HR CHALLENGES IN THE NEW MILLENNIUM
By Ashit K. Sarkar
as 'The Guest of Honour Keynote Address' - Jan 13 to 15th, 2000 - at The Nehru Center, Worli, Mumbai).
Reported widely in the press, and published in several journals.
We have all along heard that
“time moves on steadily and relentlessly”.
Then how is it that especially in the new millennium we need to review
the challenges for the HR function in organisations? Has it taken a dramatic turn, or is it
because the start of the century is a very convenient milestone to take
stock? After all, such milestones not
only show how far and in what direction we are progressing, but also give the
distance to our destination, and are often excellent anchors to take time off
to re-examine the future course of action.
Be what it may, this article will try to touch on some of the major
concerns that need to be tackled for success by the corporate leaders in
The threats facing
managements have been changing with time, and what was a fine solution
yesterday may no longer be valid tomorrow!
We all know that the world is moving at an extremely fast pace, and that
the rate of change is continuing to accelerate, as Alvin Toffler stated so
aptly many years ago in “Future Shock”.
It can now be said that we have moved to the era of not just change, but
an accelerated rate of change. This
demands that corrective steps too need to be taken fast without a long drawn
wait and see attitude. As compared to
the past, the twenty-first century corporations are getting to be globally
market driven ones with ‘invest anywhere & share everywhere’ concept. The
impact of e–commerce with rapidly changing information technology (IT) will
similarly transform conventional business structures dramatically - even
smaller organisations will not be immune.
These will demand a totally different type of HR strategy and
intervention.
Recently I attended and
participated in a HR Conclave at the Management Development Institute at Gurgaon,
when two bright young HR students, Archana Shekhar & Shivalee Puri,
presented an excellent White Paper on “Aligning HR with Strategy”. Despite their limited practical experience,
they discussed the theoretical and conceptual issues in considerable detail. Much of it has relevance to the
understanding of the current realities facing many Indian organisations and the
HR professionals in particular, in order to be able to design and develop
appropriate winning HR strategies best suited to meet the changing
challenges.
Amongst other issues, the paper
highlighted the four stages of growth and evolution process of the Human
Resource management (HRM) function as follows:
·
The
Reactive HRM function: where
the main purpose is seen as maintenance of industrial harmony, and avoiding
disruption through strikes etc. and exists generally where organisations are
operating in near monopoly situations with assured growth - the interactions
between HR and operating managers being minimal under normal situations at this
stage.
·
The
Independent HRM Function: where
the function is recognised as an independent entity. In this stage, while HR is involved in
setting up industrial systems & procedures for operating managers, but is
not fully responsible for the monitoring or correcting the problems in the
system - only being marginally involved in various processes and other
functions or results. Other functions
would mostly seek HR’s help in administrative or on few specific issues, and
line managers do not see HR as a repository of expertise.
·
The
Supportive HRM Function: has
its own direction with a distinct status within the organisation, and actively
contributes to the efforts of other functions in producing results.
Organisations requiring product or technology changes rapidly in a competitive
scenario generally need such HR involvement with high demands for qualified
& competent manpower, often in a high turnover or mobility situation. Emphasis on people development & motivation
generation comes from such HR, but their understanding or involvement in total
business perspective remains limited or inadequate, even with higher functional
participation.
·
The
Integrative HRM Function: is the
stage when the competitive success of the organisation involves HRM
significantly in an integrated manner, and demands such capabilities from the
HR specialists. Their roles shift from a
facilitator to a functional peer with competencies in other functions, and are
recognised as an equal partner by the others. The typical HRM in this case is
geared to contribute to organisational objectives of profitability and customer
satisfaction, and is seen as a vehicle for implementation of quality
processes. The department has a
responsibility for monitoring employee satisfaction, since it is seen as
surrogate to customer satisfaction.
They went on to state that “catalyst for such alignment”
was evident from McKinsey’s 7-S framework model. According to this framework, effective
organisation change is a complex relationship between seven S’s. HRM is a total matching process between the
three Hard S’s (Strategy, Structure & Systems) and the four Soft S’s
(Style, Staff, Skills & Super-ordinate goals). Clearly, all the S’s have to
complement each other and have to be aligned towards a single corporate vision
for the organisation to be effective. It has to be realised that most of the S’s are
determined directly or indirectly by the way Human Resources are managed, and
therefore, HRM must be a part of the
total business strategy.
There is also a great deal of emphasis about the need for
“Strategic HRM” today rather than the traditional way of managing the human
resource, and we need to understand the implications. The traditional HRM is seen or believed to be
both physically and psychologically disassociated from the ‘real work’ in an
organisation – as a typical ‘separate’ department. The Strategic HRM on the other hand,
represent a much closer and involved linkage – there being two important
schools representing SHRM by two very famous institutions – Michigan &
Harvard. The first focuses on strategic management, the other on human
relations.
·
The
·
At the
heart of the Harvard approach is the responsibility and capacity of managers to
make decisions about the relationship between an organisation and its employees
such as to maximise the organisational outcomes for key stakeholders. It focuses on manager’s responsibility to
manage four key HRM policy areas: employee influence (participation), human
resource flow, and the reward systems and work systems.
·
Yet
another school of thought called “open” or “contingent” approach argues that
competitive advantage will accrue to those best able to exploit environmental
opportunities and avoid or survive threats; and that the strategic management
of human resource will assist organisations in this by encouraging &
generating the appropriate sorts of behaviours, attitudes and competencies from
employees.
Whichever way it may be defined, ultimately, a strategic
approach to human resource management must culminate in the implementation of
policies and practices designed to enable, support and engender behaviours
consistent with organisation’s strategic intent. This demands the achievement
of a good fit between HR & the business strategy.
Once the strategic plan is formulated, the focus has then
to shift to strategy implementation - a process of aligning the functions of an
organisation with the strategy in order to achieve the business results.
This valuable academic debate is useful for determining
policy and direction and to decide for each organisation the course best suited
to meet their vision and mission. They have to formulate their HR philosophy
and style after analysing the strengths & weaknesses, their environment and
the opportunities & the threats it might present, besides developing the
business objectives and the future action plans.
The above may sound quite theoretical, but one of the
issues that often exists and need to be corrected, is the identification of the
stage of HRM that is best needed for the results in any organisation, and the
actual situation that exists, for tackling effectively. It has been my experience that there are
considerable differences in what is stated or structured, to what is the actual
situation, and specially compared to what is best required. In fact, to a large extent these are often
personality driven depending on or varying with personal relationships and the
trust between each of the top management members, and are therefore on their
individual competencies and limitations, and not necessarily as designed or
intended. Many HR managers are often not
driven to build other functional or business competencies, and prefer to remain
comfortably on the sidelines within their limited domains, rather than become
fully integrated in the organisation’s business results. While claiming or wanting greater
involvement, they often fail to plan their own training & development needs
- this has to be tackled effectively andd on priority. The contributions demanded towards business
results by the HR managers need this competence, supported by a suitable
organisation structure. This certainly
needs attention wherever lacking.
However, at a practical level we must anticipate and
prepare for the likely HR challenges in general that exists, or may be expected
in the coming future – the main purpose and theme of this article. They are the outcome of:
·
Consequent
to the vastly increased competition for many, & likely in future,
·
Due to
rapid development of technology, especially the impact of IT, &
·
Internal
necessities, and/or resulting from above stated causes.
I venture to suggest that second rate performances by
organisations have often been accepted as a fact of life, which did not affect
survival in the past. This scenario is
rapidly changing, and the earlier pedestrian performance standards will no
longer be acceptable. For one thing,
The first obvious and the most vital issue
is the effect of the growing competition from not only the current national
players, but specially from highly successful international corporations. Many of them have tremendous muscle, deep
pockets and staying power, speedy decision making ability, latest up-to-date
technology and also a great deal of experience in managing international
challenges. Organisations and their
managers will have to meet and beat the high standards of product quality,
service and value offered by such global organisations - particularly the image
and perceived value. They have to
relearn the distribution and marketing alternatives, with the main focus on the
previously ignored customer. Whether organisations like it or not, they will
have to accept the stark reality that in this new century, it is the customer who has become the king! The HR Managers will therefore, have to
heavily contribute to this customer driven scenario by upgrading the skill
levels all round, and enhancing the managerial aptitudes and competencies,
besides attitudes, within the organisation. Much greater thrusts in effective
training and development activities will be necessary at all levels, as also in
the attraction, selection, intake & retention of competent & key
people. Tom Peters has been reputed to have stated that “people are not assets”, but it is the “right people, who are!”
With technology upgradations, much greater
use of IT and forthcoming e-commerce etc. new breed of ‘knowledge workers’ in
‘learning organisations’ will make the differentiation. This intellectual
capital will demand much nurturing from the enterprise, in order to give back
in the shape of superior results - the HR managers will have to develop
effective ways for the organisation to benefit from this resource.
Considerable work will be essential in
building a positive organisational climate, within which improving performance
level is not only appreciated and rewarded, but becomes a way of life. The HR Team will be only one of the important
pillars, and the other functions will certainly and equally have to do a lot of
upgrading for improving the organisational results. Team work, will therefore, be a key driver
in any organisation, that will demand and result in high performance both at
all individual levels and also across functions and teams continuously and consistently.
It goes without saying that the effective
management of Industrial Relations will continue to demand a very high priority
- not just to ‘do well’, but now for thee very survival of both the organisation
as well as employee jobs. The HR managers
will have to develop highly effective communication strategies to build
understanding and co-operation from the employees and unions for this common
objective, before it becomes too late.
Instead of confrontative, partnership between unions, employees and
management will have to be developed.
Maturity from all will be needed with changes in management styles,
credibility & trust building exercises – spearheaded by the HR managers. Cost management through productivity
improvement, managing flexibility, rapid technological upgradations, and faster
response to the market requirements will also warrant the HR Managers to manage
such changes with minimum disruption – an unenviable task! The reduction in blue-collar jobs is
inevitable, and the white-collar jobs in IT or service areas will need very
different strategies, which may require retraining, rehabilitation,
multiskilling etc. Part time and
contract employment is likely to increase.
The Unions memberships and their areas of influence are also likely to
be affected, and their focus may shift from wage increases to job security
& growth, training for employees & their family members, increasing
employability, reduced working hours, unemployment relief, etc. - the HR
managers will have to deal with these vital issues.
We are yet to widely experience the severe
impact of serious upheavals resulting from organisations failing to meet the
growing challenges and becoming sick, and consequently some having to be closed
down, bought over, sold, or merged with others. No enterprise can now consider
itself as non-vulnerable purely because of their size or past history of
success. Managing mergers &
acquisitions will be a new challenge for HR managers - restructuring, re-engineering,
downsizing or closure or sale of sections or divisions has become a major
reality now. Their traumatic impact on the employees will demand competent
handling by the HR/Personnel Managers, for which most of us are ill equipped,
as are the organisations themselves. Early preparatory work to give HR Managers
competency in these new areas is very important – before the actual need that
may hopefully not arise one day!
Flatter
organisation structures are getting to be the order of the day, instead of
fatter organisations - empowerment and modern Management Information systems
has made the increase in span of control, delayering and restructuring with
optimum manpower utilisation possible.
Managerial productivity has been a neglected area for most, and value
addition from this area will demand far greater attention.
Use of modern HR techniques and tools will
become a necessity to change from the “managing by instinct” syndrome. These will include strategic measurement
systems, scorecards, surveys etc. as a base to help make quality decisions.
Competitive
compensation, benefits and remuneration strategy with thrusts for ‘payment by
results’ will demand much greater focus in the future. The trend will move
towards individualised compensation system based on the value addition. These will include Incentive Schemes, Variable Performance based pay, Annual Rewards and
Bonus Schemes, Employee Stock Option Schemes etc., which will need to be
related to support the organisational objectives. This in turn will require a
transparent, well-accepted and fair appraisal system along with procedures for
counselling, mentoring and helping employees to develop. Review and redesign of
Retiral Benefits and Medical Assistance during & subsequent to the service
period including social security needs will require attention. At the same
time, the control of the rising employee costs will continue to demand a lot of
attention – this does not imply low salaries, but high productivity and result
oriented manpower utilisation with competitive payments. The uncontrolled escalation in management
salaries and benefits of late in
Building
of self-driven and committed employees with competencies necessary for high
level of sustained performance has always been a major challenge to HR and top
managers of any enterprise, and this is getting accentuated day by day.
Retention and motivation of key employees, and their backups, will therefore,
be a major challenge for which career planning will be important. Creating an open organisation culture with
empowered employees, as the foundation to build such commitment, will be
another major policy challenge for the HR people in particular.
No organisation can remain an island, and
therefore the leadership will have to play a greater role in contributing and
participating actively in the environmental and society issues – yet another
important challenge. Similarly, planning
to manage any disaster – both internal and external - will tax the HR managers,
who will have a much larger contributory role in this area in the coming
future, along with others.
The list may look formidable, but systematic and competent
review and actions will make the challenges of the future manageable. The need, priority and urgency of meeting
these challenges will vary considerably from organisation to organisation. However, the performance of HR Managers along
with their other team members will be an important key and a vital success factor. They will need far greater support and
involvement from the top management and other functions towards maintaining and
ensuring the future success of the twenty-first century organisations.
__________________________________________________________________
Ashit K. Sarkar
Management Consultant & Advisor,
3E
Ph/Fax: (080) 2554-0393/4112-8153 E-Mail: [email protected]
Home Page: http://uk.geocities.com/ashitsarkar/