is brilliant that the National HRD Network has chosen the
topic of HR@Heart of Business for its 2002 conference, as
the HRM function is facing the emerging signs of self-doubt
and the associated fatigue. The fact that HR is central
to business has been recognized and well articulated during
the last two decades. HR has come centre-stage both in the
corporate world as well as in the socio-economic agenda
of nations. The first has been fuelled by the growth of
the services sector and the technology/knowledge content
of all activity. The second by the works of eminent economists
such as Amartya Sen, Late Mahbub ul Haq and the idea of
measuring human development through metrices of the HDI
and Business Success:
resource-based view of human resources has been a conceptual
fuel to propel the function as a driver of business and
its competitive advantage. The theoretical proposition,
even if it appears speculative arising from the Institutional
Economists, has been that human resources can actually become
strategic assets contributing to the competitive advantage
of a company. The idea of such a competitive advantage was
more acceptable to firms in services and knowledge industries
such as consultancies, R&D, software, banking and finance,
retail, hospitality and entertainment. That Human resources
give competitive advantage has been a romantic belief that
is hard to refute. It appears logical and holds out great
promise. Yet, the proof of HR having actually contributed
to competitive advantage has been rather ambiguous in the
developing markets. It is obviously not for the lack of
such a relationship, as obviously HR does contribute to
the competitive advantage. The issue has been more due to
a lack of sufficient recording of such evidence in a sound
manner, especially in India.
the first wave of strategy-speak, (say 1980-1990) the logic
of people as strategic assets (with characteristics of inimitability,
un-substitutability, value-accretion and stability) has
been accepted well. In the second wave, (say 1990-2000)
there has been some good research in the West that has provided
evidence of the connection between business performance
and high performance HR practices. The report by the US
Department of Labour (1993) titled “High Performance
Work Practices and the Firm” was particularly
helpful for the argument. Mark Huselid`s early statistical
work set new trends in analyzing the impact of HRM practices
on Turnover, Productivity and Financial Performance. The
KPMG chipped in recently to suggest a possibility of 30-50%
higher returns for companies with High Performance HR practices.
The book “Human Equation” by Jeffrey
Pfeiffer (1998) has offered examples and a powerful business
case for high performance behaviors. Yet, there appears
a slow creeping-in of disaffection with this belief in more
recent times, as apparent from indirect comments in the
media and research.
the Irish context, a survey titled “National Human
Resource Practitioners Survey-2001” has reportedly
acknowledged the centrality and high profile of human resources
particularly during the last five years. The survey identified
“relevance to core business” and “understanding
of key business issues” as presenting the greatest
opportunities for the profession over the next five years
while nearly two thirds cited the out sourcing of HR activities
as the greatest threat. The surmise is that if the HR profession
has to ward off the threat, it has to work hard on the opportunities
of making HR relevant to the core business – may be
faster than the companies will find the advantages of out-sourcing.
Outsourcing may not be bad but for the lurking feeling that
HR then might be treated as core to business but not so
critical as to have it under the same roof.
is a survey from the UK end as well of David Guest and Zella
King titled State of the Profession Survey 2001.
Connectedly there is a Board Room perspective of HR from
the well-subscribed Voices from the Board Room.
The bad news appears to be that HR profession has been rated
poorly claiming that it appears “bureaucratic”,
“steeped in jargon”, “isolated to the
outside world”. John Philport Chartered Institute
of Personnel Development’s Chief Economist had reportedly
commented “HR’s failure to stress how people
management affects the big picture means that the profession
barely features on the radar screens of policy makers, and
opinion formers. Ironically, this lack of engagement reduces
HR’s influence in the Board Room”.
UK survey has found that such a viewpoint of the Board is
also shared by 85 per cent of the HR managers who believe
that HR “struggles to get a voice at the highest levels
in the organization and that it is often over looked by
the executives”. Yet 85 per cent of them believed
that HR would be vital to the organization and that 75 per
cent of them believe that HR has a strategic business focus.
The issue that became noteworthy in the survey is the perceptional
gap between what HR managers believe that the profession
is and how it contributes to the business versus the opinion
of others like the Directors.
the survey reportedly indicates a positive correlation between
(a) the number of HR practices and the financial performance
of a company and (b) the presence of a HR professional and
the financial performance. This apparently nice sounding
conclusion masks two implicit points that have contributed
to critical remarks. The first is that the correlation is
positive but fairly insignificant at 0.11 between progressive
HR practices like training and development, performance
appraisal, job design, etc, and profit for employee. Relatedly,
the association between the presence of HR specialist and
profit per employee is also statistically insignificant,
even if positive, at 0.22.
second is an argument which has remained unresolved over
the years - the lack of sustained research on the cause
and effect relationship between HR practices and business
results. Though some excellent initiations into such exploration
have begun in India, the results have been ambiguous and
need more work with the Indian corporates. For instance,
some observers have commented that HR managers were given
the resources for progressive practices only when they found
the company doing well and/or when the company wanted a
reputation advantage in the market. Thus, an ex-post analysis
of the companies, which have failed, is tending to give
us a mixed result of good HR practices not having contributed
to the survival and sustenance of the company.
need obviously is not so much for our HR managers to convince
themselves or make assertions based on desirable paradigms,
but to convince other disciplines and the Board that HR
truly contributes to the business success. Such conviction
and confidence building should soar when there is thorough
research and pains-taking evidence built up on (a) the process
through which the HR practices actually contribute to business
success (b) historical as well as sectoral analysis to establish
stronger correlations than have been evident so far and
(c) case studies from Indian Corporates. This evidence,
particularly from the Indian Corporates, must be poured
into the media on a sustained basis to fight back the creeping
as a Profession:
other challenge, albeit a long-drawn one, before the HR
managers is to transform the discipline into a true profession.
HR managers obviously believe that they are part of a profession,
which is growing in its importance as well as criticality.
Yet, the movement of this discipline towards becoming a
profession has been rather slow as indeed is the case of
management science as a whole. It is another matter that
despite Peter Drucker’s championship, management is
still being considered as a plebian practice than science.
Renowned academe, in countries other than the US, were reluctant
to accept management as a course for several decades and
had also initially suffered them as a sub-sect of economics
than as an independent discipline by itself.
profession must have an essential feature of relating itself
to social good. It should be in a position to state how
it is able to make a difference for the lives of people
at large. How it contributes to net welfare. The statutory
welfare officer as a concept, if not in practice, had the
potential to becoming a profession because of the strong
welfare orientation as also the barriers for entry and the
threats of disqualification. Can the HR discipline encompass
these foundations and become more inclusive? The personnel
associations believe, on the basis of these welfare foundations,
that they can demand a statute for the entire personnel
function (The most recent letter from the NIPM’s National
President refers to this effort).
remind us of the challenge before HRM to be accepted as
a profession, it is worthwhile to note the critical characteristics
of a profession:
A commitment to a calling, which has a set of normative
and behavioral expectations.
A specialized education and training of substantial duration.
Membership of an association comprising of similarly trained
and practicing individuals for the purpose of protecting
and enhancing the interest of the calling.
A service orientation keeping in view the requirements
of the client and the society.
A relative degree of autonomy in the use of his/her knowledge
the road to becoming a profession, I reckon that HRM must
launch upon several actions by which we evolve a strong
base of accumulated theory, practice, and a related code
of ethics and conduct. The absence of a robust and inclusive
body of knowledge has been particularly threatening the
HR profession – HR profession is being looked upon
from the viewpoint of a few fleeting tools and techniques.
There have been strands of theories from the behaviourial
sciences, industrial engineering, economics, and yet the
historical connectivity as well as the horizontal integration
has been a matter of increasing concern. The wide base has
somehow been forsaken with the lunge for a few fashions,
which on the rebound seem to constrict the scope of HRM.
A strong syllabus needs to be developed, validated, and
distributed as a true basis on which HR professionals can
be trained, and certified. It is necessary thereafter to
create entry barriers and a strong self-regulatory organization,
which should be able to convince markets, the need for hiring
only such qualified and certified people. Chartering for
the HR professionals can be a next step by which the market
for HR professionals will be controlled by the suppliers
of the qualified and certified professionals.
am conscious of the several arguments that have been advanced
against professions and the call for de-professionalisation.
But these arguments have been due to the chicanery of some
professions at critical points - like that of the second
world war and the more recent corporate frauds - when they
have not acquitted themselves very well. At these times,
professions have been seen as monopolistic to the detriment
of social good and competition; the self-regulatory organizations
have relied primarily on the rhetoric of good intentions,
which is belied by patently self-serving activities.
have looked upon development of professions and associated
monopolistic conditions as “social closure”
particularly evident amongst the early professions in the
19th and 20th centuries. Currently, professions indeed hold
promise of good mechanisms to render ethical and qualitatively
superior service to corporates and the countries, despite
Adam Smith’s famous assertion that “people of
the same trade seldom meet together, even for merriment
and diversion, but the conversation ends in a conspiracy
against the public, or in some contravene to raise prices”.
Contrary to this fear, it is abundantly clear that the sunk
costs involved in high quality training would be so high
that “they would need to be committed to the body
of knowledge and skill, and wish to advance it and protect
its integrity. They do so by forming social closures without
which their knowledge and skills cannot become formalized.
Their work is institutionalized by the drawing of jurisdictional
boundaries so that it can be maintained and cultivated as
a coherent or at least recognizable discipline”. (Eliot
Friedson, 2001, Professionalism, the Third Logic)
is apparent that the Conference 2002 will lay the foundations
by which the critical steps towards the professionalisation
of HRM practice would be taken after convincing the business
leaders that HRM indeed has and can make the difference
to “being and not being”.