Over the years, the business environment has become more and more competitive with the growing number of technological advancements that has caused rapid globalisation of markets. In addition, according to Analoui, (1998), in this era of knowledge-based economies, the workforces of firms are seen as the key resources that enable them to gain competitive advantages over one another.
Lado and Wilson (1994) also suggested that Human Resource Management (HRM) practices lead to sustained competitive advantage for firms over the long run. These notions evolving from various research have not only modernised the people management practices of developed countries like that of the UK and USA but has also led to dramatic developments of contemporary Human Resource Management (HRM) practices and systems in firms of many developing economies including that of India (Budhwar and Khatri, 2001).
Shahnawaz and Juyal (2006), define Human Resource Management (HRM) as “management decision and practices that directly affects or influence the people, or human resources, who work for the organisation”. Thus, in reference to the context of India’s current economic state, which has seen huge growth in Foreign Direct Investments (FDI) made by the Multi National Corporations (MNCs) entering the different sectors of the economy, strategic Human Resource Management (HRM) systems have become fundamental for achieving long term success for businesses (Singh, 2004).
This implies the need for firms of having effective Human Resource (HR) functions with regards to recruitment and selection, training and development, performance management, reward management etc. However, according to Jackson and Schuler, (1999, p; 22), the function of Human Resource Management (HRM) and the systems that it entails can be very specific to individual contexts as well as to individual cultures.
This implies that cultural or national factors greatly influences the ways in which human resources are being managed in different countries across the globe.
Thus, this essay aims to highlight the distinguishing features of various Human Resource Management (HRM) systems and practices which exist in India with reference to relevant academic literatures and also to practical examples drawn from various case studies to enable readers to gain valuable insights into the differences in people management practices that exist in India from the ones which are now being practiced in the developed economy of the western world like that of the UK. 2.
The Various Human Resource Management (HRM) Systems within Firms in India Although, over the years, the Human Resource Management (HRM) practices in India have changed from the tradition model of personnel management, social, cultural, economic and political factors still endow a strong influence on the Human Resource Management (HRM) policies and practices employed by the majority of firms in India (Sodhi, 1994). For example, Tayeb, (2005, p; 80) reports that cultural factors such as large power distance still subject the Human Resource Management (HRM) systems to issues of hierarchy and bureaucracy.
Such external factors affect the various functions of Human Resource Management (HRM) in many ways which distinguish these practices from those practiced across many firms in UK and elsewhere. These differences in practices have been highlighted below with reference to relevant examples extracted from various researches done on firms operating in India and in UK. Due to research constraints the main three components of the Human Resource Management (HRM) systems which include Recruitment and Selection, Training and Development and Performance and Reward Management have been discussed below.
Recruitment and Selection Systems According to Marchington and Wilkinson (2005, p; 55), effective recruitment and selection systems play crucial roles towards the success of firms. This is because effective selection system assists in choosing the best candidates (Torrington and Taylor, 2005, p; 26). Thus, in developed countries like the UK, much attention is given to the design and the implementation of effective recruitment and selection strategies as such systems are seen to be positively related to a firm’s overall performance (Ghosh and Geetika, 2007).
However, Budhwar, (2000) reports that still today, public sector firms base their recruitment and selection activities on factors such as ascribed status and social and political connections. This clearly implies the presence of strong collectivism within work cultures that puts more emphasis on familial and communal considerations over achieving greater work productivity. For example, a study by Indian Express, (2001) reveals that Employee Referral Programmes (RPs) are the preferred hiring process for many IT organisations in India.
Pramod Sadarjoshi, Director and Head, HR, CSC India, states that “Hiring through referrals is considered more advantageous than other recruitment options like placement agents, media advertisements or direct recruitment as it cultivates greater cultural bonding at the earliest” Indian Express, (2001). On the contrary, such systems can be viewed by firms of developed countries like that of the UK as an opening for breeding extreme nepotism within the recruitment and selection practices (Mehta, 2005).
Thus, such differences in the perception indicate the influence of cultural assumptions on the recruitment and selection practices of India and the UK. * Training and Development Systems In this era of competitiveness, Training and Development has become extremely crucial in order to yield benefits from a firm’s human capital (Miah, etal, 2003). Several researches show positive links between investment in training employees and in boosting overall organisational performance. The National Employers Skills Survey 2007, published by the Learning and Skills Council, revealed that UK firms spent a total of ? 8. 6 billion on training in 2007 towards training and development of their employees (ILM, 2007). The extracted figures clearly reveal the extent to which firms in the UK view training and development of employees as a valuable means of achieving business excellence. In addition, Wright and Keheo, (2008) report that UK based firms put a lot of emphasis into the evaluation of Training and Development activities which performs a cost-benefit analysis of such activities to measure the actual monetary gains earned via return on investments.
However, in India, investment in Human Resource Development (HRD) activities has two notions. One is such that activities not only help to attain business gains but also essentially realise that such activities build employee loyalty and commitment towards the goals of firms (Singh and Krishnan, 2007). According to NASSCOM (National Association of Software and Services Companies), the Indian IT corporate training market is expected to yield approximately ? 0 million within the year of 2010 (Naukhri, 2007). Nevertheless, Singh, (2004), argues that many organisations in India still view Training and Development as only a need-based activity and treat as an expensive activity to frequently invest in. Hence, views about Training and Development activities are thus divided in Indian organisations which indicate both differences and similarity of perceptions of Indian and UK firms towards such activities. * Performance and Reward Management Systems
Armstrong and Baron define performance management as “a process which contributes to the effective management of individuals and teams in order to achieve high levels of organisational performance” CIPD, (2008). Thus, according to Sturo, (2009), via performance management tools such as appraisal schemes and 360 degrees feedback, firms are able to monitor the development of skills and attitudes of their workforce and measure them against organisational and personal development goals.
However, having performance appraisal systems in place is not adequate to motivate employees and to produce business results. For example, according to Management Today, (2007) a survey conducted in 1998 by the UK employee assessment consultants Saville & Holdsworth (SHL), indicated that 80 percent of companies in the UK had performance appraisal systems in place, yet half of employees and managers are unhappy with the way these systems are monitored and evaluated.
Subsequently, many firms in India have realised the importance of having effective performance management systems for their employees. Thus, over the recent years, many contemporary firms in India have started investing in the implementation of such systems. For example, Rallis India Limited, which is currently one of India’s largest agrochemical companies, has installed an on-demand Performance Management System called the EmpXtrack to manage performance of its employees (PRLog, 2008).
This web-based software has been designed and implemented to assist Rallis India’s Human Resources Department to implement global HR practices within the company which shows the efforts and resources that are being put into improving the performance management systems in Indian firms (PRLog, 2008). Thus, it can be deduced that in some ways firms in India are capitalising by modifying the performance management systems developed by firms of western economies and are reaping long term benefits from implementation of such systems. * Reward Management Systems
Reward management can be defined as “undertaking those activities that enable firms to grasp an understanding of the motivational factors of its workforce and designing reward strategies based on such understandings “(Price, 2007, p; 56). In other words, the term ‘reward management’ involves both the strategy and the practice of pay mechanisms adopted by organisations. However, in different cultural contexts, employees hold different views with regards to pay due to the differences in perceptions towards monetary and non-monetary rewards.
As markets have globalised and companies in India like elsewhere require facing a competitive business with massive scarcity of talented individuals, a growing number of firms have started recognising the need for rewarding and reinforcing good performance of their workforce (Vishwanath, 2009). In addition, this has followed by the trend of paying comprehensive reward packages which need to be continuously reviewed and amended according to the changing motivational needs of today’s workforce. Thus, reward management systems in India have wide similarities between those being used in UK firms. 3. 0Conclusions
Human Resources (HR) of firms are absolutely critical to the success of firms. This is the key function of businesses via which sustainable competitive advantage can be attained. The function of Human Resource Management (HRM) and its importance to achieving the strategic objectives of firms have evolved over the last few decades. Not only firms in developed countries like that of the UK but also firms operating in developing economies like India have increasingly recognised the need for developing and implementing effective Human Resource Management (HRM) systems in order to achieve business excellence.
However, researches done by many academicians and management gurus have found out that Human Resource Management (HRM) systems vary according to contextual factors. Cultural differences existing between different nations also determine the ways in which people management issues are dealt with. In this essay, the Human Resource Management (HRM) systems such as Recruitment and Selection, Training and Development and Performance and Reward Management practices of the developing economy such as that of India have been highlighted with reference to relevant examples extracted from various literatures.
Subsequently, these practices are compared with those of firms operating in the UK context that provided readers with valuable insights into the easy in which such practices vary in these two countries. However, in certain aspects similarities have also been found within the Human Resource Management (HRM) systems being practiced within India and the UK. Within the Recruitment and Selection practices, it has been noticed that such practices still show evidence of nepotism to a certain extent, the presence of which can be regarded due to the existence of collectivism culture at the workplaces of Indian firms.
In addition, Training and Development is still seen as an area where firms tend not to invest heavily. Only the IT sector in India is committed to huge investments in training and development activities of employees. Thus, it is hoped that Indian firms would be engaging more in such activities in the near future when the economy grows further with time. Moreover, evidence suggests that Performance Management has started to become an important area where more and more firms have started to invest in.
Subsequently, Reward Management practices in Indian firms are seen to have similarities with those that are being practiced in UK firms. Thus, this essay has successfully managed to draw useful insights into the distinguishing features of Human Resource Management (HRM) systems and practices within firms operating in India by providing a contrast and match with the ways in which such systems are being implemented in the UK.
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