Introduction

If you happen to meet the HR Head of a large organization, just ask him what his biggest challenge is. He will say 'retention of people'. The same person after a few minutes for the same question will answer 'attracting talent'. Probably his answer the next day will be 'staff motivation'. Different answers from the same individual at different times does not mean that he is not sure of what his problem is but it depicts the fact that the priority of HR challenges keep changing from time to time. The biggest challenge for HR in the 21st century is to identify its biggest challenge. Most of the big companies' values are tied up in intangible assets. The study of intangible assets breaks them into three components. The first is processes. Processes are important for any industry and they determine the output of any activity. Companies should manage their processes well and derive maximum results out of them. Next important intangible is the customer base, or the brand value. Over the last one and a half decades, companies are focusing more on driving maximum value for existing relationships.

Three Components of Intangible Assets The third major intangible is the workforce and the investment made on the employees. The challenge here is to optimize the return in the workforce investment and also ensure that the investment that we make is driving the expected output. It is very important to be significantly different from competitors and always be in the minds of future employees and shareholders. 'People are our biggest assets' has become the buzzword for all organizations and 'how are these great assets managed' remains a million-dollar question! This paper answers such unanswered questions and sincerely attempts to enable the HR fraternity to overcome their current challenges and make the HR roles interesting.

The management of Human Resources has now assumed strategic importance in the achievement of organizational growth and excellence. As globalization advances and we move into the information age, organizations need to adapt to the changes in technology and the changing issues in management of people. Some critical issues have clearly emerged - planning, acquisition and development of human resources, responding to the demands of the work place and, above all, evolving a strategy of dealing with industrial conflict. As a management practice, it covers all the conventional areas of personnel management and industrial relations, as well as the relatively new areas such as communication, counseling, training and development, and job enrichment. An attempt has been made in this paper to point out the experiences on the emerging issues in managing human resources.

The Changing Nature of HRM Function

Today, competitive advantage is based on the successful application of knowledge. Managing people, as an HRM function, has broadened, to include managing organizational capabilities, relationships, learning and knowledge. These functions include four generic areas, i.e., (i) Roles, (ii) Relationships, (iii) Strategic focus, and (iv) Learning focus. These areas are different from each of the economy functions, like traditional, transitional and knowledge.

Innovate HRM
Crafting creative business strategies Organizational restructuring Creating social networks Invoking new challenges Shifting approach Enabling companies to go global Leading to superior performance Creating knowledge work force

Human Resource Information System (HRlS) for Effective HRM

In today's competitive business environment, the cutting edge for any organization is given by the speed with which it takes decisions to respond to changes in the environment, internal or external. A well-designed computerized HRIS alone can provide the information and analysis within the shortest possible time. Now-a-days, many organizations are using the computerized HRIS. They keep records in a compact manner, enabling access and retrieval, in a flexible way.

Benefits of HRIS

Simplified data entry

Less paperwork Fast and accurate Better use of feedback Increased efficiency Improved tools for data analysis HRIS has great significance in every sector and it can play a vital role. It helps to have a better communication process in the organization and we can offer better service with less effort at reduced cost. Most importantly, organizations can hire and retain top performers, improve productivity and enhance job satisfaction of the employees.

Aspects of HRM
Human Resource Planning, Recruitment, Selection, Placement, Inductions, Transfer & Planning, Job Analysis, Performance Appraisal, HR Audit, Total Quality Management, Quality of Working Environment, Quality Cycle.

HRM in the Present Scenario

Low motivation or mounting frustration Promotions are consolations for transfers Cadre conflict Reward and punishment system Development of strong training system

HR, HRM & HRD

Human Relations is called HR also known as Human Resources. Managing HR is called Human Resources Management (HRM). Developing HR is called HRD. HRM is a philosophy, while HRD includes the activities and processes undertaken to promote the intellectual, moral, psychological, cultural, social and economic development of the individuals in an organization, in order to help them to achieve higher human potential as a resource for the community. It is a continuous process by which the employees are assisted in a planned way to develop capabilities.

Trends in HRM
An organization's labour force comes from its external labour market - individuals who are actively seeking employment. HRM helps organizations find and keep the best possible fit between their social system and technical system. Organizations need employees with broad skills and strong motivation. Recruiting and selection decisions are especially important for organizations that rely on knowledge workers. Employees' responsibility and authority are given to make decisions regarding all aspects of product development or customer service. HR professionals can support organizational strategies for quality growth and efficiency. Organizations with international operations hire employees in foreign countries, where they operate, as they need knowledge of differences in culture and business practices. Now-a-days, information system has become a tool for more HR professionals, and often, these systems are provided through the Internet. The widespread usage of the Internet also includes HRM applications. Organizations search for talents, and screening candidates online. Employees may receive training online. The employment relationship takes the form of a psychological contract that describes what employers and employees expect from the employment relationship. The employees are looking for flexible work schedules, comfortable working conditions, greater autonomy, opportunities for training and development, and performance-related financial incentives. For HRM, the changes

require planning for flexible staffing levels. Organizations seek flexibility in staffing levels through alternatives to the employment relationship. They may use outsourcing as well as temporary and contract workers.

Strategic HRM
It is that set of managerial decisions and actions that determine the long term performance of a corporation. It includes environmental scanning, strategy formulation, implementation, evaluation and control. The biggest benefit that strategic HRM offers is competitive advantage by building critical capabilities of HR in an organization. Strategic HRM facilitates in strategy formulation by making an organization's SWOT analysis, and also in policy implementation by providing competent human resources and competitive intelligence.

HRM in LPG (Liberalization, Privatization & Globalization) Era

We can divide HRM into seven sections, i.e., (i) HRM - Environment and Strategies (ii) HRM - Acquisition and Absorption (iii) Development (iv) Maintenance and Retention (v) Control (vi) Miscellaneous (vii) HRM Practices HRM Environment and Strategies includes objectives, scope and functions, evolution and development of HRM. Acquisition and Absorption includes HR planning, job analysis and design, recruitment, selection, placement, induction and socialisation. Development section includes career planning and development, employee training, executive development, organization development and internal mobility and separation. Maintenance and Retention section includes job evaluation, wage and salary administration, incentives and benefits, motivation, employee empowerment, workers participation in management, employee health and safety, social security, employee discipline, employee grievance, industrial relations, industrial disputes, trade unions, collective bargaining, performance & potential appraisal. Control section includes personnel research and audit, human resource audit and human resource information system.

Miscellaneous section includes HRM in a changing environment, IHRM, HRM in virtual organizations. The final section is HRM Practices in various organization levels.

Corporate Strategy in Human Resource Management

Today, there is an urgent need to link human resource management, inextricable, to the business of the organization, at both the strategic and practical levels. The HR manager has the task of being on a constant look-out for the right choice of employees, fine-tuning the job mix and compensation package to benefit the individual and the organization, devising a flat organization structure and organizing training programmes for continuing the education at different levels in the organization.

Best Practices in HRM

A best practice in HRM has invoked a great deal of interest among HR professionals. Companies that are currently under-performing in the HR area can learn and adopt some of the best practices from organizations that have acquired some mastery over the good practices in HR. In the era of liberalization, the competitive scenario in the business environment has changed a lot. Consequently, HR practices have also changed phenomenally. The performance of the employees determines the failure or the success of an organization. There are four stages of integration between HR functions and the strategic management functions: Administrative Linkage One-way Linkage Two-way Linkage Integrative Linkage HR experts are having the opinion that, though "best practices in HRM" cannot be uniformly applied to all the organizations, they have a kind of uniform applicability in some functional areas, where psychological factors play an important role. Such areas are broadly classified as follows: Process of selecting and recruiting the best talent.

 Allotment of work and responsibility, as would be appropriate to the employees natural talent and skill. System of initial training for new employees and specialized training for the experienced and skilled employees. Inculcation of a sense of team spirit. System of healthy and transparent communication, intra and extra company. System of periodic appraisal of the performance of employees. Suitable policy for career advancement of employees. Suitable policy for placement and transfer of employees. Suitable policy of recognizing and rewarding merit. Provision of security in service, to the deserving employees.

HRM in Cross-Cultural Context

Multi-cultural workforce congregations have become today's workplace realities. The cross-border market terrorism spared by MNCs evoked counter-insurgency and strategic warfare from domestic businesses. Partnering people in this race is vital for success in the market place. Workplaces have increasingly symbolized multi-cultural villages, resulting in a growing need for cross-cultural intelligence. The future competitiveness of corporations will depend on their ability to attract and manage diverse talents effectively. Cross-cultural training will give managers on international assignments the cultural understanding essential to accomplish their tasks. Cross-cultural differences are the cause of failed negotiations and interactions, resulting in losses to the firms. The strategic role of HRM in strengthening and sustaining corporate growth has assumed paramount significance, the world over.

HR OUTSOURCING
HR outsourcing market is booming and India is one of the emerging players in this market. The article explains the reasons for the growth in this segment and India's contribution to HR outsourcing.

Major consultancy firms are predicting a big boom for HR outsourcing as a whole. According to Gartner, McKinsey and others the outsourcing market is expected to touch US$ 78 billion by 2004. Gartner predicts that the worldwide HR outsourcing market will grow from $21.7 billion in 2000 to $58.5 billion in 2005.1 HR outsourcing is expected to be the fastest growing segment in the outsourcing market. 80 percent of companies now outsource at least one HR activity, and the number is growing fast. Though some analysts argue that by outsourcing major HR activities, the number of HR jobs is decreasing, others feel that on the contrary by outsourcing these kinds of repetitive and administrative jobs, higher-level HR professionals get the time they need to tackle strategic workforce challenges. With the growing market there are a number of vendors available who cater to the diverse needs of various markets and provide HR services, including staffing, payroll, benefits administration, training, employee relations, and compensation. Consequently, what started in the 1980s as a simple payroll outsourcing has exploded into a $32 billion a year business involving all facets of HR. In just four years, one HR services provider--Exult-has grown from a start-up with a handful of people to an established company with 1,500 employees and more than $400 million in annual revenues. Other big players include Accenture HR Services, ADP, Fidelity, Hewitt, and Convergys. Service Line in India Human Resources Customer Relationship Payment services Content Development and others Administration Health care
Market Potential (in billion) 3.5-4.0 7 3.0-3.5 2.5-3.0 1.5 1.5-2.0

Why the Outsourcing Rush?

What are the reasons for the growth in HR outsourcing? How do companies gain by outsourcing their HR activities? HR outsourcing is considered a viable option, if a company lacks internal expertise and confidentiality and requires unbiased opinion on human resources. Outsourcing is also gaining importance as most companies do not have the time or the expertise to deal with situations. Outsourcing has become popular because companies are finding that external vendors--through technology and economies of scale--can provide more efficient and cost-effective HR services than in-house departments. The best example of a firm that has reaped early benefits from outsourcing is BP. In 1999, it outsourced its activities to Exult in the USA and UK for services like 8

payroll, recruiting, expatriation, records management, vendor management and relocation services 63000 employees. The only function that remained in-house was BP's learning and development program in the United States. Over the last two years, the company has reaped many benefits from this arrangement. Payroll processing became more timely and accurate. Employees got their benefits questions answered sooner. HR processes have been standardized across the company. And for the first time, BP has measurable data on which HR activities are effective. As a result, its core HR staff has been slashed by 65 percent--from 100 to 35 people. Such success stories have propelled companies like Sony, AT&T and American Express to outsource HR activities. One of the main reasons for HR outsourcing that most companies quote is that such outsourcing helps them to get rid of routine transactional HR work. Some of the companies which have gone ahead with even manpower hiring outsourcing practices are Cisco, GE, Honeywell, Sun, i2.

Benefits of Outsourcing
When a number of companies are outsourcing their HR activities, there must be certain benefits associated with it. The major advantage is the cost and the time factor. According to India Life Hewitt, Vice-President, Leo Fernandes, "For large organizations to service their mammoth payroll by themselves is a huge drain on their resources. Outsourcing this one activity alone is huge direct cost saving for large legacy companies which could be in the range of 20 to 40 per cent." 2The major benefits of HR outsourcing are as follows:

Fosters Innovation Increased speed to market Improved quality Focus on core competence Cost reduction Reduced administrative costs Improved customer service Insufficient staff Conserve Capital

HR outsourcing at Ma Foi Management Consultants

Chennai based Ma Foi is a perfect example of a company that has profited by effectively tapping the HR outsourcing market. The firm which initially began just by providing outsourcing services in recruitment is moving into other areas like compensation management, psychometric evaluation, training exit interviews, and outsourcing of personnel including sales staff and manual labor. The firm is a public limited company with revenues of $10.2 million for the financial year ending 2003. Such is the potential of the HR outsourcing market that if handled with expertise and integrity can be a highly profitable market. The company has identified that its potential markets range from 9

pharma to FMCG. Its major clients include Coca Cola India, Thomson Electronics, Madura Garments, Alstom group and a major Healthcare recruiter in the UK. The firm recently launched three products, MRMS (Ma Foi Resume Management Systems), HRMS (Ma Foi Human Resource Management Systems, and DAREM (Daily Activity Reporting and Expense Management). According to Rajiv Krishnan, the director and CEO of the Ma Foi, these products will considerably reduce the time that corporates spend on regular transactional work. For example, the MRMS offers tracking, complete word-by-word search facility, automated e-mail notification, user-friendly interface, total security and consolidated reports. A major software company can get one lakh resumes and this can be a useful tool for tracking these resumes. The second product, HRMS, encompasses a wider spectrum of employee HR needs. It helps capture, track, store, and modify all information concerning an employee in an organization. It has the ease of use for multiple user access and helps in integrating employee information. The third product DRAM helps companies to keep a track of the daily activity reporting.

The Indian Scenario

Indian companies are also not lagging behind in outsourcing their HR activities. LG Soft India has outsourced its PF management, Escosoft has outsourced payroll processing, execution of training programmes and survey conduction. Depending on their need, outsourcing can be transactional or HR Consulting. In India transactional outsourcing is more prevalent.3 In the value chain, it falls at the lower-end compared to HR consultancy, although it happens to be an essential function. According to Harish Chopra, whose firm Harish Chopra & Associates has garnered a large chunk of financial sector HRO over the years: "An investment bank would prefer to recruit investment bankers rather than HR specialists. And given their minimum salaries and establishment costs, HR administration would cost them twice as much ." 4 The HR outsourcing fever has not only spread to large companies but many small and medium sized companies are also welcoming this trend. Salary and Benefits Processing, Benefits Administration, and Compensation Benchmarking & Design are the most frequently outsourced HR activities in India. According to a study conducted by the Institute of Management Accountants (IMA) in mid 1990s, mid-sized companies spent more on the routine transactional work in finance and accounting services than large companies and maintain 79 percent more headcount.5 This kind of cost is felt even more in the routing HR work. According to the survey more that 87 percent of the funds midsized companies' budget for finance and HR go towards routine processing transactions, rather than policy making strategies and analysis that could move their business forward. This is clearly counterproductive for organizations set on high productive model.

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The major HR functions companies outsource

Benefits Payroll Rewards Recruiting Learning / Development Performance Effectiveness Workforce Planning Workforce Administration Workforce Relations

India as an HR outsourcing destination

India is emerging as a major player in HR outsourcing. Though there are hardly five to six names in this market, they are trying to make a mark for themselves and tap the potential of providing HR outsourcing services. Companies like India Life Hewitt are expanding their horizons by extending their services to the Asia-Pacific and Middle East region. However, overseas HR servicing companies are beginning to view the Indian market as a viable investment destination, where they can set up their operations and cater to the rest of the international market. The $450-million Exult Inc. started a 70people outfit in Mumbai. From the tactical and straightforward handling of payroll and benefits, HR services providers are moving into the strategic world of BPO. HR-enablers are helping HR managers free themselves from the routine jobs and work towards taking employee services to a higher level. India, with its intrinsic advantages such as low cost, ready pool of English speaking manpower and geographic positioning is emerging as a viable destination for HR outsourcing companies to set up their businesses. The HR outsourcing business opportunity is large and India is likely to emerge as a major player in this market. Patni Computer Systems is looking to leverage its work done on 401K pension plans to get into HR. Daksh has started payroll processing. The $5-billion payroll processor, Automatic Data Processing is also planning to start operations in Hyderabad. The various HR processes that companies are venturing into include data entry, payroll processing, staffing, training, resume management, compensation, employee communications, pension plans, leave administration and HR data analytics. The popular delivery models for HR services outsourcing are self service, call center back up or shared services involving high caliber HR professionals who play a consultative role to line managers. When compared to other regions, India holds an advantage in HR outsourcing because of cost factor and education of the workers.

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Is the market still unexploited in India?

Despite all these figures and numbers mentioned above, HR outsourcing is still considered to be unexploited. There are a number of deterrents that are keeping companies from moving to HR outsourcing. The basic reasons hampering the growth of HR outsourcing in India are confidentiality and cost factors. Many companies outsource only a bit of their requirements because of the above two factors. Besides, the fear of losing jobs, losing control over confidential data, ethics and quality of outsourcing vendors, security breaches and overall confidence in the vendor deter many organizations. According to V. Kartikeyan, the director-human resources of Texas Instruments India, "Some companies can also be reluctant because they may not have an adequate grip over the cost-benefit equation of outsourcing. Companies need to be convinced before they can outsource select HR activities." 6 The basic cultural mindset and the acceptance at the psychological level add to the deterrents. An in-house HR person handles certain situations that an outsourcing agency cannot handle well (things like building employee incentive programmes, taking care of recognition for employees). At times, many employees would want someone in-house to resolve their work-related problems or disputes. All this is only possible if there is an inhouse HR team, which interacts with the employees on a daily basis. Quality at times forms another roadblock. The issues of pricing also play an important role as there is no standards benchmark for pricing and it varies from vendor to vendor. Doing reference check helps a lot in this case.

The future ahead

The future of HR outsourcing in India is poised to be very effective because of its intrinsic advantages such as low cost, ready pool of English speaking manpower and geographic positioning is emerging as a viable destination for HR outsourcing companies to set up their businesses. While currently there are only a few major players (table 1.2) the trend seems to be catching up as companies are showing marked interest to improve on services such as pay roll benefits as well as complete HR delivery. Companies are looking to outsourcing the complete range of HR delivery and designing products on policies, compensation, structure, and recruitment. Indian companies are not only providing services for the clients abroad but are also catering to the local market. Moreover these players are moving up the value chain. Mafoi has emerged as a major HR outsourcing center (Refer exhibit on HR outsourcing at Mafoi consultants). It is estimated that currently the organized sector of HR is catering to only two percent of the whole market.7 This is the right time for the players to tap this emerging market.

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Major Indian Companies that are into HR outsourcing

EXL Services.com (I) Pvt. Ltd. Daksh eServices Pvt. Ltd. GTL Ltd. Spectramind Datamatics Technologies Ltd. Tracmail India Pvt. Ltd. Brigade Corporation Epicenter Technologies Pvt. Ltd Firstring 24/7 Customer

Emerging New Markets

There was a tremendous focus on the US and the UK geographies till a couple of years ago especially in the IT industry. But now the scenario is changing and more countries in the Europe are emerging as potential markets. Asian countries like India and China are redefining the landscape. Many MNCs prefer to set up a base in these countries because they provide a beneficial ground on several aspects, be it manpower, skill, knowledge or anything else. Indian companies are setting up their bases in other countries as well. It is evident from several business reports and articles that the focus is shifting from US, UK to Europe and, of course, APAC. The challenge for HR is multifold in this regard.

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These challenges are just a few top priorities, the list grows longer and longer as we get into further details. Another hard fact here is that each one of these items in the list can be broken down into few smaller items, which also serve as big challenges to organizations.

Focus Shifting from US, UK (West) to Europe, Asia Pacific

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Attitude & Behavior of the Workforce

There is a phenomenal change in the quality of workforce that is available in the market these days. The emerging young workforce is very confident but at the same time too short-sighted. We may argue that the market is good and they just want to make hay while the sun shines, but the fact is these people want to make all the hay in one day. For small hiccups, our people conclude that they got themselves married with the wrong company and they decide on a quick divorce without thinking through, the options for remarriage are plenty though. With the rapidly developing economic conditions and exponentially increasing number of job opportunities across the globe, personnel retention is already a challenge. When you consider the fact too that the attitude and behavior of these new recruits both fresh and lateral entrants are changing drastically, my contention that retention is a nightmare to HR Heads will become obvious.

Leadership Development
"I want more leaders to carry the organization forward." "We need leaders to meet our vision." These are some of the common statements we would hear from a CXO of any medium or large sized organization. While there is a lot of effort, time and money invested on leadership development initiatives, we have very little evidence that these initiatives are driving the expected results. A clear indication that the performance has increased because of these initiatives is still lacking. Hence, many of these initiatives, which do not evidently produce a measurable result, make justifying them for every stakeholder and shareholder a tough task day-by-day. We need to come up with totally new approach for leadership development and that continues to be a big challenge for HR in the current scenario. As illustrated in the figure below, it is very important to ensure a balanced growth, and it is needless to mention that balancing is the biggest challenge in leadership development. Having leaders in either excessiveness or scarcity is not a healthy sign for any organization.

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BPO Scenario: HR Issues & Challenges

Human resources are the lifeline of BPO companies. The majority of the workforces in the BPO industry are young, literate and dynamic. Outsourcing HR functions will be the next big leap in India's BPO arena. The HR outsourcing segment is still in its nascent stage in the BPO Industry.

HR Function & Performance Management

The challenge before human resource professionals today is to create an enabling organizational climate for the employees, For this, they need to examine relevant issues such as training and development, performance appraisal and career planning in the organization. Selection and recruitment of personnel is an important responsibility of the human resource department. The recruitment policy provides competitive remuneration as per industry norms, maintains high standards for selection of recruits, and encourages lateral induction to infuse fresh ideas and new skills in the organization.

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Trends in Recruitment
Recruitment is increasingly becoming a two-way process, as a result of both employers and employees having higher expectations from one another. The first trend is using the resume database for recruitment; the other trend gaining prominence is the recruitment of key personnel from competitors, which is called "poaching".

Training
After successful selection and recruitment of manpower, it is essential that all employees undergo specific training programmes that help in maximizing their potential. Today's need is to place training and development at the heart of a business strategy. Training should be a continuous process keeping in view the changing market demands, the environment and the organizations' own culture. The role of a trainer, on the other hand, should be that of a mentor, facilitator and change agent.

Action Plan for Initiating Training & Development

Assess the training needs of individuals who will be undergoing training, to avoid a mismatch with training programme. Provide a questionnaire to help the participants analyze their own capabilities. This includes their knowledge, skill, aptitude and attitude. Bring out the latent potential in people and channelize it towards the common goal of the organization. Design training programmes. Ensure that the programme covers behavioral and cognitive leaning, focuses on upgradation of skills and encourages group participation. Include the real world programmes to solve the real life problems.

Role of HR Manager in Employee Training

To serve as an internal consultant. To identify programmes for individuals in tune with their individual skills. To plan a judicious mix of internal and external training programmes. To follow up activities to ensure that new skills learned, are applied in the organization.

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 To monitor the performance appraisal of employees, to ascertain the impact of the training programmes and identify the future training needs.

Essentials of Performance Appraisal

Alignment, Standards, Commitment Performance appraisal is a process of assessing the capabilities, both known and hidden, of employees, so that their strengths and weaknesses can be determined for increasing the organizational effectiveness. The appraisal is for identifying, whether the employee is: (i) Due for a promotion or reward or an increase in salary. (ii) Capable of handling additional responsibilities or needs future training and development to upgrade their skills. (iii) Incapable of meeting the requirement and is, thus, dispensable. 360 feedback appraisal system is the formal performance appraisal system. In this system, the employee receives feedback from his manager, supervisor, peers and others, that he comes in contact with. It helps in increasing employee participation, makes the person feel more committed, increases his sense of ownership for company policies, and allows alignment of personal expectations with organizational goals. It helps in assessing the employee strengths and weaknesses.

Action Plan for an Effective Performance Appraisal

The HR manager should explain the basic purpose of the exercise.

Formal communication workshops should be organized. HR department should keep the confidentiality of the appraisal report; two-way feedback should be created, the exercise should be presented as a forum. HR department should make a time-table for the appraisal process and review discussion in forums. HR department should work out the methods, incentives and department-wise ratings.

Performance & Rewards

It is a positive achievement cycle; it serves as a powerful motivational force for future growth. Success compensation refers to a salary component, various fringe benefits, performance-linked bonuses, stock options, etc. Compensation package emphasizes on performance, linked compensation, sharp increase in perks and allowances, recognition of special skills and abilities of individuals, increase in senior management remuneration, and salary increases for junior managers.

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Retaining & Managing Talent

Many years ago Mckinsey coined a term "war for talent", which is now being looked at as a competition between organizations to attract new talent. What I would like to prescribe here is that we just have to shift gears and focus more on retaining the talent that we have and also come up with new ways of developing talent. It is a good sign that many organizations are moving away from a skill-based approach to a competency-based approach. A system that enables HR to maintain and manage the current competencies and enable employees to plan their development either to higher proficiency levels in their existing competencies or new competencies is a need of the hour. Its about a learning and competency management system under retention of employees and also clubbed talent management along in the heading because they both go together. At any point in time, an employee who believes that his organization continuously invests in developing his talent and also provides him enough opportunities to deploy his talent in the field will never allow the thought of quitting creep into his mind. But on the one hand, getting more investment into talent development initiatives is currently a challenge, and on the other side creating a career plan for every employee that enables him/her to continuously deploy his/her talent remains a bigger challenge.

Innovation & Talent development

It is absolutely beyond debate that 'Innovation' is now mandatory for the success of any business. There are several drivers that can cultivate innovation in an organization and one of them is developing the skills and talents of its employees through various modes of learning. PwC has released a report where the statistics very clearly shows that the investments on training and development activities are much higher in the US than Europe or APAC countries. That could possibly be one of the reasons that most of the innovations come from the US. Japan could be an exception to this but they have restricted themselves to technology innovations while we need innovations in every field. We still do not have instruments to measure and provide a direct correlation between the investment made on innovation trainings and the number of creative outputs. But what is evident from the PwC report is that the companies that are showing maximum innovations are the companies that invest a lot on training and talent development.

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Challenges at Different Levels of Talent Development

The report also clearly highlights that companies that produce better business results invest a huge sum in training and talent development. I would like to quote my own organization as an example for this. I am proud that I am part of a true learning organization and all of us who work for our organization can loudly say so with due respect to the enormous investment which goes into our learning and development initiatives. Creating an innovative culture within the organization, creating an environment to share ideas, motivating people to innovate are some of the key challenges for HR under this head.

Employee Engagement & Commitment from Employees

Products and process alone can't help organizations to sustain loyal customers. They also need highly-motivated, dedicated and involved employees who are very passionate about their work and their organization; in short, they need "engaged employees". But, nurturing engaged employees requires a lot of effort and skill on the part of HR managers and calls for a different HR philosophy in the organization.

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We need employee engagement to serve as a core competency of an organization that would provide sustainable competitive advantage. We know employee engagement towards their work, throw few test "symptoms", i.e., feeling of creating value, having a direction to follow, an air of trust, creating engaged employees through top management endorsement, a work environment to cherish, innovative leadership and clear growth trajectories, 'one step up from commitment'. Employee engagement is the new buzzword. A successful business is directly linked to the commitment of its employees. Employee engagement ensures the successful execution of any business strategy

Rejuvenating the employees with loads of fun activities was the key task of employee engagement personnel. It helped organizations to create a sense of belonging among employees and in turn indirectly demanded a certain degree of commitment from them. Some organizations have gone one step beyond and have included the families in such events. Loyalty to the organization was considered to be the in-thing in every employee's mind. But unfortunately, today these employee engagement activities just remain as entertainment activities and they do not add any value to the expected outcome. There is again very little evidence in this area too to measure the impact it makes on the organizations. 'Be loyal to your job but never be loyal to your organization' is the definition for loyalty now-a-days among young professionals. We can go on debating whether it is the right thing to do or not, but the bottom line is that we need better employee engagement activities which will create a bonding between employees and organizations.

Survey Conducted on Employee Engagement Activities (Different IT Companies) From the above graph, we can see that about 90% of the employees are satisfied or delighted with these initiatives and 5% feel it is average. The dissatisfied percentage is only 5. If we make a direct correlation between attrition rate, which is currently at 14% (industry average), and the dissatisfaction percentage that has come out in this survey (5%), there seems to be a wide gap. We have no visible evidences to prove that our 21

employee engagement activities are helping us to retain our people. The challenge for HR is to come up with innovative HR practices which will make employee engagement activities more interesting and also help us in achieving the objective of retaining people.

HRM in 2020
Now, we identify and discuss about five issues which are expected to affect the organizational HR in the future: (i) The corporations of tomorrow, (ii) Information age, (iii) Virtual corporation, (iv) Diversity, and (v) Social responsibility.

Corporation of Tomorrow
In future, there is a two-fold effect on Indian Industries, i.e., (i) Generation of employment, and (ii) Industrial restructuring We assume that in the future workplace, which may come true by 2020: A majority of people worldwide will be connected through the IT infrastructure. Connectivity is the new frontier on the information highway to connect with one another. There are various factors on which the growth and expansion of connective technology will depend. The basic organizing unit in the workplace will be one individual engaging in business through connective technology. A learning culture will be festered by the technologies that will serve, entertain, and help people do their work. It will be basic workplace skill. Power in the organization of 2020 will be in flat structure. . Culture and language will still move between the poles of traditionalism and modernism.

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Information Age
Information age has heralded a new way of doing business. IT has the power to change the most well-entrenched business paradigms. It has the power to link and connect people, and enable the exchange of products, services and capital, in an entirely different manner than in the past. IT has increased the efficiency of the human resource functions and reduced the burden of administrative work in the HR department, at the same time, helping to increase productivity.

Virtual Corporations
A virtual company is usually a highly networked organization that extensively contracts out activities that were once performed in-house, allowing both speed and flexibility. The key to success in a virtual corporation is connectivity, i.e., the ability to network with a large number of independent companies.

Social Responsibility
Change in technology results in a change in the structure, design and environment of an organization. It has four stages: (i) acquisition of technology, (ii) adaptation of technology, (iii) utilization of technology, and (iv) improvement and development of technology. Organizations of the future will operate in a workspace, which is likely to be much more broadly defined, than it is today. Connectivity within and outside the organizations, will create a world virtual reality organization. Environmental problems fall into two broad categories, i.e., (i) Problems that arise out of poverty and inadequate development, and (ii) Problems that arise out of the process of development (threat of earthquake, deforestation, pollution of ground water).

Next Step - What Should We be Doing?

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These issues may sound mundane but they are realistic. We cannot discount the fact that many of us in various HR roles are living with such challenges day in and day out. I would like to quote a traditional proverb here, "Where there is a will, there is a way." It just needs the right attitude or passion, as we may call it, within ourselves. Many experts are talking about HR redefining its strategy to move up the value chain from a supporting function to an enabling function, and then transforming itself into a strategic business partner. To equip ourselves to be a part of this giant leap, all of us need to have certain qualities, competencies, practices, processes, and most important of all, the right people doing the right jobs. An illustration will always help us to understand things better. Along those lines, I would like to site certain initiatives that we had taken in our organization, which makes 'working an exciting experience' for every individual in the organization. We have taken utmost care that all initiatives that we take touch every associate, it really does not matter whether he is the CEO or a trainee who joined just today.

The TCS Phenomenon

TCS is a part of the TATA conglomerate, which has a history of over 130 years. This group has a reputation for its people-centric attitude and the intention to contribute back to the society. Our company not only says that 'People are our biggest assets' but also exhibits that in every move it makes. Any new HR initiative taken revolves around a people-centric approach. India's largest tech company is also its best IT employer. It is not the pay alone. What is the key to the ever-complicated HR management puzzle? Well, asking the brains at TCS could help. When an above 70,000 employee-strong organization emerges as the best employer, one cannot help but wonder what it really takes to keep such a huge workforce added both organically and inorganically-really satisfied in these trying times. The company hogs the limelight when it is managing to maintain the lowest attrition rate in the industry. The figure is around 10% when the industry average hovers around 20%. Currently, 7.5% of TCS' workforce belongs to other nationalities and are spread across the globe. True to the characteristics of a global organization, TCS has added a local flavor to all its existing HR policies. S. Padmanabhan, Executive VP, Global HR, further asserts that, "The DNA of the company is to create an easy work environment and this has been built over years of effort."

Over View of HR in TCS

Diversity in Workplace
According to Anjali Prayag, "For Indian companies, managing a diverse workforce is no longer a choice but an imperative." TCS is an equal-opportunity employer and TCSers

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come from many nationalities and speak many languages. TCS has the culture of celebrating everything under the sun, singing carols at Christmas and doing the dandiya dance at Navrathri with equal enthusiasm. Tata Consultancy Services (TCS) will recruit 4,000 foreign nationals in the forthcoming fiscal, including 800 people in the US and 1,000 in Latin America and the rest in China and Eastern Europe, according to Mr. S. Padmanabhan, Executive Vice-President of Global HR. The company intends to build a workforce with over 7.5% representation of foreign nationals. It is noteworthy that more than 25% of the employees are females. The company has adopted the diversified workforce approach in order to create a comfortable environment for clients and employees who work along with it on specific projects. The HR practioners who make a large hue and cry about bringing out the best using a diverse workforce can really quote TCS as an example. One of the chief reasons for the diversity drive was the 9/11 disaster. The move was initiated as a risk mitigating mechanism wherein, the company does not have to take the risk of losing its entire workforce due to a single catastrophe. The far sightedness of the company in this regard is further revealed by the strategy they plan to recruit the diverse workforce. In order to do this, the company is looking to implement the campus recruitment framework that it has in India in foreign countries. The company has established relationships with 180 campuses in India where it held recruitments and made 8,000 offers in the first quarter of 2006-07. Abroad, it is still in the process of building relationships with universities and colleges such as Nanyang Technological University, Singapore, and some universities in China. Acquisitions of Australia-based Financial Network Services, a 200-people strong company that offers retail-banking solutions, and Chile-based Comicrom, banking and pensions BPO that has about 930 people on its rolls, was also done as an effort to widen the foreign employee base of the company. The Indian IT scenario as such is transforming. Infosys has also announced an intake of 300 graduates from universities in the US in 2006 and about 25 from universities in the UK in 2007 as part of its commitment to create a diversified workforce. Though companies like Infosys and Wipro also go for the same, they are not successful with respect to TCS. Wipro is finding it a real challenge to manage the diverse workforce. TCS is fitting in the present.

Learning & Development (L&D)

L&D Mission - "To enhance the competency capital of TCS, through co-creation of learning experience continuously and consistently, so as to facilitate delivery of worldclass human capability to the customer, enabling the company to achieve its vision." TCS invests about 4 per cent of its annual revenues in Learning and Development, to build competency capital within the company in cutting edge technologies, domain and

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functional areas. Special emphasis is placed on providing necessary learning interventions to associates with potential of being leaders in the company. Thus, it is evident that focus is divided equally between the regular employees and managerial employees alike. All the learning programs are mapped to competencies and address learning needs at different proficiency levels. Learning and Development managers closely work with business to develop and deliver programs that will make our associates deliver value-for-money to our customers. Assessment centers are also being used by TCS. Inarguably, TCS is one of the real pioneers in the training. The state-of-theart center in Thiruvanantapuram is by far the best than its adversaries. Several levels of learning are provided in TCS. Each of the levels is unique, aimed with varying objectives. The proactivity of the company comes to light, with the inclusion of newer modules as per the requirement.

Initial Learning Program (ILP)

TCS Initial Learning Program is designed to provide a smooth transition from Campus to Corporate environment. The program is designed to transform graduate engineers into IT Consultants with global mindset. The participants are put through a rigorous 47-day program that has good mix of technical skills and soft skills.

Continuous Learning Program (CLP)

Continuous Learning Program (CLP) is a manifestation of the company's commitment to the continuous growth of associates, in line with the core value of Learning & Sharing. Programs under the CLP umbrella arise out of business strategies, project needs, technology and business directions and individual aspirations, and span across Technologies, Domains, Processes and Soft-skills. This lay emphasis on long-term, short-term and medium-term needs of the organization alike.

Leadership Development Program (LDP)

The program is to churn out the future leaders for the company. Associates are carefully assessed for leadership potential and then put through rigorous branded programs. TCS also encourages associates to attend various programs at premier B-schools across the globe.

Foreign Language Initiative (FLI)

Foreign Language Initiative is to help the associates to communicate effectively with the customers. Under this initiative, associates are encouraged to learn one or more foreign languages. This initiative also helps associates to use English effectively for business communication. This is highly beneficial in a company with a diverse workforce. The cross-cultural issues are curtailed with the proper use of communication. 26

Workplace Learning
Apart from all these initiatives TCS encourages "workplace learning". Associates are encouraged to learn while at work. To facilitate this, TCS has subscribed a huge library of e-Learning courses and online books. The classroom session and e-Learning materials complement each other.

EVA & Compensation Management

An extremely competitive compensation scale, is rendered solidarity by a highly effective 'economic value added' (EVA) model, first of its kind to adopt the practice in India. It is a basis for measuring performance and bonus, and is measured at the enterprise and department levels. The EVA system calculates profits after considering all costs, including that of capital. If the revenues are in excess of the costs, including operating expenses, costs of developing and investing in the people, products and business, then value has been created. The EVA Model In giving shape to the EVA model, an organization needs to keep its focus towards the ultimate goal of aligning its people to the corporate mission, creating an entrepreneurial culture through an empowered work force, and building ownership with accountability. TCS worked out an EVA framework to align corporate value with the performance of the constituent business units and the individuals who comprised these. It translated to a compensation model, where the employee had a share in the corporate pie with add-ons from the profits of the Business Unit and the Individual Performance Factor. At the individual level, an employee needs to know the drivers to tweak to enhance the EVA of the company, of the business unit, and his own contribution towards all these. There are three basic drivers - revenue, cost, and capital charge. Revenue is driven by the rate or license price put into the product, sales, billable hours, response time, and domain skills. The individual works towards the improvement of the benefit package, which essentially has three components - the Corporate EVA, the Business Unit EVA, and the Individual Performance Factor. Out of the total EVA payment, a certain percentage goes to each employee on the basis of corporate EVA improvement. Secondly, if your business unit did better than another business unit, then automatically you got more than the other business unit. Again it is a team reward concept. The third one depends on the evaluation of individual performance.

Strategic Benefits of EVA

With the introduction of EVA, yet another plank has fallen into place in the systemic efforts towards optimization. With the introduction of EVA, the company has to take a

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fresh look at the integrated system in a holistic perspective, and evolve ways and means of optimizing it. Implementation of EVA requires the integration of the planning and the tracking process. TCS sought to achieve this through a home grown tool called e-Pilot, which essentially drills down from strategy to day-to-day activity. This facilitates the integrated planning approach, in defining the corporate EVA, linking it to the business unit/cell, and further to various components down the line, all the way to the drivers connected to each activity.

Emerging New Markets

The organization strategy for TCS has already been very clearly drawn up for expanding in the maturing markets of Europe and Asia Pacific. We had also announced that we would be recruiting around 5000 associates in China over the next 5 years. Many high performers have been hand-picked to move to these geographies to lay a strong foundation in these maturing markets. These associates have been briefed about the role that they will perform, and have been counseled on why they have been chosen for these roles. We have selected the right people to move and the employees are also motivated that they have been hand-picked for a challenging overseas assignment; hence, it serves as a win-win situation to both the organization and the individual. We have also decided to recruit local champions to assist these leaders in their respective roles. Hence, we have proactively sought solutions for the emerging challenges, and we have ensured that we are prepared to aggressively enter into these unexplored potential markets .

Attitude & Behavior of the Workforce

We can debate whether it's a good sign or not that the attitude of young workforce is changing, but what we need right now is to accept the fact that there is a drastic change in the behavior of employees, and quickly come up with counter measures to address this issue. At TCS, management has done the same. Their induction program introduces the participants to the various initiatives of the organization and makes them feel that they are a part of the family right from Day One. This creates a sense of belongingness for every new entrant. They also put their associates through a lot of learning programs, which brings about a behavioral change, maybe not overnight, but definitely over a period of time. Moving one step ahead of all these traditional measures, they have created a standard rotational plan for all associates at almost all levels barring a few senior level 28

positions. This helps them to break the monotony of job profiles and energize people. Knowledge and expertise keeps improving and employees begin to understand that the organization is taking maximum care of their career development and, hence, they will want to stick on forever.

Leadership Development
"Leaders are not born, they are made. We, at TCS, do believe this strongly because we have the experience of create leaders for the past many years. Our leadership development program is not just a mere training program but a lot more. We have empowered our associates to nominate themselves as leaders and also select the stream in which they want to move ahead. Then these leaders are hand-picked or interviewed or assessed, followed with an extensive workshop. These workshops not only train them, but also enable them to learn. They live the life of the role that they aspire to take.The success of this initiative depends on the deployment and, hence, we ensure that these people are quickly deployed into those roles for which they were chosen. Over a period of time, these leaders along with other seniors of the organization share their experiences in the field with the next set of identified leaders. Thus, we also ensure that field experiences are ploughed back into the minds of the next generation leaders. We may still not have measures on ROI on this initiative, but we do have some metric on number of employees trained against number of employees deployed. Senior HR manager

Retaining & Managing Talent

TCS has been a fore-runner in this aspect and we have developed a system to mange our learning deployment, planning and our competencies. Various features like gap analysis, role tagging, competency mapping, learning plan creation, and so on, makes learning so exciting for our associates. They have the liberty to choose from a huge volume of learning objects, which are divided into Technical, Process, Domain and Soft Skills subject areas. Well-defined career paths for every individual and the corresponding learning interventions are some of the salient features of this system. In the long run, this system will also help us in the process of moving towards a role-based organization. As long as an employee is clearly shown the way, he will move ahead, he will be happy enough to prepare himself to move that way, and take all the necessary help required rather than trying to branch-off elsewhere. Most employees move out for better growth opportunities. If the same is assured at home turf, will anyone quit?

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Innovation & Talent Development

TCS is a learning organization, which spends over 4 percent of its revenue in its learning & development initiatives. The fact is also obvious from the business results it produces consistently. Referring back to PwC report again, TCS comes up with remarkable innovations, which serve as a benchmark in the industry. We also invest a lot in our R&D initiatives. We do not want to quantify our investment in this area and calculate the ROI. Our actual intention is to be thought leaders in the area we chose, and we have proved to be thought leaders in several unique fields. Talent management is monitored through individual learning plans and personalized career development plans.

Employee Engagement & Commitment from Employees

Expecting commitment from employees without giving a commitment to them is the fundamental reason leading to all other dissatisfactions. In TCS, employees have learnt this, and they ensure that the expectations are well set right at the beginning. Whatever we commit is what we give to our people. They do not expect our associates to participate in our employee engagement activities, but they involve them and then make them organize the event by themselves. This helps in motivating the employees and also retaining them as well. People may want to quit organizations but not families.

These initiatives have not only helped TCS to retain people with them forever, but also attract lot of new people into their organization. The number of referrals are also increasing day by day which is a motivation for HR to keep innovating. It can be a miraculous coincidence, but the fact is their attrition percentage and the dissatisfaction 30

ratio of the survey, almost tally with each other (with the former at 10.6 and the latter at 10, including average). Different tangibles offered by companies for individuals, be it salary packages or variety of roles, are getting uniform across the globe. Hence, the unique differentiator for companies has to be these employee engagement activities. The primary focus of these activities must be 'bonding', entertainment is on the cards anyway.

Conclusion
The traditional functions of HRM now need to be strategically directed towards developing and sustaining organizational capabilities, through activities that overlap with traditional business functions such as finance, marketing, and non-traditional activities, such as knowledge management. Human Resource Information System has great significance in every sector. It can play a virtual role and help the communications process in the organization. Most importantly, organizations can hire and retain the top performers, improve productivity and enhance job satisfaction of the employees. HRM has the responsibility to maximize efficiency and profit, but in the emerging scenario, the role of HR manager is changing rapidly due to changes in government policies, unions, labour legislations and technology. The trends have taken place in the organization, human resource planning, job design, motivation, recruitment, skill development and employee relations. The challenges can be faced by HRM effectively, if proper strategies are implemented. Hence, the role of HRM will be more significant in future due to the emerging scenario Challenges will keep emerging and solutions will keep emerging as well. These challenges are also necessary for keeping any system in balance. Organizations should have the capability to foresee such arising challenges. The agility of organizations to 31

solve their challenges will determine their success rate and growth in the market. Especially companies that want to enter into any market aggressively, require a third eye continuously looking for these challenges, and an attitude to keep solving them too. Proactively solving these challenges with innovative solutions has been a feather in the cap for TCS. We will continue to innovate. With the humility to learn and the magnanimity to share, we, at TCS, will ensure that we meet our vision of Global Top 10 by 2010, much ahead of schedule. HR group will be a strategic business partner in this victorious journey. As usual, we would be happy to see many other companies following our foot-steps.

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