Fundamental Changes are taking place in the World
and Indian Economy. On the one hand these changes are prompted by a relaxation
of trade barriers and on the other by technology. Consequently, the way Business enterprises
are run will also change. This change
will be propelled by three factors:
1.
Technology – There will be rapid discontinuities in
technological platforms and business models due to the technology factor. The success or failure of enterprises will be
determined by the rate of technology obsolescence, and the ability to create,
use, assimilate and absorb new technology.
This will be equally applicable to the old Economy enterprises as well
as the new economy enterprises. Most new
enterprises will be efficient, quick and networked. The Internet is emerging as a key medium for
the conduct of business.
2.
Globalization – The business environment will be hyper
competitive as Nations are forced by a combination of Politics and Economics to
shed trade barriers. Enterprises will necessarily pursue global standards in
Productivity, Quality, Delivery, Safety and Cost, and in some cases Labor
Standards, in order to survive and become competitive. This would represent a
quantum leap in the way they are organized, managed and the systems they
adopt. Keeping abreast of best
practices and in due course, setting standards in all areas will be the key.
3.
Knowledge – With the increasing influence of Technology,
there will be intense Competition for People with specific skills - Superior Human Capital as compared to
Machines will make a difference. Knowledge will be a key differentiator. The retention and motivation of the
knowledgeable worker and manager will be a major issue for enterprises, whether
they are they large or small.
Enterprises will need to focus
on the following to counter the effect of
these phenomena:
- Organizational transformation – Enterprises will seek to implement radical
changes in the way they are structured, managed and their focus of
activity i.e rightsizing, strategic transformations/reorientation,
implementation of ERP Systems, global forays, Mergers and Acquisitions,
etc.) - The organization is likely
to be smaller, leaner and focused on maximizing share holder value more
than ever.
- Core Competencies – Enterprises will seek to implement a strategy of
business process out sourcing in all functions accept the core operational
Areas. This will result in the
growth of a Specialized Service Sector.
The relationship between
the organization and the BPO agency will add a new dimension to the business scenario
as their futures will be inextricably linked.
- Employee Performance – Vision and Mission statements will be yardstick
by which individual / Team / Organization performance is measured. There will be a greater focus on
knowledge management and intellectual capital as skills become dearer and
knowledge becomes the key differentiator. Performance Management Systems geared
towards the retention of talent and Performance based Compensation systems
will replace traditional methodologies.
These phenomena
will also have implications for the individual Employee:
a)
They will have higher aspirations - Employees will expect be rewarded for
performance through lifestyle enhancers, enrich their job, learn new skills and
be treated as entrepreneurs rather than a mere cogs in the wheel.
b)
There will be higher Job Mobility - With the increase in skill levels, and the
demand for skilled personnel increasing in a technology / Knowledge dominated
environment increasing rapidly, employees will be constantly looking for
greener pastures.
c)
The concept of career
for an individual Employee will change - Companies will no longer be able to take
on the responsibility of providing a continuous source of livelihood to their
employees. They will instead offer
employability, where a stint with a company will enhance an individual’s
skills. Individual Employees will
therefore constantly be looking to update their skills. Lateral growth will replace vertical growth
as a career objective as it is comparatively easier to attain.
d)
Brainpower / talent will be a
critical skill in the job market - acquiring new and varied skills will be
the motto – the possibility and probability of job rotation and job enrichment
will assume importance in an Employee’s assessment of a job offer.
e)
Work will increasingly
be seen as a part of Life-Style – Consequently, the work environment, the
work culture and the organization’s image in society will play an increasingly
important role in the Employee’s propensity to join, stay on and contribute to
an organization.
Having examined the nature of Business in
this millennium, the factors transforming it, and their impact on enterprises
and the individual Employee, let us now examine the impact of these phenomena
on the role of the HR function.
Basically the HR function / practitioner has three roles in a business
Enterprise:
a)
As a HR Product/Service Specialist - In this role, the
HR Practitioner / Department is required to apply professional / Technical
knowledge, skills, experience and judgment to meet business objectives and
serve Employees needs by producing, managing and ensuring delivery of Employee
related products and services.
b)
As an HR Generalist – In this role the HR Practitioner /
Department performs work and process redesign to improve individual and
organization effectiveness. He also
involves groups and teams to resolve issues and improve their relationships and
interactions and maximize team and organization effectiveness.
c)
As an HR Strategist - In this role the HR Practitioner /
Department is involved in Business Process Reengineering and developing
business process out sourcing strategies and ensures that human resource
products and services support overall business goals. He also develops methods for building,
mobilizing and evaluating effectiveness through the Creation of Vision and
Mission statements and Performance Appraisals, builds a value system, ensures
that it is adhered to and facilitates communication.
Of the three roles, the emphasis has
hitherto, been on the first one. The
emphasis will necessarily have to progressively shift to the second and third
roles if the challenges arising out of the changing business scenario are to be
tackled effectively. These challenges
are:
a)
Managing Talent
b)
Managing Performance
c)
Managing Change
d)
Managing Knowledge
a) Managing Talent
This gap between the demand and supply of
skilled manpower will only widen as we move into the future. As we move into a
more competitive and global economy, the market for skilled workforce will
continue to change in three significant ways:
- Whether
in the hi-tech industries or in the so-called old economy companies, due
to the changing nature of work/job, the demand for sophisticated and
skilled people - the Knowledge Workers - who can add/create value for the
company will continue to increase. Irrespective of the industry sector,
technical literacy, entrepreneurial skills, ability to manage stretch and
a global mindset are becoming the key attributes companies look for in
their employees.
- The
growth of economy, especially in the service and high-technology sectors,
is resulting in the emergence of a large number of high technology small
and medium sized enterprises (hi-tech SME's). Within last couple of years,
we have seen a booming growth of small knowledge/service-based outfits
(e.g., software developers, e-enabled service providers, event management
firms, training/recruitment service providers, marketing agencies, etc.),
which require, source and absorb a large segment of talent from the
market.
- The
phenomenal growth of the "New Economy" has opened up many new
job avenues for the talented workforce. This is creating a phenomenal
increase in the job mobility. Earlier, a long stint in a company meant
about 10 years or more. Recently, one of the big-six consultancy firms
awarded extra-bonus and ESOPs to their "loyal" employees who had
been with the company for more than 3 years!!
These and such other environmental change
imply that the HR professionals will need to rethink the employee value
proposition they offer. In spite of all the rhetoric, talent is still the most
under-managed resource in most companies. The need is to go beyond the
traditional practices for attracting, retaining and developing talent. Studies,
for instance have shown that factors such as:
a)
Strong performance ethics in the company
b)
Opportunity for long-term wealth creation
c)
Exciting job challenges
d)
Autonomy on job
e)
Flexibility in employment terms (e.g., telecommuting,
job-sharing, etc.)
f)
Differentiated and competitive compensation packages
g)
Company's concern for maintaining work/life balance,
h)
Company's practices for talent development (that go
beyond just training), etc.
are some of the key factors for retention
and development of talent.
b) Managing Performance
While the Performance
Appraisal (PA) system has always been a tool in the HR professional's basket,
its glaring inadequacies in actually improving/ managing/monitoring performance
have also been largely ignored. In fact, in many companies, it is still
implemented as an annual ritual, without any reflection on its impact on the
actual performance. While on the surface,
performance appraisal and it’s consequent management appears to be a logical,
rational approach to organization success, the problem is that it is based on
assumptions that do not bear up under scrutiny. Amongst others it has the
following limitations:
1) It can't
appraise and completely identify potential. The system deals only with
performance on the present job.
2) The system
presumes that the man and his boss will together establish suitable standards
that will serve the company well.
3) It implies that
the boss understands the strict limitations on what he is supposed to do, and
will refrain from playing God.
4) In action, it
often aggravates a problem that appraisal should help to solve. It stresses
results alone and doesn't provide for methods of achieving them.
In order to work as an effective performance tool, the PA
system needs to be integrated with the other organizational systems, such as:
(a) The Business Plan Development
Process
(b) Work-Systems And Processes
(c) Compensation And Rewards
(d) Career And Competency Development Systems,
Etc.
Designing such performance-based HR systems will be the
second emerging challenge for the HR professionals. The issue to address would
be: how to design HR systems, processes, and activities which improve
performance, help the organizations in some tangible way to serve their
customers better, and increase shareholder value. There are a number of issues that need to be
addressed to make it an effective tool for performance management, e.g.:
(a)
Alignment: The extent to
which the factors measured by the PA system are related to the organizational
strategies and tactics.
(b)
Balance: The extent to which the system balances what is
achieved (results, which impact the short-term performance) with how it is
achieved (competencies that ensure the long-term sustainability).
(c)
Relevance: The extent to
which the system is integrated with the emerging changes in the nature of work
itself, e.g., team-based work, project assignments, virtual teams, cross-border
assignments, etc.
(d)
Consequence: The extent to which the system is able to
address, not just rewards for rewarding good performance (e.g., promotion,
increment, bonus, etc.), but also ensures superior future performance by
building in monitoring mechanisms.
(e)
Acceptance: The extent to
which the system fulfills the user's (line managers and employees)
expectations, and is seen as a support to improve performance.
c) Managing Change
The emerging business environment also
places another demand on the HR professionals - that of managing change. In the
conventional setup, the role of HR has been more of maintaining the status quo
rather than of initiating and managing change. When HR professionals act as
change agents, it generally is/ has been,
in response to certain decisions or processes that have been initiated
elsewhere - HR would pitch in when "change happened." During last few
years, we have seen many such transformations taking place among Indian
companies for e.g.:
a)
Cross-Industry Acquisitions and Mergers
b)
Movement Into Radically New Markets (e.g., Domestic To
Global; Urban To Rural; Commodity To Branded, etc.)
c)
Restructuring Of Product/Service Portfolios.
d)
Corporate Restructuring, Downsizing etc.
e)
Radical Changes in Corporate Strategy
f)
Transformation Of Corporate Identity, etc.
In the emerging environment HR Professionals must be seen
to be:
(a)
Leading Change: developing and identifying
the resources within the company - champions, sponsors, leaders - who can
initiate, lead and support change efforts
(b)
Creating a Need: stimulating the need (which exceeds the
resistance) for change among those who would be involved and affected by
proposed change.
(c)
Shaping a Vision: helping the organization
and its members develop a vision of the desired outcome of the change.
(d)
Mobilizing Commitment: mobilizing the commitment of the
key stakeholders -management, unions, powerful informal cliques - for the
change outcome, so that they feel enthused about it.
(e)
Changing Systems & Structures: aligning
the organizational systems and structures so that they support the change
efforts.
(f)
Monitoring Progress: developing
mechanisms that help indicating the progress and direction of change.
(g)
Making Change last: institutionalizing the
change in the organization.
d)
Managing Knowledge
In the emerging business environment,
organization’s capacity to create, absorb, and utilize knowledge is becoming
the key differentiator for competitive success. This is true not only for the
knowledge-based industries (IT, service, etc.), but also for the traditional
manufacturing industry. There are a number of reasons for this paradigm shift:
(a)
Product/service
offerings are increasingly becoming knowledge-based - Whether a car or an
insurance policy, more and more knowledge goes into their design and creation
(a contemporary car has more computing power than Apollo 11).
(b)
Across the industries, one finds the
products, services, and technologies becoming commoditised - Thus, the only
basis for competitive advantage lies in organization’s internal processes and
capabilities (e.g., for servicing the customer, for developing new products,
for managing projects, etc.).
(c)
The fast changing business environment, also
makes old solutions and offerings obsolete fast - To remain competitive,
organizations need to keep developing innovative solutions at a regular
intervals.
The HR professional
must therefore be at the forefront of effort to Manage Knowledge in the
Enterprise by:
- Creating a
Knowledge-Sharing Culture: While many companies have created intranets, and have got the
technical infrastructure in place, it is also a common experience that
sharing of knowledge and information does not happen automatically. In
fact, often the organizational structure, performance management systems,
practices and procedures themselves discourage people from sharing
knowledge with peers (we need to remember that the traditional
organizational designs were aimed at controlling/monitoring free-flow of
knowledge, and not for facilitating it). New HR innovations would be
needed to create structures, systems and processes that encourage
knowledge sharing among organizational members
- Creating
Systems
to Manage Tacit Knowledge: While the technology helps in
efficiently collecting and disseminating knowledge from and among
organizational members, its effectiveness remains confined to explicit
knowledge - knowledge which can be codified. A larger proportion of
business-relevant knowledge, however, resides in the minds, skills,
practices and relationships of people. This kind of knowledge gets shared
only when people meet and interact. Designing systems and practices to
make this happen is another emerging priority for the HR professional.
Can the HR Professional / HR Profession cope
with these challenges and come out on top?
The traditional role of HR was that of the
"back-office boys" who held "staff" roles, and supported
the initiatives of the line functions. As the preceding discussion highlights,
in the emerging environment, the value of HR is only as much as the
business-value it can create. Obviously, if HR professionals have to play the
role of "partners in progress" within their own companies – and
contribute - they will need to add new competencies to their repertoire. While
one can derive detailed list of competencies from the preceding discussion,
they can be broadly classified under four headings:
- Business Knowledge: If HR professionals have
to be value-adding service providers to their customers within the
company, understanding customers priorities and context becomes
imperative. Thus, understanding business and business processes - i.e.,
the market, technologies, financials, etc. – are essential for HR to
remain relevant.
- Deliverable HR Knowledge: Obviously, these are the
basic competencies of HR - staffing, appraisal, compensation and rewards,
development, etc. However, the focus so far has been predominantly on what
one does. Most of the HR activities are still done without any clear
measures of their effectiveness (e.g., what is the ROI on recruitment
costs). If HR has to be seen as a business partner, this would need to
shift to what one delivers. That is, the HR processes will need to be
designed in a manner that clear measures are possible.
- Change Agent Skills: As discussed earlier,
businesses needs to continuously change in order to remain competitively
viable. In the emerging environment, that capacity to change will be a key
competency for companies. Naturally, this would also be a key area in
which HR will need to make a significant contribution.
- Credibility and Influence: Perhaps, most important of
all, would be the challenge of building professional credibility.
Expectations from what HR can deliver are still low. Good HR professionals
are seen as people who care for people, are willing to listen, tolerate
diversity, and are trustworthy, etc. But in order to actually command
influence in the organization, a professional image should also include
perceptions such as being accurate in delivering results, meeting
commitments, being consistent in meeting targets, etc.
To succeed, the Human Resource Function must
shift from being merely responsive to being much more proactive; from “
backroom to the front line”, from a corporate to an operations focus. The HR Function can add significant value
through the following interventions:
a)
Development, clarification and communication of an
organization’s culture, vision and values
b)
Definition, communication, facilitation and development
of the organization’s key capabilities (i.e. core competencies), best practices
(i.e. successful strategies consistently applied by teams that support core
capabilities), and the critical supporting competencies
c)
Creation, distribution, and support of business and
employee products and services
d)
Generation of a clear, measurable impact on employees
and the enterprise e.g. ROI assessment
Each type of intervention above will rely
heavily on technology and out sourcing as key enablers of leaner more focused
human resource organizations. Future HR practitioners / Departments will be the
ambassadors of a high tech high touch approach in which they provide rapid,
customized solutions to work force issues.
The Human resource role of the future will
depend on the initiative and motivation of professionals pursuing a vision – an
ideal future state in which HR practitioners become true leaders in their
enterprises. In order to realize this
goal, members of the human resource community must collectively commit to
change. As the value produced by
individuals and teams becomes a more important aspect of competitive success,
organizational leaders will increasingly focus on their human assets. The demand for innovative methods fro
leveraging them is clear. Whether or not
HR practitioners and the function will respond creatively or quickly enough is
not so clear. If HR practitioners
respond to this challenge, they will play an increasingly vital role in their
organizations - that of a HR Strategist.
