LINKING HR PRACTICES TO INCREASE PRODUCTIVITY AND PROFITABILITY

HR PRACTICES,PROFITABILITY AND PRODUCTIVITY

The hi-tech industry dominates the shop floor. The role of the people in today's production process is critical. Production practices in today's industry are assigning the total work to teams of workers and empowering them. The empowered teams produce the qualitative products. The knowledgeable workers with the help of advanced technology improve the productivity beyond the normal levels.

HR PRACTICES,PROFITABILITY AND PRODUCTIVITY

Because of the global pressures Companies are forced to improve the quality of products, quality of pre-sales and post-sales service, customer-producer interface and the like. Added to this, service sector has been enlarging its scope in the global economy resulting in important functions and role of the people . The 21st century business houses realise that their distinctive competencies lie not in particularly' products, or technologies but in distinctive expertise and knowledge pool and skills of their people. Products design is an outcome of sustained personal innovation, Production is the : result of teamwork applied to technology. Marketing is the sum of people devised service added to products. Total Quality Management is the application of human. Intelligence to improve processes.

HR PRACTICES,PROFITABILITY AND PRODUCTIVITY

People provide knowledge to organisations. People spread knowledge across the company. People convert knowledge into efficient action. Continuous innovation is possible only with knowledgeable employees, which helps in coping with change. Organisational capabilities can be Leveraged through knowledgeable employees to increase profitability and productivity.

STATEMENTS OF CORPOTATES CHIEF EXECUTIVES

As Adi B. Godrej, Chief Executive Officer, Godrej soaps puts it, all Corporate strengths are dependent on people. In the words of Thaygarajan, Managing Director, Glaxo, organisations that have world class ambitions will need to nurture knowledge workers. According to Aspi Balsara, CEO of Balsara Hygiene, easy access to technology has made people the differentiating factor in todays environment.

TATA Steels Personnel Policy:

The personnel policy of Tata Steel, as contained in the Statement of objectives, is given below. The Company tries to take care of its employees: by a realistic and generous understanding and acceptance of their needs and rights : by providing adequate wages, good working conditions, job security, an effective machinery for redressal of grievances and suitable opportunities for promotion and self. development through incompany and external programmes. by treating them as individual. Giving them a sense of self-respect and better understanding of their role in the organisation and satistying their urge for self expression through closer association with management; by creating a sense of belonging through human and purposeful activities in an integral part of human relations ensuring their willing co-operation and loyalty ,

Everv organisation should have personnel policies in order to accomplish the objectives of the personnel as well as the organisation. Further organisation needs personnel policies in order to
a)minimise favoritism and discrimination in treating the employees; b) ensure that the action will be continued though the managers in key jobs; c) ) create and develop employee enthusiasm and loyalty. Advantages of HRM policies directing towards importance of human resource Delegation Uniformity Better Control Standards of Efficiency Confidence Speedy Decision Co-coordinating Devices

1.

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3. 4. 5. 6. 7.

HR IS A PROFIT CENTER, AND HERES HOW TO PROVE IT

The goal of every corporate department head should be to become the leading profit center for their corporation For the past decade the human resource function has operated under the myopic focus that process efficiency was the most critical deliverable in the enterprise. While this misguided focus can be partially attributed to external pressure from the finance function and the budgeting process, such pressure can in most cases be evaded by proactively developing the business case for all activities undertaken in HR. Unfortunately, developing a business case rarely happens and instead, the human resource function continues to make trade offs between quality and cost that carry on the lowest common denominator of deliverables at a slightly lower cost. This never ending focus, while easy to accomplish and attractive to some, fails to address or solve critical business problems facing the organizations that could be remedied via HR. Cost containment is much like periodically replacing water stained acoustic ceiling tiles versus calling out a roofer to fix the root of the problem; in the end replacing the tiles periodically will cost you much more. The other way to look at cost containment in HR is that of a race car spinning its wheels; it requires a lot of effort but produces little result. When cost containment efforts are first undertaken the results can be fairly significant, however as time passes and the efforts continue the value of the savings diminish. Today, cost containment efforts pertaining to the activities of the human resource function impact such a miniscule portion of the overall corporate budget, that the savings produced are insignificant to say the least. This is because the total HR budget in many organizations is less than 4% of all corporate expenditures.

How to Demonstrate the Productivity, Revenue and Profit Impact of Specific HR Activities

It's not enough to "believe" that HR activities and programs actually work; you must also be able to demonstrate to any critics (particularly the CFOs) satisfaction that they positively impact employee productivity, revenue and profit. Unfortunately, most HR professionals go about proving that impact the wrong way. The process of demonstrating business impact should start by assessing all current HR programs to establish a baseline and foundation point for future analysis. Once you have caught up, then step two is to keep current by evaluating all newly proposed programs using the same process. General Tips for Proving Impact There are four basic ways to provide "dead bang proof" that a program works. Each is similar to the way a new drug gets tested or that new ads and new products are tested. The most effective ones are listed first. Split sample contrast -- Use a split sample or a control group. Instead of applying a new HR program to the entire team or division, apply it to only half to demonstrate the relative impact of the program Before and after contrast Measure employee performance just prior to program implementation and again after implementation, show the contrast in performance. Demonstrate a correlation -- Show a direct correlation between the increased usage of a tool by managers and employees and an increase in productivity, revenue or profit. Also demonstrate that when usage goes down, so does productivity Results after implementation -- Show that employee performance is high immediately after the program is implemented (In this case you do not have before performance data (as in #2) for precise comparisons)

Examples by Function

Training

Split the sales team and provide one half of the sales team with increased sales training. Do nothing to the other half. Contrast the difference in sales between those with increased training and the sales people without the additional training Demonstrate that there is a high correlation or connection between the number of hours a worker receives in training and their productivity Show that lower training hours correlates with increased error rates, accidents and lower product quality. Calculate the costs of errors and accidents to prove the business impact Assess worker performance before training and then show that worker productivity increases immediately after they receive training

Recruiting

Demonstrate that newly hired workers produce more than the average worker (i.e. one already on staff) by directly comparing their productivity in jobs where output is easily measurable. For example, demonstrate that the sales people you hire under your "recruiting system" produce significantly higher average sales than your current employees. Next calculate the Rupee differential in output between the new hires and the average existing employee. Next multiply that dollar differential amount by the number of new hires, to show the overall revenue impact that new hires have Run a "pilot" employee referral program in one isolated division and demonstrate the decreased costs and increased quality of hires that result from the pilot program

Examples by Function

Compensation

Show that giving a worker a 10% raise increases their productivity by more than 10% Provide evidence that, as the percentage of your employees pay that is tied to performance increases, so does their output and productivity Demonstrate a correlation between high pay and high productivity. Show that highly paid workers produce more than the dollar value of their wage differential (between them and the average paid worker) Calculate the ratio of the Rupee value of employee output per dollar spent in compensation and benefits. Compare the difference between this year and last year. Show that you are continually getting more for your compensation dollar and also demonstrate that your output per comp dollar is significantly higher than your competitors

Employee Relations

Demonstrate that problem employees" and bottom performers increase their performance and become average or better" performers within a year after employee relations works with them. Prove the correlation between highly rated" (by employees) managers and productivity by showing the percentage increase in productivity that occurs when a highly rated manager replaces an average rated manager in a business unit (and vice versa). Next, show that your employee relations and training efforts significantly increase the rating" of previously poorly rated managers Demonstrate that your bad manager" identification program identifies, fixes or removes bad managers months faster than the industry average

Examples by Function

Work Life Balance Demonstrate that as the percentage of workers that take advantage of work life balance programs increases, so does the productivity in their department or division Show that the retention rates of employees increase as work life balance usage increases. Calculate the RUPEE impact of keeping key employees months longer Ask new hires "why they took the job" and demonstrate that the top hires took the job primarily because of your work life balance offerings Ask top performers (three months after termination) "why they left" to demonstrate that an a lack of work life balance programs wasnt a significant factor in their decision to leave

HRIS

Demonstrate a positive correlation between the increased availability of online HR "answers". And conversely, a decrease in the amount of wasted hours that employees and managers report that they spend looking" for answers within the HR department. Calculate the economic value of reducing those "wasted hours" Demonstrate HRISs effectiveness by showing the increased accuracy of "HR answers" that are provided on the firms Internet site, as compared to the answers received from (the significantly more expensive) HR generalists