People management challenges – A background

It is a demanding time for HR in Indian organizations. While the population has crossed one billion, organizations in the formal sector face grave challenges in terms of people management. The high economic growth and the consequent demand for employable people to help achieve growth have made HR personnel sit up and think. The ability of HR to cope with the demands of a high performing organization has been questioned. The High Performance workforce study 2007: India, conducted by the consulting forms Accenture, notes that Indian organizations have traditionally ignored people as a source of distinct competitive advantage and are finding people management as the second most important challenge faced by Indian CEOs. Another study among Indian CEOs identified the following people management challenges before them:

1) Creating a high performance culture
2) Retaining talent
3) Recruiting
4) Moving from patriarchic and hierarchical management to a more team based, informal organizational culture
5) Linking training with performance
6) Compensating knowledge workers
7) Building interpersonal relationships/ managing conflict
8) Going global

The CEO’s concern about people issues point to the criticality placed by the top leadership on HRM in organizations. However, as the Accenture report identifies, most CEOs doubt the ability of a large section of HR functionaries to be strategic business partners. The reasons for this are the failure of organizational leadership to encourage HR to move to the frontlines from their traditional, roles as a back room support and crisis handler, and the inability of HR function to align with business.

As Indian organizations realize the need for professional HRM, there is a high demand for HR professionals. Reports indicate that during 2008 the attrition of HR professionals in the growing IT sector is the highest at 20%, while the turnover rate for core IT professionals known for high attrition is 18%. Additionally in many organizations, HR roles are being carried out by line professionals and that too with great success. For instance, Infosys HR head T V Mohandas Pai, was its CFO earlier. Although he was not an HR professional, he has performed that role admirably. In fact, in the filing before the Securities and Exchange Commission (SEC), United States Infosys declared that Pai is the youngest and highest compensated director and board member, and earns a salary of US $ 82,033 and a bonus of US $ 308,625. Similarly other career HR professionals have also been successfully shifting to other roles like marketing and operations, with a few of them assuming CEO roles.

HRM in India:

References about personnel management systems can be found in the ancient Indian text Arthasastra which included the job description of a supervisor and performance linked pay for goldsmiths. Traditional India was famous for craftsmanship and the society itself was organized according to occupations. High quality and unique Indian goods made by traditional craftsmen were shipped to Europe and other continents as early as the 17th century. Even before that India had trade relations with the Arab countries and Southeast Asia. Employer-employee relationship during era might have been guided by the master servant relationship.

Formal industrial organizations emerged in India only after 1850. Merchants, particularly from Europe, developed trade ties and established factories in India. Cotton and jute mills were the initial industries followed by industries like steel, leather, coal, and others. The British rulers institutionalized systems for running the government, which included formal personnel management systems for recruitment and postings of government servants.

In the industrial sector, conditions of labor and work can best be described as awful and bad. Enquiry commissions of the government and committees studied the situation and their recommendations led to the formation of Labor and social security legislations.