Investing in HR development is most vital for any organization

It is unproductive to take an absolutely “raw” individual and put the person on the job however good the job induction may be. Here, the speed-to-job is anything between six months to nine months and with the shelf-life of the person being another 18 months max before moving on. Thus it is imperative to invest in human development or industry readiness processes outside of the organisation.

This apart from giving us industry ready personnel also functions as a just in time (JIT) process substantially reducing holding cost. This for could be as high as a few hundreds of crores. A company’s partnerships with IFBI, a reputed management institution and 110 graduate colleges help them with a facility for processing “raw materials” into “value adding” resources.

This also serves as an industry initiative to enlarge the real supply pool of industry ready human resources rather than engage in the poaching game which only serves in unrealistically pushing up the price, rendering the whole industry uncompetitive.

Our initiative to tap the non-English speaking but highly capable and intelligent resources from the ‘C’ and ‘D’ class towns of India has opened up a huge human resource reservoir hitherto untapped. If the industry sticks to the traditional seven or eight sourcing centers economic growth will be severely hampered.

Hence industries are in the process of exploring all the possible alternate sourcing points, even if it entails an intermediate processing cost such as teaching English, etiquette, grooming etc. These are far easier to teach than attitude and intelligence.

HR in few organizations has successfully introduced and implemented processes that are directly tied to the objectives of the company. And measuring and assessing HR performance in terms of ROI (Return on Investment) ensures that their actions are connected to the stated goals of the company and drives business growth. Therefore companies today are seeking a well calculated ROI to validate their investments on HR.

For a number of HR initiatives introduced in organizations, companies make substantial investments and it’s vital to measure the outcome against the investment. HR experts present at Personal Swiss said that HR activities should be measured through asset of easy to understand and top management accepted steps. ROI allows defining or calculating of a pay back period. For the investor, it is important to know within what time period she/he gets the investment back, when HR proves to the top management the cost of an overdue fluctuation in one department in comparison with the cost of replacement of a manager causing the fluctuation.

The strategy adopted to define HR ROI has to be unique. First use a differentiated accounting model for your HR cost. All costs appear in the annual financial accounting sheet only under ‘personnel cost’ you will not be able to show anything but the generic total cost. Secondly you need detailed statistics of all the HR activities that were carried out and it’s imperative that you should be able to break down each HR activity into sub categories and segregate them well, (for e.g. entire recruiting cost on a single recruitment should be categorized into internal and external costs, training cost, overhead costs and other recruitment related costs involved at various levels of hiring of a candidate). Thirdly, you have to measure the success of HR by evaluating the impact against the investment.

In summary, of all the places in the world, India has offered the HR function a date with running HR as a business rather than hankering after the clich and empty “HR partnering Business” slogan. In the Service industry HR is the supply chain business and those who recognise this will have a chance to run a business. The rest will have to settle for seeking a reluctant partner in the business.