WHY HRM MATTERS NOW MORE THAN EVER
Regardless of their industry, size or location, companies today face five critical business challenges. Collectively, these challenges require organizations to build new capabilities. Who is currently responsible for developing those capabilities? everyone and no one. That vacuum is HR’s opportunity to play a leadership role in enabling organizations to meet the following competitive challenges.
Globalization: Gone are the days when companies created products at home and shipped them abroad “as is”. With the rapid expansion of global markets, managers are struggling to balance the paradoxical demand to think globally and act locally. The imperative requires them to move people, ideas, products and information around the world to meet local needs. They must add new and important ingredients to the mix when making strategy: volatile political situations, contentious global trade issues, fluctuating exchange rates, and unfamiliar cultures. They must be more literate in the ways of international customers, commerce, and competition than ever before. In short, globalization requires that organizations increase their ability to learn and collaborate and to manage diversity, complexity and ambiguity.
Profitability through Growth: During the past decade, most Western companies have been clearing debris, using downsizing, reengineering, delivering and consolidation to increase efficiency and cut costs. The gains of such yard work, however, have largely been realized, and executives will now have to pay attention to the other part of the profitability equation: revenue growth.
Technology: From videoconferencing to the Internet, technology has made out world smaller and faster. Ideas and massive amounts of information are in constant movement. The challenge for managers is to make sense and good use of what technology offers. Not all technology adds value. But technology can and will affect how and where work gets done. In the coming years, managers will need to figure out how to make technology a viable, productive part of the work setting. They will need to stay ahead of the information for business results. Otherwise, they risk being swallowed by a tidal wave of data – not ideas.
Intellectual Capital: Knowledge has become a direct competitive advantage for companies selling ideas and relationships (think of professional service, software and technology-driven companies) and an indirect competitive advantage for all companies attempting to differentiate themselves by how they service customers. From now on, successful companies will be the ones that are the most adept at attracting, developing, and retaining individuals who can drive a global organization that is responsive to both its customers and the burgeoning opportunities of technology. Thus the challenge for organizations is making sure they have the capability to find, assimilate, develop, compensate, and retain such talented individuals.
Change, Change and More Change: Perhaps the greatest competitive challenge companies face is adjusting to – indeed, embracing – nonstop change. They must be able to learn rapidly and continuously, innovate ceaselessly, and take on new strategic imperatives faster and more comfortably. Constant change means organizations must create a healthy discomfort with the status quo, an ability to detect emerging trends quicker than the competition, an ability to make rapid decisions, and the agility to seek new ways of doing business. To thrive, in other words, companies will need to be in a never-ending state of transformation, perpetually creating fundamental, enduring change.
The five challenges described above have one overarching implication for business: the only competitive weapon left is organization. Sooner or later, traditional forms of competitiveness- cost, technology, distribution, manufacturing, and product features –can be copied. They have become table stakes. You must have them to be a player, but they do not guarantee you will be a winner.
THE CHANGING ROLE OF HRM
In an organization, there are tall people, short people, fat people, thin people, black people, white people, elderly people, young people and so on. Even within each category there are enormous individual differences. Some will be intelligent, others not so intelligent, some are committed to jobs, others are not, some will be outgoing, others reserved and so on. “The point is that these differences demand attention so that each person can maximize his or her potential, so that organizations can maximize their effectiveness and so that the society as a whole can make the wisest use of its human resources” (Cascio). The challenge of HR managers today is to recognize talent and nurture the same carefully and achieve significant productivity gains over a period of time. The enterprise is nothing but people. Technological advances, globalize competition, demographic changes, the information revolution and trends toward a service society have changed the rules of the game significantly. In such a scenario, organizations with similar set of resources gain competitive advantage only through effective and efficient management of human resources (Dessler).
The role of a HR manager is shifting from a protector and screener to the planner and change agent. In present day competitive world, highly trained and committed employees are often a firm’s best bet. HR professionals play a key role in planning and implementing downsizing, restructuring and other cost-cutting activities. They enable a firm to be more responsive to product innovations and technological changes. For example, team based work assignments and productivity linked rewards could replace manufacturing systems. In service enterprises like banking, hotels, insurance firms, etc., discourteous employee responses may ruin the relationships with customers. Employees who lack the temperament, maturity, social skills and tolerance for frequent contact should not be selected at all for service-oriented activities. HR professionals can help an organization select and train employees for such emerging roles. Employees are the primary pillars of corporate success. Machines neither have new ideas nor can they solve problems or grasp opportunities. Only people who are involved and thinking can make a difference. Through open communications, proper feedback and fair treatment of all employees’ grievances and discipline matters, HR professionals promote employee commitment at various levels. In such a case employees perform the assigned tasks willingly and enthusiastically and thus offer a competitive advantage to the organization. As rightly pointed out by Charles Creer, (Strategy and Human Resources, 1995), “in a growing number of organizations human resources are now viewed as a source of competitive advantage.……Increasingly it is being recognized that competitive advantage can be obtained with a high quality workforce that enables organizations to compete on the lines of market responsiveness, product and service quality, differentiated products and technological innovation”.
In the new economy, winning will spring form organizational capabilities such as speed, responsiveness, agility, learning capacity and employee competence. Successful organizations will be those that are able to quickly turn strategy into action; to manage processes intelligently and efficiently; to maximize employee contribution and commitment; and to create the conditions of seamless change. The need to develop those capabilities brings us back to the mandate for HR set forth at the beginning of this article. Let’s take a closer look at each HR imperative in turn.
Becoming a Partner in Strategy Execution. Strategy is the responsibility of the company’s executive team – of which HR is a member. To be full-fledged strategic partners with senior management, however, HR executives should impel and guide serious discussion of how the company should be organized to carry out its strategy. Creating the conditions for this discussion involves four steps.
First, HR should be held responsible for defining an organizational architecture. In other words, it should identify the underlying model of the company’s way of doing business. Several well-established frameworks can be used in this process. Jay Galbraith’s star model, for example, identifies five essential organizational component: strategy, structure, rewards, processes and people. The well-known 7-S framework created by McKinsey & Company distinguishes seven components in a company’s architecture: strategy, structure, systems, staff, style, skills and shared values.
It’s relatively unimportant which framework the HR staff uses to define the company’s architecture, as along as it’s robust. What matters more is that an architecture be articulated explicitly. Without such clarity managers can become myopic about how the company runs – and thus about what drives strategy implementation and what 9 stands in its way. They might think only of structure as the driving force behind actions and decisions, and neglect systems or skills. Or they might understand the company primarily in terms of its values and pay inadequate attention to the influence of systems on how work – that is, strategy execution – actually gets accomplished.
In India, the borderless world is shaking the roots of business. While some companies are feeling the excitement and facing up to the challenges, the demand for a tilted playing field indicates the anxiety among many Indian business leaders about competition. Increasingly, the mantra of the global economy is performance and competition.
THE CHALLENGE OF HUMAN RESOURCE MANAGEMENT
The most significant resource of any organization is often said to be its people. Such claims appear in organizations’ annual reports and mission statements. Of course, an organization is nothing but a group of people whose activities have been planned and coordinated to meet organizational objectives. An organization that exists to produce goods and services has a good chance to survive and prosper if it consists of the Right People. This is true for all organizations. In a similar fashion, people need organizations. The vast majority of people must work to support themselves and their families. But people work for many reasons other than economic security. For example, many also work to keep busy and feel useful, to create and achieve something. They want to gain recognition and achieve status or to test and stretch their capabilities. To meet these multifarious needs, people and organizations join forces. Unfortunately, this union seldom approaches perfection. Organizations encounter several obstacles in meeting their goals and in a similar way all employees report some problems in their attempts to be productive and efficient in their jobs and to feel satisfied in their work lives. The challenge of human resource management is to minimize these obstacles and problems.
The central challenge facing society is the continued improvement of our organizations, both private and public. Another important purpose of human resource management is to improve the contribution made by people to organizations, (Davis) through effective and efficient use of resources. Efficient means that it must use the minimum amount of resources needed to produce results. Effective means producing right things through right ways. The resultant productivity (ratio of output to input) gains obtained through HR efforts enable managers to reduce costs, save scarce resources, enhance profits and offer better pay, benefits and working conditions to employees.
Pervasive force : HRM is pervasive in nature. It is present in all enterprises. It permeates all levels of management in an organization.
Action oriented : HRM focuses attention an action, rather than on record keeping, written procedures or rules. The problems of employees at work are solved through rational policies.
Individually Oriented : It tries to help employees develop their potential fully. It encourages them to give out their best to the organization. It motivates employees through systematic process of recruitment, selection, training and development coupled with fair wage policies.
People oriented : HRM is all about people at work, both as individuals and groups. It tries to put people on assigned jobs in order to produce good results. The resultant gains are used to reward people and motivate them toward further improvements in productivity.
Development Oriented : HRM intends to develop the full potential of employees. The reward structure is tuned to the needs of employees. Training is offered to sharpen and improve their skills. Employees are rotated on various jobs so that they gain experience and exposure. Every attempt is made to use their talents fully in the service of organizational goals.
Integrating Mechanism : HRM tries to build and maintain cordial relations between people working at various levels in the organization. In short, it tries to integrate human assets in the best possible manner in the service of an organization.
Comprehensive Function : HRM is, to some extent, concerned with any organizational decision which has an impact on the, workforce or the potential workforce (Bernardin). The term ‘workforce’ signifies people working at various levels, including workers, supervisors, middle and top managers. It is concerned with managing people at work. It covers all types of personnel. Personnel work may take different shapes and forms at each level in the organizational hierarchy but the basic objective of achieving organizational effectiveness through effective and efficient utilization of human resources, remains the same. “It is basically a method of developing potentialities of employees so that they get maximum satisfaction out of their work and give their best efforts to the organization” (Pigors and Myers).
Auxiliary Service : HR departments exist to assist and advise the line or operating managers to do their personnel work more effectively. HR manager is a specialist advisor. It is a staff function.
Inter-disciplinary Function : HRM is a multi-disciplinary activity, utilizing knowledge and inputs drawn from psychology, sociology, anthropology, economics, etc. To unravel the mystery surrounding the human brain, managers, need to understand the appreciate the contributions of all such ‘soft ‘disciplines.
Continuous Function : According to Terry, HRM is not a one short deal. It cannot be practiced only one hour each day or one day a week. It requires a constant alertness and awareness of human relations and their importance in every day operations.
MANAGING TALENT: THE NEW ‘AVATAR’ OF HR MANAGER
Human relation movement was the turning point in the management field that changed the thinking in the field of management. After the Mayo’s work on human relation the human being has become a central point in the organization. Man as a resource now is being treated as a human being and not as machine. After that several other management thinkers also contributed a lot that how we can motivate, attract and retain people in an organization. Work of Marry Parker Follet, Maslow, Herzberg, Vroom, and Macgregor are invaluable in this field. The result of all these theories is the evolution of a new field called Human Resource Management.
The functions of HRM include human resource planning, recruitment, selection, placement, and orientation of employees; training and career development; labour relations; management of performance appraisal, compensation, and benefit programmes and development of personnel policies and procedures. The issue has been brought into sharper focus over the past few years by the concept of the “war for talent” and, more recently, new proposals or reporting on human capital management. There are three fundamental forces fuelling the war for talent: the irreversible shift from the Industrial Age to the Information Age, the intensifying demand for high calibre managerial talent, and the growing propensity for people to switch from one company to another. Because of above mentioned environment and its impact on organization, it forces us to give emphasis on understanding the talent management, what type of challenges it create for HRM and what role human resource management should play in managing the talented people. The paper starts with highlighting new vistas of talent management, and then moves on to discuss the new avatar of the HR manager as talent manager, in the next section various strategies used for attracting and retaining talent have been outlined.
Talent Management: New Vistas
Talent management is a subject that has dominated HR thinking for years, variously described as manpower-planning modeling, succession planning or high-flyer identification. As a consequence we have heard the emergence of “Talent Managers” within many organizations.
So, what is talent? A definition could be: “An identifiable ability that is perceived to add immediate or future value to any prescribed activity, discipline or enterprise”(Maurice, 2003). Identified talent normally requires an investment of resource to realize its value and a disciplined organizational mindset prepared to wait for the investment to pay off. As a result, an effective talent-management system or process is both essential for securing competitive advantage and to produce quick results.
Talent Management is a core element of human capital management. People generate capital for an organization through their competence, their behaviours and their intellectual energy. In a commercial world increasingly dominated by knowledge intensive organizations, the latter is an ever-more important requirement for competitive success. Intellectual energy is about innovation and change, about new thinking and about opportunities developed from problems.
Talent Management is primarily about identifying, developing and using those people who can provide those critical intellectual-energy ingredients. In general, from a successful talent-management system we expect: sustainable commercial competitiveness; higher levels of focused innovation; improved staff engagement and commitment, low turnover rates of knowledge and experience, lower external resourcing costs.
After the above analysis we can say that talent management has now become a more challenging job for an organization. This is also very clear that managing employees in any organization is a job of Human Resource Department. But as time passes and with reference to above referring environment now there are more opportunities for talented people in today’s world. So because of all these it is very difficult to manage them with traditional human resource practices, we have to do more than that otherwise we will lose them, and in this competitive and fast changing environment we will not survive at all. All these forces are new challenges before the Human Resource Management.
One of HR’s most challenging jobs now involves managing talent. Much has changed in recent years to make this an increasingly critical area for HR. Among the issues that have made the talent management job more difficult are: frequent restructuring, a growing reliance on outside hiring, flatter organizations with fewer growth options, a tighter job market (at least in the long term), the aging workforce and the decline of clear career paths, as we mentioned above that it create a big challenge before the HR.
In order to retain its most valuable stakeholders, an organization must find innovative ways to continually recruit its own employees. How well do you know and understand your current employees growth path? Are your employees looking outside your company for advancement opportunities? Retaining top quality talent is an enormous challenge facing corporations today and it is duty of HR to cope with it. In order to build effective retention and deployment strategies, companies must maintain visibility into and communication with their employees.
An organization’s capacity to hire, develop and retain talent is the most crucial business process as there is a definite correlation between intangible assets and market capitalization, according to the protagonists of talent management. It is due to these intrinsic intangible values that some companies are perceived as more valuable than others. Infosys (Sachdeva, 2002), for example, is perceived as being worth fifty times the value of its recorded assets.
Talent research company Kenexa paints a worrying picture of HR’s ability to be on top of its game when it comes to talent management. Ninety per cent of the 22 HR professionals polled strongly agree that recruiting talented people is a key issue, and 93 per cent feel the same way about retention. Yet 57 per cent of companies have no specific talent management strategy, and just 37 per cent employees someone whose specific remit is to manage talent (Paton, 2002).
For HR professionals, this sets a challenge. On one hand, effective talent management is an important feather in the cap of any HR manager. On the other hand, identifying, grooming and retaining talent is a notoriously nebulous business. Human Resources Department has an important part to play in providing the backbone for talent management. So at the end we can say that managing the talent means find, develop and keep the people who keep you in business is the most challengeable job of today’s HR department in any organization.