Workforce optimisation and measuring the effectiveness of human capital will become very important for HR professionals
In the current business scenario, organizations in India are faced with business-critical globalization challenges. There are the non-Indian head-quartered MNCs; the rapidly globalizing Indian corporates; and the emerging Indian corporates. There is a special significance to this classification of organizations, because the speed at which they are ‘globalizing’ is very different in India, as compared to other smaller countries in Asia.
MNCs in India have a certain level of independence in terms of implementation and designing programs and policies for their local geographies and in particular, in India. Global organizations understand that India is a different market. It is a priority market and needs special attention. Organizations we interact with in this segment are very focused on localizing their global program in the context that makes sense to their local priorities.
The second group of ‘globalizing Indian corporates’ is at a different stage of maturity in their journey to globalization. Having done a lot of research in the area of Asian MNCs expanding globally, we found that Asian MNCs are at different stages of globalization and therefore, their challenges are also unique. In India, most large business houses have begun their globalization journey, with the exception of some large conglomerates, and as they embark on their globalizing journey, their focus is very different. To realize their focus on large scale global plans and create global presence, they are intelligently using a very ‘light touch’ in their process of globalization. While their objective is to expand market share by venturing into different countries, there is also a realization that they do not know enough about these countries, and hence they need to bring local talent on board and integrate them accordingly.
The last group is of the ‘emerging Indian corporates’, which has been on a massive growth journey for the last few years. A challenge they are facing today is that they do not have the required infrastructure of processes and systems to sustain such momentous growth.
While the three groups are in a different flux, there is one thing that brings them all together. The Indian client is very intelligent and has a strong business acumen. I saw this when I worked in India 9 years ago, and I can see it more pronounced, now that I am back and have a reference point. When you speak to any CEO or senior professional, whether he works for a MNC or the Indian Government, everyone is focused on investing in human resources for effective and long term impact. They look for best-in-class processes and systems, but they are also smart enough to know that the all-size-fit-all approach to best practices will not work; thus, they want best-in-class practices to be born from the context of their organization and culture, and its application to be relevant to the business.
Going forward, 2012 will see organizations focus more on optimizing rewards and investing in leadership. Talent will be an important aspect in the business agenda. While every company faces the same challenges in terms of talent, it is how they deal with these situations based on their own context, that will make the difference. Some companies have got the formula right and some others are just starting on the journey. The slowdown foreseen in 2012 is not going to be like in 2008; the difference between 2012 and 2008 is basically that in 2008, organizations stopped spending and it was all about conserving, profitability, and maintaining margins. But I think companies are going to treat the slowdown in 2012 differently through optimization of HR budgets. So, companies will not necessarily look at reducing their HR budgets, but on optimizing its use by investing in the right things and on the right people.
I also do not think hiring is going to come down drastically. While it will certainly reduce, there will be smart companies that will continue to hire the right talent, as this is the best time to get great people. Clients will continue with their investments in HR. So, I do not see a sharp turn in terms of environment, but I do see a slight change from how we have been in 2010 to 2011. The slight slowdown will result in change in priorities. The new priorities will be around managing growth in an environment of slowdown and what that means to the organization. So, managing risks will become even more important, organizations need to ensure that employee engagement is still high and focused towards a segmented employee group. Organizations will also need to focus on optimizing total compensation and total rewards, and the way the organization wants to divert those investments to create a blue print of how the organization should look once we come out of the slowdown, and what we need to do in order to get there.
Workforce optimization and measuring the effectiveness of human capital will become very important for HR professionals as we go forward.
Vivek Nath is the MD, India at Towers Watson