The HR department has always played a vital role in an organisation, but how effective is its role as a strategic business partner, asks Sanghamitra Khan

A CEO wants the HR to be its strategic business partner. But, it has been indicated in several studies that there is a gap between the CEO’s expectations and what the HR department delivers. According to a US-based study, between 1998 and 2007, the HR’s impact on company strategy has not increased. After talks about the HR being strategic partner for nearly two decades, it is yet to get a seat at the ‘table’ where important business decisions are made. HR has a long way to go before it contributes to the corporate discussion about products, strategy and customers.

What could have been the probable reasons for such a condition? As per Geoffrey Matthews, VP – HR Strategy & Organisational Development, Merck Serono, the HR is not in the same frame of reference of executives. It has been found that the executives and the HR do not speak the same language and thus fail to be on the same page. The HR waits to be asked to contribute, making it difficult to demonstrate its effective contribution to the business. Here lies its failure to register as a key partner. Such a scenario calls for fast and effective action from the HR.

First, the HR needs to allot its time in understanding the business along with its investment in HR administrative tasks. The department also needs to understand what is on his CEO’s mind and whether it is performing to match his standard. The main areas of concern for CEOs in the current scheme of things have to be understood and the HR has to successfully contribute to those areas. HR has to inculcate the skills that can help it understand the roles its management has in the business. Ability to understand business needs is the basic requirement for developing any strong and flourishing business. So, the HR needs to understand this from the beginning.

Second, HR needs to effectively communicate its contributions, and for that it has to make its argument in business terms – not in human resources terms. HR needs to recognise the difference between the language used by it and that of business executives. Some executives say HR language consists of soft terminology and irrelevant wording which lacks measurement. Click here to read more...

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Times Come & Go, Basics Stay

Whether its about employees, shareholders, customers, suppliers, or India at large, Infosys realises that it has a huge reputation to protect. So far, it has been able to shoulder the responsibility well. Infosys talks to B&E... by Virat Bahri

Their situation was extremely difficult last year, when Infosys announced increase in variable pay and freezing of salary hikes and promotions in April 2009; citing the devastating impact of the recession. And that makes the company’s decision to implement 13-17% salary hikes across the board very special for Infosys employees.

When you are one of India’s most respected IT companies, you obviously have a reputation to live up to. Moreover, you can ill afford to take any decision without the big picture in mind. Infosys demonstrated that even last year with respect to its HR policy. Salary hikes were frozen, but the company did meet its hiring commitments that it had made across campuses and build the bench, as Kris tells us. It was an investment in retaining its reputation, for that’s what matters in the long run for them.

Chairman & Chief Mentor N. R. Narayana Murthy expresses his view about the purpose of an organisation thus, “The primary purpose of corporate leadership is to create wealth legally and ethically. This translates to bringing a high level of satisfaction to five constituencies – customers, employees, investors, vendors and the society-at-large.” Even as far as shareholders are concerned, Infosys is more concerned about long term shareholder expectations as opposed to short term. The company follows a defined set of standards on its dividend policy which mandate that the company cannot pay out more than 30% of its post tax profits as dividend, a policy which the board reviews periodically. Also, the dividend is declared twice a year, once in October post announcement of Q2 results and once during the AGM post the announcement of annual results. The interim dividend paid for FY 2009-10 was Rs.10 per share and the final dividend proposed is Rs.10 per share; which is expected to be approved at the AGM.

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Source : IIPM Editorial, 2012.

An Initiative of IIPM, Malay Chaudhuri 
and Arindam Chaudhuri (Renowned Management Guru and Economist).

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