Renaissance of Human Resource Management in 21st Century

Changes in Human Resource Management

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By Dr MW Shaikh

Seventeen years have passed since the beginning of the 21^st century. As a senior HR professional when I look back, I realize the ways and the pace at which the human resource management function has evolved.

The storm of globalization has affected the businesses, the countries and their economies. Some countries faced the worst recession and some countries saw the boom and growing economies. Each and every profession and functions related to business underwent changes in the beginning of 21^st century. HRM – as a business function was born from the Traditional Personnel Management and Industrial Relations; personnel management and IRs were reduced to sub-functions of Human Resource Management. The changing business environment and technology whispered the new words in the ears of HR-Managers viz. TQM, M&A (Merger & Acquisition), ISO standards, psychometric testing, right-sizing, down-sizing, VRS, HR audit, HR re-engineering and so on.

With the advent of technology the traditional methods of recruiting and training employees were abandoned. The impact of this disruption was so high that every functional area got changed. In HR – the traditional factory management, the time office, suited to manufacturing era also got changed. The growing service sector and new businesses required different skills, educations and knowledge of new technologies. At this juncture the renaissance in HRM started; rebirth and new awakening for survival! HRM started aligning itself with business goals and objectives. With this new ‘avatar’ it evolved as a strategic business function; rather than acting as a support function. So what new did the HR look after?

Businesses in 21^st century are very competitive and each business is run by competent people i.e. human beings. Therefore it first started studying the skills, qualities, traits, competencies of people who are running the businesses successfully. They developed techniques for ‘Talent Acquisition’ because talented or clever people are capable of generating profits, sustaining profits and surviving the competitions. So the first challenge for HR was identifying talented people and attracting them towards the job and the organization. HR started working on two aspects in order to get talented people (a) employer branding which was must to attract or pool in talented people (b) to identify the source to acquire suitable talented people for the organization. 

The second challenge was job analysis process, which was required to be done by modern method. In job analysis, a number of taxonomies of human abilities have been developed over the years and are widely used. Taken collectively, these taxonomies identify four major types of abilities.

• Psychomotor ability e.g. dexterity
• Physical abilities e.g. stamina
• Cognitive abilities e.g. intelligence
• Situational abilities e.g. to work under pressure

The next challenge for HR was recruiting and job search which was followed by HR planning and goes hand in hand with the selection process by which the organization evaluates the suitability of candidates for various job. While recruiting a candidate the organization has to keep in mind its recruitment strategy, values, labour market, ability to pay and to retain employees. This depends on recruitment as per the philosophy and HR policies of the organizations keeping in mind the far reaching effect on employer branding and employment ethics. After recruitment the organization has to evaluate the outcomes of, methods and sources its recruiters used.

Performance assessment was also a challenge faced by HR managers. It is necessary to develop an appraisal system based on traits, behavior and performance outcome. Several methods are available but the best suited method to the organization and the business has to be selected to measure quality, quantity, leadership, working with others, with less errors/raters bias. The important point here is the appraisal becomes the basis for -

a) Promoting an employee

b) Transferring an employee

c) Rewarding an employee

d) Training the employees on the weaknesses / lower performance indicated.

The next challenge was to compensate the employees. An organization exists to accomplish specific goals and objectives. The individuals hired by the organization have their own needs. The employee provides knowledge, skills and abilities desired by the organization to meet its goals in return for money, goods and services. Hence the todays HR has to design sound compensation policy and pay the employees according to job-market, capacity of organization to pay and to meet or satisfy clever/talented people by designing incentive schemes. Modern employer has to take care of behavior theory like Equity Theory and Hay Plan which is used for evaluating managerial and executive positions by a large number of organizations worldwide.

With all the above challenges of the 21^st century do you think HRM is in ICU and will survive? Some experts have this view, that HR functions by 2020 will be outsourced and minor other functions will be taken up by other functional managers and HR will have no role to play. Then in that case all the managers will have to focus on –

A) The Traditional Personnel departments which includes compliance of labour laws, maintenance of leave record, employees’ data, government inspections and liaison.

B) HR as strategic business partner i.e. strategic HRM (SHRM)

It would be difficult for the other functional managers to focus on the above. The modern HR thinkers believe HRM in organization has the strategic approach, the increasing globalization of HR activities, maintaining ethical policies and behavior within the organization and the need to benchmark measure and evaluate the cost-benefit utility of HR.

Quoting Likert, “Every aspect of a firm’s activities is determined by the competence, motivation and general effectiveness of its human organization. Of all the tasks of management; managing the human component is the central and most important task because all depends upon how well it is done”.

Human assets are intangible in form as they exist within the human resources. Sumantra Ghosal has used the word ‘human capital’ to represent Human Resources, he further classified it into three categories, Intellectual Capital, Social Capital, Emotional Capital. Since liberalization and globalization HRM is continuously facing the change and is changing according to the industrial requirements. In India, the Central Government announced in July 1991, a package of liberalization measures under its Industrial Policy. The Industrial Policy, 1991 seeks to liberate the industry from the shackles of licensing system, drastically reduce the role of public sector and encourage foreign participation in India’s industrial development.

Economic liberalization in India has paved the way for globalization i.e. integration of Indian economy with the world economy. Government lifted the restrictions on export and import, inflow and outflow of capital and exchange of human resources. This change impacted HRM i.e. focus was on restructuring the businesses, changes in employment, compensation packages, VRS–downing etc.

The challenges ahead for HR managers are building core competency, creating competitive advantage, managing workforce diversity, empowering human resources, focusing on change, work ethics and culture, quality, work life balance, etc.

Two questions that still crop up are whether the present business managers will be in position to take up these HR functions, or should we train them to eliminate HR functions or should the HR managers start calling themselves as HR managers (Business Development) or HR Business Coordinator. The question is HRM must completely change and integrate itself with the business, as the present HR activities have become a part of business and difficult to separate.

Article references:

• Strategic Management of Human Resource- By Jeffrey Mello (Cengage Learning)
• Human Resource Management - By T. N. Chhabra (Dhanpat Rai & Co.)
• Managing Human Resource - By Fisher, Schoenfeldt & Shaw (Cengage Learning

About the Author:

Dr MW Shaikh is associated with IES Management College and Research Centre (IES MCRC), Mumbai since 2006. At present he is Associate Dean (Placements and Student Affairs) at IES MCRC. He is a double postgraduate from University of Mumbai having 37 years of experience with industries and academics.