Sunday, December 20, 2009


It is no news to managers that the global economy has gone – and in many countries still is going through -- a rough patch. The unemployment rate in the U.S. hit 10% in November, a notch down from 10.2% in October. The pressure is on more than ever to reduce costs wherever one can find them. Staffing invariably constitutes a major cost to most companies irrespective of the kind of industrial sector they are in.

To give one example, airport operator Fraport AG's bill for employees in 2008 amounted to 50.3% of total company expenses.

But this does not mean that the situation across the globe is uniform. While employees in North America and Europe will hold onto their jobs by the skin of their teeth, Indian employers will soon have to face up to a different scenario: salary inflation and high attrition rates as the economy here exits the slowdown with a vengeance.

So should we be satisfied with human resources merely concentrating on hiring in good times and, in bad times, firing employees outright or at least developing ever-more intricate voluntary redundancy programs and other intricate ways to reduce employee entitlements such as holidays, pay, and training?

Talking to some HR professionals, it often feels like it. But HR teams are not the only ones to blame for this limited view. As with so many individuals and departments, they tend to do whatever management throws at them. So the question is: What should management reasonably expect HR to deliver in order to actively drive an organization's goals?

Let's be clear about some facts first. HR's role in any organization should be that of a service provider. This means an organization must have defined roles and responsibilities which its HR department is expected to deliver. And these must go beyond the punch cards and payroll that HR departments, particularly in India, seem to consider their primary responsibilities.

“Dealing with people issues clearly requires a special set of skills and personal traits.

 In practice this has to translate into frequent and sustained interactions between the HR function and other departments, employees, management and trade unions. Anybody working in the HR department must fully understand how the organization functions, who its customers and competitors are, what strategies it pursues …and simply how the business works.

From my own experience as an employee, a senior manager and an expat in India, I know that HR faces a multitude of often-conflicting expectations. Not all of these can or should be entertained at the same time or with equal vigor. Yet they all need to be addressed.

Dealing with people issues clearly requires a special set of skills and personal traits. The mess at Air India partly stems from poor communication between senior management and employees. Management, which should be advised by HR, has not been effective in convincing their staff of the dire need for change and cost cutting – with all the sacrifices this would mean for them.

Real life examples such as this clearly demonstrate the dearth of qualities such as empathy, backbone, fairness coupled with assertiveness, forward thinking, effective administration, and lucid understanding of the needs of the employee as well as of the organization.

Important elements for organizational development and performance evaluation such as appraisal systems are often seen as a waste of time and a bureaucratic burden on managers. Why? Some of the answers may lie in the fact that the system and its merits are not properly explained to managers on a basic level. Often key departmental heads have not been involved in the development or implementation of such tools.

As a consequence, they lack the support from those who matter and at best quickly disintegrate into an annual paper exercise that only benefits consultants or product vendors but not the organization itself. It thus discredits an important and well-intentioned management instrument.

Future-oriented companies need to ensure their HR teams are equally forward looking! HR has to become actively involved in forging corporate strategy based on a ruthless assessment of the company's own human capital and its potential for growth as well as in establishing the processes and systems to implement it.

As a Hindi proverb rightly says: "Ek anaar, sau bimaar" (one pomegranate is all there is, and a hundred sick men are trying to get it.) Or, in other words, all good things are in short supply.

—Ansgar Sickert is managing director of Fraport India, based in New Delhi

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