Human Capital Management Challenges in India

By Ram Raghavan

Human Capital Management Challenges in India focuses on the Indian talent pool and identifies why companies are finding it difficult to identify, recruit, reward and retain talent. It provides an insight as to why companies find it difficult to retain talent by questioning certain fundamental assumptions held by organisations, such as the role of Human Resources. Human capital management has become a critical issue across the globe. Even in a land of billion people, identifying the right talent, training them and retaining them has become an uphill task. The book also looks at the talent pool available and demonstrates why companies have to alter their strategies to retain this talent pool. Finally, the book will provide a practical and simple approach to the human capital agenda.

• Illustrates why employees are not an organizations’ asset
• Provides a step-by-step approach on the practical and strategic workings of HR
• How to recruit and retain key talent and management

• Language: English
• Publisher: Elsevier Science
• Release date: Jun 21, 2011
• ISBN: 9781780632483

Ram Raghavan

Dr Ram Raghavan holds a PhD. in Human Capital Management from Manchester Business School, where he was awarded the Centrica Scholarship during his studies. Prior to this he earned a Bachelor’s degree in Electronics Engineering and completed his MBA with a focus on strategy specialisation, also from Manchester Business School. Dr. Raghavan brings over 10 years of industry experience from India, managing a biomedical instruments business, and served as the Strategic Insight Manager for the CEO at Heidrick and Struggles. He is currently establishing a talent management organisation – TALENGENE. Consultation contracts include many major firms such as Lloyds Business Banking, Boots plc. NHS Nottingham and the British Council.

Book preview

Chandos Asian Studies Series: Contemporary Issues and Trends

Human Capital Management Challenges in India

Ram Raghavan

Table of Contents

Cover image

Title page

Copyright

List of Figures

List of useful websites

Foreword

About the author

Chapter 1: Introduction

Abstract:

The changing nature of human capital

Chapter 2: The fundamental shift

Abstract:

Land of a billion opportunities

Employability

Challenges

Chapter 3: Is it strategic?

Abstract:

Employees are not your assets

Work–life balance

Engagement

The connected talent

Chapter 4: Practical HR

Abstract:

Whose agenda is it?

Ill-equipped or unprepared?

Why should it be everyone’s agenda?

Earn respect

Chapter 5: Introduction to practical HR

Abstract:

Practical HR

Value addition and value protection

Outsource or retain

Stress and ‘toxic’ behaviours

Three-dimensional approach to measurement

Train, retrain, retain

A new breed

Chapter 6: Strategies to manage talent

Abstract:

ERM – employee relationship management

Knowledge mapping

Talent benchmarking

The three Rs – recognition, retention and reward

Chapter 7: Talent pool

Abstract:

Generation X

Generation Y

Chapter 8: Conclusion

Abstract:

Appendix

References

Web References

Index

Copyright

Chandos Publishing

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Tel: + 44 (0) 1993 848726

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Chandos Publishing is an imprint of Woodhead Publishing Limited

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www.woodheadpublishing.com

First published in 2011

ISBN:

978 1 84334 564 0

(Chandos Publishing)

ISBN:

978 0 85709 149 9

(Woodhead Publishing)

© R. Raghavan, 2011

British Library Cataloguing-in-Publication Data.

A catalogue record for this book is available from the British Library.

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List of Figures

5.1. Toxic behaviours 71

6.1. Cupid comparison 101

6.2. How people access talent at the subconscious level 102

6.3. Human capital measurement framework 108

A.1. Employee life time value 129

A.2. Knowledge management template 131

A.3. Assessment mechanics 135

A.4. Self Q assessment template questionnaire 136

List of useful websites

1. www.business.mcmaster.ca/mktg/nbontis/ic/publications/StovelBontisJIC.pdf

2. dreamiit.com/admission.html

3. campuspep.com/iim.html

4. en.wikipedia.org/wiki/Search?search=Employability

5. www.mbauniverse.com/managementavenues.html

6. feltd.in/future_education2.asp

7. www.nextbillion.net/news/india-has-the-brains-but-wheres-the-beef

8. www.knowledgecommission.gov.in/downloads/documents/towards_knowledgesociety.pdf

9. www.hotcourses.com/uk-courses/Employee-Opinion-Survey-Workshop-courses/page_pls_user_course_details/16180339/0/w/27940516/page.htm

10. www.employment-studies.co.uk/pubs/summary.php?id=408

11. view.fdu.edu/files/rschpprlinkingempcust.pdf

12. www.the-storytellers.com/archives/engaging-employees-the-business-case

13. www.wordia.com/knowledge

14. www.eurojournals.com/ejss_14_1_09.pdf

15. rphrm.curtin.edu.au/2006/issue1/empirical.html

16. www.slideshare.net/guestad7667/nirma-etp-ent-comp

17. wejderot.se/uppsats/Chen%202003.pdf

18. en.wikipedia.org/wiki/Indian_Certificate_of_Secondary_Education

19. en.wikipedia.org/wiki/Strategy

20. www.topnews.in/indian-women-score-ace-confidence-barometer-2135508

21. www.bmacewen.com/blog/archives/2008/02/the_ten_years_war.html

22. www.bmacewen.com/blog/archives/2008/02/the_ten_years_war.html

23. www.signum-solutions.co.uk/aboutsap.html

24. www.mercer.com/referencecontent.htm?idContent=1255560

25. www.bpmmagazine.com/benefits_newsjunejuly07.html

26. www.consciousentities.com/edelman.htm

Foreword

Professor Paul Sparrow

This book begins with a paradox: how, in a country with the number of graduates that India has, can people talk about talent shortages? The problem, this book argues, lies in the nature of the education system and, excepting the output from a small number of elite institutions, a low emphasis on critical thinking as a personal competency. Drawing upon work by McKinsey, it is argued that the proportion of the workforce equipped for the demands being placed on Indian industry is relatively small. These sorts of questions resonate beyond India – they are being asked in most of the world’s major marketplaces – and they will be asked by major multinationals of other people’s labour markets. The book raises many questions about a human resource (HR) strategy based on employability.

HR functions need to think more strategically, and ask deep questions about how talent adds value. The book explores the typical frameworks used to link people management to the strategy of organisations. It examines the main drivers behind the human capital management perspective and some of better-known approaches, such as HR accounting and personnel economics. These ideas are converted into a series of practical recommendations.

In so doing, it makes some important distinctions – for example between value creation and value protection, between social value and societal value.

As we think more deeply about talent and talent’s contribution to strategy and business model change, we need to use some novel approaches. Ideas ranging from knowledge management and causal mapping approaches, through to talent assessment processes based on a better understanding of what makes people high-value managers, are all discussed. Understanding the social networks that talent brings to the organisation, the ways in which such talent can be engaged, but also some of the downsides of modern work, such as the ever-increasing mismatch between work and home life, are noted.

In short, this book brings together a wealth of perspectives and conveys how these challenges are all interconnected. Although this book raises the importance of the strategic agenda of HR professionals in India, the content and context applies to the challenges faced by HR professionals globally. The strategic challenges discussed in the book are, therefore, applicable to HR professionals in a wider context..

About the author

Ram combines cutting edge experience with state of the art research. He has developed a unique approach that combines management sciences, language/communication styles and neurology to help organisations identify gaps in their strategies, tactics and employee/customer perceptions. His expertise helps organisations identify the gap between their perceptions and employee/market perceptions using simple dipstick measures. It then used to understand a business from the 6 or 7 key strategic perspectives and identifies requisite skills, traits and behaviours to help employees align and achieve the strategy. They use it to enhance experience from a customer, employee and strategy perspective.

He currently runs a strategy consultancy that operates in the UK and Indian markets. An electronics engineer by qualification with an MS in Robotics and control, Ram started his career in India as an R&D engineer before moving into the sales and service functions. He was managing the business in a couple of countries before moving to the UK.

He completed his MBA specialising in business strategy. He ran a consultancy firm specialising in strategy and customer management. He discovered a gap in the market place for an approach that correlated strategic business perspectives and individual emotional needs to achieve and deliver synergy, coherence and sustainable performance improvement. Accordingly, he elected to study for his PhD. As part of his research, he developed a framework to measure the value of human capital.

Ram has over 20 years experience and a depth of experience that covers strategy, employee and customer management. Ram specialises in developing and customising measurement tools to profile people, performance and processes.

1

Introduction

Abstract:

Human capital management has become a critical issue across the globe. The demand supply shortage warrants that organisations start looking at talent in a different perspective. This chapter sets the tone for the book by discussing about the changing nature of human capital and the changing nature of human resources function.

Key words

human capital management

HR department challenges

Nature of work

HR outsourcing

Employee Relationship Management

Generation X

Y

Indias HR challenge

The changing nature of human capital

In an age obsessed with measurement, it is not surprising to note that organisations find it increasingly difficult to justify investment in people. However, the economy is becoming knowledge-intensive. We have been used to a world where the intangible contribution of employees was accounted as goodwill in one corner of the balance sheet. However, all that has started changing. There have been attempts to develop metrics to measure employee value, so that it would become easier for measurement-led management systems to get to grips with it. In reality, all these attempts have proved futile and irrelevant.

Organisations and managers have to come to terms with the idea that knowledge resident in people’s heads is far more valuable than the physical, tangible assets of the company. A mechanistic approach to managing people like assets is not the way forward. Human resources (HR) departments or personnel departments have to rise from the ashes and help organisations manage these knowledge resources. The challenges these departments and people face are twofold – internal and external.

The internal challenge they face is accepting the gravity of their role, as they are not used to this attention. Traditionally, HR departments never had a say in recruitment and were there to take care of the paperwork that followed recruitment. Knowledge-intensive economies have revealed the importance of HR professionals and, more importantly, their ability to evaluate people strategies with business strategies. There is, therefore, a strategic element involved. While some organisations have made huge inroads into this area, lot of work still needs to be done.

At the external level, other business units have always complained that HR is out of synchronisation with business needs and that HR professionals lack commercial experience. It is the responsibility of senior managers and leaders to ensure that HR professionals obtain a rounded exposure through secondments.

This book looks at the talent pool and advocates the need to view employees in a different light. It explains why employees do not fit the traditional definition of assets. It then moves on to explore how the nature of work has changed and how employees have started viewing work. ‘Work’ in the current context is seen as a means to an end and not the end itself. This then moves the discussion on to the nature of engagement that employees have with the organisation and with their work. The impact of technology and the nature of the connected workforce help the reader to understand how the talent pool has evolved over a period of time.

The discussion then moves to explore the role of organisations and leaders in managing human capital. The challenges that this new generation of talent poses and the limitations of HR processes to manage this workforce, and the inability of HR professionals to manage this talent pool are then revealed. It shows why they are ill-equipped and unprepared. The need for organisations to include talent management at the top of the strategic agenda at the board level is then discussed. To create an impact, HR professionals have to be taken seriously. To achieve that, HR professionals have to demonstrate their understanding of the business and develop the human capital management strategy to embrace what business needs.

Having understood the nature of the workforce and the role that organisations and HR professionals play, attention is then given to two aspects of human capital management: the practical and the strategic aspects. At the practical level, the question of value or employee value is discussed first. The concept of value protection and generation is introduced to demonstrate the value of tangible output to generate supporting functions.

The techniques discussed under the practical aspect provide a simple approach to outsourcing within HR, managing stress and negative (toxic) behaviours in the workplace. The book then introduces a three-dimensional approach to measuring employee behaviour and the value it adds as a result. Readers are introduced to an approach to developing a training framework. Then a cognitive mapping technique is discussed to identify and monitor intangible constructs that need to be groomed as part of training interventions. The book then introduces readers to brain-based epistemology and its impact on talent management.

At the strategic level, the book explains the concept of employee relationship management (ERM), which looks at employees as micro-businesses that sell their skills in return for cash. It demonstrates how traditional customer management tools and policies can be used by HR professionals to develop ERM interventions. The concept of knowledge creators and amplifiers and some practical techniques to capture knowledge are presented. The Critical, Unwanted, Preferred, Irrelevant and Desirable (CUPID) framework is then introduced to demonstrate how an organisation can identify and classify the successful competence and behaviour traits of employees. It also demonstrates how the cognitive mapping technique can be used to create an unbiased evaluation mechanism for intangible constructs pertaining to talent management.

With Baby Boomers on the last lap of the journey, the next generation of workforce relies on the much discussed Generation Y and the lost or forgotten generation, Generation X. Insights into what drives these generations to work, and why they behave the way they do, are presented. This is the generation that the HR professionals have to work with, mould and manage.

While the challenges of human capital management in India are being discussed, the lessons learned can be applied globally. India started emerging as a software power in the late 1980s and early 1990s. The challenges the software firms faced could not be met by traditional frameworks that existed at that time. Firms were quick to realise the value of HR professionals and they have since developed many systems, processes and strategies to manage talent. The challenge faced by these organisations in the late 1990s and early part of this millennium is what the Western world is facing at the moment.

India, for example, has more HR professionals at the board level than many Western countries. India was one of the first countries to have a HR development ministry 30 years ago. There are lessons to be learned from India, where the challenge of managing human capital has been addressed effectively.

2

The fundamental shift

Abstract:

This chapter starts by discussing why even in a land of Billion people identifying the right talent, training them and retaining them has become an uphill task. This chapter explores the role of human resources in Indian corporate scenario and the role of government in developing human capital. The chapter also identifies some issues plaguing human capital management in India and moves on to discuss about employability. The chapter identifies reasons why identifying right challenge can be challenging by exploring the role of universities, quality of education, societal trends and so on. It then identifies four areas individuals need to focus to become employable. It then provides a different perspective to approach and model talent from a behavioural perspective. It introduces the theory and rationale for adopting this approach and then moves on to discuss about the challenges that exist. In this chapter challenges individuals and organisations face is explored further.

Key words

HRD ministry

Student employability

Talent shortage

Education quality

Employability challenges

Behaviour modelling

Indian talent management challenges

University growth rates

Indian economy

Land of a billion opportunities

In a country of a billion people, it is truly surprising to note that a talent shortage exists. Despite having a diverse and educated workforce, India has an insufficient supply of skilled people. This chapter looks at the issues that contribute to human capital shortages. It is necessary, in the first place, to understand why the problem has arisen. Every journey has to have a starting point, and in this case, we will start by looking at the educational system and cultural factors that cause this problem. We will then build our understanding on employability and the premise of why the problem occurs, and will then summarise the challenges companies face in the current context.

India was the first country to have an HR development ministry. The Indian corporate sector was the first to develop a dedicated HR function 30 years ago. However, the agency has so far not had a great impact on talent development or management. The HR functions have only focused on process-driven recruitment, selection, remuneration, etc. The initiatives rolled out by the administration and corporate HR departments are yet to have a significant impact on talent management programmes.

The ministry so far has performed more as a regulatory body than anything else. However, India has realised that the potential of the country rests with talented people. As a result, the Human Resource Development (HRD) administration has started taking a more active part in the talent management programme. They have started changing the policy position, which would pave the way for a new wave of changes to the talent shortage.

There are some world-class institutions in India. They tend to adopt a rigorous selection process and have set strict criteria to assess the quality of students as well as teachers. As a result, they have produced some brilliant professionals. The Indian Institute of Technology (IIT) is the Mecca for aspiring engineers, while the Indian Institute of Management (professionals) produces top managers. Although they do not appear in the international rankings, the quality of their output is on a par with institutions anywhere in the world. Admission to the undergraduate B. Tech and integrated M. Tech programmes is through IIT-JEE (the Joint Entrance Examination) for which around 400,000 students apply annually, out of which only 7,500 get selected. In the case of IIMs, around 300,000 students compete for less than 1,350 general seats (out of a total of 1,700 seats). IIMs are even more selective than all the top US business schools put together. The remaining 23 per cent of seats are reserved for under-privileged candidates from less privileged backgrounds. The average percentage of students admitted to these reserved categories is smaller than that of the general category of students, which usually is around 99 per cent. Fewer than 9,000 students graduate from these two institutions. That is not enough to meet the talent management requirements. Therefore there is a need to create world class institutions.

The HRD ministry are now entering into tie-ups with several multinational universities, governing bodies and consulting firms to address this problem. The ministry has ordered a probe into colleges that have recently obtained university status. This approach would undoubtedly change the system at the institutional level. However, the universities and institutions are not subjected to an evaluation of any sort to determine the value they are adding to nurturing talent.

To understand the problem of talent shortage, one needs to understand the context in which the deficiency arose in the first place. To do that, it is essential to understand how the education system works and the impact it has on developing talent. The Indian education system has always encouraged rote learning in schools. Students rarely manage to question concepts or theories at school. They are encouraged to memorise volumes of text without understanding how theories interact and how they could be applied in the practical context. The examinations also focus on measuring how well the student is able to reproduce the text, and seldom evaluate how well the student has understood the concepts. Therefore, when they graduate, these students demonstrate a strong theoretical, as opposed to practical, knowledge. When companies employ people they look for practical knowledge, and they rarely find it.

Indian culture encourages tolerance and, more importantly, respect for one’s elders. The culture even defines the order in which people have to be respected. ‘Matha Pitha Guru Deivam’ which, when translated, means ‘Mother, Father, Teacher, God,’ tells us that, in the order of respect, mother comes first, followed by father and teacher. Incidentally, respect for God comes after teachers. This is a slogan that has been etched in the minds of many Indian children. Children, therefore, refrain from questioning the teachers, as it could be considered disrespectful. Children who learn things by heart