HR and its importance Human resour ce is the element within a compan y which deals with the human aspect s/nee ds ofworkers. It is that department or functi on of an organization which lays down pol icies, procedures, activity pertaining to human capital of an organization. Key functions Human Resource Management serves these key functions: 1. Recruitment and Selection` 2. Redundancy 3. Indus trial and Empl oyee Relat ions 4. Record kee ping of all p ersonal d ata 5. Tota l Rewar ds : Employe e benef it s and compensa ti on 6. Con fi dent ial a dvice to i nt er nal ' cust omers' i n rela ti on to probl ems at wor k7. Career development 8. Comp et ency Mapping (Co mpet ency ma pping is a pr oc es s an individ ual use s to ide nti fy and des cri be compet enci es tha t are the most cri ti cal to suc ces s in a wor ksituation or work role.) 9. Performance Appraisal Evolution of HRIt started in the 19 th century when the concept of personnel management came into existence. At that point it was only about welfare of the employees in relation to sickness, moral welfare etc. Then came the need for personnel management in industries for maintaining labor relations. But the role was small which required making policies to increase productivity. It further evolved and required personnel managers to look into aspects like labor welfare, working conditions, incentives etc. which facilitate motivation, promotion, increasing morale, performance appraisal. Such changes and importance given to personnel management gave rise to the concept of Human Resources and its evolution to the present state.
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8/8/2019 The Next Big Challenge for HR- Post Recession
Recession started with the real estate bubble bursting in the U.S.A. The effects were felt world
over. Big businesses collapsing, stock markets tumbling, grim markets could be seen all over.
More than 7 million jobs were lost in this 2 year period. 7 million is a big figure, and compare
that to just around 1 million jobs lost in the previous recession in 2001. At present, the
unemployment rate is around 10%. Even though the negative effect of the recession seems to be
lessening, that rate isn't going to come down much even for the next couple of years. In fact, it
will go up to somewhere around 11% in this current year. The job market will continue to remain
weak. Another factor is that in this calculation of 10% unemployment, it does not include
millions of individuals who have just stopped or given up looking for work. So the actual rate of
unemployment is much higher. Low consumer confidence and tight credit will keep consumer spending in check, which in turn will stop employers from adding staff in significant numbers.
At this time the companies entrusted the HR managers with the following jobs:
• Reduction or stoppage of incentives
• Reduction of basic salary
• Lay-offs of non-performing employees
• Get more jobs done out of less employees
• No external hiring, only internal job posting
Every company was pursuing cost reductions in their operations. HR departments started
formulating policies that would reduce costs related to human capital. This involved:-
• Setting higher targets
• Reducing training costs by providing it to only performing employees who were capable
of better returns
• Shuffling employees between different functional areas as per requirements
• Change of organization structure and goals related to cost reduction
Recruitment involves cost; not just as an overhead but time as well. The above data suggests that
it takes anywhere between 1.2 and 2.6 months to recruit a professional. The process takes a
considerable amount of time of the HR department and other concerned personnel. And this is
one of the major reasons why companies won’t like to lose their employees and start the process
of finding a replacement more often. Manufacturing, IT/ ITeS, pharmaceuticals and engineering
are those sectors where the average time for recruitment is fairly high. With time, the cost of
recruitment has gone too steep vis-à-vis the Cost-To-Company (“CTC”), and this study indicates
that this has shot up alarmingly when it comes to hiring for middle and top management
positions.
• Shortage of talent
The shortage of people with employable skill-sets remains a major concern across industries. As
many as 85% of the organizations in this study admitted, that they face shortage of talent with
the desired level of skills required to fulfill certain roles and responsibilities. Our research further
reveals that almost all the participating organizations from pharmaceuticals and engineering
industries were experiencing shortage of talent. The manufacturing industry too experiences an
acute shortage of technical skills that can be readily deployable in ongoing projects.
While looking at the media, entertainment and services sectors, we noted that about 35% of the participants were satisfied with the availability of manpower for their organizations.
0%
20%
40%
60%
80%
100%
120%
Feeling Of Shortage Of Tal
Across Industries
8/8/2019 The Next Big Challenge for HR- Post Recession
Conventionally, it is high-performance that is valued the most in an organization, as it is easily
observable, measurable and quantifiable. On the other hand, high potential is harder to observe,
promote, and most importantly, to translate into a discernible business result. This aspect in
talent management is critical to understand for everyone involved with organizational
development. Talent management is not merely about monitoring, and recording performance –
but converting these inputs on performance into actionable talent development initiatives. This
process alone can generate continual success in creating maximum organizational efficiency. In
the long run, it is these organizations, which recognize, develop and nurture potential, that
sustain growth and stay ahead of their competitors. It is not that high-performance should be put
on the backburner but a balance should be maintained in taking forward both of these qualities.
High performers, are those who are able to realize their potential and need to optimize it. At the
same time, there may be high potential employees who need support, recognition and
opportunities to prove their mettle. Selecting high-potential employees within the workplace is
undoubtedly a good practice, but it fails to deliver desired benefits due to lack of communication.
Acknowledgement of their importance by the organization is a must for the development of high
potential employees. This study denotes a noticeable mismatch across industries with regard to
communication between employers and high-potential employees. On the brighter side, most of
the organizations were actively identifying high-potential employees with the average reaching88% across all five industries. However, as far as communicating this factor to the employees is
concerned, the average was significantly low at 69%. These are IT/ ITeS and engineering
companies with clear expressions on the subject, while media and services, and pharmaceutical
companies were found conservative in their approach in this respect. As for the manufacturing
sector, 86% companies acknowledged identification of high-potential employees within their
organizations. However, only 71% said that they were sending this message across to their
employees.
8/8/2019 The Next Big Challenge for HR- Post Recession
industries stands at 19% of the CTC. Media and services industry are paying significantly higher
than the market average, whereas the pharmaceutical companies pay the minimum of all among
the covered industry segments. Typically annual incentives are aimed at rewarding past
performance only, but there is an increasing trend in the industry that shows that corporate
houses tend to link it to the potential of an employee along with past performance.
• Performance appraisal
The performance appraisal process should be viewed as a diagnostic exercise for understanding
employee needs and aspirations, providing clarity about roles and responsibilities and hence
keeping them motivated and engaged with their work. As for the process flow, it is largely done
by the manager, the employee himself and the manager's manager, at most workplaces. The 360
degree feedback (from all across the organization) for an employee is not very prevalent still, but
it has been used more as an input for senior level performance evaluations. Out of the
organizations that seek feedback from customers, 75% belong to the IT/ ITeS sector.
• Goal setting
As for the appraisal process, employees actively participate in setting their goals against which
they are evaluated.
About 89% organizations in our study said that employees are part of the goal-setting exercise.On the other hand, almost 81% of the organizations provide feedback to employees at the end of
the appraisal process.
Moving towards the Future
8/8/2019 The Next Big Challenge for HR- Post Recession
From the above we can see that we live in a rapidly changing environment. The economic
scenario is becoming uncertain globally. Both the employer and employee are looking to HR to
play a major role in safeguarding their interest. This is a responsibility and an opportunity. The
recent happening of being separated one day and the next day being reinstated has questioned the
efficacy and role of H R. Business is demanding greater value added services from HR.
organizations looked upon functions like sales, marketing, R&D to foster the growth of a
company but HR has joined the league as people factor has become a major differentiator.
Expectations from HR include solutions that deliver on cost- effectiveness and high level of
employee engagement, retention and productivity. HR as a value proposition would revolve
around framing HR as a source of competitive advantage by creating human abilities and
organizational capabilities that is substantially better than those of the competitors.
So for the future, the HR leaders should look to achieve the following parameters:-
• They need to move from functional expertise to business partnering. Making every
employee a part of the business process helps creating better understanding, returns and
performance.
• In the future people capabilities will define and derive business advantage. So the HR
process has to look to get the better of these capabilities.
•Since it is globalizing world diversity plays a great issue. The HR function is required tohandle this diversity and look to integrating process and people involved from all kinds of
backgrounds
• Gender equality also plays an important role as women should be given the same
opportunity as men and that position should be held on merit.
• HR is to monitor and nurture key employees
• They have to see to it that not only are there hot people available but hot jobs too.
•
Ethics should be well abided, which strengthens the moral belief of an employee to theorganization
• Grooming should constantly take place
• Not only best practices to be performed by HR but they have to move on to the next