454 HUMAN RESOURCE PLANNING

Prioritises HR initiatives by linking activities to business goals

Helps support functions identify and communicate their unique strategies

Creates a framework for initiative prioritisation and budgeting

Aligns measurement with business goal achievement

Measures HR's strategic contribution in concrete and clearly understood terms

Provides real time graphical display of key performance indicators.

Successful Execution
Research conducted by the Harvard Business School demonstrates that overall
only one out of every ten companies that formulate strategy can effectively
implement it. Many factors make it difficult to implement strategy today. The pace
of change continues to accelerate,
technology changes frequently and the workforce
is more diverse and mobile than ever before. While the business
world continues
toevolve, management systems have not kept up. The majority of measurement
and management
systems were designed to meet the needs of a stable,
incrementally changing world not the needs of today's dynamic economy. Statistics
confirm that a balanced scorecard
of
approach has emerged as the most effective
way managing and executing enterprise strategy
HR AND S1x SIGMA PRACTICES
To
leapfrog ahead of competition in this world of
experimenting with one after another processes. From uncertainty, corporate worlds
'Conformance to
to achieve total
quality, the focus has now been shifted to add economicStandards
value and
practical utility to both the organisation and the customer.
entitlement both by the customers and the Realising Value
business relationship. It is now a win-win organisations
of is now the determinant
their rightful situation for both. For customers, it
expectation to buy quality products at
organisations, it is to produce at highest possible competitive cost, while for
everybody tries to achieve in this profit. This synergy is what
Unavoidable Rejection (UR) are now thecorporate world. Rejection allowance
forbidden words. Six Sigma as a business
process is now allowing organisations to
and monitoring business improve their bottom line by designing
activities in a way that
without, however, minimises wastes and resourec
compromising
broader than Total Quality
with customer
satisfaction. Six Sigma process
on detecting and
Management (TQM) programmes. While TOM tocus
correcting defects, Six Sigma re-creates the processes to
defects never arise right from the ernisu
beginning. From organisations' point of view, "
 maximum value in the form of
Ovides
increas 455
pointofview, it provides naximum value in profits and from
vices at competitive costs. terms of
high quality customers'
S e r r

products and
Higher sigma
values indicate better
Higher
quality products and lower
r e p r e s e n t
less
products.
quality
3.4 Defects Per
At Six
Sigma level, products are sigma values
only
only Million
free,i.e.,
Opportunities (DPMO). virtually defect
Six Sigma concept is different from TQM.
ividual operations, without
TQM, per se, focuses on
in indiv
offstatistical
relating to the
it
statisticalitools and due to absence of processes. It emphasises on the improvements
ents

integration of operations and processes

hich is a series of activities or steps to create
#akes long time for an operation to
a
product or service in its totality),
analvtical tools with the improve. While Six Sigma, using rigorous
leadership
from the top,develops methodology for
a
Sustainable improvements, Sigma is Six a
commitment to achieve success by way of
more
integrated approach with
quality improvement that increases
profitability and customer satistfaction. Six
Sigma, therefore, is a breakthrough
strategy that improves organisational values, infusing changes in the processes,
which go into creating defect free product or service at minimum cost. For
introducing Six Sigma, it requires improvement in following areas:

Improvement of process

Improvement of product and services

mprovement in investor relationship

Improvement in designing
improvement in supplier relationship
mprovement in training and recruitment.

all these areas, which

a r r y (1994) in his Six Sigma Academy, emphasises
on

pare the groundwork for achieving excellence in an organisation. Every member

to be trained, following the system and then theplayers
organisation needs
be identitied to play the role of catalysts in
e breakthrough strategy need to customer is the Customers detine
process. In the change process, king.
a nge out at change
the top among
and set expectations and hence, they figure
ager Other change agents being internal to the company, they are graded through
relationship in Six Sigma breakthrough strategy
training
process. A typical inverted
Sexplained in Figure 16.1
inverted pyramid is the top
Like customer
cus at the top, at the bottom of the
and balances the Six Sigma change
process.
man
agement, which supports
 ESOURCE
Champions are also executive leaders who identify individual leaders t PLANNING
to
that key functions are
connected to Six Sigma. They are the groundin. nsure
rounding ensureto
force
make the strategy work. Master Black Belts are selected by the championa
in dissemination of to assist
breakthrough strategy and for identifying proierstentifying projects for
improvement. They train and coach Black Belts and Green Belts, organic
design cross-functional, experiments, structure and co-ordinate Droia.peop
meetings, collect and organise information. Black Belts work under the N.and and
the Maste
Black Belts and apply Six Sigma tools and
knowledge to specific proiectester
Belts on the other hand are
employees of the organisation who execute Six
as part of their overall
jobs. Green Belts dedicate only part of their overal iSigma
Six Sigma projects. Master Black Belts and Black Belts
dedicate 100% of th
in working on Six Sigma projects.
Customer
Green Belts
Black Belts
Master Black Belts
Champions
Top Management
Figure 16.1:Six Sigma breakthrough Strategy
Steps for Six Sigma
By now it has been made clear that
Six Sigma is a
breakthrough strategy aims to achieve excellenceproblem-solving tool. Six >1gna
pertaining to by properly identifying issues
business, technology,
and
in a
delivery system. There are manufacturing/services, quality, proaue
eight fundamental steps to achieve Six
process division of an
organisation. These eight stages are: Sigma qua
Measure, Analyse, Recognise, De
Improve, Control, Standardise and Integrate.
Relating Six Sigma to HR
Strategy
Strategy is the direction and scope of an term, matching its
resources to its
clients,
changing environment organisation over long term,
and in or
so as to meet
stakeholders' particular its markets,
cuon of
Istomers
ern o f
decisions concerning policies and expectations. HR strategy is tne Categic
Management of Human Resourcepractices associated with the HR syste based
Management (SHRM) is compere
b a s e d
a
 MERGING TRENDS .AND ISSUES IN HRP
ach to develop HR for sustainable 457
Tnisational,
orga institutional and competitive advantage. Environmental,
HRstrategy.
strategy. For
implementing technological factors are
potential influencers in
Omisance of each Six
such factor, Sigma break through strategy, we
right from identification to
Integrating Six Sigma to HR strategy need to take
helps in achieving excellence in reduces the time
lag institutionalisation.
time frame. significantly and thereby
quality of product and services
within minimum
Let us first try to understand the basic
At the outset, it
requirements
for
achieving Six Sigma.
the
requires to sell
organisational
values to its internal
employees.
to all cross
A clear vision
and mission do the job when customers, i.e.,
section of successfully
employees.
practices by all through personal Mere documentation will not help. Itpercolated
reflect commitment to selling (behaviour). Vision and missionrequires
quality defect free
a -

should
It should further
extend to
explaining product/services
to the customers.
plan. Subsequently goals, objectives,
In recruitment and
in all HR
practices, such strategic intentstrategies and action

skill sets and who can selection, focus should be to select those should be evident.
who have
This requires
be utilised
interchangeably
by
multiple
foreseeing the future skill sets with the cross lateral movement.
process. Similarly, regular
competency mapping and a synergy changing technology or
and
organisational competencies need to be achieved between individual
development intervention. Training
employees on Six
through training and
and behavioural
reinforcements. Any skill gap Sigma requires both technical
all fit for the requires
purpose. All cannot be black belts. It is also repeated training till they
should understand how not
required. But all
for defect free important it is for them to
improve their workmanship
products and services. Ranging from product to process
familiarisation, the training should focus.on basic
them to measure the understanding using statistical
and analytical tools to of
for failure.
help variability and attribute reasons
Similar importance to
be compensation planning, motivation and retention should
given to ensure commitment and loyalty to the
ways to
design compensation innovatively and also for organisation. There are many
employees' retention.
lo
conclude, Six Sigma, even though a top down
epends on the players, who are approach, its success largely
catalysts for such change. It makes no sense to
engage a consultant and expect results, unless the initiatives
with HR
strategy of the
are
properly integrated
organisation.
HR AND
INNOVATION AND CREATIVITY
Inn
Ovation is a new technique or idea encompassing product/services, process,
dnagerial styles and even organisational structure. It may be
technology push or
 ORC
458
demand pull or even combination of both. Research and Developm
PLANNING
such innovation. In any oroanD
(R
activities of an organisation are examples of
need for innovation is primarily felt to keep pace with the competition.
on. It
It -centered
has
has anisation
to be
essentially customer focussed as this linkage
backward facilitates process-cobe
innovative changes. Whether it is just-in-time (JIT) inventory, Supply Ch
Management (SCM), Business IProcess Outsourcing (BPO), Flexible Manufaeain
strategic backward or f g
Systems (FMS), Product/Service customisation,
integration, synergy through merger or acquisition, alliances or collabora
organisational re-engineering TQM or Six Sigma Practices, new work culturetion,
facilitator of organisational change or any R&cD initiative for value addition. whi
broadly encompasses innovation; all stem from customers' explicit or implicit needs
Mapping customers' needs and aligning the same to innovation initiative is what
we need in this competitive world. Innovation is enabled by pro-active HR
Practices. Subscribing to innovation without pro-active HR practices will hinder
rather than foster innovation in an organisation. Pro-active HR Practices, interalia
call for creating a work environment that recognises creativity, inter-organisational
co-operation rather than competition, working as cross-functional teams,
productive meetings for innovative results, introduction of formal innovation
programmes and finally organisation's receptivity to new ideas and perspectives.
Fostering innovation requires a structured approach. It has to be broadly in the
given context, leadership, values and culture. Contextual analysis helps in building
required innovation teams. Leaders facilitate the teams. Values enable adoption of
principles which foster innovation and finally the culture provides the playing
field.
At this stage, it is pertinent to define creativity as innovation. Innovation and
creativity often used interchangeably in work place. Webster Dictionary has
are
defined creativity as 'the ability or power to create, to bring into existence, to
invest with a new form, to produce through imaginative skill, to make or bring
into existence something new'. Creativity is, therefore, the core competency. It is
the talent of employees of an
organisation. Competitors can replicate the strate8
of an
organisation but not the creative talents of its employees. To encourag
Creativity, organisation must first create the right environment where employe
feel safe even to come
up with 'dumb' or 'crazy' ideas. Creativity is often punis
in organisation,
as creative people spend more time to get ready for action.
are also more difficult to
manage. Organisations, therefore, often see them as
time and money wasters and inhibit their
creative thoughts. A review or cred
literature helps us to capture creative patterns in following ways:
A creative process is idea
a balance of imagination and analysis. It invOivE
generation, analysis and evaluation.
Creativity aoes not stem from subconscious
y believed
process, as traditionaluy to
by the classical schools of thought. It is a directed ate
purposeful or
 459
generate new ideas under controlled situation to
ncompetition. Paul E. Plsek (1997), used the term
in help organisation to leapfrog
Directed Creativity'. It is a purposeful more
appropriately as
seriousness of its generation of creative ideas with
implementation, whenever it
matches with
requirements. Non-implementation of at least some ideas
organisational
will inhibit creativity. (that
fit the purpose)
Innovation is the
implementation of creative ideas.
Sub-set of innovation. Innovation Therefore, creativity is the
being a holistic concept, the term used
interchangeably.
Competencies on the other hand are set of behaviours, which encompass skills,
knowledge, abilities and attributes. Competencies are measurable and it changes
over time. Hamel and Prahalad (1990) attributed business success
only on innovative
creativity, knowledge resources and the expertise, which together create the critical
potential of an organisation, i.e., core competencies. Other proponents of core
competencies like; Quinn (1992); Drucker (1992); Porter (1995); Waterman (1983);
Peter (1988); Nonaka and Takeuchi (1955); Senge (1990); also show that
developing
core
competencies help an organisation to build strategic power. Core
competencies are difficult to duplicate by the competitors because of their
distinctiveness. Core competencies are therefore critical success factors for
any
organisation. Although there exist widespread difference regarding constituents
of core competencies and its relation with
of employees, there is
knowledge, skill, abilities and attributes
agreement among its proponents about how it is created
linking between organisation's goals, structure and culture. Innovation and
creativity helps to develop core competencies supplementing knowledge and skill
base for the employees. In this respect, directed
of new ideas
creativity, i.e. purposeful generation
matching with organisational requirements is more relevant.
Innovation, creativity and competencies are important facilitators for organisational
change. Imperatives for organisational change basically stem from redefining
Dusiness focus, restructuring, customer orientation- all for
competitive advantages.
BPO AND HRO
PrOCess of development of BPO and HRO, as an extension of SCM philosophy
s been discussed from a historical perspective to appreciate its generic root. It is
hod clear, over the years, the need for outsourcing was felt by the organisations
n for economic and strategic compulsions. SCM, as a concept, though developed
a 1ater, it now integrates the outsourcing also along with customer service,
and flow and distribution. BPO is the long-term contracting of a company's
On-core busines processes to an outside service provider. BPO paves the way
or global compe
Stakeh cOmpetition and ensures strategic focus on core capabilities for improving
takeholders' valt
e r S ' value, efficiency and reduced operating costs. Identified benefits of
 LANN
460 NNING
enhanced access to technology, lower opera
BPO are: quality improvement, erating
focus on core competencies. Organisatio
ions in
cOsts, greater efficiency and strategic
Netherlands, Spain, switzerland,Swed
the USA, Canada, U.K., France, Germany, Sweden,
and also India are among some countriesof
Italy, Australia, Brazil, Argentina, Japan BPO to
the world, who have extensively gone for reap its advantages. BPO co vers
human resources, real estate related mat.
activities such as finance and accounts, tters,
etc.
internal audit, tax compliance, applications process, procurement,
Within an organisation, a supply chain encompasses all functions, Fua.
all functional areas, such as accounine
ery
own strategies for
organisation decides its ing
and finance, human resources, information technology, etc. Such functional
chain strategies through a value chain
strategies are integrated with supply
A strategic fit when ensured through a value chain, contributes to companv's
success. Proper mapping of customers' requirements and matching the same to
supply chain responsiveness and the functional strategies within the value chain
help us to achieve the strategic fit. Major drivers in a supply chain strategy are:
inventory, transportations, facilities and information. Responsiveness and efficiency
of each driver deternmines the success of a supply chain.

SCM at the outset, emphasised on the importance of networking among

component manufactures, service providers and distributors. With IT interface it
has now assumed a broader perspective, leveraging competitive advantage for the
organisations. Among others, SCM also helps in leveraging people by better use of
human capital. BPO and HRO in that way are extension of SCM, which
institutionalised the outsourcing of non-core activities for organisations. Like
employee leasing, BPO and HRO also offer the same advantage to small companies,
without requiring them to invest unnecessarily in costly infrastructure, yet remain
competitive in global market by substantial cost savings. With simultaneous changes
in the organisational structure, as predicted by Charles Handy and the need for
redesigning organisation in line with the capability profile, as advocated by David
Cohen along with other changes
concerning management practices and goDa
economic environment, BPO and HRO are no
longer confined within small busue
support services. With initial focus in call centers and medical transcript
activities, it has now even been extended to expert knowledge services,
taculitau
organisations to outsource much more extensively their non-core actiVieo ard
limiting their focus on core
onus of
manufacturing, product management or ma
The identifying core and non-core activities lies within the organisau
n
Examination may be a core activity for an educational
organisation, while adtt not
may be a non-core activity, which can be outsourced. This, however,
ation
hold good for all. some private players in education may consider both nayn
exanu
and admission as non-core and outsource it, by limiting their focus
ony
an
an
(course-ware) aevelopment. The concept of educational franchisee, revovarnd
#his philosopny: Imilarly manufacturing may be a non-core activiy
E M E R G I
401

nisation while product development and marketing may be their core activities.
orgar
e
There a are many FMCG players who follow this model. An integrated SCM Model
with HR BPO focus is presented below:

SCM Model with HR BPO Focus

SERVICE PROVIDER
NETWORK ORGANISATIONAL NETwORK
DISTRIBUTION C
NEETWORK

Product
Development
Product
Development
******
BPO-HRO * * * * * * * * ** * * *

Logistic

********************** Manufacturîmg-

****

BPO-HRO indicates outsourcing of HR and other support services

Figure 16.2: SCM Model with HR BPO Focus

After an organisation decides about outsourcing in the next phase, it is important

for them to select the right vendors. Depending on the customers' expectations,
vendors can be benchmarked on quality, price, delivery and service parameters
based on market information, duly assigning weight for each such factor. Presently
there are only handful of players in India in BPO market with employee strength

as high as 1,2000 to as little as 25. But with the increase of global market in BPO
rom $ 208 billion in 1999 to $543 billion in 2004, as predicted by Gartner Group,
more players are likely to crowd this sector. What is more likely that major IT
giants like; Wipro, Infosys, Tata Consultancy Services (TCS), HCL Technologies,
IBM Satyam are all joining the BPO bandwagon, redefining their business focus.
With the passage of time even management consultants will make a foray into this

gment,
te
giving wide opportunities to the organisations to bargain tor the best in
of price and quality. PWC, Accenture, Exult, Arthur Andersen, Loyds ISB
re already in this business in a limited way. In BPO, HRO is a new accession,

ch makes a traditional HR Department in an organisation as redundant. HRO

init started with payroll administration, but today it encompasses all HR
nctions. Gartner
Gat Group, for HRO alone, predicted a global business of $12 billion

trom its present volume of $ 975 million (1999). Although outsourcing HR

1aely debated and there exists wide difterence ot opinions about its core
 LANI
402
ANNING
are increasingly switching over to HR Dr
or non-core characteristics, big giants
control. Exult, the international pion. BPO,
realising its potentiality beyond cost
HR BPO already roped in Bank of America, International Papers BP Amoco neer in
and
to most of the fortune 500 comna
over the years predicts to spread their business
With humble beginning in leasing, outsourcing has now become a global aci
with reinforced SCM.
activity
KNOWLEDGE MANAGEMENT
Early in the industrial age, motor/muscle power was provided by the workers f
br
product creation, leaving thinking job for the management. However, with #h
changed environment, cognitive skills became more and more important in every
very
work, be it production at the shop floor or rendering services to customersS.
Technology further played a crucial role in capturing and managing knowledge.
making it possible for an organisation to harness the potentiality of knowledge bv
its proper development, growth and maintenance. Of course with an approach to
periodically retire the knowledge which are obsolete. 'There are many contributors
to knowledge management and learning organisation, starting with the concept
of 'Gold-Collar Worker' of Kelley (1985) to Argyris (1994), Drucker (1994), Peters
(1992), Senege (1990), Setewart (1997), Nonaka and Takeuchi (1995) and many more.
Knowledge is reinforced through learning. Therefore before we define knowledge
it is appropriate for us to understand what is learning? Learning is a process of
acquiring new skills or knowledge, which results in a new behaviour. Learning
can take place through multiple ways. But for organisations, best way to promote
learning is by exposure to new experiences. Knowledge is the ability and wisdom
to use the learned experiences for achievement of individual and
organisational
objectives. Knowledge management, therefore, is the process of systematically
and
actively managing and leveraging the store of knowledge in an organisation
Any knowledge management initiative needs to be first tested in the light of available
guna dynamics, as advocated by Chakraborty (1987). It is not that he has
to
contnou
knowledge management literature but because he has first espoused, knowieg
and skills, when reinforced by values ensure better results. His of
characteria
knowledge along three gunas, in the light of Indian-psycho-philosopy
reproduced as matrix indicates that mere rajas without the essence of satwa canno
per se, make a knowledge management and so also skill enrichment u tiativ
SuCcessful in any organisation.
IEAN MANAGEMENT AND HRP
on
Lean managemet emphasises
creating customers' value focusiE y and
ttfacturing proeEs, Such as product development, order to elive
 MERGING TRENDS AND ISSUES IN HRP
463
rice
ser through the products life cycle. It
requires value creation from the
handpoint of the customers, xamining the current
sta

how it could pertorm better, process and experimenting

understanding requirement of the people and
nrocesses to support the value creation, and
the

people in search of the perfect process. aligning the purpose, processes and

To achieve the above intents,

organisations focus on eight basic areas as under:
Strategic Vision and Core Values

Inspiring Leadership
Customer Orientation
Balanced Scorecard

People Involvement and Engagement

Process Innovation
Problem Investigation and Resolution

Organisational Processes.

Strategic vision and core values are designed leveraging the collective expression
of all the stakeholders of the organisation. We can call it shared vision and shared
values. These need to be so designed so that all the members of the organisation
get the same direction and accordingly contribute. These also create a compelling
work culture. Inspiring leadership is also critical for lean management practices.
Leaders persuade members of the organisations to deliver the compelling value to
their customers. Inspirational leaders can get the required commitment from the
vision and defined core values. They motivate, coach and
people to the strategic
guide the people and transform them to a true performer.

Customer orientation refers to designing or developing

customer-centric products
customer centric approach in product design,
and services. In lean management,
and overall customer satistaction
Taking into consideration the cost, delivery, quality
ever changing; it
is tor us to track
Customers' expectations are
very important. our processes to deliver the best.
expectations and accordingly change
uch the performance results
of the employees
dlanced scorecard helps us to quantify customer
learning and growth, internal processes,
O m four major perspectives, i.e.,
four a r e a s irrespective of the
contributes to these
finance. Each employee lean management practices,
functional areas.
For effective
track
archical level and effective
instrument, as it can scientifically
balanced most
ced scorecard is the emplovees through i n c r e m e n t a l changes
in their

evelopment of the
performance.
464
requires participation of all cross-Sechio.
tions of
involvement and engagement
People lean manaoe
process through
in the transformation gement.
people of the organisation It requires the no.
explaining to the people
of people is not so simple.
Such participation to ask questions. and
giving them the indulgence
the need for transformation, feel increasingly commi
clarified on their doubts. Once people participate, they
to
prerequisite
ror people participate is t
to deliver the results. An important
advantage.
create a compelling culture for competitive

It requires challenging the eviot:..

Process innovation requires new thinking.
process, and managing the operations
altogether from different perspectives Let
us take the example of Toyota
Production System (TPS), which are actual
TPS renders our traditional percona
institutionalised lean management practices.
economies of scale as
per unit costo
i.e.producing in bulk we can achieve
it recommends formation
production reduces, wrong making it obsolete. nstead,
can create low cost throuoh
of productive cells, and proves that even smal assets
flow, not the volume. Hernce, in TPS, processes become cells, people become teams,
and products and services develop into value streams.

Problem investigation and resolution requires clear identification and

understanding of the problems and solution of the problems using various problem
solving tools. A structured model of problem investigation and resolution is
DMAIC, which we use in organisational improvement strategy through Six Sigma.
DMAIC stands for; Define, Measure, Analyse, Improve and Control. Organisational
processes put all the above elements of lean management practices together to
achieve the intended results. Organisational process may be for human resource
management, quality management or any other key business process.

As lean management practices simultaneously help in

are also effective in HRP.
resource optimisation, they