People used to join a company and retire from it. Today, they keep flipping around. Compensation is critical to keep people anchored
Q. Where did the thought of having an HR function for the development of people originate?
HR has existed since the time organisations were formed. Initially, organisations were manufacturing intensive and primarily had two factions – the management and the factory workers. Because of difference of perspective there were frequent conflicts between management workers and to resolve these issues, organisations felt the need to have a function that was devoted full time to resolving people-related issues, and that is how Personnel Management (PM) and Industrial relations (IR) was formed as an independent function. Subsequently, the academic discipline of PM & IR also developed.
In India, it is said that the first organisation that had a formal department called personnel was Tata Steel. So to the best of my knowledge that was the birth of a personnel management department in an Indian company.
In the initial years, the focus of this function was largely on the shop floor workers -- what you call the blue collar workers. As times evolved, blue collared workers became more educated and industry moved from being purely manufacturing oriented to services oriented.
As people started getting educated, the ways in which people were being managed had to change. To deal with this new breed of people, the conventional PM & IR also had to transform itself and somewhere along the line it got a new name – Human Resources. Globally, the pioneers were Shell, ICI, IBM, GE and a few others and the name “Human Resources” also came to India from the West. The focus of the business shifted from controlling people to developing people and helping them realise their innate potential.
Q. How did the diversification of HR into various sub-functions (Recruitment, Compensation & Benefits, Organisation Development, Business Partner, HR ops etc) take place? What were the stages of evolution?
Post liberalisation, the Indian corporate landscape changed drastically. Opportunities multiplied and along with that the employee turnover increased. Earlier, people used to join a company and retire from it and today, they keep flipping around. Hence compensation became one of the critical factors to keep people anchored to the organisation. Earlier, we had a routine compensation scale and employees got increments year on year, but now compensation had to be competitive and there were myriad and complicated formulas to arrive at that. This needed a specialist and that is how the Compensation and Benefits department was created. Similarly appraisals, which earlier were a ritual, became a science. Since we needed people in large numbers and we needed them fast, recruitment became a science and what you now call the talent acquisition division was created. With increasing pressures of attracting, retaining and taking care of people, the HR function was broken into mini specialties so that each part of it gets as much attention as possible.
Q. Is the idea of HR being a business partner really new as it is made out to be? Is there evidence that HR has indeed been a partner?
Every function in the business is a business partner, be it accounts, manufacturing or public relations. This question gets asked most in the HR area for the simple reason because HR has not risen to the task. Of course, they are supposed to be business partners, but once you are a business partner, you have to pull your weight. Theoretically, HR is as much a business partner as any other function in an organisation. If it plays this role well, it will be a more valued partner; if it doesn’t play it well, then it will be a passenger partner.
Q. How do you see the function evolving in the future?
The human resource function will be extremely critical. Any company that wants to survive in this economy and succeed cannot do that on the basis of products and technology alone. Instead, companies need to have a good team of people to get ahead. Whatever investments are made by companies for the future are based on the assumption that they have the right kind of people to implement the plans. According to me, the ability to attract and retain people and get the best out of them is the ultimate source of the competitiveness for organisations and the group that will look after that is the Human Resource function. The HR function will be extremely critical for the oragnisation; whether they will be able to live up to that expectation, that’s another question altogether.
Q. What are the five competencies that HR professionals need today to be successful?
They must interact with people up and down the line and not just with their bosses. They must have an ear to the ground to understand how the organisation really feels and have the credibility so that people can speak to them about their problems, grievances and aspirations. They should be able to mediate between the higher management and people who feel that they are stuck in the middle and are powerless in the system..
Q. What is the role that academic institutions can play to make the function more relevant?
HR is applied education; it is not theoretical like physics. Therefore there is no formulaic answer to your question. However, we certainly have a responsibility for educating students in a better way so that they adopt better practices at work. So apart from teaching people about the models or theories, we also need to sensitise people into what they should do. We must apart from telling them about theories and compensation schemes and so forth, also talk about how to do things in the right way, so that organisations become more effective not for just for a quarter or a financial year but for years to come. Academic institutions have a great responsibility to set things right and change the value orientation.
Q. If you were to start your career as an HR professional, what would you do to succeed?
Given a second chance, I would do many things differently. I would not be so transaction oriented as I probably was, would reduce the number of things that HR does and focus on the value-adding things like going back to the people, understanding them and trying to get the best out of them, redesign structures and systems in order to give more elbow space to people.