The Future Ofhr Function and The Challen PDF

The Future of HR Function and the Challenges before the HR Managers
Author(s): Sami A. Khan

Source: Indian Journal of Industrial Relations, Vol. 42, No. 3 (Jan., 2007), pp. 430-444
Published by: Shri Ram Centre for Industrial Relations and Human Resources
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IJIR, Vol. 42,No. 3, January 2007 COMMUNICATION
THE FUTURE OF HR FUNCTION AND THE

CHALLENGES BEFORE THE HR MANAGERS
Sami A. Khan
INTRODUCTION
The emergence of the new knowledge about machine and

people has transformed theway ofmanaging the organisation.
are in continuous search for identifying areas where
Organisations
can be
improvement can be done and bigger market share
achieved. The business environment that is highly uncertain,
and turbulent has forced organisations worldwide to
complex
adapt to these changes. There have been numerous forces for this
change. But it is a reality that competition, globalisation and

continuous change in themarket and technology are themain
movers and shakers for this reason. The technological
transformation specially the IT revolution, technological change
inmanufacturing technology, faster life cycle of the product,
emerging global market, intense competition and rising importance
and awareness of customers have exacerbated this process of
change. Restructuring, reengineering and downsizing are the

buzzwords today. Companies are tryinghard to sustain their
competitive advantage despite their technical supremacy and
attraction. In most of these the adoption of lean
organisations,
and mean structure
is commonplace and they are cutting their
and managerial levels to increase their pace of learning
employees
and responsiveness. are as a strategic
People being perceived
resource in theorganisation and thebelief thatsatisfied employees
create satisfied customers and satisfied customers create themarket
share has accentuated in recent time.
Dr. Sami A. Khan isAssistant Professor, Department ofManagement, College of

Commerce & Economics, Sultan Qaboos University,Muscat, Sultanate ofOman.

Communications 431
STRATEGIC ROLE OF HRM
In the newer scheme of things, the organisational success
depends upon the operational excellence of the system and

strategies of the companies to satisfy their customers. Organisations
worldwide are more networked, flat, and flexible.
becoming
and globalisation are the other two issues which are
Diversity
added to their well being. Creating an ambience of trust
empowerment and transparency to help the employees to come
outwith theirbest to serve the strategic goal of the firmis common
these days for HR function. are
agenda Organisations required
not tobe bound by thebureaucratic structure, inflexible rules and
hard-defined procedures; rather flexibility,diversity and employee
are to be who are
empowerment acknowledged. Organisations
to these are more concern for team
responding changes showing
working, quality, flexibility and employee commitment. The
plethora of consultancy and excellence literatureemerged during
last twenty years also endorses these characteristics for a model
structure. worldwide, are more
organisation Organisations relying
on their work processes, results and outcomes.
The changing stance of the organisation has led to the

transformation of the people management abilities of the organisation.
The people management functionhas thus transformeditselfto suit
the demand of the exigencies of theworkplace. This new face of
HRM is required to understand thedemands of the stakeholders of
the firmand todo value addition tohelp organisation in sustaining
the wave of change. It also requires more understanding of the
business strategies of the firmand designing HR strategieswhich
add value to the value-chain of the business. The reactive personnel
management failed to face the challenges of the new business reality,

and human resource management (HRM) to respond to
emerged
these new challenges (see also Saini, 2000; Khan, 2000). Hoobler
and Johnson (2004) say thatpersonnel management has evolved from
the goals of eliminating waste, inefficiency, and human suffering, to
HRM, on the and
focusing organisational perspectives performance
enhancement. Being forced by the internal and external forces, HRM
grew from a maintenance function to what many scholars and
as a source of sustained advantage
practitioners regard competitive
(Ferriset al., 1999).

432 The Indian Journalof IndustrialRelations
HRM has evolved as a strategicpartner and sharing boardroom

status with the accounting, marketing and finance departments
(Dulebohn et al., 1995), it is no more a mere administrative and
function. It has as a and
record-keeping emerged proactive strategic
function clamoring itself to be well integrated with the business
strategy of the firm. The complex business situation warrants the

firms to rely more on the proactive and effective human resource
managers who organisations in achieving the competitive

help
advantage througha high degree ofworkforce flexibilityand greater
concern for continuous learning with a strategic focus1.
The changing market conditions have also made many

traditional sources of competitive advantage, such as patents,
economies of scale, access to capital and market regulation less
important in the current global economic situation. The global
economy demands innovation, and low cost

speed, adaptability,
to make more and successful (Pfeffer,
organisation competitive
1994). These are the attributeswhich distinguish Del Computer
fromApple, Compaq, IBM and Gateway; Wal-Mart from Sears
and K-Mart; and Southwest Airlines fromDelta and US Airways.
The core of organisation and the capabilities of
competencies
employees thathelp todevelop new products, provide world class
customer service, and strategy are more
implement organisational
influential today (Becker,Huselid, Pickus and Spratt, 1997). The
human resource management function has to play such role in
adding value to the business activities in the organisation. Its

contribution in integrating the chain of activities for transforming
inputs intooutputs thatcustomers value becomes key forachieving
thedesired competitive advantage. The HR functionbeing strategic
and aligned with the business strategy results into superior
efficiency, quality, innovation and customer responsiveness which
result into competitive advantage.
Becker et al. (1997) present a model of HR-shareholder value
relationship. They advocate that thedesign ofHRM system should

be aligned with business and initiativesresulting into
strategic
improved operating and consequently the higher
performance
market value. They refer HR as High Performance Work
system
System (HPWS) which includes rigorous recruitmentand selection
procedures, performance-contingent incentive compensation

Communications 433
system and management development and training activities

linked to theneeds of thebusiness. In fact,the termHPWS become
more after the publication of The New American Workplace
popular
(Appelbaum and Batt, 1994) and Manufacturing Advantage
(Applebaum, E., Bailey, T. and Berg, R., 2000). These authors argue
that thework systems and employment models are more
supportive
of high performance when they implymix of key practices such
as rigorous selection and training system to enhance the ability
levels of incentive system to
employees, comprehensive
motivational level of employees and providing a participative
structure (such as teams and circles) that
self-managing quality
facilitate the opportunity to contribute. Boxall and Purcell (2003)
also commenting on theHR strategy prescribe theAMO rubric.
Performance is seen as a function of employees' ability (A),
motivation (M) and opportunity toparticipate and contribute (O).
Organisations are striving hard to find thepremise under which
thework system should be created to achieve the organisational
goals with less and less turbulence. The role of HR function becomes
very important in such work systems for achieving the
creating
in the organisation.
higher performance
Anderson (1997) prescribes a HR model inwhich he refersHR

planning as strategicHR planning process linked with business
strategy, organisation capabilities and people strategies.
Anticipating the future of HR, he suggests two fundamental and
to help
specific processes which can be used by HR people
management realize fullvalue from theHR function in support of
business objective. The first is linking people strategies to the
strategic management process and secondly, developing
company's
theHR strategywhich supports corporation strategy.He identifies
that a complete an
business strategy has three key components:
a financial a A
operating strategy, strategy and people strategy.
well developed business strategy needs specific organisational
as the
capabilities and reinforces the building of these capabilities
primary focus of the people strategy.Anderson (1997) prescribes
threeHR strategies used by Amoco which enable management to
achieve the corporations^ business These are:
objectives.
To to act quickly and

improve organisation's capability
decisively,

To build and deploy those criticalpeople competencies that

are needed to execute business and
strategy,
To increase the return on the investment in people.
The evolution of HRM as a function having

strategic focus
and for creating was
looking customer-responsive organisation
thus realized. Itwas supposed tomake theworkplace dynamics
more transparent and open. The relationship
building was also
more important to bring the elements of commitment
required to
inculcate new and behaviours into the employees. Some
learning
people call these as HR "rhetoric" and termHRM as the "old wine
in new bottle" (see Legge, 1995). But fact remains that theHRM
or HRM as some call it, is more
strategic people integrated,
pervasive and strives for creating coherent HR
strategies, policies
and programmes which have explicit linkage with the business
strategy. The are seen as a resource in the age of
people strategic
knowledge management.Mabey and Salaman (1998) quote Hendry
and Pettigrew (1986)who argue that the strategtic aspect ofHRM
consists of four key elements:
the use of planning;
a coherent to the and management of

approach design
personnel systems based on an employment policy and
manpower strategy, and often underpinned by a
'philosophy';
matching HRM activities and policies to some explicit

strategy; and
seeing the people of the organisation as a

'strategic resource'
for
achieving 'competitive advantage'.
Two widely popular American schools of the

strategicHRM,
Michigan and Harvard schools are worth here. The
mentioning
Michigan school (based on the key text,StrategicHuman Resource
Management, Fombrun et al., 1984) which is often remarked as the
hard approach toHRM, focuses on the interconnectionof business
strategies, organisational structures and HRM, and theHRM systems

Communications 435
and tactics are designed to support the corporate strategy, whereas,
at theheart of theHarvard approach (based on thekey text,Human
Resource Management: A General Manager's Perspective, Beer et al.,
1985) often referred as the soft approach toHRM relies on the
responsibility and capability ofmanagers tomake decision about
the relationship between the organisation and its employees such
as tomaximize the outcomes for key stakeholders (Mabey &
Salaman, 1998). These two in different vein are also
approaches
referred as open and closed to HRM. and
approaches Mabey
Salaman (1998) define the open strategyas the contingent strategy
which varies with the type of business strategy. In the closed
approach toHRM, the essence ofHR strategylies in the application
of a specific and limited range of policies in every situation. Peters
and Waterman (1982) argue that regardless of the nature of the
business, or thebusiness strategyor stage in theproduct life cycle,
one HR strategy is appropriate. Guest (1987) is another example
who advocates installing certain fixed elements regardless of business
strategy (Mabey & Salaman, 1998).Without much going into the

debate of open and closed approaches or softand hard approaches
toHRM, it iswell understood that theHR policies and practices
have tobe consistentwith overall business strategyand these should
emphasise teamwork, flexibility, employee involvement and
organisational commitment (Beaumont, 1993).
Beatty and Schneier (1997) prescribe thatHR must deliver

economic value for which the organisation's constituencies are
willing to pay. They are of theview that the role ofHR has to be
of an active player. According to them, the choice of business
strategy should relate to the HR work issues. Basing their
observation on Trecy and Wiersema's (1995)model of threebasic
to competitive i.e., operational excellence,
paths advantage,
a
product leadership, and/or customer intimacy, they present
framework for HR a
strategy which suits particular business
strategy. They suggest that an organisation following an
operational excellence strategy attempts to be the low price
provider.
A firm with an
operational excellence strategy seeks to
create a core workforce 'mind-set' which focuses on shorter-term
objectives, avoids waste and is concerned about
production
Federal Express, Dell, and Nucor are examples of
quantity.
excellence Firm a
operational companies. pursuing product

innovation and seeks a core

leadership strategy requires
workforce with an antibureaucratic and entrepreneurial mind
set and firms like Sony, Glaxo, Merck, 3M and Intel are good
examples of that. Firms following the customer intimacy strategy
focus on customer solutions which provide the competitive
unique
strategy and in these firms, the selection and development system
seek and develop active learners, customer advocates, and
who demonstrate a to share and enhance
employees willingness
learning in the organisation. Companies like Four Seasons,
Airborne, Home and Cott are of such firms
Depot examples
which customized or services at the lowest level
provide product
of customer interface (Beatty& Schneier, 1997).
The most important role forHR function is to understand the

dynamics of change and equip itself to deal with it.Commenting
on the strategy,Mintzberg et al. (1998) opine that the problem is
that eventually all situations change, environments destabilize,
niches disappear, and opportunities open up. Then all which is
supposed tobe effectiveand constructive becomes a liability.They
advocate that though the concept of strategy is rooted in stability
its focus on the change is nonetheless more
important. "The very
of to on with it? its very role in
encouragement strategy get
protecting people in the organisation from distraction?impedes
their capacity to respond to in the environment. In other
changes
words, retooling is expensive, especially when it is human minds,
and not just machines, that have to be retooled".
CHALLENGES FOR THE HR MANAGERS
The new role ofHR managers seems tobe challenging as they

have to strive hard to help organisations in achieving the
a
competitive advantage through higher degree of flexibility,
employee commitment, and by developing a workforce having
greater quality concern and search for newer learning and
experiment. The role and status of human resource functionaries
are to be reevaluated and redefined in the new situation
going
and the line between the primary and secondary functional
activities of the value creation (in organisation) or the distinction
between the line and staff status of the functions is blurring in
good number of the organisations worldwide. Khan (1999)

Communications 437
provides three significant observations which have implications

on the role and status of HR
managers:
i) HR function is warranted to come out of the cocoon and to

think proactively and strategically to serve the business
strategy in enhancing the competitive advantage of the firm;
ii) HR policies and procedures are part of the organisational

transformational process, and are to be coherent,
required
credible and result-oriented. are also to
They required
contribute to the tangible goals of the organisation, more
importantly,profits; and
iii) HR has attracted the attention of CEOs and linemanagers

and they are going to be more indulgent in designing and
implementingHR strategies.This phenomenon is likelytodilute
the ownership ofHR prerogatives by theHR functionariesas
linemanagers will be highly involved in the times to come.
The involvement of line managers in determining HR strategy

will enhance the stature of HR function. The only concern is how
to handle the conflict and making the HR strategic management
process more and team-based involving all the
participative
stakeholders of HR constituency. The traditional role of HR
managers in the procurement, deployment, development, appraisal
and reward management of the employees has also changed to a
great extent in its approach with theparadigm shift in the people

management. HR managers have to be flexible to accommodate
the change required to be reinforced in various areas of HR
management. Gomez-Mejia et al. (2004) examine the strategicHR
choices available in firmswhich provide the real test forHR
managers in making HR decisions. These are:
appropriate
i. Work Flow: Efficiency or innovation; control or flexibility;

explicit job description or broad band job classes; and
detailed work or loose work planning.
planning
ii. Internal
recruitment or external recruitment;
Staffing:
decision or HR department makes
supervisor making hiring
decision; and informal or formal hiring.
hiring hiring

iii. Employee Separations: Voluntary inducements to retire or

layoffs;hiring freeze or recruit as needed; and continuing
support for the terminated employee or letting laid off
workers fend for themselves.
iv. Performance Appraisal: Customized or uniform

appraisals
appraisal procedures; developmental appraisal or control
oriented appraisal; multipurpose appraisals or narrow focus
appraisal; and multiple inputs for appraisal or supervisor
input only.
v. and Development: Individual or team-based

Training training
training;on-the-job trainingor external training; job specific
trainingorgeneric training;and "buy" skillsby hiringexperienced
workers at a higherwage or "make" skillsby providing training
to less experienced workers hired at a lower wage.
vi. Compensation: Fixed pay or variable pay; job-based pay or

individual-based pay; seniority based pay or performance
based pay; and centralized pay decisions or decentralized
pay decisions.
vii. Relations and Labour Relations:

Employee Top-down
communication or communication and feedback;
bottom-up-
union or union and adversarial
suppression acceptance;
or
approach enlightenment management.
viii. EmployeeRights: Emphasis on discipline to reduce mistakes

or on action to reduce and
emphasis preventive mistakes;
informal ethical standards or explicit ethical codes and
enforcement procedures.
ix. International Management: Create culture or

global company
adapt to local culture; rely on or on
expatriates rely country
national; and universal company policies or ic
country-specif
company policies.
The outlined areas of HR choices given by

Gomez-Mejia et
al. (2004) provide thebasic domain of typical HR decisions and
their appropriateness depends on the usefulness of such

Communications 439
interventions in creating integrative framework for establishing
work practices that foster superior performance. The HR
managers have to also play important role in the transformation
of the culture in partnership with the line managers to create
an ambience in which HR interventions can maximum
yield
results and returns on the investment in people. Until mid
1980s, the above-listed administration of HR programmes was
the domain for most HR and their power came
professionals
from the compliance to these programmes. The increasing
importance of HR function and the establishment of the fact
that the organisation and management of people can make a
difference in the bottom line have attracted the attention of
organisational leadership. Moreover, perception ofHR function
as being expensive and ill equipped has made the stage set for
a major transformation of HR function (Beer, 1997).
The new situation puts primacy on thedevelopment of newer

set of skills and competencies for thenew age HR managers. It is
important that thebasic HR practices such as employee relations,
compensation and benefits, selection and placement, training and
development, succession planning etc. will remain important but

theadditional learning is requisite todeal with thepresent situation.
Burke (1997) provides the area of requisite additional learning for
HR He a list of nine "needs to know" for
practitioners. provides
the HR practitioners. These are:
Performance Improvement: broadened measurement;

determine key performance enhancers.
Restructuring: What are the long-term consequences?
Organisation Change: How to manage change; HR

practitioner's role.
Globalisation: Understanding the impact cross-culturally

and on small and medium size businesses.
Groups and Teams: Differentiation; self-directed groups/

teams; large group interventions.

Action Learning: "Third Wave" of training and

development.
Relationships at multiple levels.
Timeshift: Blurring of work and personal time; "stress is

prestigious".
Powershifts: More dispersion individually and

organisationally, yet more toward the global corporation.
Burke (1997) furtherexhortsHR managers to learnmore about

these nine needs. The knowledge about the organisational design
and structure,leadership, and thechanging nature ofpsychological
contract are worth here. He is of the view that HR
mentioning
practitioner is not supposed to have the specialisation in each of
these areas but should to broaden
strive his repertoire. HR
generalist inside the organisation is more valuable and his

enhanced increases the HR value as
understanding practitioner's
an adviser and as a staff executive in the organisation.
New learning for HR managers becomes critical to involve

them in playing the catalyst role in the organisation. They are
supposed to devote more time on consultative and developmental
role in comparison to strategic planning role or execution-oriented
administrative role. Anderson (1997) find that as of today, HR
managers spend sixty five per cent of their time in execution
oriented administration work but theywill be spending one
fourthof their time in futureand half of their timewill be devoted
to consultative and development activities. Though, it is a difficult
proposition to ascertain the very accurate time-usage
encompassing all levels of HR functionaries across the varieties
of organisations, and it is not warranted also but it gives the
basic idea of the domain of the HR practitioners' involvement in
future. It is also important to note that the number of HR
practitioners is going to be less and less in organisations and the
ratio of the number of total HR practitioners and the workforce
in the is on decline. HR managers have to be better
organisation
time manager as the subcontracting of HR activities will further
accentuate this process.

Communications 441
CONCLUSION
The transformation of the people management function and

the emergence of human resource management (HRM) as a more
and function is a The new business
proactive strategic reality.
environment has further exacerbated its consolidation. The
plethora of literature emerged since mid 1980s are witness to that.

Critics call it an "old wine in new bottle" but it has been well
accepted by HR constituency that thiswine tastes differentlyand
has better taste. The proponents of HRM advocate that the human
resource is an which is more
management approach integrated
with business strategy of the firm and takes care of the value
addition by establishing work systems which lead to superior
performance. It shows high degree of workforce flexibility and
commitment of workforce which results into greater quality
concern and continuous a focus (Guest,
learning having strategic
1996; Beaumont, 1996; Storey, 1995; Tyson, 1995; Towers, 1996;
Mabey, Skinner and Clark, 1998; Khan, 1998, 2000; Saini, 1999,
2000).
The obstacles to the transformationofHR function are theHR

practitioners themselves, they lack the requisite capability required
of a human resource
professional. To play a more
strategic role,
theHR practitioners have tohave analytic and interpersonal skills
equal to the best consultants which corporations use to assist them
with organisation effectiveness and change issues. The second
obstacle is the attitude of top management towards the HR
a more
managers. They want strategic HR function but often do
not understand what itentails (Beer, 1997). The topmanagement's
leadership role and initiativewill be the key and the appreciation
of HR catalyst role on their part will remain critical for the
transformation of HR function.
The challenges before the human resource managers are

huge
for managing new and skills necessary to
learning, knowledge
sustain the competitive advantage of their organisations. HR
have to in shaping their organisations
managers play critical role
to face the of the new business scenario. to
eventuality They have
act as leaders who leam how to create environment that embraces
change as an but not as a threat. HR managers have
opportunity

to show acumen and readiness to lead organisations in

necessary
the twenty-firstcentury and resultantly contributing towards
enhancing the image of HR function and serving the HR
constituency in a better way.
NOTE
1. Hill and Jones (2004) identifysuperior efficiency,quality, innovation and

customer responsiveness as the generic building blocks of the competitive
which result into value creation and
advantage superior performance.
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The Future of HR Function and the Challenges before the HR Managers

Author(s): Sami A. Khan

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