Why HR ?

By Uddalak Banerjee

Why HR ?

The perennial question confronting all aspirants in most interviews for top HR colleges like XLRI and Tiss is "Why HR?". The issue however is not limited to just an interview. Even after selection some candidates tend to weigh available options thinking whether HR is a good career option? Whether HR growth will be as high as others? Should i opt for HR for it may contain very intense "mugging up" kind of reading material?Is it fit for engineering graduates to join HR? The purpose of this article is to tackle each of this issues at length . Why HR?( from a relevance of course point of view) Any manufacturing/ consulting business has basically 3 components.

Employee

Business Activity

Sales( B 2 B, B2C)

Now it is important to understand the role of Employee in Business Activity ( production/consulting/banking/ insurance ). It is the work of employee that drives sales. The amount of production of goods , the amount of sales achieved depending on quality of products and marketing of products are all dependent on the employee. So all businesses are heavily dependent on Human Resource to provide them the impetus with a highly motivated workforce who are well engaged to all business activity . The primary challenge being to motivate individuals to work for their owner to produce goods in return for a salary figure which is far far less than the net output of their produce ( principal agent crisis).Hence Human Resource study becomes important to know how to deal with workforce requirements, challenges and concerns which in the long run decides the performance of the organization as a whole. Any anomaly can even result in death of the employee ( As was the case of HR manager belonging to Maruti who failed to gauge the sentiments of the factory workers.)

Is HR is a good career option? Before answering this question I would first ask you a question. In your graduation college ( NIT/IIT/State government engineering college/IIIT / Private college) was there any instance in which a company ( manufacturing/consulting/IT etc) who opened up one role ( e.g. management trainee) for one or more branches ( say for Computer science Engineering, Mechanical Engineering , Production Engineering, Civil Engineering) paid differently to each????? . The answer would be No. Do you know why No?

It is because of internal equity. One thing however needs to be kept in mind . Say a company comes to XLRI and offers 18 lakh per annum for a general management role ( eg. Management trainee position -1) and opens it up for HR and BM . Then the ones who get selected ( from both BM and HR ) say 3 from HR and 1 from BM or vice versa gets same salary as promised. But say the same company goes to another campus ( say IIM I/K) in which it will offer say 15 lakh per annum ( now since the salaries are different the roles have to be different. So in such case say it will be Management trainee position-2). Now if they open up the Management trainee position-2 for both BM and HR there. Then again both BM and HR will get 15 lakh . So now the structure will be like

BM
Management Trainee Position 1 -XLRI BM

HR
Management Trainee Position1 -XLRI HR

Management Trainee Position 2- IIM I/K

Management Trainee Position 2 -IIM I,K

Hence at entry level there can be no difference in pay across branches for one company. Now the question is then why is it that XLRI HR gets 16.25 lakhs per annum and XLRI BM gets 16.75 lakhs per annum as average salaries???( Based on 2012 placement data)

The answer to the above question is the presence of high paying banking companies( who profile high salaries for investment banking profiles). Now mostly investment banking companies limit their profiles to BM graduates. Now , one point here needs to be noted. The point is that there are many companies who come to XL and recruit only BM and there are also many companies which come to XLRI and recruit only HR. So hence the averages become different. Now had the same companies who came exclusively for HR opened up roles for BM or vice versa , the starting pays from the same campus would have been the same.

Whether HR growth will be as high as others?

The answer to the above question is provided in mercer data on compensation across different stages of career. and across different functions ( entry level ( associate), middle level and senior management level). I have data for Ireland ,I am stating the same as below . The source is : http://www.morganmckinley.com/sites/default/files/mm/ac/SalarySurvey2013.pdf

Now lets compare the pay scales and ranges. We will find that pay scale for hr director ,finance director , marketing director and operations director are all in the range 80-140 K .

HUMAN RESOURCES. Role HR Director HR Manager HR Business Partner HR Generalist HR Ofcer HR Administrator HR Graduate Learning & Development Director Learning & Development Manager Learning & Development Specialist Training Ofcer/Coordinator Recruitment Manager Recruitment Specialist Recruitment Administrator Compensation & Benets Manager Compensation & Benets Analyst Employee Relations Manager Organisational Development Manager

Low K 80 60 50 35 30 25 20 75 50 40 30 50 30 25 55 35 50 60

High K 130 80 65 55 40 35 25 100

FINANCIAL SERVICES Role Financial Director Head of Fund Accounting Senior Fund Accounting Manager Fund Accounting Manager Fund Accounting Supervisor Senior Fund Accountant Fund Accountant Head of Compliance

Low K 90 100 70 50 40 32 24 90 60 50 35 55 40 40 45 35 40 65

High K 140 130 100 70 50 40 32 120 80 60 50 65 55 45 65 70 55 90

75 Compliance Manager 60 Compliance Supervisor 40 70 50 35 80 Compliance Ofcer Senior Financial Analyst Internal Auditor Financial Analyst (1-3 yrs) Treasury Accountant

55 Credit Analyst 75 Operational Risk Analyst 90 Operational Risk Manager

Managing Director

120

150

MARKETING ROLE Marketing Director Head of Marketing Marketing Manager Assistant Marketing Manager Senior Brand Manager Brand Manager Assistant Brand Manager Marketing Assistant Marketing Executive Senior Product Manager Product Manager Consumer Insights Manager Consumer Insights Executive Marketing Research Manager Marketing Research Executive Communications Manager Communications Executive Campaign Manager Campaign Executive

Low 90 80 40 30 45 38 30 25 28 55 45 40 30 45 30 45 30 45 28

High 130 120 80 55 55 50 40 30 35 82 65 70 42 68 44 68 44 70 44

Operations Role Supply Chain Analyst Supply Chain Manager Supply Chain Director Procurement Specialist Procurement Manager Procurement Director Category Manager (Direct/Indirect) Tendering Specialist Supplier Relationship Manager Planner Buyer Buyer/Planner Senior Buyer/Planner Master Scheduler Materials/Logistics Manager Warehouse Manager Production Supervisor Production Manager Operations Manager (<100 staff) Operations Manager (>100 staff) Operations Director

Low High 50 70 100 40 70 100 70 35 60 35 35 35 40 45 50 45 45 55 60 80 100 70 85 130 55 85 130 85 60 80 55 55 55 65 65 70 60 55 65 80 90 120

Overall pay structures follow internal equity for most organizations. Basically salaries are same across different levels .Say the flow is like:

MD

P 40 Pay grade
Head Finance Head Marketing

Head HR

Head Operations

Each Head in P39 Pay grade H5 to M5 Each in pay grade P30-P38

job level h5

job level O5

job level f5

Job level m5

job level h4

job level 04

job level f4

job level m4

job level h3

job level O3

job level f3

job level m3

job level h2

job level O2

job level f2

job level m2

management trainee

management trainee

management trainee

management trainee

Is it fit for engineering graduates to join HR?

Well I feel the question is out of place. Because HR and marketing are something humans know about from birth . They may not know the terms but they know a lot about motivation related stuff and promotion and marketing stuff. So the core knowledge is there in everybody. Now in case of finance I think Chartered Accountants are more preferable for their deep knowledge of finance . People with CFA level 3 and beyond again do well there because to grasp finance in just 2 years ( through mba course) is rather tough specially for engineering graduates with no exposure to finance what so ever. However, in case of HR and marketing obviously most engineering grads feel at home.

Now , to give you a more holistic view with numbers (because engineers love numbers),in case of XLRI , in the HRM program usually out of 120 students 10-15 students belong to IIT s and around 50-60 students belong to NITs and about 10 from Bits pillani and goa campus and another 5 from DCE. So the net composition around 100 out of 120 belong to engineering background. ( that is around 85% of the batch). Is there any ceiling in HR? What can be its impact? Well to be very fair if you have gone through the table of salaries ,you must have seen that managing director usually goes to the finance guy and not to marketing , operations and HR guy. However, a point to note is that very very very few people actually manage

to become CEO /MD. Out of a alumni base of say 1000 finance grads only 70 actually end up with the post that too from best of best mba colleges like IIM A , B , C and XLRI . So before jumping to conclusion always look at the the rest 930 . What happened to them?

For HR like marketing and operations , the highest post is Head of function which is just one level lower than finance which usually gets the Managing Director position. Now many people ask themselves a question as to what after that???will growth stagnate? Answer to the above question is : You switch from one company to another. So what people mostly do is they switch from Hr head of one organization to another where ever they get better pay and more challenges to work with(The trend is same for all employees of hr , marketing ,operations ,finance). Usually for india , the HR to employee ratio is nearly 1:100. That means, a HR handles nearly 100 employees. Now for big organizations with thousands of workers HR heads responsibility is really very very high. See the fact is that even for finance once you get the CEO position( which will take 30 years or more and chances of getting it then also is rather less unless you are exceptionally talented and well networked ) the growth will stagnate because that is the highest and last level. For operations , marketing and HR it will be one level lesser but then it would hardly make a difference since going to the head level would still require at least 15-20 years of experience and very good performances along with networking. None of these are guaranteed and heavily dependent on individuals aptitude and attitude.

So choose the field which interests you most. it maybe finance, marketing , hr or operations. Choose it on your interest and dreams and not due to a misplaced opinion that this field is better than that field. Because there is and never was any such thing like that!