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Human resource is the organizational department that has perhaps gone through the most number of changes in this volatile business environment. All the way from a cost centre, that the top management had to grudgingly keep as a part of their organization so that the others would think of them to be employee friendly, to a profit centre which is considered to be a strategic asset to the company, it has traversed quite a path.
Human relations as we know it has come a long way from Taylor to the Hawthorne Effect. Today we claim that human beings are the assets of any company and they should be treated such. But is it actually that way?
If we look at most of the companies and the roles that are played by the HR Managers and Executives, we will see that the role of the department is purely supportive in nature. There is a well structured department in place, but they only take decisions which are restricted to hiring and firing on the recommendations of the finance or marketing managers. If by any chance the HR Manager does choose a candidate which he thinks to be a good fit with the organizations culture, but the line manager is not as happy with him, then the HR Manager will have to bow down to the line managers wishes and hire the later s choice.
The HR department is also often accused of being the submissive department that is not in sync with the other strategic departments of the company. It does not get the same amount of the importance as the other functions of the company. This in fact can also be seen through the fact that very few HR Directors or Managers actually go on to become the CEOs of the company. It is a common notion that the HR Department is not as aware of the details of the other departments and the working of the company as well as a Finance Manager would perhaps be.
Though this perception is perhaps now changing and the HR department is slowly being viewed as a profit centre. From a department that only hires people and looks after the wages, HR is being perceived as the change element of the company. Every company can get the best technology and the software that is required to run the company, but what makes one better than the other is the people working in that company. And this is something that organizations are now realizing. They can see that if their people are motivated, are working in jobs right for them, then the organizational goals are being achieved as a by product. Person-job fit, motivating employees, communicating with all the employees through technology are some of the things that the HR department is now doing.
The HR department today is not only a department as important as the others; it is ensured that it is aligned with the other key strategic areas while reviewing the organizations goals and policies. In fact the HR departments policies, if after implementation are very successful, they are also sold to other companies. This practice is being followed by leaders such as Dupont, Xerox and Microsoft. This actually allows the HR department to generate profits for the company.
From job designing to career planning, an additional baggage to integral department, cost centre to the binding force of an organization, the HR department seems to have traveled a long way. But this does not mean that it still gets it due. Apart from the manufacturing sector, the department has a stronghold in very few companies. The others are learning and trying to keep up with the changing environment, but only time will tell whether the HR department will submit or subvert to the demands of the organization.
HR : A Valero Perspective
About a 150 years ago, with the advent of the Industrial era; the age of mass production, of assembly lines, of profit maximization and worker exploitation began. People problems became a pertinent problem in the workplace. As unions formed and the worker movement grew in strength, it became extremely important to manage workers. This is where personnel management started.
For a while, HR functions dealt with worker grievances. Gradually it started dealing with worker motivation. That was an age where jobs were mainly blue collared. Workers were expendable as few skills were required. The management philosophy at the turn of the century was epitomized by Henry Ford, who often wondered why workers brought their heads to work when all he really needed was their hands and feet.
The Industry has changed drastically since then. With the advent of the Information era, a huge number of desk jobs have been generated which requires various skills. Not only is finding the right employee a significant hurdle but training and development involves a lot of cost. Employees are no longer expendable. Submissive is something an HR cannot afford to be as the successful running of the organization depends on how efficient its HR arm is. The HR department must have significant autonomy in its operation. Collaboration on predicting future Human resource requirements with the management must be there but it defeats the purpose of having an HR department if it is merely a puppet at the hands of line managers. Let us take the example of Valero Energy Corporation. It came into existence in 1980 when Coastal States Gas Corporation separated itself from a defunct subsidiary LoVaca. This was right after the energy crisis of the 1970s. Today Valero Energy is well known as one of the best employers in the US. Not only does the company have the distinction of not having laid off a single employee even during the most difficult times, but it also offers some of the best benefits, bonuses and compensation in the volatile energy sector.
This comeuppance is plainly due to the importance accorded to good HR practices. The firm has consistently believed and adopted a policy of employee-first which promotes a positive work culture resulting consequently in higher shareholder returns. Employee motivation is high and attrition rates significantly low. Practices such as systematic succession planning results in very smooth ascension and transition of employees from one role to the next. In October 2005, Valero had one of the smoothest CEO changes in American history when Bill Greehey announced that he would phase out of his role as the CEO in favor of Bill Klesse, the company's Executive Vice President and Chief Operating Officer. Sudden changes in leadership (eg - IBM) is damaging to employee motivation and work culture. A weak and submissive HR department can never facilitate the smooth running of an organization the way the HR department at Valero does.
Power on the other hand must be enjoyed responsibly. While the HR department has the power to cause a complete overhaul of the working conditions and culture, it must keep in mind the opinions and suggestions of those who will be directly impacted by those changes. The job of an HR is to facilitate open communication. It must make sure, genuine problems and innovative ideas coming from the lower ranks of the organization are not stifled. In fact, a good HR department will try to facilitate as much open sharing of ideas as possible. A unique feature of Valero's culture was the high level of visibility that the management maintained. In certain company events, it was the CEO and President who served refreshments to all. Such practices helps to bring the management closer to its employees and vice-versa. It ensures that the management gets to know the day to day issues concerning the organization. It is the job of the HR to adopt such practices. At the end of the day, an HR must remember that employees are happy with the workplace if they trust the management, take pride in what they do, is given due recognition and enjoys working with colleagues.
One head, many hats
Jack of all trade, master of them all, the employee advocate or the devil's, change agent, or simply put, a trouble-maker, the HR manager's role is about striking a balance between the management and the employees. To strike the perfect cord of harmony, not being biased either way, is the key. It's the same way with the two words chosen to describe the role. It's neither submissive nor subversive but somewhere striking the perfect balance between the two extremes.
Capital is easily available, efficient people are not: Right now operating in an economy that is still struggling to recover from a serious recession and demand contraction is creating a paradoxical situation of sorts. With downsizing and cost-cutting, there has been a marked rise in joblessness. Yet on the other hand we have a much diminished pool of talent, their supply infinitely lower than their demand. The prime challenge is to attract and retain the talent pool. The talented people, being so few in number as compared to their demand, can be thought of as a monopolistic kind of market where these people dominate and the companies all vying with each other to get their attention. To gain competitive advantage, organizations have come up with employer branding, spear-headed by the HR managers attract and retain the best talent for sustained development. Here the role tends towards subversive side, wherein, the HR has to take a pro-active job of aggressively building the employer brand, as well as living the brand.
Shift in the position of the HR department: It is going for a decentralized approach from the initial centralized structure. The changing dynamics of the organization demands that the HR functions move away from their traditional, compartmentalized, "pigeon-hole" approach to a much more decentralized form so that they can be more accountable to the line functions of finance, marketing, etc. The HR assumes a more submissive kind of role, as compared towards the line functions. But then again in areas of compensation and recruitment, which require a specialist's expertise, HR still functions in an independent, centralized way, being submissive to none.
The changing character of businesses and market place: Rise of newer and more sophisticated technologies, a steady decline in manufacturing industries and an increase in service-oriented businesses, and a very rapid market globalization, are forcing the organizations to become more focussed on people, and do away with hierarchies and go for flatter management structures. Tasks which were once fitted under well-defined, neat bunkers of job-description are gradually assuming smokier forms and ambiguous shapes. Much of the responsibility of bringing about all these changes successfully lies on the shoulders of the HR.
Thinning of the boundary across departments and responsibilities: Many top companies have their HR department headed by people from non-HR functions and vice versa. For instance, S.V. Krishnan, who headed Satyam Computers's largest business unit, was chosen to lead Satyam's HR function in 2007. He replaced Hari T, who moved on to a strategic role as head of marketing. So here, it wouldn't be fair to put the HR under either of the two extreme heads of submissive or subversive. Rather, the trick here is to tread the very delicate middle ground between the two extremes and occasionally take a stand, depending on which way the wind blows.