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Why organizations are not able to leverage HR function?

During the late 1950’s and early 1960’s, most establishments gained competitive advantage through improving the processes & systems of their core business areas (like Production /Procurement /Finance /Sales & Marketing and the ilk).

However, by late 1980’s, that competitive advantage shifted to, leveraging technology.But an interesting thing happened at the turn of the millennium: core business capabilities and technological acumen,having gone through many decades of continuous improvement, became a level playing field. Unless an establishment was a niche player – whether in the: for-profit-organization, non-profit-organization, or governmental (defense) sectors – one could no longer hope to be competitive solely by utilizing processes and technology.

Slowly but surely, top managements started to realize that leveraging ‘Human Resource (HR)’ is the best way forward to gain that ‘competitive advantage’ today. This might sound divine to any Human Resource (HR) professional, however, the reality is far from this. Let’s examine –

• Human Resource – Organization and Business – Top Managements have seldom grasped that effective Human Resource (HR) function has two (2) inbuilt divisions which has to delicately balance – Organizational Initiatives and serving the needs of the Business; that is – achieve a tight coupling between HR & Organization vis-à-vis HR & Business. Having said this, in our day-to-day experience, we see that HR is mostly kept out of the Business /Decision Making meetings with a thought process that HR has nothing to much contribute to Business.
• Lack of ‘People-Orientation’ – Establishments traditionally have been either Production-Oriented, Sales-Oriented, Technology-Oriented or Investment-Oriented but there has never been a ‘people-orientedness’ i.e. none of the entrepreneurs have understood that optimization of the Human Capital (tightly coupled with its own processes, systems, and technologies) right from the inception of an establishment would deliver medium and long-term business results (apart from IT industry; only to an extent since Human Resources are billable and contribute to the Top Line).

  

• Human Resource Department is thought to be Superfluous– During our consultation stints with many establishments from diverse industries and diverse sized establishments (typically small to medium) we have come across this common phenomenon – establishments function without a proper HR Department; let’s examine the probable reasons –
• During the initial days of any new establishment; top leadership normally tend to man the Human Resources. Even while the organization grows, typically there is an issue for ‘letting go’;
• HR and Admin departments are thought to be a single function and since there is already an Admin department what is the need for another HR department;
• Since our workforce is comprised of mostly blue-collared workers; apart from basic statutory compliances (in many occasions even this is desired for) & executing payroll (often delegated to accounts) there is nothing much to do in HR and hence it is decided that HR department is superfluous.

Buck doesn’t stop at Human Resource Department

• Most of the establishments do not have the required structure to ensure that all the discussions /decisions related to Human Capital are parked with the HR department; this gives rise to a lot of issues –
• Lack of Salary Parity, since, salaries are at the discretion of the Team Manager or Head of Department;
• In the absence of a scientific Man Power Planning, Job Evaluation and Recruitment Process, Human Resources selection is at best ad-hoc;
• HR department doesn’t own the resources and hence no standardized methodologies are being adhered to for employee assessments, salary hikes& promotions;
• Last but not the least, due to all the above-mentioned reasons,
  HR department doesn’t get the deserved respect or due, neither at the micro-level nor at the macro-level.

Lack of World-class Talent in HR – in most establishments HR is still at the operational and transactional levels, ignoring systems and strategies, this is not an issue for the HR function itself but for the entire organization. Business Leaders are still shy to delegate to HR the making and delivering of Strategic & Tactical interventions for Business and Organization alike.

Hence, over a period of time, HR being more of a transactional function, has not attracted the kind of talent with the required skills & competencies needed to Transform HR into a key and strategic function /department, which is the need of the hour.