WHITE PAPER: How to Tackle Industry Challenges?

WHITE PAPER: How to Tackle Industry Challenges? Introduction Human Resources (HR) teams came into existence, during the industrial revolution, for the purpose of manpower planning. HR professionals have successfully grown the management of human capital over the years. It has provided employment to millions of jobseekers making it one of the biggest contributors to the organizational development. Industry Challenges Recruitment has become a strategic process making it as important as any other core functions of the organization. The competitive market environment, both local and global, has forced HR management to attract and retain talents who are adaptable, agile, resilient and can focus on needs of the customers. The HR team has to transform itself to become a strategic partner and a change mentor within the organization. The global world has brought in workplace diversity which includes age, ancestry, educational background, ethnicity, gender, geographic location, income, marital status, military experience, parental status, physical abilities, race, religious beliefs, sexual orientation, and actual work experience. The HR has to attract and manage a diverse workforce for success of the organization. Such a workforce can bring in fresh perspectives, views and ideas to respond to new opportunities at a pace faster than ever before. Workforce diversity is essential for organizations to compete globally, especially for companies who have operations throughout the world. The success of workplace diversity is dependent on the thought process of the organization and its staff. The company can no longer enforce its views but has to consider the consensus. A survey conducted by PricewaterhouseCoopers on behalf of the World Federation of personnel Management Associations (WFPMA), the results of which are presented in the report titled Survey of Global HR Challenges: Yesterday, today and tomorrow, indicated the following results for North America, to a question: What are the three areas that represented significant challenges to the HR team? Challenge % of Companies Benefits and costs: Health & welfare 30% Benefits and costs: Retirement 17% Change management 40% Compensation 9% Employee rewards 15%

HR effectiveness measurement 23% HR technology selection & implementation 9% Industrial relations 0% Leadership development 53% Learning and development 15% Legal/Regulatory compliance 2% M&A integration/restructuring 15% Organizational effectiveness 28% Outsourcing 11% Staffing: International mobility of employees 4% Staffing: Recruitment and availability of skilled local labor 26% Staffing: Retention 11% Succession planning 32% Other 6% It is important to note that leadership development (53%), change management (40%), and succession planning (32%) are the three areas that figure prominently. A research by Bersin & Associates has revealed that HR organizations and thereby their professionals lack critical skills to tackle industry challenges for success in 2011 and beyond. Further, the impact on business performance by HR solely depends on the skills of professionals and not on the number of professionals, the structure of organization or the overall spending levels. HR can no longer afford to be bloated and focus only on administrative tasks. Instead it has to improve its efficiency by becoming lean, relying on new technologies and train its professionals to focus on new areas in order to retain the edge in its core processes. The concept of specialist is an impediment to the success of an organization and the practice of such old models are best discarded at the earliest. Knowledge of HR technology, social networking, global recruitment, workforce planning and succession (with new career models), integrated talent management and enterprise change management are the key competencies that can help organizations to tackle new challenges and surge ahead in the coming years. Overview The HR finds it difficult to train their staff, catch up with new practices and sustain a culture of business partnerships among the leaders. Therefore the HR of today is not prepared for the future. The HR has to take hard decisions even for mere survival in the next few years and thereby ensure the success of the organization in the next decade. It is vital that the organizations identify, source and hire the best talent they can afford. Leaders should be groomed and developed along with a culture of learning, coaching and feedback. Effective compensation also ensures high performance.

Most of the challenges faced by the HR arise from its core activities: Staffing, training and development, retention, succession planning, compensation, health and welfare management, retirement, legal and regulatory compliance, industrial relations, merger and acquisitions integration and restructuring, technology selection and implementation, outsourcing and change management. Therefore, it is important for the HR to have complete control over its core and non-core activities and eliminate all possible loopholes within the HR. Only then it will be able to face any challenges from the external environment. The rapid proliferation of new technologies, extensive growth of global markets, huge gaps in leadership positions and increase in demand for productivity are some of the new challenges faced by HR. It is time for the HR to gear up and deliver the best- in-class business decisions. This is possible through the right kind of support, research and industry-level standards the same standards relied upon heavily by leaders of other business functions. Despite the new roles and responsibilities, the HR still has to excel in its core activities such as payroll, benefits and administration. These functions need to be globalized to deal with contingent workforces. With HR now donning the role of a Strategic Business Partner, it is best that the basic functions of HR are at least outsourced to competent agencies. Issues and Solutions The HR professionals have to tackle many issues on a daily basis. Some of the common issues include: Lack of Motivation in HR Professionals The HR professionals are not acknowledged enough for their efforts in recruitment. It has become a thankless job despite achieving results and thus has demotivated many HR professionals. The senior managers in the HR have to tackle these internal issues before facing other challenges in the industry. Adapting HR to the Global Changes The HR professionals have to anticipate and prepare to adapt for any changes in the rapidly changing global village. The timeliness of the process should be maintained by the HR professionals to keep up with the times. Analyzing HR Processes The HR professionals have to make the process of recruitment appropriate for responding to immediate requirements. This requires a flexible and adaptive approach to improve the speed but lower the overall cost to really make recruitment effective. Prioritizing HR Strategies The new and emerging systems are making the job of HR professionals difficult. They have to make use of the opportunities without deviating from the basic principles, mission and vision of the organization. The goal is to keep recruitment aligned with the strategy of the company.

Priorities and Actions Prioritizing work is important for successful management of HR issues. Only when existing issues are resolved or managed, the company can face new challenges. The key issues concentrated on by HR professionals are as follows: Talent Development Improving Staff Retention Organizational Development Workforce Engagement Compensation and Benefits Although prioritizing can help tackle major or pressing issues first, an overall strategy is essential for successful management of any issues. Some of the key actions to consider for such a strategy can be as follows: Be clear with employees about what is expected of them and how they are doing Refine employee value proposition and communicate the same to employees Get performance-based reviews right Focus on retaining high-performers Take advantage of engageable moments Strengthen communication at all levels of the organization Tune-up the HR function to deliver A report titled Survey of Global HR Challenges: Yesterday, today and tomorrow indicates the following results as response when the participants were asked the question: Of the total hours worked by your HR department what percent of the total time would be spent in the following areas? Mentoring Programs for Diversity Management Introduction of diversity mentoring program is the first step to manage the issues of diversity in the organization. The program trains to accept differences and encourages new ways of doing the same

work. The goal is to make all employees go beyond their own cultural frames of reference and take advantage of the collective potential essential for success of the organization. Pooling and Organizing Strategic Talents Organizations that are expanding their market overseas, especially e-commerce companies, are in need of talents who understand niches of the specific markets. Although external consultants can be hired, the internal diverse workforce becomes a valuable asset for such organizations. This is because time is of essence and there is always some resistance to external influence. This trend of pooling strategic talents enables organizations to capture global markets utilizing the full potential of its diverse workforce. New Age Approaches to Motivation Motivated employees are the key to survival of the company and their contributions determine success of the company. Motivational factors include job characteristics, peer support, working environment and reward systems. The type and nature of job should meet employees expectations. Helpful coworkers bring about stability in the work environment and eliminate unnecessary work related stress. The reward and recognition system helps workers to showcase their best of abilities leading to immense job satisfaction. The quality of work and its outcome is directly dependent on the motivation of the worker. Workplace influences are reflected in the work of employees. Therefore it is important for HR professionals to align organizational influences with organizational goals. This new approach has a significant place in a diverse workforce environment where group motivation is essential for the success of the organization. Gain-Sharing as Retention Tool Hiring the best is far easier than retaining the same. One of the biggest challenges faced by HR professionals is attrition. The ability to retain key employees determines success of the company despite other adverse conditions. Attractive pay package may not be the only motivation for some employees; however, the changing economic conditions have made it one of the key factors. Gain-sharing programs involve sharing incremental economic gains with the group of workers responsible for that gain. The concept of gain-sharing is proving successful for many small and large companies to retain their workforce. The performance of employees is not always consistent when considered individually but as group it averages out. Therefore in gain-sharing all employees in the group gain irrespective of their individual performances unlike variable pay where individual performance determines additional payout. It brings out the best from a team as everyone gets credited for their work apart from receiving monetary gains. As HR professionals consider individual performance for promotion and additional responsibilities, gain-sharing has the potential to shape up the career of the workers in a transparent manner. Organizations get the ability to make radical reforms and take new risks. This is because gains are shared only when achieved and such a system does not adversely affect company costs unlike fixed high salaries.

Gain-sharing however, requires certain specific requirements to be in place before the program can be rolled out in the organization. The following pointers need to be seriously considered to make gainsharing a real success. Workers who participate in gain-sharing must change their day-to-day behavior and align themselves with their team s goals. The idea is to sieve individual limitations. There is no point in implementing gain-sharing programs if other factors can bring in similar performance Gain-sharing targets must be legitimate, attainable and challenging. They should be specific, achievable and consider the combined strength of the team. Otherwise, the program cannot achieve anything and also demotivates the employees Feedback is an important guidance in gain-sharing programs. It helps the participants to change their work pattern according to the goals that need to be accomplished. The feedback should be objective, based on members performance, contribution to the team and must be conducted periodically Although cost control is one of the important objectives of gain-sharing programs, the managers have to consider reasonable and justifiable requests that can help the team or individual members perform better. Managers, however, need to have a tight control over resources of the organization Executive Information Systems for HR Professionals Executive Information System (EIS) is the use of information and communication technology for management of essential business function. EIS helps HR managers to plan, analyze and check the impact of various HR processes. Any significant variation from normal trends can be spotted as it develops giving ample time for the company to come up with appropriate solutions. The evolving industry brings new challenges and EIS is an effective tool for HR managers to monitor and manage the changes. The system ensures the right people to take prompt action leading to an effective managerial control. The EIS is only a tool and it is the HR professionals who need to take tough decisions based on the information provided by the EIS. Focus Areas Development and Retention of Talents Although employees try hard to cling on to their parent organizations during recession they are likely to change companies during recovery. As organizations cut cost and reduce workforce during recession, retained employees feel threatened and will work hard to remain in the company until an alternative option becomes feasible. Therefore it is important for any organization to acknowledge the hard work of the retained employees. Such employees who have the experience of working under pressure in a crisis situation are extremely valuable to any organization. They are the real assets of the company. Retention of such talents and developing them to gear new challenges will result in a win-win situation. However, it is easier said than done. There will always be competitors who upon recovery poach talents

and thereby a part of your company s expertise. Therefore, it is important that the retention strategies are considered an essential part of the HR right from the initial hiring stage. One way of achieving this is through continuous employee development programs that make employees suitable for a wide range and depth of work. Development program should be supplemented with succession programs where future leaders should be groomed. A clear cut succession path based on expertise, responsibilities and experience will make knowledgeable employees stay as they will be assured of their growth in the company. Benefits, Compensation and Remuneration Market competitions and unstable economic situations require companies to cut costs. This directly affects the compensation and benefits enjoyed by its employees. Organizations have to get creative and find new ways of rewarding employees. Intangible benefits that give utmost satisfaction need to be explored. Each company has to find its own solution and there is no universal formula that can be implemented. As HR professionals explore and disburse non-financial benefits, it improves individual flexibility, appreciation, trust and commitment. Customized financial solutions like gain-sharing do not add any immediate additional cost burden to the company. The key is to determine a healthy mix of financial and non-financial benefits that are attractive to the employees, to continue to remain with the organization, and at the same time affordable for the company despite adverse economic conditions. Enhanced Employee Engagement There is growing concern about the erosion of employees trust and commitment to their organizations. Massive layoffs, significant reduction in pay, elimination of perks and other benefits, outsourcing of activities to cheaper sources, increase in temporary staffing are some of the prime reasons for lack of employee engagement. Although some of these activities were inevitable for mere survival, the HR has to work on a different strategy during recovery and ensure reduction of such activities in the future. The major issue for any HR professional is the rebuilding of trust and collaboration. One way of achieving this is with the help of clear and transparent communication. However, tangible benefits are required for changing the mood of the workforce. The employee engagement levels need to be measured within the organization. Companywide surveys highlight areas that need to be improved, exit interviews identify the cause for frequent resignations and comprehensive feedback shows what is wrong with organization. The HR should identity key talents and what they value, assess leaders and their motivational skills, and pay special attention to employee engagement activities. Effective Cost Control Cost control is usually exercised by the HR in compensation, benefits and training activities. Although cost control is inevitable, it needs to be efficient. However, HR professionals are increasingly finding it difficult to strike a balance acceptable to both the employees and the management. The HR can contain costs in several ways from managing payment structure to outsourcing non-core activities. The HR

department can also restructure its own department and set an example for other department s to follow. Perceptions about the HR HR, although being a people department, has to take tough decisions about the people working in its organization. This cutthroat business approach has resulted in a less than desirable image of HR in the eyes of the employees. The HR also needs to build good relationship with other departments and they in turn should help the HR to be in alignment with the current business requirements. Summary Managing human resources is an ongoing challenge. If some aspects are tackled in a particular way, some others arise which will need a different strategy for efficient handling. Strategies must be reviewed, refined and redefined on a continuous basis in order to obtain optimal results from the human resource capital. Along with the continued influence of social, economic and political events, HR face several challenges on the technological, global and regional levels as well. All these affect the organization and it is important for HR teams to keep themselves abreast with the latest development, and develop strategies that are effective in today s environment. The HR must put in a process of continuous improvement where in core and broad professional issues can be identified. The HR should focus on methodologies for training and development in order to find solutions to such issues. The HR professionals need to constantly monitor changes in the business environment and simultaneously meet those changes without affecting routine functions of the organization. HR professionals can equip themselves to meet any challenges by making themselves flexible and adaptable to new systems. They must learn as well as unlearn and keep moving with the emerging trends. Successful organizations never stop planning, organizing, leading, directing and rewarding their human capital.