From shop floor to a seat in the boardroom

TRENDS: HR has undergone a transformation from a mere enabler of business into a strategic factor.

From being a support function, HR has now turned into a line function. From an enabler of the functioning of a business, HR is today at the centre of the working of any business.

This process has seen the rise of strategic HR, a much broader set of practices than the legally-driven HR functions that are now the legal minimum expected of any company.

The status of the HR department has got a fillip with the coming in of industries or sectors that are hi-tech and at the same time labour-intensive. HR has now come to occupy boardroom space.

HR is no longer a hygiene factor, but a strategic one. This is especially so in the IT/ ITeS sector. Since it consists entirely of knowledge workers, HR managers in the sector have had to leapfrog ahead of their counterparts in other industries in order to address the greater challenges that a knowledge workforce poses.

With billing in the IT/ ITeS sector being made on the basis of number of man-hours put in, there is a direct correlation between HR policies on the one hand, and revenues and profits on the other. If HR costs rise, the possibility losing the competitive advantage is very high.

Says Pranesh Anthapur, COO, Yahoo! India R&D: "While an oil major like Exxon would watch the oil inflow and the banking sector would watch the deposit inflow, the IT sector would watch the people flow. The talent flow is the important flow in the information age, which explains the focus on HR."

The BPO and the IT/ITeS sectors are cases in point. Their labour intensiveness is not of the kind seen earlier in India's agrarian economy. The services sector now is made up of well-educated manpower whose aspiration levels, as a result, are also much higher.

Gone are the days when 'soft' skills were given no importance. Today, soft skills matter a lot and this has led to the emergence of problems, as the service industry is also one where people come face-to-face with customers. It has hence become important that customers have a pleasant experience, lest they turn away.

"Now the trend is that of hiring and then training people, as opposed to the earlier system of only hiring people with experience in the field," says Rahul Varma, head of HR at Accenture India.

The role of the HR department has today reached a state where some HR members sit on the boards of firms. This is a major shift from its status a few years ago, when it was rare to find HR professionals at the top echelons of any firm. "They are today part of the decision making process in most firms," says Varma.

Companies aim to keep the salary:revenue ratio low. But, instead of keeping salaries low, the aim must be to increas revenues, says Yasho V Varma, director (HR &MS) at LG Electronics India. So it is given as much importance as any other department in a company. That's how HR heads have come to be on the boards of many a firm.