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How did the HR function evolve?

Leave a Comment / HR Views & News / HR Footprints / 18/12/2013

In an earlier article “What are the Career options in HR?” (Posted on December 11, 2013), we discussed on the fundamental nature of the HR function. We also addressed some important questions on the importance of the HR function as a support to business, pay and growth in HR careers. If the HR function is indeed looking attractive, what should an aspiring candidate do to prepare for a career in HR? A good understanding of the evolution and changing nature of the HR department is an apt starting point and that is the focus of this article! Core Business Processes: Any business has to have some product or service to offer and address a customer need. To deliver what the customer wants, one needs to have a facility to make the product (manufacturing), a channel to tell and sell to the potential customer (marketing/sales) and a process of managing the cash flows (finance). This is a very rudimentary view of core business process. With the increased complexity and to compete with the other players, organisations do add several functions like IT, supply chain, research and so on. Please note that we have not included HR function yet! How did the need for HR emerge? It is common sense to understand that all these departments perform their roles only through people and those people do have some needs. That is where the need for some essential services of administration and employee welfare started. Organisations felt that there must be some department that takes care of the work place administration like seating, transport, food and so on. In addition, there is a need for someone to attend to the personal aspects of the employee or their families. It includes essential services like salaries, health care, insurance, loans/advances, provident fund and so on. On the other hand, government agencies wanted to ensure that the organisations comply with certain norms and rules to prevent any exploitation of those people who work for the organisations. It called for someone to be responsible for all compliances. To address all these needs of the employees, organisations felt the need for a separate department. Consequently, the personnel and administration (P&A) department came into existence. P&A department essentially took care of facility administration, employee services and statutory compliance. Anyone who is good in excellent coordination, liaison, service orientation, interpersonal skills and with good understanding of labour laws fit this role. Of course, as one grows in these areas and becomes a manager of a team, other team management skills are also called for. By the way, in some places, the same P&A function is renamed as HR department (while the true meaning of HR function includes several other aspects beyond P&A). What is the present status? From the way the need emerged, it is an essential function and if we do not cater to any of these requirements, there is bound to be employee dissatisfaction and possibility of non-compliance to the laws of the land. Therefore, in most of the companies of decent size, these functions are usually performed at the required level. At the same time, the present outlook of the organisations is that P&A is necessary as an essential service, but not good enough to make a huge difference to the business. Consequently, companies do not want to spend too much of money on these functions. As the recent trends are emerging , organisations may opt for outsourcing. The expected benefit of outsourcing is greater efficiency, lower costs and better compliance. In light of these changes, aspiring candidates can opt for a job in P&A function of an organisation or in a company that offers outsourced services. A graduation with a diploma in labour laws and basic computer skills is essential for a career in these areas.However, due to the outlook of the organisations towards this function, salaries are usually not very high. Also, it may not offer too much scope for innovation except some ideas for process optimization. As the demands from employees kept increasing, organizations’ expectations kept changing from the P&A department, hitherto performing essential functions! That led to new age HR function! More on that next week! This article was published in: HR Mirror Hans India Follow us on Twitter @hrfootprints Follow Dr. Raj on Twitter @drraj29

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Power balance in organization structuring

Before we understand the need for power balance in organization structuring we must understand the factors that influence the organization structure. We must understand why it is important that the structuring is done right. One of the most critical exercises that organizations carry out is “Structuring”. It is always intriguing to understand the best way to organize various businesses or functions or departments. Ideally we all know that structure should follow strategy. For example, a company that is expanding to multiple markets for growth need to reorganize itself accordingly by creating marketing and sales teams in respective geographies. Beyond strategy, there seem to be several others factors that need to play on the structure. What are the factors that must be considered while structuring? Critical Success factors: Understand closely the business model and analyze the critical success factors. For example, in an industry, speed to market determines the success of the company. In another company, a collaborative effort in solving a customer complaint is critical. Your structure should factor in these factors. Customer as a stakeholder: While structuring is an internal matter, it impacts the customer. Particularly if you are in a business that requires close customer interface, taking the customer into confidence is extremely important. Your internal structure should not cause external inconvenience. Cohesive business process: Designing a structure around a cohesive business process helps in defining the accountability. For example, if a planning person operates away from procurement function, then we will have gaps in coordination. It may then make sense to integrate planning and procurement functions under one roof so that it will be a cohesive business process that can work seamlessly. Where does POWER figure? A more important factor however seems to be how the ‘power’ is balanced across the organization. The way different business functions are pitched against each other by design is to balance the power and to introduce a healthy management control. For example, if finance is overseeing the credit limits offered by the sales people, it is meant to safeguard the receivables. If sales team raises a flag against production department for want of output, it is intended to serve the customer better with on time supplies. What happens when ‘power’ gets centralized and does not get distributed? What happens when there is no power balance in the organization? Instead of pitching one function against the other and thereby safeguarding the interest of the business and driving efficiencies, sometimes organizations create ‘concentric power centers’. In other words, they create individuals or positions that will exercise all the power and will not have any controls on them. If leaders in such positions happen to be high on integrity, then they will exercise self-restraint. More often, however, such power corrupts best of the leaders and they end up misusing the power. Why do organizations end up creating such power centers? One expectation is to offer all the power and then expect accountability for results. When you do so, however, one should realize that power gets (mis) used first and then one hopes to have results. What if power gets misused and we do not get results? In such a scenario, the damage to the organization is enormous. To restore the structure with more sensible power distribution and to resurrect the morale of the managers, organizations need to expend significant energy. It is therefore pragmatic to ensure power balance in organization structuring !