers. Succession planning, team-building, and executive coaching are other common uses of the High Performance Hiring process.

Business owners also have something else to worry about regarding recruiting and hiring… negligent hiring. Negligent hiring means you and your company can be held liable if one of your people injures other employees, especially if you could have foreseen a problem but did not do a thorough check of the new employee before hiring.

The following are the top 3 hiring mistakes and how you can prevent them.

Mistake 1: No Job Description

What are your needs?The first step in the hiring process is to determine your needs. Write out the duties, responsibilities, skills, expertise needed, experience, education and training required for the position. Prioritize these needs and develop a picture of the person you need.

Write a job description. A good job description serves as an important guide for hiring as well as for performance appraisals later. What is the jobholder supposed to do? What are they not supposed to do? How much decision-making authority do they have? …On what type of decisions? The more specific you can be, the better job you will do screening candidates. You will also have guidelines to manage by, once the new-hire is on the job.

Mistake 2: Relying Too Much on the Interview - Trusting your “gut” too much

The interview is an important part of the hiring process, but it's only one part. Most managers tend to put too much weight on the interview. They are looking for that feeling in their gut that tells them, “This is the one.” Unfortunately when it comes to hiring, most “gut feelings” fail miserably.

A University of Michigan study measured the usefulness of the interview in overall success on the job. The typical interview was found to increase success in choosing the best candidate by less than 2%. You'd improve your chances by 48% if you just flipped a coin.

The problem is not the interview, it's the gut. Most managers ask good questions, but they don't spend any time up front determining the best answers or what they mean. Without an understanding of what a good response would be, the interviewer judges a candidate only on rapport and communication skills by default.

Go back to the Job Description and determine the skills and qualities that you'd like to be displayed in an answer to each of your interview questions. Ask for an example of how they handled a hypothetical situation in the past and look for those qualities. Count how many of the requirements they used. Put a number to it. Then put a value or a weight to the number, relative to the priority of the skill listed in your job description.

If possible, arrange a group interview. Conduct a panel interview, or multiple interviews with other managers or employees in the position's peer group. The team approach to the interview will help negate the “charm” factor of an experienced interviewer and will also build consensus toward the candidate's fit within the culture of the company.

Mistake 3: No Reference Check

Most companies, large or small never check references. Calling references and verifying credentials may be the written policy, but for whatever reason, in a large majority of the cases the check is never done. Couple this with the fact that as many as 30% of job applications and resumes present false information, and you've got the recipe for a problem employee.

Thoroughly check references before you make a job offer. Some companies use the checks as a screening system for applicants, but by saving this step until after the interview, you will have an opportunity to verify information discussed in the interview.

Reference checks can be handled over the phone, but you may need to request it in writing. To avoid litigation, many former employers play it safe and verify only dates of employment and salary. If your reference checks are a dead end, that in itself may be a red flag. The candidate needs to provide to you references that are reachable and responsive. Ask for more. An interview only tests the candidate's ability to interview well. A reference check may be the single most important step of the selection process.

A drug test and DMV background check are also a good and inexpensive precaution, especially if the job requires operating machinery or driving a vehicle.

In summary, the more you do at the beginning of the hiring process, the fewer problems you will encounter during the process and after the person is hired. It is much easier and less expensive to hire right the first time, than to repeat the process over and over for the same position or to have to deal with people who are not the right fit for the job. Nothing you do will be more important than getting the right people into the right jobs.

As for the “negligent hiring” by documenting that you took all of these steps, you've gone a long way toward protecting yourself against a lawsuit. And more importantly, you've taken the first steps toward finding an employee you can trust and with whom you can establish a successful employment relationship.

Young people enter the workforce shaped by those who have gone before. They are scared, a little arrogant, and full of ambition. They want to be guided into right thinking, to be given new experiences, and of course, to make lots of money. Truth be told, that is what they say is the real reason for the job. All other elements that make up their own reality define the total experience that adults call work. The higher the experience for the young person, the better results the employer will have with them. Ultimately, the business which creates positive growth experiences for its employees will reap greater financial rewards. This is what separates the good from the great, the mediocre from dynamic, and the apathetic from the motivated.

The first job provides a fresh dose of real life when the environment fits the applicant. It is difficult to pinpoint the age or time span of the first job but the facts remain that the first job experience is a stepping stone to all of life. It is a rite of passage much like getting a driver's license. Human beings were created to be productive contributors to society which includes employment, community contributions, and personal growth. Young people seek the same benefit. Having hired and led a myriad of teenagers with little or no work and life experience, the perspective I have gained in this arena is significant. The rise and fall of unemployment percentages begs the question of what makes the candidate successful at the onset and the long haul. The fact is that specific characteristics prevail which separate the good from the great. As a leader in business, I maintain a chief goal to recruit, hire and retain the best candidates. Of course, this is the goal of each employer. But what are the distinguishing qualities which stand out as the determinants of success. Further, why is this discussion so pertinent to this time period in the 21st century? These are the questions which will serve as the springboard for this dialogue.

Nutshell Truths:

• The prevailing economic environment influences hiring quality candidates.
• The savvy business leader must look for employees who provide immediate gain and residual service.
• Job skills which accompany personal skills create a valuable package for the employer.
• Young people have little to no life experience with which to build a workable skill set.
• When an employee is hired, the employer also hires the life experiences and relationships that surround the individual.
• Habits and attitudes developed from authority figures to the point of the first job influence the quality of the employment experience.
• Authority figures define the success of the young person by instilling worth and value through correct attitudes about work and life.
• The manager holds a critical role in shaping the work quality of the young person in their charge. The work ethic of the immediate supervisors creates an environment for ultimate success.
• For young people to thrive, they must be presented with a wide mix of work experiences which add value to their character and ultimate skill set.
• When young people thrive, they contribute relational benefit, develop stronger leadership skills among their peers, and become effective at problem solving.
• An employer who realizes these trends and how they relate to the long-term success of the organization has the ability to reduce turnover and produce higher levels of productivity over time.

Retention is a key quality to competing in today's workforce. More importantly, young people define the face of work over the next generation, not just for the immediate employer but for society as a whole. In this sense, retention means that the young person remains as a strong contributor in the workforce. Therefore, it is the obligation of every manager and leader to encourage, develop, and inspire work quality in this “up and coming” generation. I have had the privilege of watching once unconfident, unskilled, undeveloped young people become leaders, problems solvers, and strong contributors in society. They are training to be accountants, teachers, doctors, athletes, and men of the Armed Forces. This fact is not solely the result of one factor, but all pieces feed into the whole.

1. Between the KSAs (knowledge, skills and ability) of the individual and the task demands
2. Between the overall personality of the individual and the culture of the organization

Person-Organization Fit and HIO

High involvement organizations (HIOs) are another class of organization that uses multiple systems to support hiring for person-organization fit.

For obvious reasons, hiring practices in HlOs typically attempt to select employees who prefer working in groups and who have high needs for personal growth and development.

Thus, the hiring process is one design element of many that must fit with the overall design.

Characteristic of HIO

1. The organization is designed to create very high levels of employee involvement
2. Power, information, skills, and rewards for performance are pushed down to the lowest levels of the organization
3. Self-managed teams or other structures enable employees to share decision-making power
4. Extensive training in technical, social, and business skills provides team members with the skills needed for effective self-management
5. Information systems communicate the performance data that teams need to manage themselves
6. Reward systems such as skill-based pay and gain sharing motivate needed behaviors, such as learning and problem solving

• Job Analysis: Individual KSA; position analysis questionnaire; task inventories; critical incident techniques
• Organizational Analysis: to define and assess the work environment in terms of the characteristics of the organization, rather than just in terms of the characteristics of a specific job. The person-organization fit model explicitly recognizes that successful employees have knowledge, skills, abilities, and other personal characteristics that match both the content and the context of the job

Infer the Type of Person Required

• Technical knowledge, skills and abilities (KSA)
• Social skills, ex. if the organizational analysis reveals that teamwork is important, then selection tools must be used to find people who are team players. Furthermore, social and interpersonal skills will be necessary
• Personal needs, values, and interests
• Personality traits (ex. emotion stability)

Design “Rites of Passage”

• Design "rites of passage" for organization entry that allow both the organization and the applicant to assess their fit
• To allow the organization and the individual to assess fit
• Multiple screening to applicants are done to get the best candidate for the position

“Rites of Passage”

• Multiple screenings not only allow the organization to select employees, but also provides applicants with sufficient realistic information about the work environment so that they can make an informed choice about whether they even want the job
• The people who join the organization feel special. They have survived the elaborate rites of passage necessary to join the organization.
• The hiring process thus introduces prospective employees to the culture of the organization
• Tests of cognitive, motor, and interpersonal abilities
• Interviews by potential co-workers and others
• Personality traits
• Realistic job previews, including work samples
• Help both the person and the organization assess fit
• The applicant receives a realistic job preview of the work
• The organization has an opportunity to assess applicants' technical skills and interpersonal skills

Reinforce (strengthen) person-organization fit at work

• Reinforce skills and knowledge through task design and training
• Reinforce personal orientation through organization design
• The hiring process must be integrated with, and supported by, the firm's other human resource management practices

Potential Benefits of New Selection Model

1. Employee Attitudes (resulting in greater job satisfaction and organization commitment and greater team spirit)
2. Employee Behaviors. Studies indicate that HIO, which typically use the new selection model, have low rates of absenteeism, turnover, and grievances, thus promote sense of belonging to the organization.
3. Reinforcement (strengthening) of Organization Design

Potential Problems of New Selection Model

1. Greater Investment in Hiring, ex. Mazda up to US$ 13k per employee
2. Undeveloped Selection Technology, the supporting selection technology is still relatively undeveloped and unproven, ex. Unproven personality tests against job performance
3. Employee Stress, employee take work problems to home and feel the strains as big as the managerial roles
4. Difficult to Use the Full Model Where the Benefits are Greatest. Most of the hiring model which have been described can be used in new organizations. One component of the model, specifically formal selection testing, often cannot be used appropriately or legally early in the life of the organization because the tests have not yet been validated. By the time the validation studies have been conducted, most of the workforce will have been hired. In some circumstances, it may be possible to avoid this problem by validating the tests before hiring in the new organization.
5. Lack of Organizational Adaptation, as Everyone had the same personality profile. The organization might become stagnant (obviously, the issue is the same whether employees all tend to have the same point of view because of the selection system or because of training and socialization.) There is some evidence indicating that organizations with little internal variability in employee perspectives perform better in the short run but worse in the long run, presumably as a result of inferior adaptation.

The Future of Hiring for person-Organization Fit

1. It will become the only effective selection model for the typical business environment
2. The defining attributes of this business environment - such as shortened product life cycles, increasingly sophisticated technologies, growing globalization of markets, shifting customer demands -make for very transitory requirements in specific employee jobs
3. That senior managers must become more "person-oriented" in their own implicit resolution of the person-situation controversy if hiring for person-organization fit is to become a more common approach to selection
4. Managers tend to believe that tightly controlled situations are more effective in shaping employee performance than less-structured situations that allow the expression of individual differences. Managers who believe this are more inclined to spend resources on creating strong situations via job descriptions, close supervision, and so on than on sophisticated selection procedures.

Important Caveat

“Person-oriented" managers must manage a paradox (inconsistency). They must build strong organizational cultures yet, at the same time, design work situations that are weak enough to allow the unique qualities of individual employees to impact work performance. They key ingredient in balancing this paradox is to create a strong organizational culture with values that empower employees to apply their individual potentials to the conduct of their work. In this way, “fragile systems”( meaning that management relies heavily on self-motivated, committed people for system effectiveness) release the employee energy necessary to compete in today's business environment.

The liberalisation of economic activities has an impact upon the nature of work of an organisation, employment, labour markets and employee. It is evident that MNCs has opened production sites at various locations around the world and these production sites can be relocated easily according to the company's objectives. This relocation of production sites of multinational companies affects the employee and HR practices.

The multinational companies are thought agents of change. They bring new information's and thinking for the local organisations and the latter follow these ideas and standard in the field of HR.

Traditionally, retailing even wholesaling is considered as a localized sector, which means composed of small-scale operations. The introduction of various laws that encourage free

trade or lessen trade barriers through international treaties has made commerce vital to attain economic growth resulting in lesser barriers in worldwide employment.

Huge multinational or national retail chains are considered among the largest businesses in many developed countries, and accounted for a huge share of the approximately US$6.5 trillion in international commercial transactions in 1997.

There are various contributing factor for this phenomenon. Leading among them are the technological advancements (including electronic commerce for instance) introduced, the international movement of enterprises and quickly spreading competition-driven changes such as just-in-time production and sales. Ironically, these are considered both the cause and result of an increasingly integrated and highly competitive global market that deeply affect the organization and human resource strategy of commercial organizations. Despite its development and dynamism, deterioration of employment and working conditions are also getting prevalent causing concern among business organizations.

The trends of regionalization and the effects of global operations have heightened the need to set up HRD strategies to acquire and retain competent workforce for them to maintain competitive market positions. The skill shortages often pertain to managerial and professional skills, clerical and production workers and an overall shortage of IT skills for all economies.

It is important to keep the capabilities of both managers and workers presently working for the business at the same time introduce structural changes to allow a smooth transition to higher value-added industries. The solution for the multi-national companies as well as local companies in production sites and strategic regional centers could be in better forecasting of HRD needs, a cost-benefit training framework, better labor market policy-making, and quality vocational and training programs that are jointly conducted by the government and the private sector.

The free market makes people all over the planet to become connected to each other, creating world that is turning into a huge “global village.”

It is necessary to recognize the fact that this unprecedented modern phenomenon is actually based on an old ideology. This is the ideology of the free-market which stipulates that there is absolute truth and desirability of unregulated global capitalism. Globalization is based on an interpretation of the classical liberal social philosophy of Adam Smith, which anticipated universal human progress through free trade.

Four basic arguments are developed with respect to the impact of financial globalization. First, globalization has increased the capital available to developing countries, which has the potential of attaining faster growth than if they had to rely exclusively on their own resources. This has produced competitive pressure among local and multi national companies for capital, labor and materials - the three important factors in any organization.

Not all capital inflows however could contribute to growth. Short-term flows and the purchase of existing assets are less valuable than acquiring investments in new facilities. At the same time, the increasing movement of bigger capital can also lead to greater instability which could have negative effects for growth.

Second, capital flows are not distributed equally by region and country, thus twisting the patterns of growth. Even within a country a noticeable uneven distribution of capital by geographic area, sector, type of firm, and social group are created. This creates division within the country's organizations particularly between winners and losers. Locally-based organizations with less capital often find themselves in the losing side.

Finally, policy changes at the global, regional, and national levels could lead to confusion among organizations in the country. Having clear policies however could solve the problems.

As competition pressure intensifies, and swift changes in market conditions are introduced, policymakers have to respond accordingly to develop new talents and the necessary human resources. To prepare the workforce for the huge structural transformations, individual economies have created and adopted specific strategies that make effective use of public resources, update labor market policies and provide education and training to help people become more employable, productive and internationally competitive. It is a common

concern to secure effective and efficient means of capacity building for sustainable economic development. Human resource policies are at the forefront of these changes.