1.1 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.

Three Components of Intangible Assets

The study of intangible assets breaks them into three components: Process 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. Customer base 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. Workforce 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.

1.2 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

1.3 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.

1.4 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.

1.5 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

1.6 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.

1.7 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.

1.8 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.

1.9 HRM in Liberalization, Privatization & Globalization
We can divide HRM into seven sections, i.e.
 

    

HRM - Environment and Strategies HRM - Acquisition and Absorption Development Maintenance and Retention Control Miscellaneous 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 socialization. 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.

1.10 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.

1.11 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.

1.12 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.

2.1 Introduction
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

2.2 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 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.

2.3 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


2.4 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 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 corporate 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.

2.5 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 mid-sized 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.

2.6 The major HR functions companies outsource
         Benefits Payroll Rewards Recruiting Learning / Development Performance Effectiveness Workforce Planning Workforce Administration Workforce Relations

2.7 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 AsiaPacific 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 70-people 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.

2.8 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 in-house 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.

2.9 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.

2.10 Major Indian Companies that are into HR outsourcing
          EXL (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
3.1 Introduction
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.


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

3.2 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. 3.3 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.


BPO Scenario: HR Issues & Challenges
4.1 Introduction
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.

4.2 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.

4.3 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".

4.4 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.

4.5 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.

4.6 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.

 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
5.1 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:  

Due for a promotion or reward or an increase in salary. Capable of handling additional responsibilities or needs future training and development to upgrade their skills. 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.

5.2 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 feed-back 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.

5.3 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 5

5.4 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. It’s 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.

5.5 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.


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.

5.6 Employee Engagement & Commitment
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. 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 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
6.1 Introduction
Now, we identify and discuss about five issues which are expected to affect the organizational HR in the future:  The corporations of tomorrow,  Information age,  Virtual corporation,  Diversity and  Social responsibility.

6.2 Corporation of Tomorrow
In future, there is a two-fold effect on Indian Industries, i.e., Generation of employment, and  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.

6.3 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.

6.4 Virtual Corporations
A virtual company is usually a highly networked organization that extensively contracts out activities that were once performed inhouse, 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.

6.5 Social Responsibility
Change in technology results in a change in the structure, design and environment of an organization. It has four stages:  acquisition of technology,

 adaptation of technology,  utilization of technology, and  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., Problems that arise out of poverty and inadequate development, and  Problems that arise out of the process of development (threat of earthquake, deforestation, pollution of ground water).

6.6 Next Step - What should we be Doing?
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 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, and 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 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.


Pareek, U. (2002). Training instruments for HRD & OD, Chapter 98. New Delhi: Tata McGraw-Hill.


Litwin, G.H. and R.A. Stringer (1968). Motivational Organizational Climate. Cambridge, MA: Harvard University Press.


Likert, Rensis (1967). The Human Organizations. New York: McGraw-Hill.


Litwin, G.H. and R.A. Stringer (1968). Motivational Organizational Climate. Cambridge, MA: Harvard University Press.


Pareek, U. (2002). Training instruments for HRD & OD, Chapter 96. New Delhi: Tata McGraw-Hill.

6. Ibid., for review of these studies.



Khandwalla, P.N. (1992). Excellent Corporate Turnaround. New Delhi: Sage.


Schein, E.H. (1985). Organizational Culture and Leadership, p.9. San Francisco: Jossey-Bass.


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