Innovative human resource management and corporate performance in the context of

economic liberalization in India

*Basava.Aruna

Abstract

Innovation is in need of a significant transformation on how it is designed, developed and

executed in most organizations. Traditional approaches to managing this simply need ripping up
and redesigning to allow innovation to become more the central core. Where does Human
Resource Management (HRM) fit within this?

If we look at the broad areas that HRM has to cover and master in organizational development
today, it can, perhaps, leave little time for adding in innovation into this array of demands. You
can understand that HRM has little time to master a decent understanding of what makes up
innovation, when they are grappling with so much already but they should. Innovation is very
people centric and HRM should be working hard in facilitating this often understated aspect.

The Indian economy was forced to adopt a structural adjustment programme at the beginning of
1991. The structural adjustment programme or liberalization initiated the process of the opening
up of an otherwise closed economy of India. Liberalization created a hyper-competitive
environment and to respond to this turbulence, Indian organizations adopted innovative changes
in their HRM practices.

Well organized HR practices are a requirement for a successful strategic change. HRM plays a
critical role in redefining new strategies so that they can suit the changing environment scenario.
At times, HRM not only be a part of the new strategy, but also becomes the deciding and
defining factor in pursuing a particular strategy. To keep abreast with the dynamic business
conditions, Indian and Foreign MNCs have revamped their HR strategic practices. This paper
discusses about the innovative strategies of Indian and Foreign MNCs and the HR practices
implemented by them.

Keywords: India, HRM, Liberalization, Performance, strategic change

*B.Aruna, Assistant Professor, Department of Management Science, Sasi Institute of

Technology and Engineering, Affiliated to JNTU (K) Tadepalligudem, India, Mobile:
7396810776 Email Id:baruna@sasi.ac.in

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INTRODUCTION

Brief History of Human Resource Management in India

Though not infant, HRD in India has not entered in its adulthood. The first dedicated HRD
department started in 1975 at L&T. Uday Pareek and T.V Rao in 1975 outlined a philosophy for
the new HRD System . After L&T accepted and started implementing their recommendations in
full the State Bank of India the single largest bank and its associates decided to implement the
Integrated HRD System approach and decided to create a new HRD department. By the mid
80s a large number of organizations in India had established fully fledged HRD departments .In
1979 the first workshop on HRD was conducted by IIM A by Dr. T.V.Rao , where the draft of the
book Designing and managing Human Resource System was presented and tested. After that
a large number of companies started showing interest in having HRD departments.

However over the period of time HRD as a concept and practice have gone through different
stages of metamorphosis. In the mid-70s HRD departments were started with a view to
promote competence-building and work motivation. The need was fulfilled to a large extent by
the late 80s. By the early 90s, the focus of HRD changed from HR for its own sake to HR for
business. Today in globally competitive market its presence and role is well understood.

HRD defined in different parts of the world

Len Nadler, USA defined it as a series of organized activities conducted within a specified period
of time and designed to produce behavioral change. Common activities in HRD include Training
, Education and development. Training to improve job performances, education to improve
competency not specific to any one job and development as preparation to help the employee
move with the organization as it develops.

China believes it as a planned and organized education and learning process to improve
employees knowledge and skill as well as change their job attitude and behaviour.

Germany, there is no specified field defined as HRD.

The concept of HRD in Japan identified in three terms

development of individual abilities,

formulation level of mastery over human resources through the work system and training, and

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human resource development through management of human resource process. In short
individual development, carrier development and organization development are the three
major areas HRD covered in Japan.

In Korea it is training and development.

Themes we must discuss while discussing Human Resource

Management

360 degree Change Leadership System Workplace

feedback managemen and building Learning
t leadership
developmen
t
Action Culture Mentoring Performanc Transfer of
learning building and modeling e appraisal learning
Career Knowledge Commitment Strategic Organization
developmen management building human al
t performanc development
e processes etcetc

Todays HRM role is demanding and complex, no question.

Lets firstly remind ourselves what does make up a current HRM role in leading or participating
in many crucial areas needing constant attention. These include planning and designing and the
executing of change management, seeking out potential leaders, participating in career
development and recruitment, managing organization capability and effectiveness in all its
different demands called for across a diverse demanding organization.

HRM gets fully involved with seeking out different designs to team building or should,
organization transformation work, building knowledge and talent capacity, let alone the classic
payroll, reviews and turnover questions brought on by volatile markets, change of directions or
global expansion.

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Adding innovation as a simple add-on into HRM will not work

What we need to flag today is that HRM has evolved to be at the vanguard of regulatory and
compliance oriented. This mindset certainly can conflict with encouraging and developing more
free-thinking needed for innovation and for HRM to shift over to supporting innovation will
need further change within the HRM team itself. If it can achieve this release of its shackles it
might be seen as a go to competence centre for people development again.

Managing the culture needed for innovation that fosters creativity would allow a flourishing of
ideas and creativity many organizations need today. Can HRM make changes, firstly within
themselves and then in taking hold of the development of the people side within the building of
innovation competencies?

Presently HRM is little involved in the current innovation process where innovation is focused
on developing and designing new products, services and often even excluded from the design
of new innovation business models to find the best ways to break these out from existing
organization design so they thrive and not just survive due to patronage alone.

The management of human resource needs to be replaced with the management of human
creativity and ingenuity, as this is the triggering point to innovation success. The critical role of
innovation is without question needed for the future growth, wealth creation and organizations
potential survival. Who is to drive the human change required here? I believe HRM should have
a lasting design impact and central engagement role in this.

HRM has a crucial role to play in the needs to facilitate and underpin the people factor as well
designed into the organization, in every activity for making innovation the way of life and well
understood as corporately vital to be well support and consistently enhance in capabilities and
capacities.

Those that attempt innovation gain valuable experience

If HRM took innovation into the core of organizational design, the mandate for each person is
to get involved in innovation activity to gain valuable experience that enhances the desired
capabilities for the future. If innovation is seen as core, you begin to break down the present
barriers and mindsets that restrict innovation today by current behaviours, blocking innovating
activity or placing constraints in allocating the required resources to allow innovation to
flourish.

HRM plays the critical role in breaking down the existing barriers (cultural, environmental,
structural) and determines the need for information and knowledge sharing to actively lower

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one of innovations greatest barriers today, the not invented here, that existing within
organizations both in themselves and in opening up to external new sources of stimulus. HRM
can find clear ways to foster innovation in more open ways.

The changing role of organization design

There is a consistent need to sustain and secure a steady top-line and bottom-line growth,
CEOs tenure is mostly based on this. What is increasingly needed is to go beyond this expected
state and deliver the wow factor, which comes mostly through innovation. Here top
managers have to seek out speed, flexibility and adaptability as outlined earlier in this article
but they also need to go beyond this. We come back to the ability to extract new value is in the
individuals identifying, assimilating and exploiting knowledge and it is in recognizing this
reverse flow, is where the HRM role needs to focus on a different organizational design.

Future leaders need to emerge not from managing existing assets well but in managing in
increased uncertainties, being more adaptive, agile and responsive to changing needs. CEOs
are demanding creativity, flexibility and speed to size up, quickly seize and grab breaking
opportunity. These newer demanded skills come from knowing how and where to go, to be
well-connected across platforms of knowledge, having close client connectivity and being able
to extract all the essentials, resources and commitments to enable execution. Adaptability to
constant change has a very different mindset to be developed in our future leaders

HRM needs to be on the cutting edge of innovation and faces a stark choice

HRM does need to step up and define a new mandate for innovation. If innovation is ever going
to achieve a core place within organizations it has to be deliberately designed in for skill
definitions, leadership development and knowledge and experiences gained. HRM needs to
cultivate, mobilize and capitalize innovation.

HRM needs to take on a more pivotal role for innovation. They can become central for a lasting
place to plan and significantly contribute to building innovation capability and capacity or stay
more passive and operate always in the outer periphery of todays and the future corporate
relevance that innovation needs to play.

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I believe HRM needs a new raison dtre, one that comes from grabbing hold of innovation and
making this core to the organizations future design. Building capabilities and capacities for
innovation are essential to our organizations future well-being and HRM needs to step up and
become far more engaged.

Human resource management (HRM), therefore, plays a major role because of the importance
of the human resources themselves and the intricacies of their management.Indian and Foreign
MNCs have developed by the share of HR department. Performance appraisal, competency
mapping, job rotations, team work, excellent team work strategies and games, training-online
and offline, entertainment programmes, open management policies, compensation system
with incentives-bonus-awards- criteria like age, educational background and business
background. Policies of the company need to be tailor-made according to the needs of each
group, in order to optimally utilize the resources offered by each segment. There are many
hurdles coming in the way of companies to achieve their goals. For this, they need to take some
strategic initiatives which need to be fulfilled by HR practices by satisfying employees. Human
satisfaction leads to achieve organizational goals.

Indian corporates have been late movers, though fast changing to competitive pressures.
Foreign MNCs focus on mind recall and cost effectiveness. HRM strategies should be adopted to
boost morale of employees and high retention of skilled employees.

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Table 1 provides a summary of the strategic initiatives and innovative HRM pract ices of
Indian MNCs

Table 2 summarizes for foreign MNCs.

Table 1:

Innovative HR strategic Industry Strategic Initiatives HR practices

practices adopted by
Indian MNCs Company

Mahindra & Mahindra Automobile Tractor Rationalize BPR Business Process

Ltd. manufacturing process Reengineering scheme to
Formation of productive reinvent business process
labour force Flat structure that
encourages teamwork
Outsourcing workforce
for advanced and noncore
activities

Infosys Information Technology

Accept the challenges of Employee-driven
globalization campus programs like
Powered by intellect and Infosys Toastmasters
driven by values Club to provide support to
Culture of ethics, the employees
performance, meritocracy Construction of a
Creation and sharing of leadership institute to foster
wealth the qualities of leadership
within the employees
Leadership through
INSTEP where three to six
month internships are given
to students from across the
globe

Wipro Information Technology

Sustaining the wealth of Introducing employee
their human capital stock option schemes

Maruti Udyog Ltd. Automobile utility car

segment Launch new models for Recruit professional HR
diverse markets managers
Increase dealer network Make HR responsible
Reduce costs and for internal communication
increase operating and relations with union
efficiencies Creation of an excellent
compensation policy

TATA Steel
Global coordination and Manager Assimilation
control Program
Building capabilities for E-learning initiatives
customer centricity available for employees
Managing workforce (Gyan Jyoti)
diversity and embracing Employee Induction
inclusion Programs like HELLO

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 (Helping employees launch
and learn in the
organization) and NEST
(Nurturing engagement with
satisfaction and trust)

Hindustan Unilever Ltd. FMCG

Increase penetration 360 degree performance
level as well as per capita appraisal for performance
consumption management
Increase productivity Talent identification and
and quality Talent development strategy

Table 2

Table 2: Innovative Strategic Initiatives HR practices

HR strategic practices
adopted by Foreign
MNCs Company

Industry
Ford
People orientation Phased retirement program
Automobile Improve quality Cafeteria Planning
Launch new models Productivity campaigns
for diverse markets Management development program
Reduce costs and to enhance the capacity of managers to
increase operating think strategically, manage their time
efficiencies effectively and improve work methods
Align employee and quality
attitude with corporate Implementing healthy
culture communication through the removal of
emotion and reliance on data

IBM Machines
Demonstrate and Minority recruiting/people with
sustain respect disabilities-IBMs Project Able
Commitment to E-learning programs like Basic
workforce diversity Blue, One Voice and Coaching
To be known for the Simulator were introduced to guide
greatest respect for the employees for a variety of challenging
individual management situations
Commitment to the Flexibility/telecommunicating/leave
advancement of women in of absence programs
the workplace Blended approach to learning
Global women leaders task force
was formed and expanded its

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 technology camps for girls summer
program to encourage for technical
degree

Rolls-Royce Motor
Transformation and 80% aged sixteen to eighteen are
evolution added each year for creative ideas

Marks & Spencer Retail

To rung of business Prioritized communication
success ladder Regular conferences are held
Employee engagement

The new economic environment is primarily marked by the freeing of shackles for
entrepreneurship and economic growth. The license system has been replaced, to a great
extent, by a market system. The challenge of Human Resource Management (HRM) practices
would be to create an environment of resilience, which can accommodate and assimilate
successfully changes in systems, structures, technologies, methods, etc. People would have to
ascribe the right meaning to the change process. India is well-equipped to succeed on global
markets. It has a pool of highly educated people, a well-developed judicial system, democratic
governance, an established banking industry, and fairly sophisticated and inter-linked financial
markets. Knowledge industries will be at the vanguard of economic opportunity, and India will
be poised to take advantage of this trend with its corpus of highly skilled people. The changes
on the market scene have necessitated the Indian industry to look inward for the development
of human resources (HR).

People develop themselves in a globalized scenario with new directions along with new
problems and issues arising to develop new competencies to meet the changing requirements,
aspirations, and problems. There are, however, some universal goods towards which all human
resource management efforts should be aimed at. The emergence of Japanese human resource
management has led to the concept of culture in a big way.

At the organizational level, the goal of HRM is normally to have competent and motivated
employees to ensure managerial effectiveness and growth of the organization. Organizations
normally direct their HRM efforts towards the development of competencies and
organizational culture. Organizations use mechanisms to achieve HRM goals with competent
and committed employees. Organizations can achieve very little even if they have excellent
technological and other resources at their command. Such an assertion gains better credibility
in the context of developing countries like India, that is, typically in early growth stages in terms
of economic development, and growing more rapidly than the traditional developed
economies of Japan, North America and

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CONCLUSION

HR practices have successfully improved in on the key drivers for employee commitment and
engagement. Globalization of companies are presenting dynamics unique to cultures across the
globe, hence human resources focus on valuing diversity is crucial to employee engagement
and satisfaction and ultimately retention and development through proper training programs.
Investment on initiatives that drive the quality of life and ultimately employee retention and
development is a necessary cost to any business. Organizations may give adequate attention to
their HR policies as it has benefited both the Indian as well as Foreign MNCs in formulating their
strategies and implementing policies. Human resources policies and practices play a crucial role
in Indian as well as foreign MNCs for the development of the company. Problems differ from
company to company, accordingly strategies must be undertaken.

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SOURCES OF THE TABLES:

Journal of Management Research and Analysis 2015;2(3): 173-176

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