I do not believe that there is anything wrong in making HR a business as long as you do not give up the focus on service
Many organisations and their CEOs still do not know how to use HR consulting services and some are even using it for the wrong purpose
Whether you are a manager or a consultant, if you are in the human services profession, the primary purpose is service while all other purposes are secondary.
Frankly I have not given much thought to the issue whether HR consulting is a profession or a business. I am socialised at IIMA for long years where the purpose of consulting has always been to generate new knowledge in systems and processes and disseminate the same for professionalizing management in all sectors of the society. Faculty members are encouraged to undertake consulting projects mainly for disseminating their knowledge or for generating new knowledge. They get a share of their consulting fee collected from the client, but get academic credit for their consulting work only once they convert their experience into an article, case study, a paper, or a book and take it to the classroom. So for them, consulting projects’ primary objection is creation of a body of knowledge. But this is only the case in the few premiere b-schools like the IIMs in India and certainly consulting firms cannot operate like the IIMs do.
In the West, the best consultants like Vijay Govindarajan and Dave Ulrich hail from the management schools. They continue to work in the b-school along with their own consulting outfit which ensures that quality of knowledge is never compromised and is updated regularly. And for those who have set up their consultancy firms outside the University or business school systems have done so only after extensive research, book/ paper publishing and development of their own products. For example, David McClelland set up McBer which subsequently became the world famous HR consulting firm while he was teaching at Harvard, and McKinsey’s founder was a professor of accounting. While in India, consultants rarely undertake any research work or contribute to the enhancement of knowledge, and largely set up their firms on the basis of their experience. This perhaps is not the right model as it does not instil a systematic approach to building the knowledge required to provide appropriate HR consulting to organizations. If you look for dissemination of existing knowledge and experience, HR consulting firms in India are doing a good job.
The primary purpose of consulting firms is to generate consulting income by selling their services. In fact disseminating their work through books, articles and cases works to the disadvantage of consulting firms in India as it leads to the development of competitors. In our company we publish books, we have our own manuals and we even conduct certificate programs in which other consulting companies participate. In the West, HR consulting firms like McKinsey became famous through publications like “In Search of Excellence”.
Twenty years of continuous work at IIMA followed by the Academy of HRD and setting up of the National HRD Network have influenced my thoughts on consulting tremendously.
I consider HR consulting, a service and HR, a profession - whether you are a HR manager or a HR consultant, you are in the human services profession. In service, the primary purpose is service and all other purposes are secondary. Just like a doctor earns money by providing service to patients, a HR consultant earns money by providing service to people. I do not believe that there is anything wrong in making HR a business as long as you do not give up the focus on service. However the primary purpose of consulting should be to serve, solve problems, and enable people to function and contribute better. Effectiveness of HR consultants should be measured mainly by the services they provide and not merely by their annual turnover and profits. Dissemination of knowledge and creation of HR capabilities should be the primary purpose. In this context I am happy to see a good number of experienced HR managers joining as consultants. A number of them I know have experienced limitations in implementing what they believed should be implemented in their corporations and decided to make their services available to a larger number. Thus they are a great addition to the HR solutions.
The table highlights my views on the issues covered under each of the areas which show the current status of consulting in each area. It is an attempt to show the extent to which the field is well developed and the scope for future for consultants. The conceptualization is also valid for HR educators as they are in the business of developing HR professionals.
Are we on the right track?
People Matters asks the Father of HRD, Dr. T. V. Rao in India about the future of the HR industry
What are the challenges faced when selling HR services in India?
Selling HR services in India face challenges from three angles. Firstly, many organizations and their CEOs still do not know how to use HR consulting services and some are even using it for the wrong purpose. For example, few companies are using ‘360 degree feedback’ and ‘assessment centres’ to control their employees rather than to nurture talent and develop leadership competencies.
Secondly, the buyers of HR consulting face the challenge of choosing the right service as they are often ignorant of the options available in the market. The lack of commitment from top management and frequent change of those responsible for administering the HR services further adds to the problem. Many PSUs are using tenders while choosing HR consultants and this has done more damage to the profession and the company. You cannot get the best doctor through a tendering process. Those who participate in such a process are seeing HR as a commodity to be sold.
Lastly, there is inadequacy on the suppliers’ side as the consulting report given at the end of the engagement does not show how the buyer can calculate the ROI on the investment. And so the management is not convinced about the results that the engagement has brought about. Further, in most organizations there is no task force who takes on the onus of ensuring that the recommendation by the consultant is implemented for business effectiveness. I have given many tips for getting the best from consultants in blogs and my book on Hurconomics.
How do you see HR consulting evolving? Which are the specific areas to look out for?
Demand in consulting is definitely increasing. In my opinion, the growth areas will be on developing leadership, succession, empowering line managers to take on HR role, 360 degree feedback, assessment and development centres, retention management, value and culture building, human potential utilisation, talent management, organizational restructuring, developing heterogeneous HR policies, managing Gen Y and Gen Z employees, work space arrangements, work-life balance, executive coaching, performance management, employee engagement, integration and assimilation of new recruits, expectation management, stress management, healthy living and building future. I would not consider outsourcing of salary, perks compensation, recruitment, visas, transport, canteen etc. as HR consulting.
How is the service provider and client engagement model evolving? In which ways is the industry different in India when compared to the rest of the world?
Real consulting involves closely working with the client. There are only two models – the family physician model and the specialist consulting model.
In the first case you have a consultant working with you for a long-time and you keep taking his help as and when you need. He will recommend you specialists if you need the same. There should be high level of trust between the two, and the consultant should be mature enough to say he does not know certain things and refer you to a specialist. In the specialist model you keep going to different specialists as and when you need and you yourself decide when you need a specialist and who the best specialist or an affordable person is. In India both models operate but the difficulty is there are many generalists who administer specialist medicines.
The main difference between India and the west is HR consulting in the west is largely research based while in India it is more experience based. In the west it is dominated by well laid out theoretical models while in India it tries to be more practical and execution centric. There are lot of similarities like the areas of HR consulting and the line managers’ attitudes to HR etc.
Dr. T. V. Rao is, Chairman, TVRLS, Founder President National HRD Network, Founder Honorary Director, AHRD; Former Professor at IIMA and former L&T Professor of HRD at XLRI.