Perceptions of Executives on HRM Practices through HR Value Proposition.

AuthorSrimannarayana, M.
PositionHuman resource management


Traditionally, HR departments often had limited involvement in the company's business affairs and goals. With the growing importance of human resource for the firm's success, HR managers and departments are deeply involved in business. The involvement of HR professionals includes planning the long-term strategic direction of the organizations as well as planning and implementing more tactical activities in the short term (Jackson & Schuler, 2003). The importance of the strategic view of human resource function was solidified in the light of the dynamic and changing business environment (Legnick-Hall & Legnick-Hall, 2003), as well as the increased complexity of modern organizations and business that was embedded in an information and knowledge-intensive world (Felin et. al., 2009). The role and status of personnel/human resource function in India too changed over time keeping in view the external and internal business realities that affect a firm's financial performance. The HR function in India has been transformed from clerical to administrative, administrative to managerial, managerial to executive, and executive to strategic partner (Venkata Ratnam & Srivastava, 1991; Budhwar, 2009) over time.

The HR function is playing an increasingly significant role in building and creating successful organizations by playing different roles that add value in an increasingly complex environment based on two main dimensions: operational focus and strategic focus. From the juxtaposition of these two dimensions, the HR roles are defined as strategic partner, administrative expert, employee champion and change agent (Ulrich, 1997). Based on the same dimensions, there is another set of HR roles such as transaction role, translation role, transition role, and transformation role (Kossek & Block, 2000). According to another classification, the key HR roles are as strategic management, enabler and consultant, monitoring and maintaining, innovator, change and knowledge facilitator (Jackson & Schuler, 2003). In the light of new rules for organizational success in a radically different world, a revolutionary new role is created for the HR function, namely, that of the 'chief organization effectiveness officer' which goes well beyond today's top HR jobs (Roberts & Hirsch, 2005). After filtering and synthesizing the previous works on HR roles, Ulirch and Brockbank (2005) proposed another framework for roles of HR professionals consisting of metaphors such as employee advocate, human capital developer, functional expert, strategic partner, and HR leader. Based on the changing roles of HR function, the competencies required to perform the roles kept on evolving over time. Ulrich and his associates conducted Human Resource Competency Studies (HRCS) from 1987. The study conducted in 2012, identified six clusters of HR competencies such as credible activist, strategic positioner, capability builder, change champion, HR innovator and integrator, and technology proponent as the HR competencies required. The study further found that the HR competencies significantly impact business performance (Ulrich et al, 2012).

The HR professionals have to demonstrate these competencies while performing their roles taking into consideration the interests of stakeholders. Their interests are vital for the survival and success of the organization (Freeman, 1984; Donaldson & Preston, 1995). But simply defining performance in its contribution to bottom-line financial performance does not do justice to the various actors (both inside and outside the organization) involved in either shaping of the HRM practices or those affected by it. It is better to opt for a stakeholders' approach, which also implies opting for a multi-dimensional concept of performance (Paauwe & Boselie, 2005).

The HR Value Proposition

Ulrich and Brockbank (2005) presented the HR value proposition for the future of HR that begins with the central premise and vision that "HR succeeds when it creates value." Since value is defined by the receiver, not the giver, the value premise of HR professionals should add value to the stakeholders. The stakeholders for HR professionals include not only managers and employees of the organization, but also their investors and customers. To attain this vision, they identified five elements such as understanding external realities, serving internal and external stakeholders, crafting HR practices, building HR resources and ensuring HR professionalism (Fig. 1).

The first element is understanding external realities. Every organization exists and grows in an external business environment. The external business realities around the globe influence a particular business and organization. HR professionals must be in a position to understand the business realities in the areas of technology including increasing microprocessor speed, and efficiency and decreasing unit costs for chip production and computer construction, increasing connectivity between stakeholders, and improved customization of products and services to better address customers' needs. HR professionals must understand relevant economic and regulatory factors, as well as several important trends in workforce demographics, increasing diversity of the workforce, and increasing globalization of labor. The second element is serving internal and external stakeholders. HR professionals must serve their external and internal stakeholders. The success of an HR initiative should be measured not by how well its design and implementation goes but by what the initiative does for the organization's key stakeholders. HR actions generate value only when they create sustainable competitive advantage. Therefore, Ulrich and Brockbank (2005) urge HR professionals to become both investor literate and customer literate, to think and act like an investor or a customer, and align HR practices with investor and customer needs. HR professionals must obviously build ties with, and address the needs of, internal stakeholders as well by gaining the trust of and create value for managers and employees. The third element is crafting HR practices. This model classifies the HR practices into four domains such as flow of people, performance management, information processes, and managing work flow design and process. An effective HR function must manage all the four domains in a way that adds value. These practices must be defined and evolved to deliver what stakeholders expect. HR professionals must play a key role to enable their organizations better align with both investor and customer requirements by using investor and customer criteria and participation in the staffing, training and development process, putting a larger portion of total compensation into stock-based incentives, and getting customers involved in appraising and rewarding employees. The fourth element of this model is building HR resources. The HR function must create strategies and organize resources so that individual efforts of HR professionals combine to create value. An effective HR function must have a clear strategic planning process for aligning HR investments with business goals. HR function must align its administrative setup with the business strategy. This model offers a blueprint for building HR strategy so as to link and integrate the various stakeholder requirements, business strategies, organizational capabilities, and HR practices. The fifth element...

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