Alternate Hr Perspectives and Valuation

ALTERNATIVE HR PERSPECTIVES AND VALUATION By Ganesh Shermon ©

PART A: EMERGING ROLE OF HRM IN THE 21ST CENTURY. A RESEARCH INITIATIVE HR Folks International, a virtual knowledge organization on the web, recently conducted an India corporate based research covering a large spectrum of companies that represented a wide span of industry segment. The purpose of the study was “To evaluate the consequences of the knowledge economy on the HR function with a particular reference to career management”. ORGANIZATIONAL EFFECTIVENESS Organizational effectiveness continues to be an unanswered inconclusive question given changes in the business economy scenario. Many alternatives and measures are available, all of which are right to measure corporate success or failure. However none of the measures offers a conclusive answer to the vexed question. What makes an organization effective? Asset size? Customer base? Market capitalization? Served markets? Global presence? Financial ratios? Growth rate? Or in the context of the web is it the community space, the data warehousing capabilities, the networking capabilities, advancement and strengths in the digital world etc? The McKinsey debate published, in the McKinsey quarterly, a scholarly debate between a consultant and a teaching faculty that brings in the wide variety of perspectives and logical reasoning on “big” as one of the key indicators of survival or being networked and effective being the other. Which of the two organizations would survive? The classical question was Market Capitalization vs Customer Interaction. Is big better?

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The emergence of a new organizational model in our opinion is inevitable. The Intellectual Company of the new millenium. What makes this new organization so different from others? 1. Strategy based on intellect. The organization primarily revolves around

its people and their capabilities. Its strategy is purely a function of utilization of its people and leveraging it through a business proposition.

2. Functional / divisional / matrix. Or Networked, Chain, Link, Circle, Web? The search for a new structure, a new way of doing and getting things done continues. What would make the new age individual work, perform and obtain results?

3. Race for growth on known areas of competence & urge for divestment from unknown or little known areas is a sure shot syndrome of the current era. Nobody wants to be in a business that they either know little or that can be outsourced.

4. “People - systems” against “systems-people” is a predictable change. as companies get more and more systems integrated with a enterprise wide solutions the danger of a distance between the individual and the one large monolithic system is a grave possibility. Distancing people away through a tightly packed system that allows for little flexibility for empowerment or handling customer service requirement on a mass customization basis would bring in unknown agony.

5. New marketing models: E-commerce is the most happening. Every business is working on a B2b or B2C solutions. Each of the business enterprise are making efforts to change the way they work and bring in more revenues. Changing the business model through the web is not good enough. Changing the way we do business by increasing the share of the mind and the wallet of the customer is key. B2B e-commerce business is expected to soar from $ 43 billion in 1998 to $1 trillion by 2001, dwarfing the B2C market, which is projected to grow from $7.8 billion to $ 108 billion during the same period.1

6. Competitive advantage through management of people. Using principles of KM to make every individual bring in a value adding perspective to their jobs as they discover their intellectual advantage.

1 AMR Research, Inc. Competing in a Customer Driven Economy. Fortune. October 25,1999.

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EMPLOYMENT ISSUES: CONSEQUENT DISCONTINUITIES Career planning is perhaps an oxymoron? It is a contradiction in a business scenario wherein individuals are expected to cannibalize each other by innovating and counter innovating. Employees would make their roles self perpetuating by generating new ideas as they keep working on their old ones. As they come up with a new idea they transfer their old one to another and move on to the new, unknown area. In this context, perhaps, careers do not make a lot of meaning. The unknown area could be in another location, company or place. Learning divestment & knowledge acquisition implies that as we learn more we realize the need to alter and unlearn several assumptions of the past. Seeking pure knowledge necessitates divesting ourselves off preconceived notions, stereotypical attitudes and make believe perspectives on right and wrong. Specialization and specialization is another dimension to study. If the organization of tomorrow implies knowledge intensiveness does it indicate greater specialization and depth of what is known. The question is whether more and more employees would seek vertical knowledge focus as against a horizontal spread. Specialization indicates knowing more and more of less and less. Both the individual and the organization would find management of specialized knowledge difficult to handle given inevitable insecurities that go along with it. Or the fact that peer understanding of the specialized knowledge would by itself be limiting. Intellectual property: Individual or organizational rights are a classical ethical question? As people create, innovate and make new things happen or while they perform their jobs intellectually generation of ideas and consequent patents are inevitable. Who would take ownership for the patent? Why would a question that until today did not have a dilemma suddenly emerging to become one? New knowledge always starts with the individual. An individual’s personal knowledge is transformed into organizational knowledge valuable to the company. The organization cannot create on its own without the initiative of the individual and the interaction that takes place within the group. Transition from an individual to an organizational knowledge many mean articulating mutual benefits and rewards that make creation and sharing easy to manage. Remuneration policies of the corporation are yet another change oriented HR policy perspective to study. As people compete and perform in a competitive environment, where individual contribution is more measurable than ever before skewing remuneration and rewards in favor of the individual is more than necessary. Compensation is another way to answer the ethical question dilemma of intellectual property. As individuals perform and as they realize their value to the corporation they would demand more for their contribution. Offering ownership stakes is a way to address this problem. Creating a program that links contribution to long term rewards and

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a proportionate risk-reward ratio would motivate employees. Bringing in “Intrepreneurs” 2who have taken ownership responsibilities for their actions is a viable alternative. Predicting the future HR Scenario Available options Vs Research Experience A) Empirical model based on secondary research only. B) Study of other economies in an advanced stage, or C) Researching the leaders and Top Management of businesses in India managing the

enterprise of tomorrow by using both the primary and secondary research tools. A Research Experience •Objective 1. CEO and top management add a futuristic perspective on HRM issues in the first decade

of the 21st century 2. Relevant influencer of business direction to present their perspective Issues addressed 1. Critical People Success Factors in the New Millenium 2. Career Definition in the New Millenium 3. Motivation for Organizational Effec iveness t4. Knowledge Management Strategies Methodology •Sample of CEOs and top management of top Indian corporate in India in 1. Emerging industries 2. Global corporations 3. Indian giants 4. Technology focused industries 5. Service sectors • Open ended 4 point search and content analysis from published materials, magazines, books and company brochures, including a questionnaire for select participants administered: 1999 Survey Content feedback Methodology.

2 Pinchot, G., III. 1985. Intrapreneuring: Why You Don’t Have to Leave the Corporation to Become an Entrepreneur. New York: Harper & Row.

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• Frequency distribution of responses plotted & key trends identified. A predicator model of reading between lines on what are emerging to be likely issues for the future as seen by the top management of the companies. Is there a pattern or consistency to what is being predicted as the issues concerning HRM professionals for the future? The Information Search 1. Please articulate the critical “people success factors” for organizations in the decade

2010 2. The 20th century employer sought “career employees”. What in your opinion, would be

the trend in the decade 2010? 3. What would you consider “Motivation Theory 2010” for organizational effectiveness? 4. In the knowledge era, what are the “Knowledge Management Strategies” that

organizations should adopt? The Research Results and Analysis. A) Critical People Success Factors (Not Rank Order but greater frequency of inputs) 1. “High tech - low touch” comfort employees 2. Blend of “thinker - doer” competency in every individual 3. Creativity and solution providers 4. Self-managed stress and ability to handle business weight 5. Strong “value based” leadership 6. Balance between “specialization & general management” 7. Compelling “vision & leadership” 8. “Cross cultural” adaptability 9. “Quick responses” to unprecedented change B) People Success Generic Statements (Important but not a pattern) 1. Managing enterprise “holistically” 2. “Environment relationship” managers 3. Culture of openness tending towards “informality” C) People Success Characteristics/Attributes and Trends a. Multiple skills and Versatility - 64% b. Teamwork and Group Work - 36% c. Competency Development - 64% d. Value based leadership - 27% e. Technology comfort - 18%

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*Multiple responses from each respondent hence total is not 100% D) Career employment trends (Consistent Pattern of Responses) 1. Knowledge worker & knowledge careers 2. Low settling in time for peak performance 3. Short term service providers like consultants & freelancers 4. Immediate hits rather than long-time loyals 5. Frequent internal transfers - flexible employees 6. Career employees may not be available E) Most sought after employee in 2000 - 2010 a. Career Employee with Long Term Perspective - 18% b. Knowledge Worker and Intensive Intellect - 45% c. Consultants/Freelancers - 55% * Multiple responses from each respondent hence total is not 100% F) Motivation theory 2010 1. “Profit sharing” through ESOP: Owner Managers 2. Organizations will endeavor to enhance “quality of life” beyond work 3. Satisfying “learning needs & self actualization” while at employment 4. Delivery based “extravagant pay” 5. Enhance “employability” and specialized skills and competencies. 6. Significant “empowerment” and Freedom to act. 7. Company environment that recognizes the need for “personal growth” G) Motivate through a. Personal growth 64% b. Significant empowerment 45% c. Competency training 27% d. ESOP 18% e. Lifestyle management 18% * Multiple responses from each respondent hence total is not 100%.

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H) Knowledge Strategies suggested by the CEO/Top Management 1. “Flexibility” rather than legacy systems 2. Become a “model learning organization” 3. “Mentoring” for knowledge workers 4. “Performance conflicts” tension through internal competition 5. Extensive “environmental scanning” for internal knowledge 6. Storing “corporate knowledge” & dissemination across the organization 7. “Investment” in data collection, storage, retrieval & processing of organizational knowledge 8. Systems for “faster access” of organizational knowledge 9. Dismantling organizational “silos” & organization-wide sharing 10. “Online transaction” based information flow 11. Managing a “continuous innovation” streak 12. Creating organizational “structures for knowledge acquisition” I) Knowledge Strategies (Prioritization of Thinking) 1. Investment in systems - 82% 2. Organization Learning - 72% 3. Environment Scanning - 45% 4. Innovating Culture - 36% 5. Online Knowledge Capturing - 36% *Multiple responses from each respondent hence total is not 100%

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J) Summary of our Findings and Conclusions: HRM 21st CENTURY 1. Multiple specialization 2. “Team” as an inevitable unit of accountability 3. “Technology friendly” employees 4. “Competency” will determine employment 5. “Value based leadership” for cutting edge 6. “Consultants & freelancers” would prevail over full time employees 7. “Merciless meritocracy” as a value over loyalty 8. “Delivery based pay systems” as the compensation trend – effectiveness of contribution & consequent value to the organization, funds employee pay 9. “Quicker time” to market new ideas as an employee attribute 10. “Employee seen as an independent system” accountable for own development as well as organizational results - significant empowerment as a consequence 11. Company culture must create a “climate” for enhanced learning 12. “Knowledge work” will form a significant part of the employment economy 13. Competing strategy will be governed by environmental scanning, knowledge capturing & retrieval systems, and knowledge dissemination systems 14. “Dismantling all silos” that come in the way of enhancing knowledge based competitiveness will be an organizational priority PART B: 21ST CENTURY INITIATIVES: STRATEGIC HUMAN CAPITAL MANAGEMENT3 (a) Renewal program on the vision and values of the corporation conducted across the

corporation. Help people re experience the organizational dream. (b) Redevelop, communicate and execute a change management program to understand

the implications and challenges of the New World, the knowledge employee and consequent impact on the organization and HR processes.

(c) Regain top and influential management commitment, be a part of the top

management and make the change program effective. (d) Renovate and help share the vision and spread it across the organization, winning

involvement and commitment. Arvind implemented a change management program titled “GLOBAL ENDEAVORS: ARVIND 2000”4, to make this happen holistically.

3 Reproduced from “Applied Intellectual Capital Assessment Base” © and “AICAB” © copyright of Ganesh Shermon, Vinayak Kamath, Neelesh Hundekari and Sanjay Roychowdhury. 4 Shermon.G. 1994-96. Global Endeavors: Arvind 2000. A series of Change Management Workshop covering over 1000 management staff over a period of 3 years.

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(e) Rebuild a communications network that works and say more than what has ever been said before.

(f) Restructure to bring in a boundary less, seamless organization that works for all.

There is enough for an employee to do everyday. Let not getting things done through a simple structure is yet another milestone. WM-data has a policy to not allow any unit with more than 50 employees. This creates sense of family and belonging that in turn increases trust and knowledge sharing.

(g) Restate organizational priorities and goals in the context of the economic

turbulence. Dow Chemical USA has put all its 25,000 patents into a database, which is used by all its divisions to explore how existing patents can gain more revenues. This experience is now being transferred towards brands.

(h) Reward programs of the corporate should make collective benefit of information

usage become real. To encourage knowledge sharing organizations must align compensation, bonuses and other reward programs to the advantage of the group effort.

(i) Rework core HR systems and policies to facilitate its adaptation to the dynamic

people – business scenario. Oticon Denmark has created an organization with no job descriptions, role clarity, fixed time or work rules, but work entirely on a project and performance basis.

(j) Redesign workplace to help knowledge people work in an integrated connected

architecture. Help collection of tools, techniques, and services to be accessible and easy to handle. HP has built offices as open spaces with no partitions or partitions at eye level. This increases sharing of tacit knowledge and values. Satyam Computers and Enterprises have built literally a romantic TechNet Park for its knowledge employees built over several 100 acres. The workplace, the conventional office has lost its significance at Satyam5. The workplace of the company is today a home for its employees, who in any case are treated like partners and value creators and for whom visiting their place of work, is fun.

(k) Reinvent competencies and for it to be effective continue to change as radically

as the business itself. It is critical for the HR function to make learning happen at several times the pace as obsolescence. This is fundamental to remain competitive.

PART C: COMPETITIVE POSITIONING OF HR IN THE 21ST CENTURY6

5 From the author’s personal visit to the Satyam Enterprises sprawling campus at Hyderabad. A true visionary’s dream location. 6 Reproduced with permission of the copyright owners of “AICAB” ©

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Several HR initiatives in addition to challenges raised in the article mentioned below are necessary for managing the knowledge workers. The list is definitely not exhaustive please!

1.1 Bring down wage disparity between levels. Reduction of the blue collar is inevitable and a dramatic shift to new age workforce would happen.

1.2 Hiring profile would undergo a dynamic shift. The new breed of talent would need innovative form of socialization and adaptive procedures.

1.3 Bring in new forms of training and behavioral interventions to manage the competitive fallout of the workforce dynamics.

1.4 Flexibility of company culture and practical policies for home office, flex working are real and happening today.

1.5 Compensation and rewards have to be individually charted depending on the intellect brought in by the employee along with the time frame for its delivery. The company should have reward programs on a group basis for knowledge workers. The Performance Appraisal system must have built in rewards for system creators.

1.6 Time horizon for managing careers would radically shorten. Corporations should not turn desolate and despondent. This is the way things would be. Our retention strategy should be of the KNOWLEDGE and not the person per se, lest we miss the woods from trees.

1.7 Strategic structures would become real and dynamic. Flatter, directly managed entrepreneurial style would become inevitable. Intellect cannot be managed by a bureaucratic structure and policy oriented mechanisms.

1.8 Knowledge based HR products should become available for people management. HR problems would need to be solved electronically. Information access, easy and friendly, is critical.

1.9 Cultures should outlandishly become OPEN AND TRANSPARENT. A knowledge sharing culture needs to become a way of life. Knowledge mapping skills, developing human networks of complementary skills become essential.

1.10 If we don’t tell them somebody else will.

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PART D: A CASE STUDY ANALYSIS7 The case study attempts to address the following questions: 1. What is the role of HR in the 21st Century? 2. Are there inevitable changes in the business management scenario that HR should take

cognizance of and act upon it now? 3. How can HR use technology to its advantage and make “Human Touch” happen? 4. What new forms would HR take in the 21st Century? 5. What is HR preparedness to meet with changes and consequent challenges? TWO ALTERNATIVES HAVE BEEN PRESENTED: ALTERNATIVE 1: THE CASE STUDY THAT ARTICULATES ONE MODEL OF A TYPICAL HR ORGANIZATION OF THE FUTURE. ALTERNATIVE 2: THE ARVIND MILLS LIMITED HR FUNCTION REORGANIZATION “6 R STRUCTURE” THAT INTEGRATES THE HR FUNCTION WITH OPERATING MANAGEMENT AND KNOWLEDGE MANAGEMENT BASICS. ALTERNATIVE 1 WHAT HAPPENS WHEN CALVIN GROWS UP?

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TOO HARD TO HANDLE NOW! The formative era of the HR service provider is long over. Having moved on, the HR function now typically consists of resource groups which cater to RECRUITMENT, MANPOWER PLANNING, TRAINING & DEVELOPMENT, INDUSTRIAL RELATIONS, FACILITIES & ADMINISTRATION, COMPENSATION & BENEFITS and WELFARE and EMPLOYEE HEALTH AND EDUCATION SECTIONS. More than just being a maintenance function its has been increasingly pressurized to change the way it works and has indeed taken on different and more challenging roles in keeping with the times.This has been an outcome of the changes in the business environment and in the commercial and economic infrastructure that have impacted corporate in aligning themselves. The last decade has seen corporate movefrom geographica and f sca channe s of d str but on to e-commerce Te e-

7 Case Prepared by Mohit James keeping an altered HR folks Model in perspective.

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marketing, and satellite channels of promoting products. More number of mergers, acquisition and strategic amalgamations in the recent past have occurred than in the rest of the century put together. The number of e-com ndustr es have gone up and it is expected that over70% of a commerc atransactions globally shall be transacted through the net. Changing and challenging the internal mindset has been and w cont nue to be a task athand for most HR professionals and functions. On the outset of the times that have arrived, the Human Resources Function has moved to being a strategic partner to the business as a competence building specialist function and is indirectly impacting the growth and performance of severalbusinesses around the world. Inspite of these influences, however quantifiable they may seem to the organization's business performance, expectations from the HR function have continued to rise in myriad and complex ways. It may seem a harsh reality to digest that time and time again the HR function has been ca led upon to prove itself and re-establish its significance and credibility to the business.

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The below mentioned case deals with the state-of-the-function situation that faces most HR departments today. Is the time right? Irrespective a close observation of the changing trends in employment practices, Information Technology and its impact on HR systems will tell us that not only the mundane maintenance and administrative functions are being serviced through high-tech computers but are also impacting decision making processes. In the bargain through Comprehensive HRIS and ERP systems and software several effective HR outsourcing models are emerging. Infact outsourcing is no longer confined to administration, payroll, facilities or training. Intranet/Internet based models with the entire HR Value Chain from manpower planning to exit, including career planning and competency profiling could be outsourced. What will be the role of HR in the coming millenium? How will the HR Function establish its equivalence and equity as a function at par, contributing to the bottomline? Will it shift from staff to line- is this transition possible, an unthinkable act, paradigm busting contrivance. Can the business absorb the impact of the HR function, which has been a support service provider, actually adding to the bottomline. Does it need to piggyback on the business it is servicing currently or should it branch out as a business itself.

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Human Resources- A PROFIT CENTER. Black & co. a multi-business conglomerate that has interests in engineering, telecommunication and home appliances business has a well-established Human Resource function that works at a centralized plane. The business has also grown over the years with restructuring and better and latest management practices being initiated by the organization under the able leadership of the CEO. As part of the strategy to boost management think, it was critical to initiate new management style, which was in sync with the moving markets and trends in an otherwise traditional business. This was done by hiring top management from various benchmarked multi-national companies, initiating better management practices as far as managing the business was concerned. Human Resource processes formed a key anchor in this strategy for transformation. The Head of HR, a dynamic and well versed professional with experience in managing HR in a varied and global environment was a key member of the management team which steered these changes. The HR team consisting of professional HR experts slowly and surely worked on changes in the HR policy, systems and practices. The HR organization was classified in the standard process mould and consisted of separate sub-functions. Manpower Planning & Resourcing that created high-end recruiting systems in line with global practices, helped in positioning Black & Co. as a competitive organization for professionals to build a career in and eventually placing itself as a top employer in the industry. Compensation was managed effectively by making the structure of the compensation in line with the markets and being competitive through tax effective payments, capital and fringe benefits, performance rewards, etc. This team for various regions around the world also handled management of ex-pat policy through remuneration. A management and organizational development team ably managed six world-class training centers through active learning processes and a focus on competence and skill enhancement programs. This was fed- in with a performance evaluation system ably linked with business needs based on human- skills intensive platform.

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The employee relations' aspect was managed effectively by bringing in an egalitarian approach and establishing a structure for creating an empowered workforce. In toto, it was an enviable HR function with the state-of-the-art policies, systems, procedures and practices. A strong sense of values and a definitive direction also provided the required balance. Through the support of the CEO and under the leadership of the Head of HR the function moved from milestone to milestone creating on the way several creative breakthroughs in the field of organizational management and Human Resources. Several of the concepts created through projects were published and the creators of the same acclaimed for the quality of thinking and contribution made to the HR function at large along with the organization itself. Simultaneously, the HR team at Black & Co. also underwent their share of honing experiences through exposure to various functions and projects in HR related areas impacting the business directly. These included business restructuring and re-engineering, rightsizing, compensation restructuring, intellectual capital management, career planning and potential mapping, management of cultural issues with respect to mergers and acquisition, etc. All these activities and assignments were also popularized amongst the corporate intellectual community through well published articles and papers at conferences and symposia. Given the breadth and depth of experience, the team members exuded confidence in their ability to handle all and sundry assignments that impacted organizations from a people point of view. There were several other institutions including professional management Council chapters, educational institutions and 8 corporate eagerly wanting to learn and be a part of this influencing conundrum. The scheme of things as they stood seemed Utopian, come the recession, the industry demanded the business to defocus from long-term institution building and value creation processes for the future to survival. Tremendous pressure resulted in reduction of manpower and resource allocation to activities envisaged and perceived as non-value adding at Black & Co. At this juncture the management committee was convened to identify processes and functions which fell in the Schindler's List. HR was also one of the functions which came under heavy weather for downsizing given its changing usefulness in its current form owing to changing business conditions and 8 HR folks, www.hrfolks.com

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expectations.. The decision was kept on hold as part of the management committee was divided in its views. Some opined that HR was an integral part of the organization and was needed to provide the sundry services that the key line functions could not spare time for. Others looked at an option of outsourcing HR to an external agency with the help of IT tools and interfaces already available in the market for a price. The CEO at this point seemed at the end of the tether, although being a firm supporter of HR practices and approach had a bigger responsibility of sustaining the business and formulating strategy and plans for survival. The Head of HR was also involved in the process of decision making. The young, inspiring HR leader had his own share of dilemmas. The team which was created from scratch, which now was the pride of the industry and the HR fraternity, was nurtured with pain and patience and held great scope and promises for leading in the future, faced the threat of disintegration and subsequent extinction. The HR Head put up a proposal to spin off the HR function as a profit centre that shall fend for itself in as far as generating revenues to sustain its position and those of its members. All he looked at was that the Internet and the Web was an enabler. As a profit centre, the HR head envisaged the function would actually be able to add to the bottom line of the organization and at the same time provide better internal services to the organization. This, he said, would be done through the translation of learning and experiences gathered while servicing external clients. The HR team backed up this idea although there were some hard liners who insisted on keeping to the internal service provider role of HR confirming their fear to tackle the future and situation ahead. The enthusiasm of the many actually reduced the voice of the dissenting faction to a whimper. Midnight oil was burned. A business plan saw the light of day. The proposal consisted of a set of services being provided by this new-formed unit that would contribute to the organization at large. The laundry list was impressive, the medium as decided to promote this new profit centre was indeed the Internet and other IT tools and linkages available to enhance business performance.

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The HR profit centre looked at some of the following services that they wanted to concentrate on:

CONSULTANCY COMMUNICATION RESEARCH RESTRUCTURING TECHNOLOGY PRODUCTS ONLINE EDUCATION AND SELF LEARNING HR SERVICES AND OUTSOURCING LEGAL SERVICES PUBLISHING TRAINING & EDUCATION CAREER SCHOOL HR EXCELLENCE CELL EVENT MANAGEMENT LEADERSHIP DEVELOPMENT RECRUITING AND SOCIALIZATION

The idea was mooted in front of the management committee and with reluctance the management committee decided to give this chance to the HR function at Black & Co. The time frame to do or die was 6 months. The HR team was to prove its capability and mettle during this period. The team worked with vigor and passion and did wonders, obviously the goodwill and name created through its earlier endeavors helped. The industry contacts and forums supported the initiative and within a short span of time results spewed forth. The quality of internal services also improved but due the business orientation that came into being through dealing with external agencies it was matter of act and exacting to requirements and specifications. That extra mile although was missed somewhere along the line. The members of the management committee also noticed this along with a large number of employees in the organization.

DILEMMAS ARISE: 9

9 Responses to the Case and its Analysis may be forwarded to www.hrfolks.com of the HR folks International and would be responded to by Mohit James.

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Should the HR Function at Black & Co. launch out on its own and make a Black & Co. one amongst the many in its list of increasing clientele? Should the HR function as a gesture of loyalty to Black & Co. and the opportunities provided by it to give the HR function the much required breadth and depth of exposure override its profit motives and concentrate more on Black & Co. and its needs rather than the profit centre? ALTERNATIVE 2 PART E: HUMAN RESOURCES SYSTEM AND SUB SYSTEM10 THE ARVIND MILLS LTD (AML) KNOWLEDGE MODEL FOR THE HR STRUCTURE: THE “R”STRUCTURE.

The current HR sub system model includes hiring, training, compensation, performance, career planning, potential appraisal, succession planning, employee relations, administration and HR information system while effective linkages are possible the process is not conducive for integrated effectiveness. The Human Resources function has often been termed a staff role to service business needs. As an area of functional competence, there is a defined value chain in the HR function. This value chain has to focus on both value creation and delivery to function effectively as a responsive service organization. In the context of AML, given the business needs of today and times to come, the priorities for HR are as follows: To hire top talent from business and technical schools and the industry

to meet the ambitious projects undertaken To groom the talent for future needs through entry-level hiring,

socialization and training Use the Management Training program to build leaders for the

corporation

10 Reproduced with permission of The Arvind Mills Ltd. Human Resources

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Facilitate creation and nurturing of a culture that performs and makes people enjoy working Design and execute competitive pay, individualized for performance

programs, perquisites, fringes & benefit programs Offer employees a life style that befits a quality of life for self and

family. Build long term Industrial relations with the unions Make internal hospitality services productive and performing Offer relevant and effective training and development programs,

including introducing self learning programs Design and execute reward programs for individual & team based

breakthrough efforts Facilitate long term settling down of employees, including designing

career plans and life goal satisfaction facilitation Ensuring a harmonious, effective and productive work environment Design & implement systems for facilitating employees for various

requirements on the job THE HR SYSTEM AND SUB SYSTEM MODEL11 A need was felt by the organization to integrate the HR sub systems and functional specialization to enhance its integrated effectiveness and help HR function synergize with the overall corporate strategic planning goals of the company. The proposed “R (Resourcing) Structure” was based on the following principles: Link corporate strategy and HRM strategy holistically. Create a structure that links strategy and functional goals of a

department. Make this structure flexible enough to change and absorb changes

including facilitating changes in other functions. Make HRM undergo as many iterations and changes as would a business

strategic plan given changing business plans and objectives. Help HRM understand the dynamics of a business enterprise as against a

traditional understanding of a policy and paper run function. Make the HRM function into a resourcing activity as against an

administrative function responsible only for reaction to a problem. 11 The Arvind Mills Ltd.

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Resourcing meant planning for people in advance as a corporate would plan for finance, materials, power etc. in advance. Involve HRM professionals in corporate strategy formalization programs

including its review and execution. Train HRM professionals on understanding the business and its functions

through education and job rotation. Create formal task forces and group meetings involving operations and

HRM to work on problems and issues together. Eliminate line vs staff demarcation and make HR goals deeply entrenched

with the overall business and profitability goals of the company. Managing facilities in a state-of-the-art manner by integrating all sub

components and systems. Ensuring ongoing employee development to meet the challenges of a

growing organization Designing robust communication & corporate relations systems Undertaking all the above activities through researched inputs and

implement OD interventions as appropriate. Help HRM identify products and services that can be delivered to the

customer with quality, consistency and long term credibility. Make HRM systems adaptive to the needs of a Multiple Business Unit

(MBU) scenario where the needs of one business may be different from another. Customize solutions from one unit to another. Ownership to an HRM issue should rest with the immediate superior and

HRM should be available to support their effectiveness. Make knowledge management of HR process, system and experience easy

and user friendly. Focus on Resourcing, Research, Relations, Rewards and Retreat with

Results as the end goal or destination. HR effectively creates a learning culture when it fulfills the following conditions:12 1. Common concern for people that takes the form of an equal concern for

all stakeholders, customers, employees, suppliers, the community, and stockholders.

2. A belief that peopl can and will learn and value learning and change in its own right.

12 Schein, E.H. 1992. Organizational Culture and Leadership. San Frascisco, CA.: Jossey-Bass.

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3. A shared belief that the world around them is malleable, that they have the capacity to change their environment and that ultimately they make their own fate.

4. That there must be some slack, some time available for generating learning with an equally diverse set of people to interact and learn from.

5. A shared commitment to be open and extensive in communication by telling all and telling the truth.

Fig: A conceptual framework of the 6R structure is as given below:

entation.

Relations Communications

Relations P l

Research

Resources Recruitment R ti

Reward

Retreat

Strategy of Firm

Actions not anticipatedduring strategy formulationbut that end up as part ofthe actual strategy offirm and for which firmaction plans should bedrawn for implem

Strategy Implementation

Formal Plans & StrategyFormulation

Corporate StrategicPlanning Group

Strategic Human Resources Management Group:

Knowledge Management

Linkages for Effective HRM

6R STRUCTURE – HUMAN RESOURCES MANAGEMENT The 6 R Structure covers the overall HRM function with a focus on knowledge management and resourcing for organizational needs. 1. Resources: Recruiting/Remuneration 2. Rewards 3. Relations: Systems/Hospitality/People 4. Research and Restructuring 5. Retreat and Development

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6. Relations: Corporate Communication.

Valuedeliverysystem

Customization

Quality

Consistency

Benchmarked/Reliability

Individualized

Appliedknowledge

OwnershipUnique andrare

Convenience

Through

service

Through

Intellect

Value delivery modeVa

lue

Cre

atio

n

Delivery System of HR

Fig: To execute the above priorities, the 6 R structure is being implemented keeping the “Delivery System”13 outlined here as a conceptual backdrop 7. HR-Knowledge Management: The integrating role-played by HR-KM amongst all of the R Structure. R 1 – Resources The Role of Resources is identifying, selecting, placing and rewarding the human resources needed for the organization. Resources has two sub-sections R 1a – Resources Recruitment The role of Resources Recruitment is to identify the skill requirements for current and future needs, to identify appropriate sources for fulfilling such requirements, selection and placement of an appropriate number and mix of professionals, operatives & trainees. The sources could be internal, lateral hires or entry-level hires.

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13 HR Folks. www.hrfolks.com

Special emphasis lies in search for key positions, entry-level hire for long-term growth and succession planning. R 1b – Resources Remuneration & Rewards Pay and benefits design and administration is not a new skill. However, in a competitive era, when budgets are shrinking, available monetary resources have to be stretched to deliver ambitious outputs. Another characteristic of today’s environment is that the “one size fits all” paradigm has been rendered obsolete in the marketplace. This is true even of employee reward programs, which will have to be tailored to facilitate the achievement objectives of various endeavors in all functions and businesses of the organization. Resources Remuneration & Rewards is an arm that will facilitate the above objectives. The priority areas for this group are budgeting & monitoring of actuals, appropriate salary fitment through position evaluation benchmarking, creation of contemporary benefits policies & administration of the same, and international compensation & benefits management. R 2 – Relations People For an effective organization, the critical inputs required are harmonious relations at the workplace, achievement of ambitious productivity norms, tight manning, manpower availability, and maintenance of a good work ethic at the shopfloor. This involves setting of right norms through inter-unit & inter-department benchmarking, understanding employee needs motives & expectations at the grassroots level, facilitating a good work environment, and defining & maintaining discipline. The role of Relations People encompasses all this. It goes beyond a traditional industrial relations activity towards adapting contemporary management science at the grass-root level. For our geographic needs of the textile businesses, Relations People resource group has two arms:14 R 2a – Relations People Region 1 This arm caters to the needs of Factory 1, Factory 2, newly acquired units and city garmenting factories. Within this arm there are resource professionals looking after D1, D2, D3, D4 & D5 and the group companies in garments, air-conditioning and refrigeration, financial services, telecom, entertainment, engineering and realty. The role encompasses identifying,

14 Improvised “Value Delivery System” created by Sanjay Roy Chowdhury of the HR folks International.

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developing, maintaining and concluding relationships with both the internal and external environment. The relationship managers become single point contact with the communication environment. Their job is to build long term partnerships with all influencing segments of the business scenario in a constructive sense. R 2b – Relations People Region 2 This arm caters to AML & APL F3, and Arvind F4. As above, there are professionals for Business 1 (B1), B2, B3, B4, B6 and B7. This is an off site management job where external environment would also include community development and township planning and maintenance. Health, education, family planning, self-employment, equality and fairness amongst sex, management of diversity would be an important role. R 3 – Relations Systems Getting the best of people to work at competitive remuneration with the best technology sounds the ideal recipe for an effective workplace. This overlooks some basic needs and has inherent fallacies. Some questions would lead us to the intended line of thinking. How does the workplace look? What facilities are available for communication, are they reliable? What about cafeteria and pantry services? How about office equipment, are they maintained and available at convenient locations? What about drinking water? Moreover, housekeeping & security? However, these are always taken for granted, are they not? These factors, termed as hygiene factors, can make or break the work environment depending on the extent to which they are available. All these services have an attached cost, and a potential nuisance level. Managing these services for maximum service levels at low costs is as challenging as managing the commercial customer service wing of any organization. The role of Relations Systems is to design services, create systems for execution and management and control the cost of these services. R 4 – Relations Corporate Communication Two most important processes in any contemporary organization will be communications and networking. Designing of Systems, interventions and processes that will facilitate communication and networking is a crucial HR activity. The role envisaged of Relations Corporate is managing both the external and the internal communications & networks. The former involves

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media relations, relations with all external stakeholders and managing our website. The latter involves employee communications, Intranet, in-house magazines & communiqués. R 5 – Retreat One of the signs of a successful organization is the rate of growth of all its constituents – strategy, systems, competencies and organizational capabilities, technology, skills, service levels, responsiveness, quality, and resource productivity. It is easy to say that good people will make this happen. To ensure such growth, the organization has to invest in the growth and renewal of people. As stakeholders and the vehicles for an organization’s success, the organization owes it to its employees to invest in their growth and learning. The retreat function has been set up with this objective. Some of the activities envisaged are training, in-house and outbound, team interventions, on-the-job learning, learning booklets and handouts, competency mapping, and performance management. R 6 - Research & Restructuring A good management relies on information-based decision-making. Every management structure must therefore have an arm, which will research various aspects of competitiveness in the given area of operations. Research & Restructuring is a resource group formed to provide information on people aspects for decision making on people fronts. Research could be both external and internal. The envisaged role is presenting reports on climate & environment, HR challenges & opportunities, and benchmarking HR practices. The other role of this resource group is restructuring – designing organization structures on a zero-basis and benchmarking structures between units & departments. Resource Integration of HRM: Knowledge Management Group. The linking pin to all of the R Structure is the HR – KM activity. A group of members identified to performed the HR-KM function with a responsibility to facilitate HR knowledge creation, management, retrieval, storage, documentation and dissemination. Their role extends beyond the creation of a system or documenting paper work or activities. The purpose of HR-KM is to make every organizational member appreciate the necessity of creating and consolidating best practices, day to day learnings, people critical experiences. The use of Intranet was but a first step that HR-KM delivered at the company. The HR-KM group was expected to work closely with line and operating management and make aware the need for managing knowledge. The KM framework helped operating management understand the criticality of holding on to intellectual information in the context of employee attrition or the ever changing customer expectation and demands. In the 21st century HR would be rechristened as HR-IT-KM all put into one.

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INTEGRATED “R” STRUCTURE IN EVOLUTION15

Region – Remuneration & Recruitme

Region – F3/F4Relations

Resources

Human Resources:Knowledge Mgmt Relations

Retreat

Relations Commn. Research &

15 HR folks. www.hrfolks.com

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“Making the simple complicated is commonplace; making the complex awfully simple is creativity. That is the knowledge world. There is something for all. Our Utopia of corporate collaboration is creating an organization of human capital that performs at all times”. O2K - HR'S ANSWER TO THE Y2K PROBLEM16

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16 O2K MODEL– is the copyright of H.R. Folks Pvt Limited -“ORGANIZATION OF 2000”

NEWHRMODEL

VIRTUALEDUCATION

HRCONSULTANCY

21ST CENTURYCORPORATION

NEW FORMS OFWORKORGANIZATION

ORGANISATIONALRESEARCH

CORPORATEETHICS

HREXCELLENCE

GOVERNANCE

MANAGEMENTSCIENCE REVIEW

TOPMANAGEMENTSTYLECHANGES

STRATEGICSTRUCTURESKNOWLEDGE

CENTRE

NEW FORMSOF REWARDMANAGEMENT

CORPORATERESOURCEPROGRAM

SELFLEARNING

CULTUREBEYOND 2000

GLOBALBENCHMARKING

COMPETENCYPROFILING

HORIZONTALFAST TRACKING

COACHING

INTELLECT

EMPOWERMENT©

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SYMBOLIC REPRESENTATION OF Y2K HR FUNCTION WITH COMPETENCIES, COACHING, CULTURE, BENCHMARKING, EMPOWERMENT, NEW FORMS OF REWARDS, SELF LEARNING, HR SYSTEMS, KNWOLEDGE MANAGEMENT AND HORIZONTAL FAST TRACKING AS THE BUILDING BLOCKS AND MODEL HR ORGANIZATION, GOVERNANCE, ETHICS, RESEARCH, STRUCTURES, ETYLES, CONSULTING, 21ST CENTURY CORPORATION AND HR EXCELLENCE AMONGST OTHERS AS THE DIRECTION TO BE TAKEN CONSTRUCTIVELY IN EVERY ORGANIZATION. Article by Ganesh Shermon, Chief Executive officer of HR India. Com Private Limited a B2B web Consulting Company specializing in Knowledge HR products and Services.