HR VIEWS

Aug-Dec 04, Issue 7 e-zine edited by Vinod Bidwaik

Editor’s Note
Members of HRGexclusive or recipient of this issue of HR Views are permitted to freely distribute/print the unmodified version of this issue. HR views is published at HRGexclusive. No attempt has been made to obtain commercial benefit from the valuable work of the authors and the Editor/Publisher claims the ‘fair use’ of copyrighted material. If you think that by publishing a particular material, your copyright has been violated, please let us know. The Editor/Publisher is not responsible for statements or opinions expressed herein nor do such statements necessarily express the views of Editor/Publisher and HRGexclusive. Editor & Publisher Vinod Bidwaik

Aligning Business through Human Capital Management & Best HR Practices -Vinod Bidwaik
{This article was published in THE HUMAN FACTOR, October 2004, Volume I Issue 2, an official Journal of IIPM, New Delhi.} Globalization and competition After the globalization and WTO regime, the whole dimension of economy has changed. The survival of the Industry has become a vital issue. Productivity, Quality, Delivery and Customer Satisfaction, these four words have become key words to sustain the shocks given by the globalized competition. Focus of production has been changed towards market and customer. Rapid growth has become necessary and Change Management has become the ‘Mantra’ for survival. Return on Investment (ROI), Return on Capital Employed (ROCE), Economic Value Added (EVA), these words are determining the performance of industries. Instead of speaking Above indications has are widened positive. the area The of globalization about only profit, now Indians are speaking about world class manufacturing processes.

competition and given the opportunities to Indian Companies. But the main issue is how we are going to encash the opportunity. Some of the facts published in the recent UTI report, (published in April 2004), says, “A number of Tier-I & Tier-II suppliers in Europe are going bankrupt. This provides an unprecedented window of opportunity to companies from developing nations. OEM’s abroad are under pressure to reduce costs and are consequently on the look out for low cost suppliers from Indians & China. Indian is the

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HR VIEWS
Aug-Dec 04, Issue 7 e-zine edited by Vinod Bidwaik

largest producer of qualified engineers in the world, thereby ensuring easy availability of skilled power. Global auto majors and OEM’s typically look at minimum double digit cost reduction before they consider replacing an existing supplier.” Above facts, mentioned in the report

Improve fund flow Increase returns of Investment Improve Quality Increase productivity Reduce cost Reduce cycle time Increase market capitalization. To achieve above objects, the participation of HR is necessary. The competitive workforce creation is necessary. The Talent Management has to be practiced, Learning Organizations and the organization which will adopt the change very rapidly will survive only. One research on successful companies was conducted by ‘Watson Wyatt’. It says that the companies that make more money were associated with better talent management producers. In these companies 15% profit performance was driven by – Management participation Open management style and effective communication Taking calculated risks Customer orientation by top brass Training & development Performance bases incentive schemes Career & succession planning etc. etc. Thus aligning the human resource towards business goal is the prime need for success, Competences and the competitive edge, showed that when an organization identifies and communicates the core competencies that it needs to be successful in the present and the future, it has developed a powerful tool to
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enlightens the scope to Indians and if we take it positively we can generate the huge employment. BPO and call-centers are basic examples of these and if administration, political parties and government take it positively the India has a chance to become a strong economy. After collapsing the South Asian Economy in 1995, Indian has the opportunity to achieve economic growth in Industry. Deployment of Human Capital Management The resource like Material, Machinery will not only contribute in the success. Stronger Human Capital Management is required to run the successful show. It is proved that integrated, Management aligned systems Human have Capital provided

significant economic benefits to campier that have embraced them as ongoing process instead of one-time events. For becoming world class, what we need to do? We need to – Increase revenue

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HR VIEWS
Aug-Dec 04, Issue 7 e-zine edited by Vinod Bidwaik

helps meet its goals. Competencies define and communicate an organization’s strategy and help employers to understand that strategy and achieve to goals. The role that competences can play is an organization include – Articulating what the organization values Providing a common language for employers and managers to describe value creation. Establishing a new paradigm for Human Capital Management Programme. Focusing on the development of the individual linking pay, promotion and growth directly to what the organization values to be successful. Companies should adopt the view that contributions are role related and not position related. The competences have to be developed and stress to be given on the development aspect. We, Indians, are far away from quality and productivity. Productivity may be calculated as net sales per employee using Gross Rate of Return on Assets (GRATE) or input output ratio in case of production personnel. The company should devise the proper system to calculate the productivity of Human Capital from top to bottom. China is the dominant over India on productivity issue. We have the different mindset. The Chinese work like robots, we Indians work, when we get the

time to work from other matters. The attitude has to be changed productivity of man, machine, plant utilities have to be improved. The same is about quality. Quality is customer satisfaction, which is fit for use product, cost effective, service, delivery etc. Prudent use of resources is necessary. Last but not least aspect in the success, is process and cycle time. Processes & Human Capital Each process must be created based on measuring, managing and building the current capacity and future promise of employees. The objectives of the processes should be: It should align the strategic objectives, Ensure the responsibilities and accountabilities of each individual, Build the capacity and competencies, Placement of right people at right job at right time, We should not deny the following facts in success of companies and employees. Following are the effective factors, which play important role in individual success. Technical knowledge, skill Professional experience in the respective area Interpersonal behavioral traits Learning attitude and capacity Interest and attitude in the work We should adopt the new initiatives in Human Resource and Capital development. Human Capital Ideas
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HR VIEWS
Aug-Dec 04, Issue 7 e-zine edited by Vinod Bidwaik

Before deployment of any Human Capital initiatives one should not forget the Principal behind Human Capital deployment. 1. People are assets whose value can be enhanced through investment. 2. Human capital approaches should be designed, implemented, and assessed by how well they help the organization achieve strategic results and pursue its mission. Management concepts are changing and taking various modes as per the requirement of business and competition. The challenges are totally different as compare to mid 90s. We have adopted the financial management as a tool of performance technology as measurement. a tool of Information

companies then have to declare VRS and downsizing. This often constitutes largest budgetary expenses. Effective human capital management approaches serve the cornerstone of any serious change management initiatives. It reduces the hierarchical, process orientated approach and shifts towards more flat, result oriented, integrated and externally focused. But it only requires the full commitment to value the people as a strategic asset. When the initiatives of cost cutting are implemented, first area targeted is Human Resource. This results skill imbalances, workload imbalances for remaining workers, inadequate accountability for performance, training and development cost reduction and hence performance and morale of the existing workforce is affected. We have various challenges before us. Is HR required in the organization, is a debatable question. Most of the activities, which HR is performing, can be outsourced. The issue is related to strategic HR management and Human Capital Development is a part of this. The HR Managers need to concentrate on developmental aspects instead of administrative aspects. The best practices can be benchmarked. The organizations should think about following practices. 1. Knowledge Management: The employee should be able to convert the data available into information,
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improvement in quality and productivity, and result oriented approaches for survival, but still we do less care about human capital development. Key Factors for Effective Management People, process and technology are the key factors for effective management. The most important of the three is people-an group of human capital. People are the most significant organizational asset. This is the only reason why the software are and other the modern talent companies targeting

management issue. It is said that other costs reductions are very easy as compare to cost cutting on staff. This is the only cost which increases every year. To become viable

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HR VIEWS
Aug-Dec 04, Issue 7 e-zine edited by Vinod Bidwaik

knowledge and then into wisdom. It is basically wisdom management. 2. Learning Organization: An organization, which facilitates the learning of all its members and continuously transforms itself. Peter Senge has given the Model of learning organization with five disciplines. A) System Thinking, B) Personal Mastery, C) Mental Models, D) Shared Vision, E) Team Learning 3. Talent Management: Attracting and retaining the talented people. 4. Work Culture and the people new development: Foster

Model

of

effective

Human

Capital

Management Technology & People There are many documented cases where companies tried to install new technologies or systems of working without considering the impact on social systems (the way people work and interact with each other), or without giving thought to how the people who actually do the work feel about the changes. The result is usually an expensive failure, with employee reactions ranging from simple misunderstandings (resulting in lost productivity or damage) to outright sabotage and organized labor actions. Because of this, the best way to bring about change is to first gain the support of the people who will be affected by it, and the people whose support you need to implement it. No matter how good a change seems on paper, if nobody will support it, it's probably not a good idea. Most of them worked very well when they were first applied, and have tremendous success stories. The early literature for these initiatives - process re-engineering, quality circles, organizational development, team building, and all the rest - are full of incredible deeds and stories of companies that turned on a dime to achieve amazing things. The stories are true. Each system worked effectively. Each one also failed miserably when applied in other organizations. Each is
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conducive work culture and people capabilities & development. 5. Performance management: Establishing performance indicators and effective measurement systems. 6. Communication systems: Effective communication systems which would help to communicate the policies, goals and vision of the organization. 7. Rewards and Recognizations: Right & perfect performance rewards and recognizations policies and methods. 8. Strategic Change management: To identify, face, adopt and sustain the change rapidly. Selection of effective tool to implement this.

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HR VIEWS
Aug-Dec 04, Issue 7 e-zine edited by Vinod Bidwaik

probably still being applied today, with and without success, in different places. Many are rediscovered each year and assigned different names to be the specialty of a different consulting firm. There's a simple reason for it: each has certain requirements, which, if they are filled, will bring success. When those requirements are not met, failure is likely. However the common factor in all systems was as under:
• •

information

up

and

down

the

hierarchy, and across departments; sharing it with customers, suppliers, and partners; and even creating information, as in data mining and market research. Direction. Choosing and leading people in a clear direction is the central thrust of leadership initiatives, mission scorecards, statements, and similar balanced systems.

Power. Each system pushes power downwards, so people who do the work can make decisions. Some, like job enrichment and empowerment, made this almost the sole focus. Others, such as balanced scorecards and re-engineering, imply it or make it part of the process. Research shows that pushing power downwards in an organization to the lowest possible level greatly increases innovation, motivation, quality, and productivity. It also, paradoxically, increases the power of executives and managers, by freeing them from much of the dayto-day "fire fighting" and trivial decisions, and by providing them with a capable workforce than can carry out their strategic decisions.

People prefer to work with a clear direction in mind; and, when people are aligned, decisions are faster and easier, and there is far less waste. Culture. A shared set of values, beliefs, and norms - in short, a shared language and perspective which helps diverse people to work together in harmony. The same people working under different cultures - even in the same organization - can act in very different ways. Change culture, and you change the way people act. Above indicates leadership and cultural transformation. The stress on following ideas have to be given a) Leadership: Commitment to Human Capital Management People are viewed as a key enabler of organization performance. Here Managers are held responsible to handle the human

Communication. Again, each system relies on increased communication. It takes many forms, but in essence, communication is spreading

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HR VIEWS
Aug-Dec 04, Issue 7 e-zine edited by Vinod Bidwaik

capital, the leaders support efforts & monitor the effectiveness. b) Strategic Human Capital Planning: Integration and Alignment Approaches supports organizational performance, designed for supporting the organizational goals. c) Acquiring, Developing and retaining talent: Targeted investment in people Human capital expenditures are regarded as investments in people. This investment is evaluated and monitored. d) Result cultures: inclusiveness Employees at all level are given the authority and resources to attain the Bibliography: UTI Report, April 07, 2004, oriented organizational & Empowerment

goals. Innovation and problem solving is encouraged. The Human Capital is treated fairly and supported at every level. Last but not least is to develop the people to face and adopt the change effectively. The organization is always benefited by these approaches. Conclusion: Organizational excellence is possible through the people initiatives. They are the best assets of the organization. Human Resource should be treated as the important Capital of the organization. The investment on the people does mean to enrich them and develop them for performing excellently. All the initiatives and change management are possible if the Human Capital is developed.

McClelland D, “Identifying competencies with behaviour-Event Interventions” Vol-9, Pfeffer, J (1998) Human Capital Equation Bosten MA: Harward Business School Press, The Human Side of Organizations, Eight Edition, Michael Drafke, Stan Kossen, http://www.watsonwyatt.com Dear Readers
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