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"HR is dead. Long live HR," says David Ulrich, a professor of business administration at the University of Michigan. That's his way of saying that "the old HR"--that which emphasizes expertise in transactions and paperwork--"is dying in a sense."
HR management though conventionally seen as a support function has evolved into more strategic role for any company. Gone are the days when HR personnel just recruited and dealt with training and development, and compensation issues. Now HR managers have become instrumental in creating a well defined vision and communicating the same to the entire staff of the organization. The paradigm shifts has resulted in the HR department being perceived as a more strategic business partner and not as a mere support team. The velocity of change in the corporate environment has grown exponentially in the past few decades. HR staff has to deal with a plethora of issues to handle these times of dynamic changes. Change can be perceived as one or more of the following aspects: cultural transformation, handling workforce diversity, varying demographics vis-à-vis retention and acquisition, ethnocentric to multicultural perspective and global competitions.
Knowing how to link change to the strategic needs of the organization can minimize employee dissatisfaction and resistance to change. The HR professional contributes to the organization by constantly assessing the effectiveness of the HR function.
Emerging HR challenges- HR knows them all!
Top future HR challenges were identified in an online survey administered on HR and other executives throughout the world in 83 different countries and market by Boston Consulting group and WFPMA. The survey results revealed following challenges in three strategic areas-
Developing and retaining best employees
Enabling the organization
As we move on we would be discussing in detail about the key challenges reinforcing the fact that HR of today knows the change- the future challenges- and how it can tackle one and all of them.
Managing Change and Cultural Transformation
As companies hire employees from around the globe and enter new markets with increasing speed, managing corporate and cultural change has become a critical capability. An organization should be able to respond to respond to business opportunities more rapidly and creatively leveraging its mix of talents of diverse cultural backgrounds, genders, ages and lifestyles. More importantly, if the organizational environment does not support diversity broadly, one risks losing talent to competitors. The future success of any organizations relies on the ability to manage a diverse body of talent that can bring innovative ideas, perspectives and views to their work. The challenge and problems faced of workplace diversity can be turned into a strategic organizational asset if HR is able to capitalize on this melting pot of diverse talents. Refer the figure to understand change management.
With more companies spreading up globally, the expatriate managers and their families face a lot of issues during the time the employee is on a different location. The management of these expats could go a long way in deciding how quickly companies are able to diversify geographically. Both socio-cultural and psychological contract needs to be established. Cross cultural training like language training could range from introduction to immersion level.
The key to creating a consistent corporate culture across multiple locations is maintaining the critical balance between a strong corporate culture and local cultural differences. A more complex economy demands more sophisticated talent with global acumen, multi-cultural fluency, technological literacy, entrepreneurial skill, and the ability to manage increasingly de-layered, disaggregated organizations." Globalization has given HR an opportunity to expand its hiring horizon and enabled organizations to reap maximum benefit out of diverse talent pool and economies. However, along with positives, globalization comes with some negative aspects too. The highly integrated network of these rapidly growing economies becomes a pain in a situation like the very recent The Great Recession of 2008. Layoff was the only word that occupied everyone's mind. In such a situation role of HR becomes highly important in keeping the survivors motivated. An organization that succeeds in winning the hearts of its survivors who are supposedly their best people has half its battle of employee engagement won. The other practices that HR should follow during good as well as bad times include the following-
Rely on a fair and merit based process to conduct layoff and retain the most loyal, capable and committed employees
Involve the survivors in building the company by giving then additional roles and responsibilities.
Rely on metrics by regularly celebrating the achievement of key milestones and discussing key performance metrics.
In developed economies baby boomers are beginning to retire and in developing ones the qualification of graduate does not meet the needs of companies that do business there.HR executives in Asian countries like China, India, and much the rest of the developing world increasingly encounter shortage of suitable candidates and the changes associated with the staggering pace of economic growth make it difficult for companies to attract and retain enough qualified workers. In an ever intensifying competition for talent companies that can appeal to and retain different kinds of employees are more likely to succeed.
Prospective women and Gen-Y workforce needs to be dealt with seriously. Number of women entering the workforce is increasing. Gen Y has different expectations from older generations. In US women were projected to account for 49% increase in total labor force growth between 2006 and 2010. In India participation of women is although low (3-6%) but is witnessing an increase since last few years. The million dollar question is how to address the change.
How to manage changing expectation of Gen "y"- the millennial
Current trends indicate that the majority of Gen y youngsters do job-hoping every 18 months and expect to move up the ladder quickly. The question arises how to retain this lot. The answer lies in establishing psychological contract, setting greater expectation for better performance (Pygmalion effect) and providing flexible timings.
How to hire and retain women workforce
In an interview with McKinsey, Beth Axelrod, HR head at eBay shared following viewpoints on how to tackle this challenge. The first step should be to create an environment where senior leaders would develop the mindset to recognize that this matters by bringing Fairness, meritocracy, work-flexibility and commitment towards nurturing women leadership.
Developing and retaining best employees
Pushing into the future requires two things: a clear understanding of talent needs in the context of business goals, and the capacity to design and implement practical, long-term plans to source, develop and retain talent when and where it's needed. Planning would be the comprehensive set of actions that are intended to be taken in order to maximize the efficiency of an organization vis-à-vis their employees. The colossal changes with respect to source of talent would warrant the need for HR personnel to keep themselves abreast with the latest in social networking sites such as Facebook and LinkedIn. Developing talent within the organization is considered by many HR pundits as the right way to go forward. Retaining the best of the talent is a monumental effort by itself. This would only increase in the upcoming future.
HR needs to shift its focus from ethnocentric view to a culturally relative perspective to effectively manage workplace diversity. This shift in philosophy has to be ingrained in the managerial framework of the HR Manager in his planning, organizing, leading and controlling of organizational resources.
After thorough research we have come up with following best practices that HR should keep in mind to effectively manage its valuable talent pool.
Launch a Diversity Mentoring Program which would seek to encourage members to move beyond their own cultural frame of reference to recognize and take full advantage of the productivity potential inherent in a diverse population.
Organize Talents Strategically. Let us understand this with an example. In late 1980s, when China opened up its markets to international markets, the Chinese companies like Haier sought the marketing expertise of Singaporeans. This is because Singapore's marketing talents were able to understand the local China markets as well as English markets relatively well.
An HR Manager must be able to organize the pool of diverse talents strategically for the organization. He must consider how a diverse workforce can enable the company to attain new markets and other organizational goals in order to harness the full potential of workplace diversity.
Control and Measure Results. An HR Manager must conduct regular organizational assessments on issues like compensation, benefits, work environment and promotional opportunities to assess the progress over the long term. There is also a need to develop appropriate measuring tools like organization wide feedback surveys to measure the impact of diversity initiatives.
Communicate HR value proposition and keep identifying new talent pools. Strive to become employer of the choice.
Improving leadership development
Leaders convey the mission and sense of purpose of the organization. They serve role models, are the primary developers of people, and engage the staff in highly visible ways. Corporations should invest considerable resources in defining specific leadership models, assessing their leaders, and designing development programs HR mangers should invest time and effort towards effective succession management. It is taken as a highly positive signal by the employees and eventually leads to increased organizational commitment. Moreover, leaders have to internalize the culture of your organization so relevant training programs should be provided for the same. Various measurement tools like LMX (Leader member exchange) questionnaire should be administered to gauge the perception of employees about their leaders.
Enabling the organization
Becoming a learning organization
Famous organizational theorist Peter Senge defined learning organizations as "Organizations where people continually expand their capacity to create the results they truly desire, where new and expansive patterns of thinking are nurtured, where collective aspiration is set free, and where people are continually learning to learn together." Achieving a competitive edge requires making changes that generate innovation and constant improvements. Technology, equipment, and supplies can all be duplicated but People are the one organizational aspect that can't be copied. Structures and systems that allow organizations to tap into and enhance the power of those human assets are the keys to growth and success in the future. The benefits of such an organization are multi-fold like engaged employees, higher revenue growth and employee performance.
Transforming HR into strategic partner
HR and business need to be able to understand the process of formulating the business strategy, the process of formulating the HR strategy and aligning the HR strategy to the business strategy as well as the process of executing the HR strategy. We propose following model in the light of the same.
The HRP model has come a long way from being an elementary planning model to a strategic human resource planning where HR objectives are linked to organizational objectives and planning. It is designed to ensure consistency so that the objectives of strategic plan are feasible.
Linking HR with metrics and strategy
HR function must be able to measure, count, and calculate the effectiveness of both its internal operations and the company's overall people strategies. One of the most effective ways to integrate HR and strategy is through the creation of a strategic work force plan. Boston consulting group has come up with an interesting framework for the same.
Sourcing strategy should be directed towards acquiring talented workforce by matching the potential workforce supply in labour market and its own demand of workforce in future. Performance strategy signifies that performance metrics should be closely in sync with the corporate goals. Development strategy should reinforce corporate objectives by development of its future leaders. All these critical HR tools should be tracked on an ongoing basis to make adjustments as and when needed. According to affiliation strategy these steps would help better the systems and enable building relationships with employees.
Is HR a Profit Centre?
Traditionally, HR has been financially accounted for as a cost centre hence becomes a major target for cost reductions. Many HR plans end up being curtailed because HR initiatives are not measured on their ROI as they are perceived to have minimal impact on sales and profitability. Regardless of irresistible evidence from studies across the world that efficient human capital practices encourage bottom line performance, people-focused initiatives are still not accepted as strategic priorities in most companies.
The capacity of non-financial measures and they extent to which they drive business performance is grossly underrated. However, there is a rich source of empirical evidence available to quantify the value in HR-based initiatives to a very high precision.
Companies that invest in talent management initiatives yield 27% greater shareholder return.
Increasing employee engagement by 5 percent can add 2.4 percent to a business' operating margin.
Over a 10 year period, an Index of Human Asset Focused Companies significantly out-performed the S&P 500.
Human capital practices account for as much as 43% of the difference between a company's market-to-book value and its competitors'.
Shareholder returns are 3 times higher at companies with superior human-capital practices than at companies with weak human-capital practices. The positive impact holds whether the business cycle is in a boom or a recession.
HR is on the brink of redefining corporate performance. It is its now responsibility to create the vision of the value of the human asset and link this value to the bottom line.
We believe that HR of today is well equipped with business knowledge and is aware of the emerging challenges that it would encounter in future. No doubt, HR knows it all and thus fitting to say that HR knows change. But is HR ready to deal with the changes? As future HR personnel ourselves, we can only add to this beautiful conundrum as we need to find the balance between ingenuity and organization's mission.