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Changing Face of Higher Education in India

Conference Paper · August 2015

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Rahul Agarwal
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Introduction:

Strategic human resource management (SHRM) theory is based on the assumption that
effective human resource management (HRM) practices have the power to contribute
significantly to organizational effectiveness, expressed in terms of productivity, flexibility,
effectiveness, efficiency, return on investment, competitiveness, sustainability and ultimately
profitability.

Various researchers have found that business strategy and HRM practices interaction is an
important factor in organizational effectiveness (Bird and Beechler, 1995; Huselid 1995;
MacDuffi e, 1995; Delery and Doty, 1996; Huang, 2001; Ghebregiorgis and Karsten 2007;
Youndt, Snell and Lepak 1996). A Few have focused on the links between SHRM, performance
management systems and overall organizational effectiveness. (Lepak and Snell 1999, Cascio
2005, Losey et al. 2006, Becker and Huselid 2006, Bartram et al. 2007, Cascio and Boudreau
2009, Boudreau and Ramstad 2009, Stanton et al. 2010); and their contributions to pointers of
organizational effectiveness such as flexibility, competence, customer care, quality, working
relations, and overall productivity (Ulrich and Smallwood 2005, Cascio and Boudreau 2009, Fitz-
Enz 2009, Boudreau and Ramstad 2009).

There are many research conducted in this regard. However, most of the researches are
conducted in America and other parts of the world barring a few in developing economies
namely India. Also, there is lack of such studies for universities, barring a very few, giving
insights to what is the state of affairs with universities from this standpoint.

This paper, through extensive literature survey, tries to understand this linkage in SHRM,
Performance management systems and organizational effectiveness in a university set up in
Indian context and to understand how they are using the strategic performance management
systems to achieve organizational effectiveness and, further, to find the gap.

Strategic Human Resource Management:

Since long, the organizations have realized the importance of human resources and effective
human resources management in their survival, sustenance and development. But, nowadays
there are higher risks and uncertainties as compared to the past, due to unsettling innovations
and unpredicted shocks coming at a faster rate. This is now ‘new normal’, an era of constant
turmoil and increased chaos(Kotler & Caslione,2009). This “New Economy” as defined by
Porter,M.E. (1998), is changing rapidly characterized by such phenomena as the globalization,
changing customer and investor demands, ever-increasing product-market competition.

In this era of change and ambiguity, organization’s focus to human resources has changed
radically and substantially. In this "new era" the role of human resource management has
evolved considerably. Now managers talk about the vital role of "human" in the organizational
success, often using the term "human capital" (Porter, 1998). It can be seen by analyzing the
change in the thought process, definitions, evolving theories of human resources, human
resource management over time. Human resource management deals with all business
processes that affect employees, such as hiring, firing, pay, benefits, training, and
administration. The concept of "human resource” has evolved from “cost element" to “strategic
element”(Ioana, 2009).

Strategic human resource management deals with forward thinking and planning ways for a
better strategic fit between the employees and the company where the company better meet
the needs of its employees, and the employees better meet the needs of the company. SHRM
is linking of human resources with strategic objectives of the organization in order to improve
business performance and develop an organizational culture that encourage innovation and
flexibility (Ratna & Singh, 2013). This strategic approach to human resource management
allows organizations to obtain a competitive advantage over other competitors in the field by
befitting the human resource strategies and efforts to the overall organization’s strategy. This
“strategic fit” gives organizations a two pronged advantage: on one hand, all the skills,
capabilities, efforts and strategies are channelized towards the overall larger objectives of the
organization. On the other hand, the human resource is benefitted as their efforts, being in the
right direction, earn them the necessary rewards and development and motivate them
appropriately.
Organizations often arrive at certain junctures, where the old strategy does not give the desired
results and must be quickly replaced with a new one. And therefore, in present scenario, the
most reliable source to obtain a sustainable competitive advantage by organizations is
innovation (Ioana, 2009). Now, investment in human resources is seen from a strategic
standpoint that needs to be constantly evaluated, optimized and aligned rather than from a
cost perspective that need to be minimized and kept as low as possible.

Practice has proved that the success of an organization is vested in its people. Organization's
objectives can only be met if it is able to harness the necessary human resources and
competencies defined through strategic human resource planning which are then strategically
aligned, utilized, developed and appraised. Strategic human resource management concerns
with the creation of a linkage between the overall strategic aims of business and the human
resource strategy and implementation.

SHRM and Organizational Effectiveness:

Strategic Human Resource Management has seen a rapid development in recent years, This
could be attributed to the impact that human resources have had on the competitiveness of
organizations (Lefter, Marincas, Puia, 2007). Rothmann et al, (2002) observed that proper
utilization of human resources results into positive employee outcomes which have direct
impact on overall organizational effectiveness. Zivile Stankeviciute (2011) explains that human
resources and their management have a significant impact on organizational performance.

Strategic human resource management concerns with the creation of a linkage between the
overall strategic aims of business and the human resource strategy and implementation
(ÇALIŞKAN, 2010). The fundamental objective of strategic human resource management is to
generate strategic capability to ensure that the organization has highly qualified, highly
motivated employees to achieve competitive advantage. (Lefter, Marincas, Puia, 2007)
Strategic human resource management theory is best implemented and evidenced through the
two way alignment of human resource management strategies, processes, and functions
(horizontal); and of these with overall organization’s strategies (vertical). These two way
effective associations have the greatest potential to achieve and are the key to
organizational effectiveness (Stanton, P., & Nankervis, A.,2011).

MUDULI, A. (2012) in his research found out strong positive relationship among Business
strategy, SHRM practices, HR Outcome variables and Organizational performance. The results
further shows that SHRM practices are primarily based on the business strategy adopted by the
organization focused and designed deliberately to achieve specific HR outcomes like
commitment, motivation, cooperation, satisfaction etc, that in turn will contribute to desired
organizational effectiveness.

The findings are in-line with numerous previous studies and further supported by Ratna, R., &
Singh, P. (2013), who in their study finds out that there exist a strong and positive relationship
between SHRM practices and employee satisfaction of a firm which is an essential condition for
accomplishing organizational goals and organizational effectiveness.
SHRM and Performance Management

Performance management systems are the most challenging task of human resources
management. A recent survey by Watson Wyatt showed that only three out of 10 workers
agree that their company’s performance management system helps improve performance. Less
than 40 percent of employees said their systems established clear performance goals,
generated honest feedback or used technology to streamline the process (Pulakos, 2004).

Performance management can be defined as a strategic and integrated approach to delivering

sustained success to organizations by improving the performance of the people who work in
them and by developing the capabilities of teams and individual contributors 1.

In spite of the inherent difficulties, performance management is an essential tool for high
performing Organizations. The prerequisites for effective performance management systems, is
the linkage between the system and overall strategy of the organization. De Cieri and Kramar
(2005) suggest that performance management has three major purposes,

 A strategic purpose – which includes the articulation of how the goals are to be linked,
 A developmental purpose with a focus on the individual and
 An administrative purpose which includes decision making.

In the very basic sense, the performance management system has its linkage to the
organizational strategy. The entire process, that’s why, need to be crafted so that these
strategic goals are achieved.

1
https://www.uop.edu.jo/Repository/41/Strategic%20Human%20Resource%20Management.pdf p142
 Source: http://www.pilat.com/wp-content/uploads/2012/01/Cogs-Graphic-
e1332655294627.png

The performance management is an integrated process in four dimensions(Armstrong, 2006)

 Vertical Integration
 Functional Integration
 HRM Integration
 Goal Integration

Tobey, D. H., & Benson, P. G. (2009) states that the role of HRM has changed from managing
processes to managing capabilities and human capacities of entire strategic value chain by
linking human resource practices to organizational performance. This linking of SHRM and
performance management practices is basically concerned with (Armstrong, 2006)

 Performance Improvement
 Employee Development
  Satisfying the needs of all stakeholders
 communication and Involvement

Table 1: SHRM strategies that impact Performance

SHRM practice area How it impacts

Attracting, developing and Provides for the acquisition, development and retention of
retaining high-quality strategically aligned employees for ensuring delivery of higher
people performance, productivity, flexibility, creativity and high levels
of customer service by matching people to the strategic and
operational needs of the organization and ensuring cultural ‘fit’
Talent management Identifying, acquiring and developing the right talent for
organization to meet present and future needs and ensuring that
they are available and well motivated
Working environment – Develops ‘the big idea’ (Purcell et al, 2003), ie a clear vision and
core values, leadership, a set of well integrated value system, Makes the organization ‘a
work–life balance, great place to work
managing diversity, secure
employment
Job and work design Provides individuals with challenging, motivating and interesting
work by giving them variety, autonomy and flexibility to perform
their jobs thereby enhancing the overall job satisfaction and
ensuring high performance and productivity.
Learning and development Identifying, enhancing and enlarging the strategic competencies
required in the workforce. Encourages voluntary learning by
creating a climate of learning for growth where self-managed
learning as well as coaching, mentoring and training flourish and
by mapping it to individual’s and organizational performance
Managing knowledge and Focuses on management of both organizational and individual
intellectual capital knowledge by developing the ability to share knowledge in a
 systematic way. Focuses on retention of vital knowledge,
efficient flow of knowledge, information and learning within the
organization.
motivation, commitment Develops a climate of mutual trust and cooperation. Helping
and role engagement people to identify themselves with the core values of the
organization and to contribute enthusiastically to the
achievement of shared goals.

Management of High- Developing a culture of high performance in all areas of

performance organization. Empowers employees to exhibit the discretionary
behaviors most closely associated and consistent with the
overall strategy of the organization.
Reward management Creating and managing a reward system to increase motivation,
commitment, job engagement and discretionary behavior
strategically needed and rewarding people in accordance with
their contribution.
Source: Michael Armstrong (2006). Strategic Human Resource Management: A Guide to Action.
Kogan Page. London. p. 77-78.

Strategy, HRM, Performance Management and Organizational Effectiveness

Performance management is a crucial aspect of HRM as it is the linkages between outcome

(individual, section, division, and overall organization) and overall strategy of the organization.
This is perceived as the key to effectiveness and competitiveness of organization (Ulrich and
Smallwood 2005, Losey et al. 2006, Cascio and Boudreau 2009, Boudreau and Ramstad 2009).

Researchers suggest that the performance can be enhanced by aligning the performance
outputs with broader strategic outcomes. Thus, the linkage of strategy to individual efforts and
performance and their linkage to overall effectiveness of the organization has become arguably
the most important HRM function.

Literature suggests that the broader organizational values and strategies defines the broader
HR strategies which in-turn determine the performance management system which
(theoretically) defines and measures the efficacy of HRM programs at micro level and
contribute to achievement of business effectiveness measures such as efficiency, productivity,
compliance, ROI at macro level.

Source: http://web.b.ebscohost.com/ehost/pdfviewer/pdfviewer?sid=98e311d4-afdd-4585-
bde4-a383d60c2a9a%40sessionmgr112&vid=2&hid=122

However, review of previous works suggest that there is no general theory about performance
and performance management per se. Either they merely refer to employee performance
outcomes and equated to performance appraisal or they encompass all organizational
performance indicators including job design, recruitment selection, learning, training,
development, compensation, rewards, discipline etc. However, more or less all different
approaches have three things in common ( Stanton, P., & Nankervis, A.,2011).

 content of performance and its outcome

 measures and type of performance data (employee and organization)
 and casual links between employee and organization’s performance

This is therefore can be inferred, that despite no unanimity among different approaches of
performance management, there is a common thread linking individual and organizations
performance. In the words of Yeo (2003, p. 200) ,

“…performance management should not be treated as a separate isolated

system. Instead, measurement should be considered at the individual, process,
and organizational levels ... [and] ... can facilitate the achievement of goals of all
individuals, teams, departments and processes with the strategic aims of the
organization.”

However, use of common practices may not lead to competitive advantage and organizational
effectiveness. Managers need to attempt to design and implement performance management
systems which align individual and organizational performance goals and outcomes to improve
business effectiveness. Congruence with organizational strategy requires such systems to align
employee behaviors with organizational goals (Tobey, D. H., & Benson, P. G. (2009).

Performance Management in Universities:

Performance management has been described as a “vehicle for creative competitive

advantage” for organizations and therefore, has remained an important topic of investigation
among organizational researchers because people have been identified as the source of
competitive advantage (Poon, 2004).
Globally, There are three key issues that have affected the education that have made the
education sector to give increased focus and emphasis on performance management (Jericho,
2004).

 Emergence of notion of global competitiveness: It has been argued that this globalized
open economy is energized by “information and knowledge” power as much as by any
other factor. The economic success of the countries will depend on how successfully
countries invest in knowledge and how successfully these investments pay off. The
nations would require technologically literate citizens, focus on learning and research to
be globally competitive and therefore the education sector is at the heart of it.

 Changing role of government: To be competitive the governments had to change their

policies from being social welfare to more strategically aligned to their global
competitiveness. It was believed that the market forces will produce better outcomes
with limited resources and therefore, the privatization was promoted to the extent
possible. This was done to ensure that the services are customer oriented, to reduce
cost, to improve managerial efficiencies, infuse competition, to offer customer with
wide choice, to fix accountability and to the extent possible separation of funding and
delivery. Education being one of the important functions of the government is
influenced by this changing role. This is visible through promotion of private
participation in education sector across the world. Now the education sector needs to
be more pragmatic in terms of accountability and performance management practices.

 Increased government expectation of education: To be globally competitive, the

government has to look at education from “human capital” angle believing that the
investment in education will add value to the students and people, who in turn will
ensure the economic growth of the country. Therefore, the education sector is at the
heart of the nation’s competitiveness. Now the governments want to harness the
education sector for the cause of economic development of the country and hence need
to operate more efficiently.
These factors have necessitated the education sector to sought efficiencies in their operation
and incorporate strategic performance management systems in place. In this environment, the
need to attract, recruit, develop and retain the right caliber of employees is now widely
recognized as being essential in assuring competitive advantage.

This called for the linking of the performance management system to strategic goals, using it as
developmental rather than just a monitoring tool, and its seamless integration with other HRM
policies. Performance management in universities has been increasingly talked about
throughout the 1990s as a response to the new political ideology, changed higher education
policy, fiscal conditions and the industrial relations environment (Stanton, Morris, & Young).

The development of performance management in universities has taken place in different

phases (Lonsdale, 1998). Universities, initially, had focused largely on narrow performance
appraisals of individual staff member rather than a consolidated performance management
system per se. involving a basic formal assessment by supervisors and a feedback to
subordinates. The second phase was characterized by focused on assessing/evaluating and
appraising the individual performance in achieving the organizational goals. This approach was
individualistic and was not aligned to strategic goals. However, failure to identification of
individual developmental needs and subsequent organizational outcomes forced universities to
look towards the more comprehensive performance management approaches.

In third phase, the universities get down to change their performance management systems
and processes to be more aptly aligned to their strategic direction to enhance staff productivity
and organizational effectiveness. The main focal points were,

 To have a clear linkage between the individual performance and the strategic direction
of ‘the relevant department, school, or, the university’.
 To report and give performance feedback to staff and relevant skill development within
that strategic frame. This feedback could be from varied sources such as supervisors,
colleagues, staff, students or other appropriate persons so as to have a feedback from
multiple viewpoints.
  To ‘identify developmental gaps and formulate action plans for fostering staff’s career
development’
 To generate, gather and analyze data for making administrative decisions on matters
such as probation, increments, tenure contract renewal, and even terminations.

So clearly, the focus of universities worldwide has shifted from a narrow perspective of
performance appraisal to need for developing performance management system which is
strategic and developmental in nature. Today, there is a unvarying requirement of aligning,
measuring and quantifying performance at colleges and universities. Higher education
institutions need to act in accordance with the government directives, compete globally for
good academicians, researchers and students, constantly review and update programs offered
and secure accreditation, make decisions about whether to build on existing strengths or
develop new areas (Thomson Reuters, 20102). These and other new realities were evident from
various reports that surveyed higher education executive from across the globe. Their roles are
changing – and whether they are working for regulation compliance, have roles for strategy
formulation, or merely analyzing data to track progress, they are finding that performance
measurement is central to their responsibilities.
There is lot of work in this regard done, as established by the researches in different countries,
establishing performance management systems and strategic linking of such systems. The
countries have also seen the benefits of such systems in place which is visible through
education sector’s increased effective competitiveness and contribution towards intended
goals.

Status of Higher Education in India

With more than 650 universities and more than 35000 (UGC, UNIVERSITY GRANTS
COMMISSION, 2012) affiliated colleges, Indian higher education system is a compound system
that has grown at a high rate. By almost doubling the number of universities in last five years

2
http://researchanalytics.thomsonreuters.com/m/pdfs/higher-ed-exec-report.pdf
and adding more than 20000 colleges merely in a decade the higher education sector has
shown a CAGR of 11%(MHRD, 2013). Enrolling approximately 20 million students, Indian
education industry is the third largest in the world next only to US and China(PWC, 2012).
Various reasons have contributed to this exponential growth including low literacy rate, huge
demand supply gap, low GER, growth of service sector necessitating the huge demand for
skilled workforce, increased FDI, increase in internet based education, increased and growing
incomes are few among them(PWC, 2012).

Increase in number of Universities

2007 2011 2012 2013

656
613
569

368
297 299 311
222
171
129 130 129 140
102 100
28 43 44 45 16

State Universities Deemed to be Central Universities Private Universities Total Universities

Universities

This growth has put a lot of pressure on the state and has created an opportunity for Private
and Foreign partnership in education field making this sector as ‘sunrise sector’ for them. This
prospect is well responded too by the private players and the number of private universities
have grown from 16 to 171 over the past six years(UGC, UNIVERSITY GRANTS COMMISSION,
2012) and registering a growth of 150%. With an estimate of more than 150 million people in
the age group of 18-23, the sector still holds very promising prospects for private players.
However, despite a huge untapped potential and demand supply gap, the sector has a very low
GER (15%) as compared to USA (84%) and other countries (Deloitte, 2012). This low GER is both
curse and blessing. On the one hand it depicts the low number of students enrolling for higher
education making the capacity un-utilized, it also tells about the opportunity to scale up the
‘business’ and make higher ROI on the other specially by private players.

The associated problems

Apart from this, the universities from across the globe want to reach out to India by the way to
join hands with existing educational institutions to expand their reach and also to reap the
benefits of a huge and expanding market3. This ‘internationalization’, increased expectations of
state, competition, limited resources, increasing demand for higher education and at the same
time higher expectations of their ‘consumer’ on their ‘investment’ has made these institutions
to rethink their processes in order to ensure value adding processes are in place.

Universities and colleges are increasingly facing demands to be accountable to their

stakeholders. In fact, lots of questions have been asked about the relevance of such institutions
and the value they are adding to the business, community and nation. Recent articles authored
by business academics and administrators have strongly criticized business education’s
relevance to business and the community in general (Bennis & Toole, 2005:96; Holstein,
2005:16).

Apart from this, the Indian education sector is plagued by their incapable of producing students
who have skills and knowledge and the process neither serves a screening or signaling function
of potential students. This not only means students spending more years on campus and
spending more resources but also impedes the government and economy to achieve its long
term strategic goals by not producing the right talent.(Kapur & Mehta, 2004)

The most acute weakness plaguing India’s higher education is a crisis of governance. Its most
visible manifestation is a crisis of faculty. The lack of talented faculty members, high attrition
rate, little likelihood of sufficient and competent replenishment, given ingrained mediocrity in
institutions with life-time appointments, few competitive pressures and awful governance, lack

33
http://www.unom.ac.in/asc/Pdf/Higher%20Education-1.pdf p:57
on focus on performance, lack of direction are the key reasons for this crisis. This predicament
is masked behind the success of a very few professional institutions.

Universities and education institutions serve as storehouses of knowledge for nurturing the
manpower needs of the nation and hence for satisfying the aspirations of the. Therefore the
academic staff’s roles are crucial and their number, quality, motivation and their effectiveness
make the difference in university education production function and to the wider society
(Mwadiani, 2002). No academic institution can really ensure sustainability and quality in the
long run without a well-qualified and committed academic staff. This therefore makes it
critically important to retain and motivate this Intellectual capital.

Many institutions of higher education in the country have excellent performance management
systems which are almost as good as the best in the business globally. But, it isn’t true for
majority of institutions of higher education in the country and this huge gap between the
requirement and reality in standards and facilities has been a cause of concern to the policy
makers of higher education in India(UGC, Higher Education In India: Issues, concerns and new
directions, 2003).

The Current Status:

Venkatesha (2003 as cited in Venkatesh & Dutta, 2007) finds a lot of difference in work culture
between the university teachers and college teachers. While for college teachers their
performance in teaching and their efforts on improving these skills (seminars, symposia,
workshops, summer camps etc.) are basis for their appraisals. There is not much of focus on
research. Whereas research is one of the yardsticks for appraisal and performance that the
teacher need to take up along with the teaching in universities. Because of this type of dual role
of teaching and research without defined standard guidelines, university teachers may neglect
either teaching or research, or sometimes both. This results in deserted teaching and taking
up some sort of irrelevant, uneconomical, unproductive, outdated and repetitive type research
resulting into the substandard research articles resulting into missing the objectives of higher
education institutions by a fair margin. Unfortunately, in both the cases (college and university
teachers), no concrete method has been developed so far to judge the efforts and
performance.

Altbach (2005) provides an general idea of the higher education machinery in India that , with
just a few exceptions, it has fundamentally become a large, under-funded, ungovernable
politically infested system. Misra (2002) identifies “management without objectives” as one of
the key reasons of the downfall of the Indian higher education system. He underlines the need
for adopting a strategically aligned functional approach in our universities with a focus on
performance, accountability, administrative restructuring and making education relevant to
larger objectives in improving the Indian universities. This necessitates the paradigm shift in the
way universities are managed and demands for adoption of strategic management tools and to
see that they have a strategic association with institution’s strategy.

After an extensive review of literature it is found that there is a huge gap between how the
management is and how it needs to be in case of higher education institutes in India. Almost all
the researchers have felt that the gap is huge and is manifesting itself by the poor quality
students, sub-standard research, repetitive and outdated research, high attrition, low morale
of staff, low institutional effectiveness and competitiveness.

The solution lies with designing, implementing and aligning the performance management
systems by the universities and colleges to a clearly though of and laid overall strategy. The
argument is justifiable for a number of reasons as it would enable institutions to – set clarity
and direction of strategic vision; communicate clear and concise strategic objectives throughout
the institution; align individual, departmental and institutional efforts and goals; identify and
align strategic initiatives; put measurement, corrective and developmental process in place to
align and re-align strategy and actions (Kaplan and Norton, 1996).

Conclusion:

With the above discussion, it is clear that there is an apparent and strong relationship among
strategy, HRM, Performance management systems and organizational effectiveness. The same
is proved by researches time and again. Due to the changing environment and the demands
from the universities, the role of universities has become more critical and strategic for nation’s
global competitiveness and, therefore, universities need to be more accountable and
professionally managed. This calls for effective performance management systems in place and
lots of researches found out that the various countries have been working in this direction and
have been able to reap the benefits. However, in India the situation is far from satisfactory and
a lot need to be done in this regard. There seems to be lack of alignment in the action of staff
and the strategic goals of the respective institutions and education sector as a whole. Thus it
demands for identification of institutions strategic goals, understanding the performance
objectives to achieve those goals, aligning those actions with strategy through proper
performance appraisal methods and feedback mechanisms, establishment of developmental
programs to empower the staff to be able to achieve those goals. With a proper performance
management the universities would be able to play the central role in nations to achieve the
global competitiveness, which is expected out of them.

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