Change in Role of HR Due to Recession_Paper

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Change in Role of HR

Due to Recession

The Future of HR Function

A Research Paper

Symbiosis Institute of International Business (2009-11)

By: Sidharth Kapil

[email protected]


Change in Role of HR

Due to Recession

The Future of HR Function

A Research Paper

Submitted By:

Sidharth Kapil

Symbiosis Institute of International Business (SIIB)

Hinjewadi, Symbiosis Infotech Campus, Pune

Date of Submission: Email: [email protected]

30.09.09


Executive Summary

The role of Human Resources is changing as fast as technology and the global marketplace. Historically, the HR

Department was viewed as administrative overhead.

The events, beginning from Subprime crisis in U.S. mortgage market which led to series of bankruptcies,

insolvency amongst companies led to new aspects in the role of Human resources function. The damage to

most of the organization was done by external factors and thus leading to urgent measures for damage control.

Thus, HR department had to do the damage control part by assisting in the cost reduction measures. The real

challenge was not only to lay off people but also retain the best talent for future.

HR function faced internal challenges like Reduction in HR job itself and certain external challenges like

changing the nature of its function based on rapid developments in the company structure.

This report also focuses on the opportunities available to HR function for improvement in the crisis and also

the future of HR role in the organization post recession.


Table of Contents

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01 Introduction

02 Methodology

03 Purpose & Significance of Study

04 Challenges Faced By HR Function

04.a. Internal Challenges – Within HR Department

04.b. External Challenges – Outside HR Department

05 Opportunity in the Times of Recession

06 Case Studies

06.a. IGate ‘adult’ to adult engagement model

06.b. Hewitt concept for crisis management

07 Future Best Practices

08 New Roles of HR

09 Conclusion

10 Bibliography & References


01. Introduction

When the White House brought out its $700 billion rescue plan two weeks ago, its sheer size was meant to soothe the

global financial system, restoring trust and confidence. Three days after the plan was approved, it looks like a pebble

tossed into a churning sea.

The crisis that began as a made-in-America subprime lending problem and radiated across the world is now circling

back home, where it pummelled stock and credit markets.

Indeed, the ripple effects from Europe and the United States were amplified as they spread to stock markets in

Russia, Brazil, Indonesia and the Middle East.

Banks are just like a heart in the economic structure and the Capital provided by it is like blood in it. As long as blood

is in circulation the organs will remain sound and healthy. If the blood is not supplied to any organ then that part would

become useless, so if the finance is not provided to Agricultural sector, Retail or Industrial sector, they will be

destroyed.

This has led to raise in unemployment figures from 4.9% in Jan 2008 to 9.4% in May 2009 US. (3)

In India however, this recession has brought slowdown to the economy. The two worst effected sectors are Service

industry and Export Industry. For the first time in five years, India’s export growth has turned negative. Exports for

October 2008 contracted by 15% on a year-on-year basis. This should not surprise as the OECD economies that

account for over 40% of India’s export market have been slowing for months. (4)

A sharp fall in export growth could mean job losses in this sector. This would necessitate government intervention.

On the other hand the Service sector (Outsourcing Industries) is also facing the brunt of slowdown in the US

economy. The pressure to reduce cost, low deals in market to capture & cut down on perks and incentives of

employee.

(1)

With the present scenario of recession led Lay-offs, Cost cut and slowdown, the US based outsourcing service

industry has faced the brunt. With all necessary actions taken for survival of companies in service sector, steps like

Salary cuts, Workforce reduction etc one business unit had a key role to play.

The business unit which had to change its strategy: from fulfilling the growth requirements to survival requirements in

the economic situation.


The Business unit which had a proactive role to play in the damage control post the recession hit the global

economies.

This department as defined is the personnel department of an organization, dealing with the recruitment,

administration, management and training of employees; abbreviated as HR.

Workforce reduction brought contributed substantially to the cost reduction in the organizations and thus their survival.

The role of a business unit i.e. Human Resource unit was backbone of success for the whole process. Being a

department which changed its strategy focus from recruitment to lay-offs in a matter of time. The HR department

evolved during the difficult times. Also changed the perception amongst various businesses across and was accepted

as a business unit rather than a support unit.

(2)

Focal point of the Research

The focal point of the research is to highlight the “New Dimension of HR Roles in Global Recession.”

It is informative to read publications from one year ago, when major HR concerns included a shrinking Labour supply, keeping older workers working longer, engaging an increasingly diverse workforce, and Generation Y entering the workforce. Almost overnight, the recession changed the conversation to reducing labour costs, handling terminations, managing an anxious workforce, and dealing with survivor issues. Hanging on to Talent


The global recession has brought multitude challenges for HR department:

• With dynamic environment, effective implementation of change management policies • Biggest reason for changing is the motive of decreasing expenses on a company level • Half the companies expecting growth are planning a change in salary budget • Significant Drop in Client Engagement Scores

(5)

Human resources professionals are likely to find themselves being asked to manage rapid organizational change which can involve cost cutting, up-skilling managers and selecting employees for redundancy, as well as recruiting new consultants, to help the organization survive the economic down turn.

The change in HR metrics like from emphasis on attrition rate to responsibility on huge number of layoffs. From improving support services to eliminate them, being an expense to organization. Another challenge which comes to HR is, organising manpower at the time of merger and acquisition.

As per HRM review management magazine, 2009 HR, need of the hour for HR professionals are:

• Multi – skill development • More emphasis on training needs • Inclusion of Six sigma practices, • Retention strategy for employees (6)


02. Methodology

The dissertation was compiled using secondary data available on the internet and books,

reports, journals, and other library resources. The timelines were as follows:


03. Purpose & Significance of the Study

The goal of this study is to refine the current understanding of HR function and its importance during the time global recession and global downturn. It attends to highlight the work of Human resource function to handle the pressure of cost cuts and methodology for planning the corporate manpower in the forthcoming times. The need for HR functions to protect vital assets even in the face of number crunchers with their simplistic cost profiles and smarter because workforce planning tells us what future resources are required.

HR has prospered in the past 10 years or more as the war for talent has raged. The function has had to emphasize strategies on retention and attraction — employer branding, family-friendly policies and flexible benefits are just some of HR's responses. People have been centre stage, and HR has positioned itself as the agent encouraging their contribution.

But in these tough times, will HR be able to use the position it developed for itself in the good times to argue the case for protecting skills, retaining talent, and keeping those policies in place that motivated people? Will HR, even if the business news is grim, be able to think ahead about what will be needed post-recession? What would be the new dimensions in the role of HR?

Aim is to get an answer to these questions.

This information would cater to students who would like to pursue their career as HR professionals. It aims to show them the way ahead the roles of a HR department.


4(a). Internal challenges

• Creating a Reputation for HR Function

• HR downsizing

• Operational planning

If you read only headlines, you may think U.S. employers are slashing employee benefits to the bone. Not so. “In contrast to media attention on the most severe cutbacks, most companies are staying the course in the benefits arena, with very few taking precipitous action right now,” says a new Towers Perrin survey of 500 firms. One reason: Over the past decade, rising costs have forced employers to tighten their benefits belts and institute more employee cost-sharing. But the weak economy is forcing organizations and their employees to make some tough choices, particularly in compensation and benefits. Current times seem to require a shift from strategic HR business growth and future-proofing considerations like talent attraction, leadership development, team engagement and corporate culture to the short-horizon cost base reduction motive, key to cash savings and business survival. Reputation of HR department (7) The HR community is currently broadly split between the short-term transactions of change, including business rationalisation projects, redundancies, severance payments, compensation and benefits cost reduction / rationalisation projects and so on, (and hence of immediate savings-generation value to the bruins), whilst placing longer term programmes, projects and initiatives on hold, reducing them in scope, or cutting them along with other non essentials. Long term focus by HR (collectively) during current times is business reputation both at the CSR (Corporate social Responsibility) and the employer branding levels - ensuring that the business arises in the future, from the current down market-conditions, with its character intact, regardless of the tough choices it may need to make now to survive and set itself up for success in the next upswing. Focus on reputation during the time of recession would have positive implications for relationships with key talent currently within the organisation, with future candidates, with customers, and the broader community; especially in an era where disgruntled staff and those who have left the organisation are able to share their opinions with the world via the various online channels available to them. Thus some efforts/ best practices which a HR should follow are: Coach HR Colleagues should recognise the importance of their business partnership role at this time of commercial difficulty. Effective business partnership is crucial in difficult times, and HR professionals need to be brave in challenging leadership behaviours and policy decisions that negatively impact business reputation. Coach Managers To recognise the importance of upholding the organisation's values and employee value to ensure that business reputation is maintained, or possibly even strengthened during difficult times. This needn't cost much, or anything either, but does require a step-up in HR's bravery, its willingness to challenge, and its willingness to shape leadership behaviours.

Make a tangible commitment to support the career transition needs of those whose roles no longer fit the organisation This can be done via the provision of professional outplacement support. As author and blogger. Bob Sutton says, 'If we part, we will do all we can to ensure that we part in friendship'. Again, this commitment needn't cost a huge amount. Whilst full outplacement programmes typically equate to one month’s salary per person; a high level of professional external career transition support comprising online and telephone based resources can be provided as a more cost-effective mechanism and delivery via group workshops.


Thus the challenge of not only ensuring smooth present functioning but also ensuring a good reputation in future is an additional deliverable added to the role of HR. These new roles for HR professionals are a challenge which depends on the span of the HR department and their ability to fulfil these deliverables. HR downsizing The HR function by its very own nature is an expense to the organization for handling the human capital. Hence with downsizing of human capital, the brunt for decimating the HR function is the next in line. Some of the facts in this regard are: Hackett's evidence-based research of 200 global companies in October and November 2008 found that 40% were planning HR staff cuts. A further 12% were planning HR recruitment freezes.

In comparison, just 35% were planning job cuts in IT, 23% in finance and 18% in procurement.

The trend of relocating transactional HR in low-cost countries will increase as the economic crisis worsens, according to the study.

It estimates that the number of globalised back-office jobs at the world's biggest 1,000 companies will rise by the equivalent of 359,000 full-time employees over the next two years.

About 15% of transactional HR jobs at big firms will be off shored by 2010, according to the study. This is up from about 10% now.

Operational Challenges faced by HR departments for employees in HR role:

Dissatisfied Employees aren’t quitting Even those who don’t like their jobs or consider their workplaces hostile are reluctant to quit when new jobs are scarce. That leaves more employees who are “floating” through the job, bumping heads with co-workers or considering litigation. Employees are responding to pay-raise alternatives They aren’t surprised by the “no raise” message anymore. Grateful that they have jobs at all during a recession, overworked employees who believe they deserve pay raises are instead embracing the nonmonetary rewards offered. Thus handling employee issues within HR function gives the job of a HR manager a new dimension. The role for charting out layoff plans becomes a must for a HR manager; in addition to that, these challenges not only hinder the mere basis for execution of layoff plans but also harm the reputation of HR department.


4. b. External challenges

• Employee Motivation

• Leadership challenge

The HR department is a business unit which made headlines in recent past. Some of them were

• August 20, 2009, Fidelity Exec Says "Big Layoffs" Are Over

• July 10, 2009, 200 Layoffs At American Steamship

• June 23, 2009, Harvard To Lay Off 275

• May 20, 2009, Chrysler To Lay Off 992 In Belvidere

• March 5, 2009, Borders Announces 742 Layoffs

• February 5, 2009, Swedish Hospital Announces Layoffs

• January , 2009, Citigroup Announces 52,000 Layoffs, Places Limits On Executive Pay

These headlines (10) are from almost all industries and sectors presenting the role of a HR professional.

However, for completion of these tasks, which makes headlines, the HR function has to face a lot of challenges. The

point to be kept in focus is headlines (11) like:

• Feb 13, 2009, HR Access Announces Strong Growth in 2008 - Increase by 19%

• Published: Oct 22, 2008, Staff Journalist, Singapore: The new retention engine • 29 January 2008, Improving Staff Retention is Top 2008 Resolution

Hence, we see a change in objectives of a human resource function by its end results which made to the headlines. This change leads to a total U-turn in the path which the HR function was following, hence bringing challenges to it.

The change in HR role was caused due to Global recession, Dramatic fall in stock prices, Rising global unemployment and increase in governmental interventions. Thus, due to these factors the businesses saw a dramatic change in their nature of functioning and challenges known to all.

However, focusing on the challenges to HR department, the most critical one was:

Human Talent getting demotivated According to the analysis from the Kenexa WorkTrends™ database, employee engagement is statistically and practically lower for employees whose organizations have conducted layoffs in the past 12 months than it is for employees working in organizations without layoffs. In addition, the survey found that both layoff and no layoff groups of employees need to feel confident about their company and in their future. Of those employees in organizations who have experienced layoffs in the past 12 months, however, fewer employees feel confident-only 43 percent of employees with layoffs report confidence in the future of their company, compared to 61 percent of employees with no layoffs (a 17 percentage point difference).

However, with the coming trends the HR function faces not only difficult objectives and deliverables but also

continuation of its omnipresent role of “People Management.”


The organization at such times needs a good leader to handle a team for taking company to places, giving it

new perspectives and goals. However, during this recession period the layoffs demotivated most of the

employees at the higher level. Hence, HR function not only handled counselling of employees at lower level,

however faced challenges like handling the psychology of management professional working in other

functions.

Some of the challenges are: (12)

• Denial of circumstances, tendencies

The managers in hard times tend to overlook the critical decisions. This is primarily because the attitude for

not taking the responsibility for their actions. The HR has to play its role for creating a system of responsibility

and accountability.

• Cost cuts without valid strategic reason

The management due to fear of worse to happen tend to, at times, act in a manner which seems

unreasonable to the organization as a whole. Thus the HR department needs to assist the management in

such cases, hence creating an effective system of communication.

• Short term (tactical) steps weaken long term strategy

Certain decisions taken by the management are implemented due to the management being succumbed by

external variable factors. These decisions may definitely by beneficial for the company in the short term;

however they might lead to deviation of company from its long term goals, its mission and vision. Thus the HR

department needs to assist the management in such cases, hence creating an effective system of decision

making.

Thus, here we focus on the challenges faced by the HR department from the functions outside the HR

functional zone. Thus, HR which was initially treated as a support function to the organization, it became an

indispensible unit to such functional units. Hence, this also plays a role in transition of HR function from

support function to a business unit.


05. Study of the opportunities during recession

Every challenge brings opportunity, this statement sounds very optimistic and so be it. Now optimism would be the key

to success for HR department. This recession has brought various issues like restructuring of functions, salary &

compensation benefits etc in scrutiny, thus this would be a great opportunity to streamline such functions. In this

section we would further drill down to these topics/ issues.

As many companies rethink strategies and structure in response to the short-term demands of the global recession

and its anticipated long-term impact on the business landscape, their HR rationales must change as well. But to

improve talent management and performance over the long term, they should also revamp and realign their function,

policies, and services, as well as seize other opportunities created by the economic downturn.

The best HR heads are avoiding across-the-board reductions that often destroy value and damage capabilities.

Instead, they are eliminating jobs that represent excess capacity, that are noncritical, or that no longer fit with the

strategic direction and structure of their companies.

At the present situation a HR can look into reducing the costs, they can defer the major technological costs, and focus

on certain long term costs like training & development plans which prepare employees for future. Outsourcing certain

HR roles/ functions can also be looked as a potential area for reduction of cost.

Once the initial need for cost reduction is met, HR can help prepare their companies to profit during the recovery by

turning their attention to opportunities to strengthen the talent base and capabilities and to enhance the effectiveness

of the HR function.

Also, now is a good time to remind our workforce that providing quality service to customers and creating greater effectiveness and efficiency are the absolute best ways for employees to help the business through the difficult times. Fear and the drive to keep your business up and running can unify an organization and become a great motivational tool for employees.

There are few tasks that support the goals for profit during opportunity: (13)

• Reappraising talent and performance management

Once HR is realigned with the company, the HR can continue to reduce costs and prepare the company for recovery by conducting a rigorous talent review aimed at creating an enterprise-wide talent portrait. This review should identify the company’s most critical talent segments and optimize their contribution to strategic success, as well as pinpoint and close critical capability gaps in high-priority areas. A rigorous talent review serves as the foundation for maximizing the productivity and performance of the workforce: Low-performing employees can be identified and aggressively addressed, and leadership capabilities and bench strength improved. The demands of recession make it imperative for companies to redouble performance management efforts. Savvy HR can tie talent reviews to their continuing efforts to build performance-based meritocracies, to measure performance more effectively, and to build more business leader ownership of performance management and improvement processes.

• Reenergizing the workforce

Now is also the time to reenergize and reengage the surviving workforce. Employee trust, productivity, and commitment levels typically decline dramatically in uncertain times. Top performers, who are always in demand, are tempted to leave. And the limitations on cash and stock awards in many companies create a greater need for a more strategic focus on enhanced employee value propositions. This is particularly important given the multigenerational and multicultural nature of today’s global workforce. Employees have very different expectations and motivators; a one-size-fits-all employee value proposition is no longer an option. Finally, HRs should also encourage senior leaders to be visible and ensure that internal communications about the business are frequent, transparent, and honest.


• Reinforcing leadership development efforts

For companies to prosper and grow during recovery, performance management efforts must be tightly intertwined with continued and reinforced leadership development efforts. If they haven’t already, HR needs to invest in building better leadership capability and effectiveness (a key driver of employee engagement and performance); Booz & Company’s annual CEO succession studies confirm that companies find it challenging to attract and retain leaders with the capabilities needed to execute their strategies. Leadership requirements for this new environment must be defined, and the programs and processes needed to meet those requirements must be developed—especially a rigorous process to identify high-potential employees and ensure that they get the right developmental opportunities.


06. Cases representing the new role of HR

06. a.

iGATE 'adult to adult engagement' model

In most organizations, at most times, the underlying assumption is that employees are immature. Therefore, the

emphasis is more on processes and dependency is high on systems rather than on people. The fact, however, is that

human intervention is dynamic and the real differentiator to produce services can happen only when people wish. This

pre supposes that you treat people the way they are i.e., mature individuals.

At iGATE, senior management team before a HR policy is brought out; the views of employees are encouraged by:

• Encouraged constructive dissent and

• Consensual decision making,

Also, found opportunities to involve employees on continuous basis, and imposed no penalty for failure but penalise

for not taking initiative. Before a HR policy is brought out, the views of employees are sought. Thus looking at

employees as Self-Achievers

By:- Dr Srinivas Kandula, global HR head at iGATE, talks about the evolution of the HR process in the Indian IT/BPO

industry


06.b.

Hewitt Concept for Crisis Management (14)

The crux of this study is on how the HR roles changes and increases its span while the organization faces economic

crisis.

The study not only focuses on the approach to cut costs but also focus on the future requirement for manpower. The

role varies from

Retaining Key employees ------� Managing Downsize

Reducing Costs ------� Growth Options

Using the above strategy; the success of Hewitt projects have been:

� System review and reorganisation reduced compensation costs by 5-20% – while employee satisfaction regarding benefits increased.

� Restructuring processes and outsourcing reduced operational HR costs by 20-30%

� Talent is attracted and retained more effectively by improving talent management system; rate of ROI growth

is 0.7%

� Reforming orientation and training of sales personnel increased the results of new sales employees by 12%


07. Future Best Practices

There has never been a more pressing time for HR professionals and leaders to develop a long term workforce strategy for their organizations. Cost cutting is an unavoidable necessity in the midst of a recession; However, retaining, recruiting, and strengthening top talent are all requirements to successfully outlasting a recession. The leading organizations post recession will be the ones that are able to look beyond the current financial turmoil and identify the competencies they will need in the future. HR professionals and corporate leaders should be working together to define what their future workforce must look like Before conducting any more layoff s. Companies that do not first establish a strategy for the future run the Risk of not having the right players on board to see them through the recession or compete successfully when the economy turns around. Just keeping the right staff is not enough. Forward thinking businesses understand that the time to recruit for the future is today. The competition for top talent is still very Much alive and well. HR professionals taking the long-term view foresee the need to invest in training and development now to build a stronger workforce for tomorrow. The need to organically grow talent combined with the rapidly changing pace of skills and education required within the energy industry suggest that a heavy focus on training be undertaken immediately. Developing the skills of the workforce not only strengthens a company’s competitive edge, but also inspires loyalty, organizational commitment, and encourages continued learning for the future. HR professionals have the opportunity to lead corporations forward not by tactically enforcing operational cost cutting measures, but by developing a long-term workforce strategy.

HR Managers today are focusing attention on the following-

a) Policies- HR policies based on trust, openness, equity and consensus.

b) Motivation- Create conditions in which people are willing to work with zeal, initiative and enthusiasm; make people feel like winners.

c) Relations- Fair treatment of people and prompt redress of grievances would pave the way for healthy work-place relations.

d) Change agent- Prepare workers to accept technological changes by clarifying doubts.

e) Quality Consciousness- Commitment to quality in all aspects of personnel administration will ensure success.

Contents:

1. Incorporating Change management in the organization’s DNA 2. Incorporating Operational Excellence methods - Six Sigma in HR function 3. Improving hiring techniques


Incorporating Change management (16)

Change capability needs to be fostered at three different levels within any organisation: the individual, the managerial and the organisational.

Individual It’s critical that key leaders understand the process of personal transition in order to develop change resilience. Leaders and followers need to understand that feelings of denial and gloom are merely stages on the way to letting go of the past and facing a different future. If skilled in coaching, HR practitioners can support leaders themselves, or, arrange coaching for change to be provided by external experts. For groups of employees half day change workshops can be provided to explain the stages of individual transition and how to manage them.

Managerial Manager’s capability is a key differentiator in successful change as people felt greatest loyalty to their local managers. Line and middle managers need to face two ways during change. In a downward direction the line needs to counsel teams to maintain trust through the process of change but they also need to look upwards to understand, support and then translate the organisation’s strategic objectives. To manage help managers fulfil this two headed role, HR may need to

• Rapidly provide low cost but effective development interventions, not in the hard skills of project management, but also in soft skills of counselling people through change. The multinational Bausch and Lomb, manufacturers of eye health products, sent their all their factory managers from Waterford on a course at Roffey Park to develop their change management capabilities.

• Assist these line managers in translating communications about strategic transformations from the corporate centre into everyday operational language that’s both accessible and engaging for local team briefings.

• Insist that during 2009 managers are held accountable in their performance evaluation for successfully managing people through change

Organisational Our research showed that providing opportunities for people to voice their concerns during change can positively influence employees’ organisational commitment to change. The feedback may be negative but sometimes employees just want to be heard even if their grievances cannot be remedied. When Glaxo Wellcome merged with Smith Kline Beecham GSKUK’s Organisational Development community led a successful programme where two thirds of employees attended workshops determining the cultural future for the merged organisation.

Ensuring the top team look out for the long term as well as surviving the short term is another key HR contribution but senior HR professionals need to translate the strategic rhetoric into an operational language that people at all levels can understand. If change that’s happening on many fronts, HR can ensure a coherent messaging amongst different functions - GKN, the engineering multinational, use lean processing as the touchpoint for all change. Finally identifying and retaining top talent during rocky times ensures the organisation will be poised to take full advantage of the return to growth when it comes.

Those organisations who invest in these capability building activities over the forthcoming months will find this form of change investment actually does pay dividends in both the short and long term.


Operational Excellence methods - Six Sigma (15) Some of the recent trends that are being observed are as follows:

• The recent quality management standards ISO 9001 and ISO 9004 of 2000 focus more on people centric organizations. Organizations now need to prepare themselves in order to address people centred issues with commitment from the top management, with renewed thrust on HR issues, more particularly on training.

• To leapfrog ahead of competition in this world of uncertainty, organizations have introduced six- sigma practices. Six- sigma uses rigorous analytical tools with leadership from the top and develops a method for sustainable improvement. These practices improve organizational values and helps in creating defect free product or services at minimum cost.

It must be understood that HR isn’t a huge part of any business, but it has a huge effect on every business. Human resources should be considered as human capital. HR must ensure that there’s good return on investment in human capital. Typical HR functions include benefits management, compensation, recruitment and skills development. Innovation and change management must also become key functions in the HR department. In addition to managing these functions well, managing idea to innovation, improving HR functions, and accountability of employees and executives must also be implemented. One must create a process map for HR department to clearly understand HR functions and prepare for implementing Six Sigma. For the critical steps in the HR functions, one can answer the following questions to identify opportunities for improvement that can be exploited by applying the Six Sigma methodology:

• What is the purpose the HR function or sub-function? • What are the expected deliverables (people, skills, services, value, reports, etc.)? • What are the measures of goodness of key-deliverables? • What are the error opportunities for key-deliverables? • What improvement activities are carried out in the HR function?

Answering the above questions, one can identify output (unit), measures of reliability, and items and elements that can go wrong (opportunities for error). Having identified ‘what’ to measure, one can establish a baseline for key performance indicators, which may include one or more of the following:

• HR Responsiveness • Employee involvement • Idea and innovation for improvement • HR effectiveness in fulfilling its intended functions

Implementing Six Sigma in HR is no different than applying it in other functions. The key is recognizing gaps or opportunities for improvement by breaking down processes in manageable chunks. The HR function can take the following steps to implement Six Sigma in HR or to facilitate implementation of Six Sigma in the organization:

• Establish a clear and significant role of HR for institutionalizing Six Sigma • Establish Six Sigma objectives and role in HR • Seek customer feedback and identify opportunities for improvement • Establish Six Sigma goals for HR function • Formulate, prioritize projects and form teams • Provide Six Sigma Green Belt training • Implement DMAIC for breakthrough solution.


Examples of Six Sigma projects that companies’ HR departments have completed include reduction in overtime, reduction in time and cost to hire an employee, reduction in employee retention or turnover, reduction in safety violations, reduction in cost of employee separation, and HR response to internal inquiries for benefits, payroll, promotion and fairness. Six Sigma implies dramatic improvement through reengineering or innovation of the HR function. HR involvement in achieving corporate growth and profitability must be defined. The HR role must support leadership and departmental activities, provide feedback, and intellectually engage employees in achieving their personal and corporate objectives. Customers expect better, faster and cost-effective solutions. Unless every department performs better, faster and cheaper, the company will be unable to meet customer expectations. HR is no exception to this expectation. It must be set to perform better, faster and more cost-effectively by creating value rather than just rote support of management or training. Creating value could be accomplished through innovative solutions and employee innovation. This is a low-hanging fruit for HR. Hiring Trends for Future: (17)

Company the opportunity to improve the Hiring Process. Here are a few tips to do exactly that:

1. Keep getting rid of The Others & the Prima Donnas! Continue to evaluate all Employees at every level of the organization. Don’t be deceived by The Others pretending to be Core Employees and when a Prima Donna starts to warble it’s time for them to go. This ongoing Employee pruning process will provide openings for replacement Core employees now.

2. Start interviewing potential Core employees NOW! How many Core Employees in your industry are available now? A lot! Start interviewing those Core Employees now and when business improves you can make those Core Employees your Core Employees.

3. Involve your Core Employees in the hiring process! One of the best ways to hire Core Employees is to involve your Core Employees in the hiring process. Who better to give input on a potential new hire than the people who have to work with them? Does this require training your Core Employees to be involved in the hiring process? Yes! Do that training now.

4. Develop the Ideal Employee Profile! Simplify the hiring decision making process by developing an Ideal Employee Profile to match potential Employees against. Another opportunity to involve your Core Employees since they provide the basis for the elements of the Ideal Employee Profile


08. New Aspects of HR function (18) INTRODUCTION The business world is changing at bullet-train speed – technology, the global economy, increasing regulatory scrutiny, the looming talent crisis, recognition that mental illness is dramatically affecting the workplace. All of these are having a huge impact on the HR profession. The c-level is finally starting to realize how important your role is. They want you to get out of the day-to-day administrivia - while still making sure everything is done perfectly, mind you. They want you to measurably contribute to the top-line and the bottom line, and help mitigate risk. #1. The Changing Role of the HR Professional We need to put the “human” back into human resources. Employees are humans, not commodities, and HR departments have to start seeing them differently. With the current push towards strategies that engage employees, attract top talent, and contribute to the bottom line, this change is imperative. CEOs are demanding that HR stop giving lip service to strategic performance and find the metrics that prove they are contributing to the growth and performance of the company through effective people management. Increasingly, more is being expected of HR practitioners than just being good at HR. They need to broaden their skill-sets so that they can sit at the 3 executive table and understand as much about the business as the other leaders. If HR is to be perceived as an enabler of business strategies, they need to be seen to be making measurable contributions to the bottom line through expense reduction, or revenue generation, talent management and risk mitigation. HR people need to be a lot more creative in the way they do things. The “one size fits all” approach doesn’t work anymore. HR departments of today need to be the talent departments of tomorrow. #2 - The War for Talent The most important corporate resource over the next 20 years will be talent: smart, sophisticated business-people who are technologically literate, globally astute, and operationally agile. Traditional workforce planning is being replaced by talent strategies and skills gap analysis. Once they determine the gap, it becomes clear what talent they need to hire, to layoff, or to develop or transfer internally. Need is to dig deep into the organization to identify the top talent, the high performers in every aspect of your business. In all likelihood it’s not the people who are the most politically astute or the most popular. Traditional marketing practices are going to have to be applied to recruitment. Employer branding and unique selling points with a strong differentiator are imperative. Changing your employer brand from the groan-inducing “we’re a big successful company” to a company delivering on the promise of continuous learning, work-life balance, personally-fulfilling roles and innovative reward and recognition programs. Some recruitment effectiveness strategies include:

• Employment branding • Ongoing recruiting, not stop-start • Nurturing relationships with strong candidates, even though no jobs for them are currently available • Referrals – this is particularly effective with Generation “Y”ers. They do everything through leveraging their

networks. Realistic job previews • Managers trained in interviewing • Selection criteria – Can they do the job? (Competencies) Will they do the job? (Motivation) Can we offer them

what they are looking for? • Rapid response and follow up – Hard to hire skills are in high demand • Debrief candidates as quality control monitoring for recruitment process • Importance of handling the rejection process effectively.

#3. Outsourcing of HR Functions: The Virtual HR Organization


If you are an HR professional I doubt that you got hired for your ability to process employee information changes, sort resumes or process the payroll every other week. CEOs’ expectations of their senior HR people have changed significantly. The HR executive is expected to deliver value in areas like organizational effectiveness, talent management, change management, leadership development, succession planning, merger integration, strategic compensation. The primary benefit of HR outsourcing is that it will allow you to keep your job because it will enable you to tackle these more strategic issues! HR professionals need to embrace outsourcing. They can’t be afraid of it. Outsourcing of HR transactions is a proven way to reduce costs and get access to a higher level of service. There are five good reasons why companies outsource their HR services: 1. Cost reduction – economies of scale, automation and process improvement, especially for transactional work 2. Focus – allows HR to allocate time to strategic, not transactional, concerns 3. Regulatory compliance – minimizes or transfer legal risk to the outsourcer and obtains specialized regulatory expertise. 4. Access to best technologies – mutual benefits to ensure technology is continually upgraded 5. No available internal resources – provides an HR capability for a company that does not have one, cannot staff it, or cannot afford a full-time resource, but has reached a size and complexity where expertise is required #4. Talent Management: Leadership Development Leadership skills are not built through courses. Management is a function of what you do; leadership is a function of what you are. When planning leadership development initiatives, the tendency is to first look for courses. One of the scarcest capabilities, now and for the foreseeable future, is leadership. As organizations, their customers, their employees and their environment become more global, more complex, and more competitive and more subject to rapid and radical change, the competency requirements for successful leadership are increasing exponentially. Most organizations would acknowledge that they currently have a shortage of leadership talent or bench strength; how will they fare when the bar keeps on being raised? Leadership is less definable and therefore leadership capabilities are more difficult to build or transmit. Indeed, one could debate whether leadership skills can be taught at all, or whether they are innate. An emerging trend is ‘Action Learning’ – which has been well established in Europe for many years. It involves assigning groups of executives, with diverse backgrounds, to work on issues of strategic interest to their organization – with a facilitator to keep them on track and provide feedback. The advantage of Action Learning is that it engages leaders and potential leaders in real work and a real work environment rather than a simulation. Part of fostering leadership is encouraging and rewarding risk-taking. It is also giving these leaders, wherever they are in the organization, the opportunity to contribute to the development of the corporate strategies and plans. Leadership comes with empowerment – employees can’t be leaders unless they have the power to take risks, make decisions, innovate and lead. #5. Corporate Values and Culture We are entering the third wave of public mistrust about corporations, according to Market and social trend analyst Daniel Yankelovich. The first, set off by the Great Depression, continued until World War II; the second, caused in part by economic stagflation and the Vietnam War, lasted from the early 1960s until the early 1980s. In each of these periods companies tended to be reactive, blaming a few bad apples, dismissing values as “not central to what we do,” or ignoring opportunities to improve because “we don’t have to make major changes.” The current wave of disapproval began in 2001 with the bursting of the dotcom bubble, the ensuing bear market and the financial scandals involving Enron, WorldCom, Tyco and others. But this time, corporate response is different. Companies are going well beyond the PR exercise of displaying values statements. They’re engaging in values-driven management improvement efforts, training staff in values and appraising executives and staff on their adherence to values.


What is clearly evident these days is that more and more firms are unwilling to tolerate unethical behaviour from their executives. They are taking drastic action as in the case of the Boeing CEO who was ousted because of unethical activities. Ethical behaviour should be a core component of company culture. Ethics related language in formal statements not only sets corporate expectations for employee behaviour, it also serves as a shield for companies in an increasingly complex and regulatory environment. An effective corporate culture is not about being a nice place to work. It is about engaging employees at a fundamental level and translating that engagement to performance that meets the organization’s objectives. Increasingly, companies around the world have adopted formal statements of corporate values, and senior executives now routinely identify ethical behaviour, honesty, integrity, and social concerns as top issues on their companies’ agendas. Business leaders are now recognizing that an effective corporate culture is essential to long-term success. They are taking steps to align corporate culture to business strategy. Many organizations are now making their values explicit and that’s a significant change from corporate practices 10 years ago. Leaders and top management must be responsible for building strong, high performance cultures. They are the ones who construct the social reality, and shape the values of the organization. A recent study on the factors that drive performance found that corporate environments where culture is flexible, adaptable to change and ongoing improvements will increase performance by 22.9% So what does an effective corporate culture offer?

• Branding: the alignment of the vision of the employee with the vision of the company. In effect, it makes a promise about the values of the organization and delivers on it.

• Engagement: The congruency between employees’ needs and those of the employer. Culture is a key element in achieving this match.

Culture will translate into employer branding. Employers have to deliver on their promises – they have to live up to the brand. They have to walk the talk. Remember that because of technology, i.e., all those blogs, your employer brand can be damaged or praised easily. #6. Impact of Legal and Compliance Issues Today’s legislative and regulatory requirements surrounding data privacy, security, etc., are a bureaucratic nightmare that Kafka would have been proud of. Highly publicized instances of poor corporate governance, combined with growing consumer concerns about security and privacy, have led us to an era of interventionist and regulatory government involvement in many facets of our business. Regulations or laws that we have to worry about include: Affecting financial systems: Money laundering and support of terrorism (FINTRAC), Sarbanes-Oxley and its upcoming Canadian equivalent and others on a sector by sector basis National security: Anti-Terrorism Act, Public Safety Act, PATRIOT Act (for those of you that deal with or have a corporate relationship with US based entities) Privacy: PIPEDA (Federal private sector), Privacy Act (Federal public sector), public sector in all provinces, private sector in three, and health information privacy in four provinces Privacy laws are in the process of fundamentally changing the way in which the HR department interacts with employees.


This may include but is not limited to:

• the creation of employee privacy policies • changing and more stringent rules on HR data • 'least privilege' access rules to HR data - restrictions on access to HR data • restrictions on employee references • restrictions on background checks • changing and more stringent records management practices • implementation of data retention and data destruction policies • employee access to their own data

So what does all this mean to the HR professional? It means a lot of responsibility around risk management. It means we need to be looking for different skill-sets in HR to understand the new realities of privacy and security of employee data. And it means developing closer relationships with IT and Finance to understand the new rules.

Structures for Economic Slowdown (19)

The HR function also realises the importance of making structures to deal with economic slowdown.

For this, we may study the “Survival – Win Continuum” model of Hewitt consultants.

This model basically explains the present situation of layoffs & businesses receding. These leads to the companies

going into conservative mood hence applying cost cutting & other functions for balancing its operations. Hence, they

consider the effected relationships with clients and pressure for maintaining financial indexes.

Hence, the organization’s focus would be on accelerating investments & acquire companies at a right price.

The HR for achieving the objectives as mentioned by the “Survival – Win Continuum”, recruiting would be the next challenge coming up for them. However, in the present scenario of global recession, recruiting methodology would have a new dimension.


09. Conclusion

Considering the study of the Human Resource function, we can conclude that it will see a change in its

dynamics. The new role of a HR professional would not only be to support a certain assigned span of

employees but also to abridge employee goals to organizational goals.

The HR professionals need to think like marketers. Establish an employer brand. Communicate the

employer brand. Sell the employer brand. Be at the forefront of the latest trends and requirements and

react to them quickly. Acquire a broader range of business skills, in particular, think like a CFO. What

are the metrics that you can develop that prove to the business the impact you are making.

HR Management must set priorities and ensure the strategic impact of the HR role in the organization.

The role of the HR Management is not only recruitment and fulfilling manpower requirement but also to

make the organization stronger and ready for the future growth.


10. References & Bibliography

1, 2, 5, 12, 14, 19 - György Balázs, Rita Veres, HR challenges and actions in times of economic recession

19th

Jan 2008, Hewitt Consultants

3, 4, 10, 11– www.financialtimes.com, http://www.jobbankusa.com/News/Layoffs/harvard_to_lay_off_275.html

6 – HRM Review, Jan 2009

7 – Pip Furlong, Recession Proofing HR, human resources, Jan 2009

8 - Acceleration of Globalisation report by consultancy the Hackett Group, Feb 2009

9 – HR & Recession – 7 trends & 7 Solutions, The HR Specialist, July 2009

13 – De Anne Aguirre, Acceleration of Globalisation report by consultancy the Hackett Group, Booz&co.

15 – Praveen Gupta, Six Sigma in Human Resources, Quality Digest,

16 - Veronica Hope Hailey, Get on track to develop your change ability, http://www.cass.city.ac.uk/

17 - Hiring in the Time of Recession BY FC Expert Blogger Paul Glover, Wed Mar 4, 2009

18 - Dave MacKay, 10 HR TRENDS THAT ARE CHANGING THE FACE OF BUSINESS, A Keynote Presentation Delivered

Other Sources:

www.personneltoday.com/

www.hr-guide.com

www.hradvice.com/

www.citehr.com

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