10. LEADERSHIP ROLES AND SELF-RENEWAL OF HR PROFESSIONALS – Hurconomics for Talent Management: The Creation of a Business-driven HRD Missionary


Leadership Roles and Self-Renewal of HR Professionals

How Much Does an HR Manager Cost?

Rekha had joined New Designers, an FMCG company. The company had lately diversified into luxury goods for high-end users. It had opened new high-design outlets in select department stores to promote its new design products such as jewellery and home decorations. It recruited fresh MBAs from prestigious institutions like the IIMs to promote the new products. Rekha, who had been to a premier management school, was one of New Designer’s recruits. She was born and brought up in a middle-class family in Karnataka and had studied mostly in Kar-nataka and Chennai. After a two-month induction programme, she was posted in Mumbai as sales manager. She was given a target of 10 crore for the year, and three sales executives who were all local girls recruited from Mumbai by the regional manager. Rekha was quite excited about her new posting, but at the same time was apprehensive about living in Mumbai. She had done her summer placement partly in Mumbai, but, as she had been staying with a friend at the time, she had not really had a chance to experience the city. All that she knew was that she had little time to hunt around for a house, given the ambitious target. She decided to get going from day one. She approached the VP (marketing), who organized her stay in the company guest house until such time as Rekha found a house. Driven by the target, and with a high achievement motivation, Rekha started working with intense involvement. In 15 days, she was able to establish many contacts and get a feel of the market. She was beginning to feel that the 10 crore target might be easily achievable. During those two weeks, she did not think too much about her accommodation. She sounded out a few friends about exploring accommodation possibilities. She was certain, though, that the first two months on the job were going to be crucial as the festival season was approaching, and a lot of buyers would make their purchase decisions over the course of the next month. She was happy with her progress and the prospect of meeting her target.

Two weeks later, after a hard day’s work, she returned to the guest house to discover the HR chief from the head office, whom she had met only twice during her induction, waiting for her. She was surprised. As soon as he saw her, he said, ‘So you are Rekha. Who gave you permission to stay here in this guest house? It is meant only for senior officers of the company. I understand you have been staying here for the last two weeks. You should vacate the place immediately’

Rekha was shell-shocked and explained to him about the target given to her, how she was new to the city, had had no time to look for a flat and that she had been told by the secretary to the VP (marketing) to stay, as the latter had spoken to the CMD’s office. The HR head replied, ‘Your VP or CMD’s office doesn’t decide who stays here. There is a policy and we set the policies. You are not eligible to stay here. Please vacate this place within the next 24 hours’

Scared and upset, Rekha stopped working for the next few days and started hunting for accommodation. The few days she lost affected her tempo and severely damaged her motivation to achieve her targets. She felt that for the HR head, status considerations seemed to be much more important than achieving company targets. Also, the HR head had behaved as though it was not his responsibility to help managers find accommodation. Was it worth working for such a company? Nonetheless, she continued with New Designers for the next three years because the marketing chief was a very good boss and always made her and the other employees feel that they contributed a good deal to the company. Five years after she left the company, she still found the ugly incident with the HR chief deeply traumatic. She once said that if that had not happened, she might have set a new benchmark in the company’s sales turnover that year and added 2 crore more to it.

An HR research study from Yale University has established that there is a direct link between the percentage of time people feel positive emotions at their workplace and the likelihood of their continuing in the job (Goleman, et al 2002). The researchers also found that cheerfulness and warmth spread most easily. However, in Asian cultures, negativism perhaps spreads more easily. A frustrated employee can do a lot of damage to the company and to herself/himself. HR managers should always make efforts to establish good cheer, keep motivation levels high and plan effective interventions. An unscrupulous and insensitive HR manager can do more damage than good to the human resources of a company.

HR managers have various sources of power. These include:

  • Educational qualifications/professional qualifications
  • Brand image of the companies she/he has worked with and is currently working with
  • Professional positions held
  • Current position/designation
  • Work done in the past, including innovations, execution/implementation, writing
  • Business networks

A good HR manager draws power from her/his own work and accomplishments, the extent to which she/he has been able to empower the line managers, the extent to which she/he has contributed to the CEO’s effectiveness, and the extent to which she/he has been able to empower employees and the HR department as a whole, and make them indispensable.

In an article entitled ‘Why we hate HR?’ Keith Hammonds (2005) outlines four reasons why HR departments are disliked. These are:

  1. HR people aren’t the sharpest tacks in the box.
  2. HR pursues efficiency in lieu of value. Dave Ulrich, a professor at the University of Michigan, recalls meeting the chairperson and top HR people from a big bank. The training manager said to Ulrich that 80 per cent of employees had done at least 40 hours in classes. The chairperson said, ‘Congratulations’ Ulrich said, ‘You’re talking about the activities You’re doing. The question is, what are you delivering?’
  3. Human resources forfeit long-term value for short-term cost efficiency. There is a tension created by HR, as it pretends to be the preserver of corporate assets and makes sure that rules are followed rather than ensuring that larger business goals are achieved.
  4. HR seems to be good at the tasks companies are outsourcing—the administrative tasks.

To get HR to contribute, Hammonds suggests the following:

  1. Say the right thing.
  2. Do the right thing. Measure the right thing.
  3. Get rid of social workers. Human resources should not be about cutting costs but about understanding strategy, competition and customers, and enabling people to acquire the required competencies.
  4. Serve the business.
  5. Create value not activity.

Importance of HR and HR managers

The era when technology, finance and systems gave firms a competitive advantage has come to an end. All these are more easily available than before and in some cases available in abundance. What is not available as easily are competent people. In the absence of competent people, those who are responsible for procuring them, maintaining them and multiplying them become a strategic resource and give a firm its competitive advantage. Hence, competent people and HR departments are becoming strategic and critical. This should explain the ever-increasing compensation in the Asia Pacific region. In fact, Asian managers are in demand everywhere, and the West has recognized their competencies as much as they have recognized the market opportunities in the Asia Pacific region.

What makes an HR manager such a strategic resource?

What are the roles that HR managers are expected to perform, to become strategic resources? What are the competencies needed to perform such roles?

Theoretical Frameworks of HRD

In this section, we shall discuss some key theoretical frameworks of HR.

Pareek and Rao’s framework

In 1975, L&T appointed two consultants from IIM Ahmedabad to study the performance appraisal system and make recommendations for improving it. The two consultants studied the existing system through interviews and suggested a new system. In the new system, ‘… performance appraisal, potential appraisal, feedback and counselling, career development and career planning, and training and development get distinct attention as unique parts of an integrated system, which we call the human resources development system’ (Pareek and Rao 1975; 1998: 24). This system was proposed as a separate one with strong linkages with the personnel (human resources) system. Pareek and Rao, in their second report of the human resources system at L&T, recommended that the personnel function be viewed as human resources function (HRF), and suggested a trifurcated function: personnel administration, HRD and worker affairs. Further, adding organization development (OD) to the HRD function, the consultants recommended that ’Since OD is being added now, it is necessary to strengthen that part of HRD. We therefore recommend that the company may appoint a manager (OD) with two officers to do a lot of research work, which will soon start (Pareek and Rao 1977: 139).

The consultants distinguished HRD from the other components of HRF, and also integrated the components of HRF structurally and system-wise. Structurally, HRD was to be a subsystem of HRF and the integration of this with the other two subsystems (personnel administration and worker affairs) was to be done by the person at the director level, for example, vice-president (personnel & HRD), through task forces and subsystem linkages. Inter-system linkages were outlined between various HRD subsystems to build an integrated system. Pareek and Rao also outlined a philosophy for the new HR system. They outlined 14 principles to be kept in mind when designing the HRD system. These principles dealt with both the purpose of HRD systems and the process of their implementation (Pareek and Rao 1975).

  1. HRD systems should help the company to increase enabling capabilities. The capabilities include the development of human resources in all aspects, organizational health, problem-solving abilities, diagnostic skills, capabilities to support all the other systems in the company, and so on.
  2. HRD systems should help individuals to recognize their potential and help them to contribute their best towards the various organizational roles they are expected to perform.
  3. HRD systems should help maximize individual autonomy through increased responsibility.
  4. HRD systems should facilitate decentralization through delegation and shared responsibility.
  5. HRD systems should facilitate participative decision-making.
  6. HRD systems should attempt to balance the current organizational culture with the changing culture.
  7. There should be a balance between differentiation and integration.
  8. There should be a balance between the specialization of a function and its diffusion into other functions.
  9. HRD systems should ensure that responsibilities are carried out in a responsible way.
  10. HRD systems should build upon feedback and reinforcement mechanisms.
  11. HRD systems should maintain a balance between quantitative and qualitative decisions.
  12. There should be a balance between external and internal help.
  13. HRD systems should plan the evolution of the HR function.
  14. There should be a continuous review and renewal of the HR function.

In sum, the integrated HRD systems approach of Pareek and Rao (1975) has the following elements: (a) separate and differentiated HRD department with full-time HRD staff; (b) six HRD subsystems, including OD; (c) interlinkages between the various subsystems; (d) fourteen principles of design; and (e) linkages to other subsystems of HRF. After L&T accepted these recommendations in full and started implementing them, SBI, the single largest Indian bank, and its associates decided to use the integrated HRD systems approach to create a new HRD department. A large number of organizations in India have since established HRD departments.

Other frameworks of HR

As HRD came into prominence between 1995 and 2000, other frameworks and models came into existence. Some of these are briefly reviewed here.

Strategic HR framework  The strategic HR framework, formulated by Ulrich and Lake (1990), aims to leverage and/or align HR practices to build critical organizational capabilities that enable an organization to achieve its goals. This framework offers specific tools and paths to identify how a firm can leverage its HR practices. Business strategy, organizational capabilities and HR practices are the three important elements in this framework. Dave Ulrich (1997) presents a framework for HR professionals in terms of four key roles: (a) management of strategic human resources; (b) management of the firm’s infrastructure; (c) management of employee contribution; and (d) management of transformation and change. The activities for managing strategic human resources include: aligning HR and business strategy, organizational diagnosis, re-engineering organization processes, shared services, listening and responding to employees, providing resources to employees, managing transformation and change, and ensuring [the] capacity for change.

The management of a firm’s infrastructure involves constant examination for improving the HR processes, the need for HR professionals to act as administrative experts to ferret out unnecessary costs, improve efficiency and constantly find new ways to do things better, and the need to undertake activities leading to continual re-engineering of the work processes. HR professionals are required to design and deliver efficient HR processes for staffing, training, appraising, rewarding, promoting and otherwise managing the flow of employees through the organization. The activities for managing employee contributions include listening, responding and finding ways to provide employees with resources that meet their changing demands. The activities for managing transformation and change include identifying and framing problems, building relationships of trust, solving problems, and creating and fulfilling action plans.

Integrative framework  The integrative framework offered by Yeung and Berman (1997) identifies three paths through which HR practices can contribute to business performance: (a) building organizational capabilities; (b) improving employee satisfaction; and (c) shaping customer and shareholder satisfaction. Yeung and Berman argue for dynamic changes in HR measures to re-focus the priorities and resources of the HR function. They argue that HR measures should be business-driven rather than HR-driven, impact-driven rather than activity-driven, forward-looking and innovative rather than backward-looking, and instead of focusing on individual HR practices should focus on the entire HR system, taking into account synergies existing among all HR practices.

Human capital appraisal approach  The human capital appraisal approach, outlined by Friedman, Hatch and Walker (1998) of Arthur Andersen, is based on the belief that there are five stages in the management of human capital: clarification stage, assessment stage, design stage, implementation stage and monitoring stage. There are five areas of human capital management: (i) recruitment, retention and retirement; (ii) rewards and performance management; (iii) career development, succession planning and training; (iv) organizational structure; and (v) human capital enablers. A 5×5 matrix using these five stages and five areas could be used to evaluate and manage human capital well. For example, in the clarification stage, managers examine their human capital programmes to fit into their strategy and overall culture. They may also examine each of the areas to fit into the strategy, and so on.

HRD score card approach An approach  formulated by Rao (1999) envisages that HR interventions—in order to make the right business impact—should be mature in terms of HRD systems, competencies, culture (including styles) and business linkages. A well-formulated HRD audit assesses the maturity level and appropriateness of each of the HR subsystems and HR structures, the level of competency of HR staff, line managers and top management, the HRD culture (defined in terms of openness, collaboration, trust, autonomy, proaction, authenticity, confrontation and experimentation), and the compatibility of the style of top management and HR staff with HRD culture, and the extent to which all the systems and practices result in employee and customer satisfaction. Rao outlined these as a part of the HRD score card approach.

The HR score card approach has been promoted by Dave Ulrich and his team. While most companies are aware of good financial and operational strategies, they have an extremely limited understanding of strategies for developing human capital (HRD strategies).

The HR score card approach is based on the research work and experiences of Dave Ulrich and his associates. The main points are:

  1. If the HR function cannot show that it adds value, it risks being outsourced. There is nothing wrong with outsourcing as it saves costs for the firm. However, it denies the company an opportunity to utilize its human capital and runs the risk of wasting a function’s potential.
  2. The differences in market value of any company are largely reflections of the nature of its intellectual capital. When you take the examples of two firms, one having double the market value of the other, most often the explanation is to be found in the intellectual capital that the firm has created. For example, the CEO of a company when asked how his HR was helping him build the market capital replied: ‘ This is business and not HR’ This company has innovative HR systems but is not perceived as being linked to business. In the past, HR was not seen as a part of business strategy. As a result, firms lost a significant opportunity to build intellectual capital. HR people have not helped identify this lapse: they are too busy innovating.

    The Sears story illustrates how HR, if aligned with strategy, can boost a company’s performance. When Sears was incurring losses in billions in the early 1990s, its reorganization involved making it a compelling place to shop. But to make it a compelling place to shop, the company had to make it a compelling place to work. Through an effective implementation of vision, effective measurement systems, and monitoring, Sears has been able to turn itself around in a big way.

    Sears developed objective measures for each of the three compelling places (a place which focuses on vision, effective measurement and monitoring). For example, support for ideas and innovation helped Sears establish itself as a compelling place to work. Similarly, by focusing on making Sears a fun place to shop, it became a compelling place to shop. The company identified the behavioural objectives and competencies needed by employees to accomplish these goals. It created a Sears University and changed the recruitment policy, job design, performance management, and so on, aligning these parameters with strategy.

  3. HR’s emerging strategic potential hinges on the increasingly central role played by intangible assets and intellectual capital in today’s economy. Some points to remember in this context are:
    • Intangible assets generate tangible benefits.
    • Managing intangible assets requires different skill sets from managing tangible assets.
    • Tangible assets are clearly visible, easily quantifiable and easily measurable. They form a part of the balance sheet, produce known returns, are easily duplicated, managed with scarce mental resources, leveraged through control, and can be stored and accumulated.
    • Intangible assets are invisible, difficult to quantify, not traceable through accounting; their assessment is based on assumptions; they appreciate with purposeful use; they have multiple applications without value reduction; they are best managed and leveraged through alignment; they are dynamic and have a short shelf life when not used. The following are some of the intangible assets listed or used by financial analysts:
      • Execution of corporate strategy (execution ability)
      • Management credibility
      • Quality of corporate strategy
      • Innovation
      • Ability to attract and retain talented people
      • Market share
      • Management expertise
      • Alignment of compensation with shareholders
      • Research leadership
    • In the USA, the ratio of the market value of firms has doubled in comparison to the book value based on intangible assets. Therefore, financial analysts have begun to look for such assets.
    • It is here that the HR function can make things easier by demonstrating the value of intangible assets. The measurement of intangible assets will perhaps provide answers about linking HR with strategy.
    • If the current measures cannot give HR professionals the measurement tools they need, they have to develop their own ways of demonstrating their contribution to the firm’s performance.
    • The first step is to discard the accounting mentality that treats HR as a cost centre, and cost minimization as the primary indicator of success.
    • The architecture of HR consists of (a) The function, (b) the system and (c) employee behaviour.
    • There are two separate human resource managements: The technical HRM, which deals with the delivery of HR basics such as recruitment, compensation, and so on and the strategic HRM, which includes those services that support the implementation of the firm’s strategy.
    • In a study of 300 firms, Huselid (1995) and Huselid and Becker (1996) have found that the technical proficiency was 35 per cent higher than the strategic proficiency of HR professionals. They were particularly deficient at translating the firm’s strategy into operational and HR goals, and subsequently implementing them.
    • Ulrich and his associates advocate what they call the high performance work system (HPWS), in which each element of the HR system is designed to enhance the overall quality of the human capital throughout the organization. HPWS does the following:
      • Links selection and promotion decisions to validate competency models
      • Develops strategies that provide timely and effective support for the skills demanded by the firm’s strategy implementation
      • Enacts compensation and performance management policies that attract, retain and motivate high-performance employees

In short, for HR to create value, a firm needs to structure each of its HR systems in a way that relentlessly emphasizes, supports and reinforces a high-performance workforce.

Studies indicate that the HR practices of high-performing organizations differ substantially from those of low-performing ones. The following are the characteristics of high-performing organizations:

  • They devote considerably more resources to recruitment and selection.
  • They train with much greater vigour.
  • They do a lot of performance management and tie compensation with it.
  • They use teams to a much greater extent.
  • They have roughly double the number of HR professionals per employee.
  • They are less likely to be unionized.
  • No single subsystem but the subsystems taken as a whole explain the difference.

The PCMM approach  Curtis and team (1995) developed the people capability maturity model (PCMM) for software organizations. PCMM aims at providing guidance on how to improve the ability of software organizations to attract, develop, motivate, organize and retain the talent needed to steadily improve their software development capability. The strategic objectives of PCMM are:

  • Improving the capability of software organizations by increasing the capability of the workforce
  • Ensuring that the software development capability is an attribute of the organization, rather than that of a few individuals
  • Aligning the motivation of individuals with that of the organization
  • Retaining human assets (people with critical knowledge and skills) within the organization

A fundamental premise of the maturity framework is that a practice cannot be improved if it cannot be repeated. In an organization’s least mature state, systematic and repeated performance of practices is sporadic. PCMM describes an evolutionary improvement path, from ad hoc, inconsistently performed practices to a mature, disciplined and continuously improving development of the knowledge, skills and motivation of the workforce.

It is intended to help software organizations to: (a) characterize the maturity of their workforce practices; (b) guide a programme of continuous workforce development; (c) set priorities for immediate actions; (d) integrate workforce development with process improvement; and (e) establish a culture of software engineering excellence. It is designed to guide software organizations in selecting immediate improvement actions based on the current maturity of their workforce practices. PCMM includes practices such as improving the work environment, communication, staffing, managing performance, training, compensation, competency development, career development, team-building, and culture development. PCMM is based on the assumption that organizations establish and improve their people management practices by progressing through the following five stages of maturity: initial, repeatable, defined, managed and optimizing. Each of the maturity levels comprises several KPAs that identify clusters of related workforce practices. When performed collectively, the practices of a KPA achieve a set of goals considered important for enhancing workforce capability.

In maturing from the initial to the repeatable level, the organization installs the discipline of performing basic practices for managing its workforce. In maturing to the defined level, these practices are tailored to enhance the particular knowledge, skills, and work methods that best support the organization’s business. The core competencies of the organization are identified and the workforce activities are aligned to the development of these competencies. In maturing to the managed level, the organization uses data to evaluate how effective its workforce practices are and to reduce variation in their execution. The organization quantitatively manages organizational growth in workforce capabilities, and, when appropriate, establishes competency-based teams. In maturing to the optimizing level, the organization looks continuously for innovative ways to improve its overall talent. The organization is actively involved in applying and continuously improving methods, for developing individual and organizational competence (Curtis et al. 1995).

All these approaches share a lot of common features. All of them have the following characteristics with varying degrees of emphasis:

  1. They are systems-driven HRD systems or subsystems or tools.
  2. They attempt to link HR practices with business goals.
  3. They recognize the importance of HR professionals.
  4. They recognize the importance of HRD.

The integrated systems approach of Pareek and Rao envisaged a separate HRD department for the effective design and implementation of HRD systems. It envisaged strategy as a starting point (as in Ulrich and Lake 1990), and therefore focused on all the systems to achieve business goals and employee satisfaction. It aimed at synergy (as in Yeung and Berman’s integrated approach), proposed the phased evolution of the HRD function (as in PCMM approach) and included most of the elements of the human capital approach.

Leadership and Execution Roles of HR Professionals

On the basis of experience and work with HR departments in India and other countries in the Asia Pacific region, TVRLS has identified ten roles for HR professionals at senior levels. The most important of these roles is that of an intellectual capital builder (Rao 2008). The others are the leadership and managerial roles required to build intellectual capital. In organizations like Microsoft, Infosys, Wipro and TCS tangible assets constitute less than 5 per cent of the market value. About 95 per cent to 99 per cent of the market value consists of their intellectual capital. HR has a role in building intellectual capital. Doing this means aiming at long-term capital formation. This requires activities that yield long-term capital rather than those that merely produce short-term results. Unfortunately, today’s CEO is under pressure to deliver short-term results and looks to the HR manager to achieve business results rather than seeing her/him as an intellectual builder. Once the importance of long-term capital building is understood, the role of HR changes and there is likely to be a better appreciation for HR interventions that contribute to long-term capital building, such as culture capital, value capital and other forms of intellectual capital.

Five leadership roles required to build intellectual capital

  1. Direct intellectual capital-building activities
    • Vision setting and strategy formulation
    • Organizational restructuring
    • Customer-centric interventions and systems development
    • Value and culture building: OCTAPACE values and a learning culture
  2. Change management
    • Technology and systems, processes, and so on
    • Quality and cost-related changes
    • Changes due to diversification, mergers, acquisitions, and so on
  3. Style management: CEOs and top management
    • Developmental and learning facilitating styles
    • Coaching, mentoring, and other enabling and empowering styles
  4. HR policies and systems-building
    • Review and renewal of HR and other systems
  5. Innovations and benchmarking
    • Keeping in touch with best practices and initiating next practices
    • Experimentation

Five e xecution roles

  1. Systems monitoring: Recruitment, PMS, training, induction, and so on
  2. Infrastructure management (should be taken out of HR as this is the factor most damaging to HR reputation and credibility)
  3. Communication and public relations: Brand-building, employee engagement surveys
  4. Execution of new initiatives coming out of leadership roles: 360° FD, ADCs, downsizing, ESS and climate surveys
  5. Cost management and in-house capacity-building in quality and customer service: These roles vary at middle and junior levels.

Based on the Indian experience and the studies by Michigan University and the Society for Human Resource Management (SHRM), the 10 competency clusters identified by TVRLS for effectively performing the discussed roles are:

  1. Business knowledge: Knowledge of business (products, services, customers, technology, competitors, developments, R&D) and all functions (sales and marketing, production and operations, finance, systems, MIS, logistics, services and so on), knowledge of business capital (intellectual property) and its constituents and methods of building business capital
  2. Functional excellence: HR knowledge and HR delivery, including culture sensitivity, empathy, coaching and facilitation for HR delivery
  3. Leadership and change management: Communication, initiative, creativity and change management
  4. Strategic thinking
  5. Personal credibility
  6. Being technology savvy and understanding HR technology and research methods
  7. Personnel management and administrative skill
  8. Vision of the function and entrepreneurship
  9. Learning attitude and self-management: Self-awareness and the desire to learn, time management, networking, research and analytical skills
  10. Execution skills: Planning and monitoring skills, cultural sensitivity, persuasion skills, behaviour modification techniques and group dynamics, ability to craft interventions for implementation, cost and quality sensitivity

Competencies needed to elevate HR

Cultural sensitivity is critical in elevating the role of HR managers, as they deal with the sensitive issue of people and their feelings. The competencies required for elevating HR vary from organization to organization and from one period to another. They should be based on the following contexts:

  1. Cultural context: Indian HRD managers need to understand the Indian psyche. For example, the experience of an Indian company that recruited an American HR head indicated that it was a huge waste as American HR managers are highly systems-driven, while the Indian company needed HR managers to be highly flexible.

    Asian styles are different from those of the West. Some of the distinguishing features of Indian culture that have an impact on HRD competencies are:

    • India is a growing nation with ambitious people.
    • There is no one way of thinking and there is high cultural diversity.
    • The older generation and old economy can be characterized as:
      • Emotional and hard-working
      • Still insecure as they have seen hard times and have risen in life through hard work
      • Divisive and classificatory
      • Action-oriented and less systems-driven
      • Could be change-resistant at times
      • Relationship-driven and may have low authenticity and trustworthiness
      • Struggling to become professional and constantly caught between loyalty and professionalism
    • The younger generation and new economy professionals can be characterized as:
      • Restless
      • Independent and secretive
      • Rebellious
      • Preferring to have their own identity and make their own mark
      • Getting easily bored and constantly seeking new environments and experiences
      • Wanting to maintain a large private world and feeling easily intruded upon
      • Feeling easily depressed
  2. Organizational context: Competency requirements vary from business to business. BPOs, the pharmaceutical industry, insurance industry, teleservices, IT industry, and so on require different competencies and interventions as compared to traditional manufacturing industries. SMEs have different competency requirements as compared to large enterprises. PSUs require different skills as compared to MNCs.
  3. History of the organization: Large organizations with their own history and traditions (for example, the Birla Group, the Tata Group, the Murugappa Group, TVS) dictate different competency requirements for their HR managers. The nature of CEOs and their managerial profiles also determine what will work and the roles needed to build intellectual capital.
  4. Organizational ambitions: Ambitious organizations are more willing to change and will need ambitious and fast-growing people as HR managers. Stable and slow-growth organizations require different skill sets.

Thus, we need to consider the requirements of the organization. It becomes difficult to apply a universal skill set. HR managers should start a self-selection process to delineate the competency requirements of the organization they join. Bodies like the National HRD Network can facilitate the process by profiling the competency requirements of different industries and, at the same time, pursuing the competency models that have universal applications.

Self-Renewal of HR Professionals

An HRD audit of 12 Indian corporations in 2003 revealed the pathetic state of HRD implementation (Rao 2003). Table 10.1 presents a summary of the extent to which Pareek and Rao’s integrated system approach (1975) is followed in the 12 organizations. The observations are derived from various audits.

It is clear from Table 10.1 that 25 years after the integrated HRD systems approach was made available in India, it has been very poorly implemented. ‘In sum, it looks as if Indian corporations still have a long way to go in using all the principles and getting the best benefits out of HRD’ (Rao 2003). While the HRD systems approach is very simple and has been locally evolved with the help of Indian managers, it has not been well implemented because of the following factors:


TABLE 10.1 Extent to which the integrated systems approach is being followed

Element Extent to which followed
1. Differentiated structure with separate HRD department and full-time staff 1. None of the organizations has differentiated HRD structures; less than 50% have full-time HRD staff
2. Six subsystems of HRD 2. Only two of the subsystems implemented reasonably well: training and performance appraisal; potential appraisal, career planning and OD are weak
3. Interlinkages between subsystems 3. Only performance appraisal linked to training; full potential of performance appraisal not used
4. Designed with 14 principles in focus 4. Principles not used, though occasionally some components figure in terms of company values
5. Linked to other systems of HRF 5. Done by default as HRD doesn’t have a separate identity
  • Lack of understanding and appreciation by the top management of the significance of HRD and its linkages to business
  • Lack of competent HRD staff
  • Lack of professional preparation of HRD staff
  • Inadequate understanding of HRD concepts and frameworks

The following are the important prerequisites for HR professionals to use any of these models:

  • CEOs should be willing to treat their people (employees) as a strategic resource, and willing to accord HR the status it deserves.
  • They should recognize HR professionals as competent and strategic partners in business.
  • HR professionals should learn as much about the business as they do about HR systems, change management and transformational technologies.
  • They should continuously enhance their HR competencies to keep pace with the changing environment.
  • Their agenda and roles should be redefined to include involvement in business plans, organizational structures and all implementation activities. For example, the success of ERP or SAP implementation will depend greatly on how well the changes are orchestrated in terms of employee involvement and how well these changes have been integrated into various HR processes and the HRD planning for ERP and SAP
  • More competent HR professionals are needed in India. (The number of HR professionals who went on to become CEOs in the last 25 years number less than a dozen in India.)
  • Administrative functions should be differentiated from HRD.

An assessment and development centre conducted for HR managers by TVRLS between 2003 and 2005 has indicated that some of them have a very good knowledge of the business while others know a great deal about one or two subsystems. HR functional knowledge is a significant area where young managers need to improve a lot. Most of them have been found to be subsystem managers and occasionally even leaders, rather than showing functional versatility.

More ADCs and HRD audits are needed to test the competencies of HR managers and to assess the roles and competencies needed to perform strategic HR roles. The National HRD Network is already taking steps in this direction. This is an urgent need. The future is bright for HR professionals who recognize that HR will soon come to occupy centre stage and drive everything else.


TABLE 10.2 Time allocation by 12 HR managers (in hours)



In 2002, TVRLS conducted a self-renewal workshop for 20 participants from the HR departments of some of India’s most well-known companies. The participants were all senior managers cutting across the manufacturing, service and IT sectors. At the end of the one-day workshop, the participants were required to come up with an action plan for the rest of the year. They were asked to note down some of the key activities in which they would like to invest their time and expertise in five areas of self development: change management, strategic partnerships, championing employees and administration. Table 10.2 presents their time allocation. Calculate the ROI on each category of activities by making your own assumptions on R-COT and O-COT.


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