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INTRODUCTION TO HUMAN RESOURCE MANAGEMENT

‘Always recognize that human individuals are ends, and do not use them as means to your end.’

 

—Immanuel Kant (1724–1804), German philosopher

When you read this quote, do you agree that the expression ‘human resource’ makes you feel a wee bit guilty? Are human beings mere resources? Moreover, when we speak of them as resources, does it not actually translate into individuals being used as means to an end? It is sad but true too. However, it has to be also argued that if organizations exist to achieve ends, which they obviously do, and if these ends can only be achieved through people, which is clearly the case, the concern of managements for commitment and performance from those people is not unnatural. This dilemma between concern for the organization's performance and welfare of its people has been the central theme around which many theories regarding HRM have been propounded.

1.1 EVOLUTION OF HRM

As early as in 1800 BCE itself, ‘minimum wage rate’ and ‘incentive wage plan’ were included in the Babylonian code of Hammurabi. In India too, there has been evidence of the concern for the welfare of workers and also the need to manage them from times immemorial. Kautilya's Arthshastra, written around 300 BCE, had procedures outlined for the selection of ministers and other government officials, the methods to pay workers depending on work produced and also the penalty for wastage of time.

Unfortunately, those who have chronicled the growth of management in our country have tried to do it from the 1920s when ‘management’ was for those times a revolutionary concept. In India, it manifested itself in the form of government intervening to protect the interests of the workers through the appointment of labour welfare officers (1931). In 1948, the Factories Act came into being, which made the appointment of welfare officers compulsory. After World War II, the scope of people management went beyond welfare measures, as expectations of people in independent India started going up. Labour welfare, industrial relations and personnel administration were all combined to take care of the interest of the people and came to be known as Personnel Management.

The five-year plans gave a thrust to the economic activity; the public sector grew at a steady pace and management started becoming more and more professional. In the 1970s, the focus had shifted from the concern of the welfare of people to the concern for the performance of organizations, and by the 1980s, personnel management morphed into HRM as new technologies came to be discussed to manage people and their performances.

The two professional bodies, Indian Institute of Personnel Management (IIPM) and National Institute of Labour Management (NILM), merged in 1980 to form the National Institute of Personnel Management (NIPM). The emphasis kept shifting and in 1990, the American Society of Personnel Management renamed itself as The Society of Human Resource Management. HRM had arrived for good!

1.2 DEFINING HRM

This is how personnel management was defined 50 years ago: ‘Personnel management aims to achieve both efficiency and justice. It seeks to bring together and develop into an effective organization the men and women who make up the enterprise, enabling each to make his own best contribution to its success. It seeks to provide fair terms and conditions of employment, and satisfying work for those employed’ (IPM 1963).

If one studies the definition of ‘personnel management’, one would note that the broad contents of HRM stay quite the same; however, through so many years the job for HR managers have come a long way from the personnel manager of yesteryears. The traditional version of the definition of personnel management is that it is a concept that can be conveniently related to the old model of organizations; it is bureaucratic in nature, with less flexibility and higher degree of centralization and formalization, for example, adherence to rules and regulation. HRM, on the other hand, is compatible with the organic design of new organizations. Such organizations have cross-functional and cross-hierarchical teams. They are centralized and flexible, with low formalization and somewhat looser control. Having said this, let us look at how HRM in practice has evolved from personnel management in the past few decades.

Table 1.1 summarizes the differences between personnel management and human resource management.

 

Table 1.1 Difference between personnel management and human resource management

Personnel Management

Human Resource Management

Reactive, servicing role Emphasis on implementation of procedures Specialist department Focus on employees' need in their own right Employees seen as a cost to be controlled Presumption of union manager conflicts Preference for collective bargaining of pay and working conditions Emphasis on settling pay more in terms of the organization's internal market Serving other departments/units Supporting change Challenging business goals in the light of effect on employees Less flexible approach to staff deployments

Proactive, innovative role Emphasis on strategy General management activity Focus on employees' requirements in the light of business needs Employees seen as an investment to be nurtured as well as a cost to be controlled Conflicts dealt with by team members within their teams Management-led planning of people resources and employment conditions Emphasis on competitive pay and conditions to stay ahead of competitors Contributing ‘added value’ to business Stimulating change Total commitment to business goals Completely flexible approach to staff deployment

Thus in the changing world, HRM may be defined as a strategic and coherent approach to the management of an organization's most valued assets—the people working there, who individually and collectively contribute to the achievement of its objectives.

1.3 CHANGING ENVIRONMENT IN THE MARKETPLACE

Over the years, as personnel management has grown into HRM, the realities in the marketplace have also been changing. What the future of HRM would look like will depend on this environment. Let us look at a few drivers of this changing environment.

1.3.1 Shift Towards Services

The Indian economy has broken away from what was called the Hindu rate of growth and steadily grown into a large and robust economy. While steady growth indicates an increase in the employment opportunities to people, it is also important to steady the direction of this growth because therein lies the reason for one of the major changes in the dynamics and grammar of the workplace in India. Over the years, the service sectors as a percentage of the GDP has grown from a mere 30 per cent in the 1950s to close to 60 per cent in 2010. The service sector comprises mainly professional services (financial services, BPO (business process outsourcing), health services, legal services, education services and IT services), construction, tourism, entertainment and media. The cornerstone of any organization's success in these sectors is primarily its workforce. Therefore, if it is advertising, media or entertainment, it is the creativity of its people; if it is financial services and consulting, it is the knowledge and acumen of its people—in all these sectors, it is the quality of its people that will decide the survival and growth of the organization. As a result, the importance of people has increased manifold, and keeping employees engaged has become a necessity for the business. Therefore, while employees earlier would work hard to keep their job; in these sunrise industries, keeping employees engaged in their jobs has become the responsibility of the organization.

 

 

Second, all these sectors have come about in the post-liberalized India, i.e., after the wide sweeping reforms that have steadily swept India in the past 20 years, from 1991 onwards. These 20 years have seen a steady growth in the number of jobs across the country. The educational setup, however, has not been able to keep pace with this increased requirement in the breadth and depth of a variety of skills. The result has been a crunch ranging from mild to severe in terms of talent in the country. Therefore, whilst there are many engaged in jobs, getting quality resource has become a nightmare for a recruiter. Quality resources would find it easy to find similar jobs in the industry and competition would easily pay them higher to get them on board, but a recruiter would find it extremely difficult to replace a quality resource at the same or marginally higher cost too.

All this has only helped the employee gain a bargaining advantage over organizations and hence HR policies and practices have also reinvented themselves to suit this new and changing world.

1.3.2 The New Business Cult

Competition in the marketplace has gone beyond the confines of predictable business practices, with the result that now innovation is the keel of successful business management. Moreover, innovation today is not limited to just product innovation. Now, companies are approaching business in a very different manner. Let us take the example of the Dainik Bhaskar Group. Players in the publishing newspaper daily business would start cautiously and then based on the response of its readers grow incrementally every year. Thus, reaching a leadership position would take years, at times decades. On the other hand, the Dainik Bhaskar Group was not too happy planning for incremental steps but wanted to take a quantum leap. What emerged out of their ambition was a vision to take the newspaper to the leadership position (number one or two) on the day of the launch itself in every region where they launched. You would ask how could they do this? When they had to launch the Jaipur edition of the newspaper, they co-created a newspaper with the readers. You would wonder what that would mean and how could it be done. They took no shortcuts in this process. The representatives of the company reached out to lakhs of potential readers to understand the content they were looking for in the newspapers, designed the content and then went back to the customer to validate whether their understanding was correct or not. And guess what? The last time they met the customer, they also took an advance subscription for a year—another unheard of fact in the newspaper world. The purpose of stating all this is to drive home the point that innovations in the market need efforts from people. People, therefore, have become the shoulders on whom rests the success of the business. With the advent of technology, the erstwhile functions of the HR department have ceased to occupy a large share of the HR manager's time pie. Now, the human resources function has transformed from being a maintenance department to actually being the most strategic partner in business.

1.3.3 Globalization

Businesses today regard global operations as a way to access new markets, tap sources of revenue, technologies and alternative production configurations. Consequently, as companies globalize business operations, it affects work life and workers. Consider how Lenovo describes itself as a new world company:

Lenovo, a new kind of PC company, defies geographic and organizational boundaries on a global scale:

We develop, produce and deliver our products across six continents.

Our global company has no single corporate headquarters.

Our American CEO is based in Singapore.

Our Chinese chairman works from North Carolina.

Lenovo is an example of how nationalities can no longer be attached to organizations as companies go global. As a result, ‘glocalization’ (‘think globally and act locally’) has become the order of the day. Another example is the Indian company Tata Consultancy Services (TCS). It caters to its many American clients through its widespread operations in Latin America with global delivery centres in Argentina, Brazil, Chile, Colombia, Ecuador, Peru and Uruguay, where it is not uncommon to find Uruguayans learning to speak English with an Indian accent and Indian project managers looking for a vegetarian meal in Montevideo, Uruguay.

In response to this heightened form of globalization, the management of organizations has been forced to be internationalized. The demographics of organizations have moved from easy predictable mixes to a motley group of people from all across the world. Employees are increasingly getting foreign assignments; in fact, cross-cultural exposure is looked upon as an edge that candidates vying for senior management positions can have over their competitor. Expatriate postings have become the order of the day and this has posed a new challenge for designing compensation and benefits. Earlier, it was easy to draw a line between compensation structures based on the location being a home or host location. However, the present-day world truly has become a global village—it is not unusual for people to have dual passports, be born in one, get educated in another and work in different countries all over the world. This has given rise to HR practices that are much more responsive to the flux that the employee and their family have to be in because of moving locations. Cross-cultural trainings, affirmation workshops (to promote diversity) and repatriation support for expats are some of the new age management practices which have crept into organizational management to occupy very important positions now.

Globalization has also meant that now the customer is truly the king and wants the best by paying the least. This has resulted in two other major changes in the workplace. First, organizations are looking for increasingly efficient and effective work methods to produce superior quality goods and services. Second, organizations are moving across national and regional boundaries to cut costs and optimize resources as much as they can. All these have given rise to the phenomenon of outsourcing, off-shoring and nearshoring. This has resulted in organizations moving from traditional, functional, divisional and matrix structures to new generation ways of organizing themselves either around processes, customers or real and virtual networks. The reporting lines have got blurred and the authority structures have got shaken up. For example, if TCS is handling a process for a foreign bank, then does the process manager report in to the head of all processes at TCS or to their client/customer in the United States or to both? This gives rise to new kinds of influencing models, political strains and communication challenges, all of which have to be faced by the design of robust HR processes for they are here to stay and cannot be wished away.

The pressure of globalization is forcing traditional organizations to relook at their operations. A research report in The Economic Times pointed out that labour productivity in India is much lower than its world average. The reason that it gave for this is either the lack of contemporary information of management practices by the management or wrongly placed beliefs in modern methods of management. Closely held Indian organizations in the traditional industries also have a very limited management span of control which translates to limited delegation and hence the growth of people in the business. However, all this cannot continue. Organizations shall have to improve management practices to survive against lower-cost imports from countries such as China.

1.3.4 Technology Trends

Information and Communications Technology (ICT) systems have integrated the power of the Internet, customer relationship management and supply chain management in a seamless and one-source destination site. This integration has allowed organizations to reorganize their businesses in a more performance-efficient and cost-efficient manner. Take, for example, the entire business of buying and selling books. Today, flipkart.com houses more books in its online shops than any brick and mortar bookshop can imagine. Buying for the customer is a more informed decision now—they can have the same books by different publishers (if the copyright has expired) and at different costs and read reviews of books to decide what to buy. However, this online bookstore has changed many aspects of the business. It does not need salespersons at bookstores and it does not need cashiers at the till. But while the business could do without them, there is a whole new range of skills which are in demand now. Keeping inventory and logistics would be the new challenges in the business. Technology has thus changed the way business is done and as a result changed the employment landscape too.

The introduction of technology gives rise to new jobs and makes many redundant. The advent of technology and more of it in the future will have most workers’ primary activities involve information technology. They will gather, create, manipulate, store and distribute information related to products, services and customer needs. Computer networks will be interconnected with information systems that will affect all industries. Some engineers claimed that the ultimate purpose of computerized manufacturing systems is ‘wrestling manufacturing away from human interference’. In traditional industries such as manufacturing, robotics have reduced the need for assembly workers and thus eliminated thousands of blue-collar jobs in American factories and assembly plants. Computers have reduced the need for many white-collar managers since they allow one person to do the work of two or three. Castrol's Silvassa Plant is run by less than 50 employees. In the banking industry, for example, the massive computerization of banking operations in recent years has been prompted by the management's efforts to contain labour costs in the background of a steady rise in the level of banking transactions and growing inter-bank competition for customers. Some law firms in the developed world are even utilizing forms of artificial intelligence. The software today has not matched with the ability of the human mind; however, it will not be an exaggeration to say that it is inching in very fast. While facilities such as voice mail, personal digital assistants, calendar software for PCs and handhelds and voice-to-text software have eliminated many routine clerical jobs, many software programs are able to do in a jiffy what multiple human minds would have to be engaged for hours. Thus, on one the hand, there will be jobs which would get redundant and on the other hand, there will be new jobs which will get created or enhanced and enriched. For example, currently, there is a shortage of and crying need for search engine optimization skills (the process of improving the visibility of a Web site or a Web page in search engines), a skill unheard of a decade back.

New Industries Have Come Up Because of Technology

Think about the surplus of jobs in India—would it have been possible without the advances in technology? The enhancement of technology in the Indian economy has given rise to a new industry called ICT (Information and Communication Technology) and ITES (Information Technology Enabled Services).

A Redefined Work Ethic

Technology is getting leveraged at every level for people to deliver more efficiently and at an optimal cost. Labour-short companies are increasingly willing to accommodate employees’ desire for more flexible scheduling, evidenced by the growing number of firms offering telecommuting, flexi time and core hours. Increased telecommuting will not only benefit employees desiring more balance between work and family, but also will pay dividends for employers in terms of improved productivity. Fusion of home and work will bring an end to weekends. As more people gain more control over when and where they work, neither the workday nor the workweek will have a distinguishable beginning or end. The trade-off may be that the combinations of these alternative work arrangements with the breakneck speed of doing business in the new economy will further blur the line between work and home/family/leisure.

Business parks of a new kind will pop up. Due to the vast amount of information available through computer networks, the permanent office will start to become obsolete. Employees or part-time workers would occupy generically furnished office spaces ranging from one day to a year or more.

Isolation then will be a new workplace problem. Employees will become more and more isolated. Digitally mediated communication, such as e-mail and voice mail, are replacing face-to-face exchanges. The resulting decline in social skills may hinder team problem-solving and threaten productivity. Companies will address this situation through methods such as on-site counselling and the development of special programmes designed to bring employees together in social settings where they can meet and get to know one another. All these will require HR managers to be more responsive to this new work ethic by devising new age work policies and practices suited to changing times.

1.3.5 Demographic Trends

With the explosive requirement of talent in certain areas, the demographics of the workforce will also go through a sea change. In the past few years, the requirement of talent has far outpaced the supply of talent in India. Various studies have been pointing out a gap between supply and demand in the future. There are various reasons for the same. While we have professionally qualified and trained people in India, the quality of training and competency of professionals leave a lot to be desired. Though the Indian government has taken a lot of initiatives in upgrading the skills of its employable workforce, the effect is yet to show. Due to this, many in the industry especially the new age ones are employing and paying very high salaries more for their scarce value than their competence.

As against the problem in the developed world of an ageing population, India has a young employable population base in the country. In the past couple of decades, the number of women who have come into the workforce has also added to the numbers. In addition to this, the employability of those in Tier B and Tier C cities in India is also fast improving. However, the pace is again not enough to meet the increase in demands.

With the advent of various new-age industries, there is also a big shift from the traditional sectors to these new-age sectors, making it difficult for the traditional manufacturing sectors to also find talent easily. For example, a supply chain manager would rather move laterally into an IT firm and become a supply chain consultant (a more glamorous title, higher salary and a people-friendly environment to work in) than move into a higher role in supply chain management in another manufacturing setup.

While trying to define what HRM is, one of the most explicit statements of the HRM concept was made by the Michigan School (Fombrun et al. 1984). Their submission was that the organizational structure should be managed in way that it is aligned to the organizational strategy. Apart from this, they also explained that there is an HR cycle which consists of the following four generic processes or functions:

1. Selection, i.e., matching available human resources with the jobs
2. Appraisal, i.e., performance management
3. Rewards, i.e., rewarding short- and long-term achievements of the people
4. Development, i.e., developing high-quality employees

1.4 THE HARVARD FRAMEWORK

The other pioneers of HRM were the Harvard Business School of Beer et al. (1984), who developed what Boxall (1992) calls the ‘Harvard Framework’. The belief that this model has is that line managers ought to have a view on how employees can be involved and developed in an enterprise. They ought to have a view as to what kind of HR policies, practices and procedures could achieve these objectives. Without these, HRM policies would be a loosely held bundle of independent activities, each guided by its own practice and tradition. It can be safely claimed that this framework is still believed and subscribed to by the industry (Figure 1.1).

 

 

Figure 1.1 The Harvard analytical framework for HRM

 

1.5 WHOSE JOB IS HRM?

Now, we have established the fact that HRM is an integral part of business. The next obvious question is whose job it is to manage people. Read the excerpts of the interview with Vineet Nayyar (author of Employee First Customer Second; currently, he is the CEO of HCL Technologies) to get an insight into what leaders have to say on whose job it is.

1.5.1 Role of the Line Manager

Every person with a direct responsibility for the performance of others has an HR function to fulfil. Careful study of this book shall ensure that all managers do a good job of all HR-related activities towards becoming a successful executive. Typical HRM activities that might have to be carried out by a line manager could include the following:

• employee selection
• induction of new employees
• training and development (especially on-the-job training)
• employee performance appraisals
• job structuring
• implementation of grievance and disciplinary machinery
• implementation and control of bonus/incentive payments
• team motivation
• establishment of adequate communication systems
• implementation of organizational policies of diversity and inclusion
• planning for the effects of change of staff

Why do not corporations then leave HRM to its managers and not have any human resources department at all?

The tasks which a line manager has to perform as part of their HRM duties are complex tasks in their own right and they have to be undertaken in association with equally complex tasks related to all the processes required to achieve team goals—planning, organizing, leading and controlling. Not surprisingly, in such conditions, a line manager is likely to meet their business goals more effectively and efficiently if supported and assisted by specialists from various functions, including human resources.

1.5.2 Line and Staff Aspects of an HR Manager's Job

Historically, what necessitated an HR department were the functions and responsibilities which no one else either wanted or was capable of doing. From recruiting to orienting new employees, from writing job descriptions to tracking attendance and from instituting and monitoring policies to monitoring benefits, there has been a need for a specialized HR department. How are these responsibilities handled by HR managers different from the ones handled by the line managers?

HR managers have two kinds of authorities—line authority, which gives individuals in management positions the formal power to direct and control immediate subordinates, and staff authority, which grants staff specialists the right to advise, recommend and counsel in the staff specialists’ area of expertise. It is a communication relationship with the management. It has an influence that derives indirectly from line authority at a higher level. An HR manager has line authority over the staff of the HR department and staff authority to support, assist and advise mangers of other departments in matters related to HR management.

 

1.5.3 Collaboration Between Line Manager and HR Manager

The people management inside an organization is a collaborative effort of the line manager and the HR manager. Figure 1.2 summarizes a few areas of collaboration between line managers and HR specialists.

 

Figure 1.2 Staff and line authorities

1.6 ROLE OF THE HR FUNCTION

Traditionally, HR managers carry out three distinct functions within an organization:

1. Line function: HR managers have clear control of activities of the people in their department. They have limited (implied authority) control outside their function. The implied authority also stems from the fact that the line managers think that HR is a close confidante of the senior management and leadership teams in many areas.
2. Coordinative function: They exercise functional authority (or control) over other departments to ensure the adherence to all HR policies and procedures in the organization.
3. Staff (assistance and advice) function: They assist and advise line managers to better understand and appreciate the HR aspects of the company's strategic options. In carrying out this function, an HR manager becomes an innovator and employee champion depending on the situation.

However, this view that was largely subscribed to till some years back has now undergone transformation. The roles played by the HR now are:

• Employee advocate: Responsible for making sure the employee–employer relationship is one of reciprocal values.
• Human capital developer: Responsible for building the future workforce.
• Functional expert: Responsible for designing and delivering HR practices that ensure individual ability and create organizational capability.
• Strategic partner: Responsible for helping line managers reach their goals.
• HR leader: Responsible for exhibiting genuine leadership, i.e., credibility within the HR organization and to those outside.

1.6.1 Employee Advocate

A corporate reputation for fairness and equity (organizational justice) requires policies that treat employees fairly and with empathy. Moreover, is it not the HR professionals in the organization who design and implement these people policies? The HR function shall be able to deliver on this expectation only if it has the pulse of the people. Therefore, it is not surprising that HR professionals spend most of their time with employee-related issues. This proportion will be higher if it is a service centre. It is imperative for them to see the world through the eyes of the employees, understand their concerns and empathize with them, while at the same time looking through the management's eyes and communicating to employees what is required for them to be successful.

A large part of employee engagement and consequent loyalty stems from healthy relationship, and relationships grow from personal care. Employee advocacy involves being available and caring while also being able to assimilate and share different viewpoints. The challenge is in building a competitive yet caring organization. Caring does not mean divesting oneself of fiscal or management responsibilities. It means listening and responding to an individual's important needs: resolving grievances before they turn ugly, helping find work for spouses and school for children of transferred employees and arranging work permits and visa where required. Care can be communicated through special attention (whether it is a birthday, anniversary or leave to attend a personal exigency), personal style (open-door policy, always accessible over phone or e-mail), and friendly organizational practices (flexi hours, learning environment and affinity clubs to pursue non-work-related passions).

Advocacy also involves systematic discussion of employees’ concerns. If strategy is being discussed and it involves divesting of some business, changing of locations, cutting of employee costs, then it is the role of the HR function to voice the concerns of the employee. It involves proposing fair policies for health, safety, terms and conditions of work and discipline, as well as implementing these policies across the organization.

From the sound of the word, advocacy should not be taken as all sweetness and light. It also involves sharing tough news with employees. The employee advocacy role requires HR to establish a transparent and fair process for reproving and removing employees for whatever reason and then to help implement the process equitably throughout the organization.

In a nutshell, the tasks of developing the HR employee advocate role in HRM function include:

• Conducting regular opinion surveys among employees.
• Providing feedback from the organization to the top and line managements.
• Providing development opportunities for the employees to help them build value for the organization.
• Assisting employees to get used to the changes in the organization and to help the employees in the risk of the layoff.
• Communicating honestly to the employees about the new business initiatives and the impact on employees.
• Supporting in building and developing the corporate culture.

1.6.2 Human Capital Developer

In this role, the HR manager focuses on the wealth created through the people in the organization. As human capital developers, HR professionals focus on the future, often one employee at a time, developing plans that offer each employee opportunities to develop future abilities, matching desires with opportunities. The focus is on developing the most superior workforce, so that the organization and individual employees can accomplish their individual goals while accomplishing their work goals.

There are two parts to the role. First, individual employees have to be given a menu of opportunities and options to unlearn old obsolete skills and acquire new ones (e.g., in the banking sector, automation has changed the entire paradigm of treating customers as well as day-to-day working) in line with the requirements of the organization. This would mean opportunities such as employee training, employee career development, management development, coaching, mentoring, succession planning and the identification of high-potential employees. All these processes can be formal like a classroom training, a college course or an organizational planned change effort or can be informal like employee coaching by a manager. Second, it is also HR's role to coach leaders by focusing on both attitudes and behaviours, working from an understanding of individual differences to figure out how to motivate desired behaviour. They coach by building trust, sharing observations and affirming changes. As human capital developers, they assume the responsibility for positive team relationships. This may involve formal team-building or it may involve informal dialogues with the team members and team leaders to disclose and resolve differences.

1.6.3 Functional Expert

HR's role to fulfil the role of functional expert goes without saying. One reason is that if HR has to advice and coach line managers they ought to have the ability to do their own job and do it well. (Imagine an underperforming HR manager trying to coach a team leader on how to improve the performance of their team!) As a profession, HR has a body of knowledge. Access to this body of knowledge lets HR professionals act with wisdom and insight in any business situation. With this knowledge, they are able to improve decisions and also implement them more effectively than any other manager. For example, an executive worries about the competency of their future leaders. An HR professional will draw on their body of knowledge and design a competency framework and a learning programme which will be the solution to the executive's worry.

Another important thing to note is that this body of knowledge in HR is ever expanding and it is impossible for one to be an expert at everything. It is, however, important to know how to become an expert in whichever functional area which one needs to or has to. To be an expert, you need to pick a specific domain and absorb its functional heritage. With respect to compensation, it might mean knowing how it traces its roots to the motivation theories and why people do what they do. For industry-specific research, there are many consultants (Tower Watson and Mercer Consulting) who could give you that information. Howsoever, one might know there may still be an area where one will not have the answers. True functional experts not only know their limitations but also know where to source the information which they do not have.

The functional expertise operates at multiple levels. ‘Tier 1’ involves the creation of solutions to routine HR problems. These are usually a part of the HR administration and may typically include leaves, probation appraisal, induction, payroll and tax query and benefits administration. A solution can be in terms of design of a process or implementation of a procedure towards increasing the efficiency and effectiveness of the service. ‘Tier 2’ requires rich access to the HR body of knowledge and involves research of best practices, to turn knowledge and skills into a programme or a process. ‘Tier 3’ comes into play when HR specialists consult with businesses and adapt their programmes to the unique needs of the business. In this tier, the diagnostic skills and ability to analyse data and information to make sound judgements and decisions and the creativity to design solutions is of paramount importance. ‘Tier 4’ work sets the overall policy and direction for HR practices within a specialty area. This calls for understanding of strategy and the ability to adapt to a strategic context.

1.6.4 Strategic Partner

In their larger role as strategic partners to business, HR professionals play the role of strategists, change agents, and internal consultants and facilitators.

Strategists

They bring business, change, consulting, learning and competence know-how to their partnership with line managers to create value. They have an informed opinion on the strategy based on their knowledge of customers, insight into business knowledge, expertise on organizational affairs, and people and people processes. In essence, this involves working closely with senior business leaders on strategy formulation and execution, in particular, designing HR systems and processes that address strategic business issues. In practice, this means being more customer-focused, cost-efficient, innovative and structured in such a way that it can quickly respond to changing priorities.

Change Agent

Needless to say, all organizations are in flux, ever changing their focuses, expanding or contracting their activities and rethinking their products and services. Most organizations, more than 10 years old, look nothing like they did even five years ago. In this context, managers have to be able to introduce and manage change to ensure the organizational objectives of change are met and they have to ensure that they gain the commitment of their people, both during and after implementation. This is where HR practitioners have to act as change agents. They should be successfully able to identify the key drivers for bringing about the required transformation. Moreover, as organizations are increasingly becoming network-based, a network organization is a collection of autonomous firms or units that behave as a single larger entity, using social mechanisms for coordination and control. The entities that make up a network organization are usually—but not always—legally independent entities. Some of the entities may be wholly owned subsidiaries. They can even be divisions within the company, but treated as separate companies that sell to outside customers. HR managers must now consider the issues that exist across and outside the boundaries of the firm: they need to address the concerns of cross-boundary HRM too. This requires the development of a series of boundary spanning HRM practices which involve the extension of practices which are traditionally used only for employees (i.e., individuals contracted to the organization) to these important people who are outside the boundaries of the organization (i.e., individuals contracted to a different organization or self-employed but who deliver services within the organization).

Internal Consultants and Facilitators

They advise the leaders on the changing people landscape and suggest measures to capitalize these changes instead of succumbing to them or at best defending against them. With their expertise on people, behaviour, power and politics, they are the best advisors to the leadership team on issues such as the formation of teams, the deployment of people in key positions or succession planning.

1.6.5 HR Leader

A leader is one who has the ability to envision the future and then leads their team to it. Moreover, that leadership begins at home is also true. Therefore, HR leaders must lead and value their function before anyone else does. Consider this: there is a business planning conference being held for the following year; corporate planning exercise and the conference agenda are being planned by the HR head. The conference is to last for three days and all functions are supposed to make an interactive presentation for two hours on their plans for the coming year, except for HR, which has a one-hour slot and that too on the last day of the conference, in the evening, which is a Saturday. The message, in such a case, is obvious: even HR professionals do not think HR matters much. This only shows that the HR head is not operating from an empowered HR perspective. Business leaders share the natural human tendency to learn more from what they see than what they hear; therefore, it is essential to set a good example.

Dave Ulrich and Wayne Brockbank (2005) advocate following a simple equation: effective leadership equals attribute time results. Attributes are things that leaders know and do—setting a vision, engaging others, acting with integrity and learning constantly. Results are the productive outcome of the leaders’ knowledge and actions. Effective HR leadership means setting clear goals, being decisive, communicating inside and out, managing change and defining results in terms of value added for investors, customers, line managers and employees. HR's credibility starts and ends with operational excellence. Without flawless basics (paying on time, training on time and hiring on time), other strategic things do not matter. This leadership is not just limited to the top of the HR organization. Every HR professional exercises personal leadership by accepting accountability for doing the day's work while adapting for the next day's requirements.

1.7 COMPETENCIES OF THE HR PROFESSIONAL

For many years, the HR manager's proficiencies have been categorized under four areas:

1. HR proficiencies: Knowledge in the areas of employee selection, training and compensation.
2. Business proficiencies: HR professionals’ strategic role in partnering business.
3. Leadership proficiencies: Lead management groups and drive the changes required.
4. Learning proficiencies: Staying abreast of and applying new technologies and practices affecting the profession.

By considering the new dynamics of the work place, a different set of competencies is being suggested for HR professionals (Table 1.2) now and they are bunched under five domains:

1. Strategic contribution
2. Personal credibility
3. HR delivery
4. Business knowledge
5. HR technology

1.7.1 Strategic Contribution

In this domain, the capability to manage culture, initiate and drive fast change, support strategic decision-making and ability to connect and be responsive to the market is captured.

To manage culture would mean to define culture, as consistent with the requirements of the external customers, business strategy and engaged employees. The definition should be supported with the design of practices and processes which cultivate and encourage desirable behaviour from people. For example, at Google, engineers could spend one day a week or 20 per cent of their time working on projects that are not necessarily in their job descriptions. They can use the time to develop something new or modify something already existing. Many new features in Google (e.g., Google News) are the result of such a policy within the organization. While being innovative was the defined element of culture Google wanted, it did not sit back and ask people to be innovative; it put in place this philosophy of 20 per cent time to cultivate and encourage the culture of innovation.

The only constant is change which is present in all organizations today. Initiating and driving fast change is the competency of the HR professional to initiate, drive and sustain the changes in the organization at a pace which is higher than the traditional time and space one gives for the transformational change. For this, HR professionals need to have facilitation skills to continuously monitor and drive change.

There are two parts to the ability to support strategic decision-making. First, HR professionals need to bring ‘business IQ’ and intellectual capital to the business to add rigour to decision-making. Second, it is the ability to ask insightful questions which encourage others to be strategic. This requires both interpersonal skills and intellectual capacity to look at things from all sides of an argument.

An HR professional also needs to have the ability to amplify important signals from the market and play it to the organization so that the organization is aptly responsive to the market.

1.7.2 Personal Credibility

Personal credibility of HR professionals comes from three sources—their ability to deliver results, make and maintain effective relationships and communicate effectively.

Credible HR professionals have the ability to deliver what they commit and commit only as much as they can deliver. An important bit about the delivery is not only about achieving results, but also about how these results are achieved. Since HR is the conscience keeper of the organization, it is also important for HR professionals to deliver while meeting the highest standards of integrity.

Interpersonal skills are the corner stone of all effective relationships and HR professionals need to have this in abundance to deal with their other HR colleagues, individual line executives and the management team as a whole. They ought to be helpful and empathetic in addressing concerns whether or not directly work-related, and they should have the ability to decompress tense interpersonal issues.

When HR professionals hire, promote and fire certain people, when they design and implement measurement and reward systems and then offer specific training programmes, they send powerful messages about what is important for the organization and to its success. Hence, HR professionals must have superior communication skills being able to communicate well, both on paper and face-to-face, leveraging formal as well as informal channels of communication.

 

1.7.3 HR Delivery

This domain captures the traditional HR competencies frameworks which involve the traditional tools of HR trade namely acquisition of human resources, training and development, organizational design, HR measurement, statutory and legal compliance and performance management. They should be able to design and deliver basic HR practices, but with an overarching cultural or change agenda. If they limit themselves to delivering on the basics that would limit the eventual influence on business performance.

1.7.4 Business Knowledge

In order to be a valued partner to business, HR professionals need to understand the industry which means knowing the entire value chain of the business. It is also important to understand where in the value chain does the organization lie and what its value proposition over its competitors is. After that comes the knowledge of the human resources in the organization and outside to develop an informed opinion about the organization's position in the employers’ market.

1.7.5 HR Technology

We all know that the pace of technological innovation will continue to accelerate. HR has taken advantage of these changes by automating HR processes and becoming more effective in communicating with its internal customers. However, since the focus has always been efficiency and cost-savings, the technology leverage is limited to support basic functions such as HR data, payroll, compensation and benefits administration. HR professionals ought to have the ability to go beyond suboptimal use of technology and learn how to integrate various solutions on an HRMS platform, thus leveraging it for strategic planning, for example, human capital planning, support of growth initiative, succession planning, job evaluation. Refer to Table 1.2 for further details.

 

Table 1.2 Summary of HR competencies

Competency	Description
Strategic contribution
Culture management Ability to manage change Strategic decision-making Market-driven connectivity	Define appropriate culture and design practices and processes to cultivate and sustain it Plan and implement large-scale interventions that make change happen quickly Contribute to business decision by critiquing the existing strategy and by having a personal vision for the future of the business Facilitate the dissemination of market information throughout the firm to create organizational readiness
Personal credibility
Achieving results Effective relationships Communication skills	Meet commitment in performing accurate work and achieving results with integrity Have good relationship with internal and external clients based on respect and confidence Effectively communicate using formal and informal channels of communication
HR delivery
Acquisition of human resources Training and development Organizational design HR measurement Statutory and legal compliance Performance management	Design and deliver staffing cycles that include hiring, promoting, transferring, redeploying, retaining and separating Design and deliver development agendas which integrate personal aspirations and organizational requirements Design organizational structure and work processes Measure results at each step of HR value proposition Understand the legal and other statutory requirements that are relevant to the organization as well as employees Design and deliver performance measurement systems as well as reward systems for superior performance
Business knowledge
Knowledge of the value chain Knowledge of the organization's value proposition Labour knowledge	Have knowledge of each component of the business value chain and its integration Have knowledge of how the organization creates value for the customer and in the world at large Have knowledge of talent in the market, labour law driver for maintaining effective employee relationships
HR technology
Ability to apply technology to HR processes	Apply information systems technology to HR processes

1.8 THE HR ORGANIZATION

The structure of modern business is very different from the way it used to be. Traditional organizational structures have given way to complex structures. Traditionally businesses were organized with a functional (departmental), divisional or a matrix structure. In many organizations, these organizational structures have been replaced with process based structures, customer-centric structures and network structures. These organizations have contributed to process efficiencies, increased focus on the customer and driven optimum utilization of resources but they have also complicated the way people relate to each other in the organization. In addition to this, the other factors such as globalization and technology have also had their roles to play. The HR organization has also gone through the changes with new concepts having got added to the traditional methods of handling the HR function.

 

1.8.1 HR Functional Organization

An HR functional organization will have specialists in each domain of HR. In such a structure, there will be a head of the function and to them would report specialists in the different areas such as compensation and benefits, learning and development, performance management and recruitment. These specialists contribute by being experts in their area academically as well as practically.

When the company is very small—till the time it has 50–75 people—it does not need a full-time HR, a line manager is able to do the HR activities. When the company size goes up, it usually expands the functional way with roles revolving around different areas of expertise. A single business will usually have a functional HR structure at the top. These specialists would have the responsibility of designing all policies and practices, as is required by the business. Usually, this department is known as the corporate HR department. If the organization is very large and spread over a large geographical area, the different centre would also have local HR generalists who would implement the policies and practices designed by the corporate HR department. The common mistakes which can occur in a structure like this is that corporate HR may become far removed from the realities of the business and not be responsive to business. This results in a kind of a tussle between corporate HR specialists and the implementing HR generalists which can prove to be a dysfunctional conflict which the organization can do without. The other risk is that too many specialists might not be able to deliver a unified HR strategy which is easy for the business to follow.

If the company is a large group with diverse businesses such as the Tata Group, then a functional structure would work a bit differently. Obviously, all policies cannot be made at the corporate level because each business would have its own strategy which would need to have a tailor-made policy according to its strategy requirements. Hence, each business has its own dedicated HR. The corporate HR limits itself to crafting a general HR value framework, setting minimum standards and spearheading specific HR interventions which are required for the entire group. Corporate HR takes on the mantle of guides and thought leaders. Taking the example of the Tata Group, the corporate HR does not dictate business strategies but provides process tools for business unit HR professionals to design and implement business-focused HR agendas. It does drive specific HR interventions such as hiring of high potentials (Tata Administrative Services), succession planning and leadership development. This structure works well with large business houses but does carry the risk of duplication of work (e.g., in the form of design of interventions) in separate business units.

1.8.2 HR Shared Services

Most large organizations now are neither single businesses nor can they be called holding companies. In response to business requirements, their structure lies somewhere in between. They create separate units to compete in different markets at the same time they do want to create a synergy between these units too. For such business organizations, a new concept has come in which is known as shared services. In a shared services model, what usually happens is that one part of the organization or group has designed a superior way of providing service to its employees. In order to leverage this, the rest of the group also starts sharing this service. Thus, the funding and resourcing of the service is shared and the providing department effectively becomes an internal service provider. The key is the idea of ‘sharing’ within an organization or group.

 

Figure 1.3 Shared services

 

Shared services have been around for quite some time but now they are changing in their focus and the reason this is happening is what is explained in this chart above (Figure 1.3). Earlier HR used to spend most of its time into transactional work and the angled line shows that is changing. Now, HR functions believe in doing more of transformational work such as the design and implementation of HR strategies. There are many jobs which fall in the HR realm which very usually repetitive, rules driven and do not translate to HR capability building. However, they have to be done because of either legal requirement (statutory compliances for payroll function) or are necessary for operations (e.g., leave management). Organizations have realized that they could cut costs and increase process efficiency if they are done by centres which specialize in doing just that. From this came the concept of service centres, outsourcing and technology and employee self-reliance.

Service Centres

Service centres are centres where a large amount of similar transactional HR jobs are done by a unit for multiple units. Service centres enjoy economies of scale (reducing duplication and redundancy) enabling employee concerns to be resolved by fewer dedicated resources. They have standardized HR processes which increases processing efficiency and decreases processing time. However, this model has certain pitfalls too. Service centres dehumanize transactions. An administrative question is dealt with like a question to be answered. An HR professional answering the same query might also pick up relevant data about employees’ engagement levels, work environment or feedback on HR policies. In addition to this, often employees might look for a simple question to be answered and in the absence of an HR manager, they might start looking up to the line manager to address their query. This might result in the wastage of time and resources (on the service centre!).

Outsourcing

Outsourcing means handing over a process to an outside party or vendor to deliver as per the requirement of the customer organization. India arrived on the outsourcing scene as a vendor for supplying HR outsourcing to the companies in the United States and Europe. However, now, Indian companies themselves are choosing this outsourcing route themselves. A survey by an HR association showed that 72 per cent of Indian companies have outsourced at least one HR activity and 50 per cent of these are operational in nature. HR outsourcing in India began with outsourcing in areas such as payroll and employee benefits administration but many more functions have got added to it now.

Outsourcing has brought many benefits to the table. Organizations are able to save costs, drive process standardization and increase the speed and quality of their service. With the transactional jobs outsourced, HR is able to spend more time and effort on strategic thought and action. However, this also has its share of risks. A wrong vendor, an unbalanced contract between the outsourcer and the vendor and loss of control totally to the vendor are some of the risks. In addition to this, outsourcing does change the way HR functions function in an organization. On outsourcing, the employee has to talk to a voice across the phone line rather than walk up to a person to have their apprehension or query resolved. This needs a change of mindset in the organization. Hence, for outsourcing to be truly successful, a proper programme to manage the transition of services from the vendor should be instituted.

Technology and Employee Self-reliance

With the advent of technology, it has been realized that a bulk of the employee services can be met with the help of technology and minimal human intervention. This has prompted many organizations to design technology-driven platforms which help employees meet their administrative work on their own. These would include things such as accessing their leave balance, applying for a leave, checking the holiday calendar and finding out provident fund (PF) balance. For example, an executive at Tech Mahindra has admitted in an interview to Human Capital that the availability of self-service applications has provided flexibility and convenience, and also empowered associates and their managers to share intelligence, handle requirements such as work scheduling, absence handling and approvals with ease, leading to definite improvement in productivity. Those which cannot be done on their own can be dealt with the help of a customer-service executive or at best by a case manager at the shared services centre. Though technology has increased efficiencies, it has its set of challenges too. A technology-driven environment undermines the importance of relationships at work (which drive employee engagement), privacy of data and a lack of touch and feel.

1.8.3 Embedded HR

Those organizations that have relegated the transactional part of the HR function to shared services then have HR professionals work inside the business units defined by geography, product line or function. These embedded HR professionals are called ‘Business HR’, ‘HR generalist’, ‘engagement managers’ and many such names. These HR professionals work directly with the line manager or the business unit leader to clarify business strategy, develop HR strategy and lead a supportive HR unit for the business.

1.9 ETHICS IN HRM

Fairness issues are important to employees and the involvement of HR staff and departments in ethics and compliance programmes could be important to the real and perceived fairness of those programme. Therefore, HR staff and departments need to play a more central role in ethics management initiatives if those initiatives are to provide real benefits for both organizations and their members. Moreover, it has also been found that six of the ten most serious ethical issues—workplace safety, security of employee records, employee theft, affirmative action, comparable work and employee privacy rights—were all HR management related.

While HRM is the conscience keeper of the organization, it is equally important for HR professionals to maintain high standards of ethical behaviour. In India, NIPM and NHRDN (National HRD Network) have Code of Ethics for HR professionals to follow.

There are a host of textbooks that you can refer to (given in the References) to clarify concepts. However, management is more about practice than theory. Our advice to you would be to read books by renowned authors with a sharp eye on the listed HR competencies outlined in the chapter. Here are the names of a few books.

• ‘The New Age of Innovation: Driving Co created Value Through Global Networks’, by C.K. Prahalad and M.S. Krishnan (McGraw Hill Books): This book shall give you a clear perspective of what future businesses would look like in the times to come.
• ‘The Talent Masters, Why Smart Leaders Put People Before Numbers’, by Bill Conaty and Ram Charan. The book presents the best practices followed by some of the most respected corporations in India and the world and makes very interesting reading.
• ‘Good to Great’, by Jim Collins to develop an understanding of expectations by business leaders from HR and various success stories around it. Based on a five-year research project, Good to Great answers the question: ‘Can a good company become a great company, and, if so, how?’ True to the rigorous research methodology and invigorating teaching style of Jim Collins, this book teaches how even the dowdiest of companies can make the leap to outperform market leaders such as Coca-Cola, Intel, General Electric and Merck.
• To build your credibility as a practising manager, refer to books written by Steven Covey and Dale Carnegie. These will help you explore your own person and help you develop personal leadership.
• For a sample employee handbook, you could access a sample list of contents at http://humanresources.about.com/od/handbookspolicies/a/sample_handbook.htm (address as accessed on 7 February 2011).

1. There is a clear overlap between the core roles of modern HRM and the ‘traditional’ functions of personnel management. However, the emphasis has changed. How?
2. Describe the role of the HR manager and the line manager in any three areas of your choice with illustrations.
3. How can HR be the competitive edge for organizations? How can HR professionals help companies achieve this?
4. What are the competencies that HR professionals need to succeed in the new world?
5. How is the HR function organized in the modern corporation?
6. Why is ethics and integrity more important for HR managers?

1. Individual exercise: You have declared a ‘People First’ initiative in the organization and then there is a slowdown. How will you deal with such a situation? Find out what HCL Technologies did when faced with a similar situation.
2. Group exercise: Take the example of Yakult, a health drink which got introduced in India. Like its worldwide partners, it uses a network of women whom it calls ‘Yakult ladies’ to deliver the product to the homes of its customers. What specific challenges could you face in handling an all women work force?
3. Group exercise: The table below tries to capture some of the activities done by a manager in a typical day's work which falls in the ambit of HRM as we have described it. The various areas may be HR planning, job analysis and design, recruitment, selection, induction, statutory compliances, compensation and benefits, performance management, talent management, training and development, career management, employee engagement or HR policies. In addition, try to identify what would it cost the manager if they were not to do a good job of the same and what are the benefits which would accrue to the organization if the job was well done.

Activity	Areas of HRM	What a Well-done Job would Ensure
Taking an interview Meeting an employee who is leaving and trying to retain them Meeting an employee to discuss concerns about poor performance Behavioural concerns of team members Following up with a team member on some pending work Allocating work to team members Meeting a client or a customer or an internal customer with the team to address bottlenecks Speaking to the training manager to discuss a development programme for the team Designing incentive programmes or meeting a disgruntled employee on some compensation issue. Taking the team out for lunch

 

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‘Cognizant Tweaks Consultancy Focus’, The Economic Times, 15 March 2010.

‘Companies Work at Cultural Matches, Post M&A's’, The Economic Times, 29 March 2011.

Devanna, M. A., Fombrun, C. and Tichy, N. 1984. ‘A Framework for Strategic Human Resource Management’, in C. J. Fomburn, N. M. Tichy and M. A. Devanna (Eds.), Strategic Human Resource Management. New York, NY: John Wiley & Sons, 33–51.

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Friedman, Thomas. 2007. The World Is Flat: A Brief History of the Twenty-First Century. New York, NY: Picador/Farrar, Straus and Giroux.

Gajulapalli, Ravindra S. and Ramdas, Kamalini 2008. HCL Technologies: Employee First, Customer Second. Darden Business Publishing.

‘Macroeconomic Framework Statement’, available at http://indiabudget.nic.in/ub2011-12/frbm/frbm1.pdf

Munshi, Porus. 2009. Making Breakthrough Innovation Happen. IBD.

Rafter, Michelle V. 2005. ‘Unicru Breaks Through in the Science of “Smart Hiring”’, Workforce Management, 84: 76–78.

Rison, Richard P. and Tower, Jennifer. 2005. ‘How to Reduce the Cost of HR and Continue to Provide Value’, Human Resource Planning, 28: 14–17.

Schramm, Jennifer. 2006. ‘HR Technology Competencies: New Roles for HR Professionals’, HR Magazine, 51: 1–10.

‘The Climber's Club’, Business Today, February 2011.

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Ulrich, Dave and Brockbank, Wayne. 2005. The HR Value Proposition. Boston, MA: Harvard Business School Publishing.

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1. http://www.lenovo.com/lenovo/au/en/our_company.html, accessed on 15 November 2011.