Academic journal article IUP Journal of Management Research

Protecting the Competitive Advantage Derived through HR: Challenges for IT Industry

Academic journal article IUP Journal of Management Research

Protecting the Competitive Advantage Derived through HR: Challenges for IT Industry

Article excerpt

Innovative practices in design, development and delivery of services; responsiveness to customer issues; and trusted relationships with the customer's organization are the three differentiators for knowledge organizations. These differentiators require Human Resources (HR) with the required competence, experience, capabilities and motivation. The competitive advantage derived through HR should be sustained which requires benchmarking of the HR practices and resources with the best competition. This paper presents a conceptual framework to discuss the possible and preferable HR practices by classifying the key areas into five Rs: (1) Recruitment, (2) Results (performance management), (3) Reward (compensation management), (4) Retention (talent management), and (5) Retrenchment (downsizing/rightsizing). The challenges in these five activity groups and approaches of management during recession and supposed recovery are different and a comparison of the questions that practicing managers are pondering about is showcased. The concept is applied with specific reference to the IT industry in India, as HR forms a very critical component of this industry. The data regarding IT industry is collected from secondary sources and published reports. Anecdotal evidence from experiences of HR practitioners and senior managers is considered for expanding the model of five Rs for the recovery period of the business cycle. The findings reveal that no single solution may be prescribed for the firms in the IT industry and therefore HR departments have to customize solutions for their firm.

Introduction

Tough times call for tough decisions. The singular dilemma of top management in the recessionary business environment is prioritization in meeting the expectations of diverse stakeholders and still ensuring sustainability and survival of business. The shareholders/owners expect their share value to be retained, the employees expect their jobs and emoluments to be protected, the distributors expect support in running business when footfalls are coming down, the suppliers expect to supply the required material at the same price and with more relaxed financial terms and conditions and preferably higher quality than before, and the government expects the company to take care of the society around the business. All these diversified and conflicting expectations have made the decision making very tricky.

Lahteenmaki et al. (1998) have studied the dominance of economic cycles as a defining feature of the relationship between HR measures and company performance. The management challenges for a business coming out of recession are many (Gurkov and Settles, 2012). Confirming the commencement of recovery with certainty; and being sure about its speed. The recovery phase calls for a different strategic focus from recession times because the attitude of the management undergoes a subtle but profound change-the finance department is interested in investment and expansion than cost-cutting and control; the production department will look for development of new products and increased production levels; the sales department is more optimistic for better revenue generation; and the top management is more optimistic than cautious. The decisions during the recovery phase of the business cycle have a more profound effect on the sustenance and growth of a company. The economy is recovering, the business sentiment is on the high, and purchasing power has gone up resulting in a positive mindset among consumers (PTI, 2012). This also results in a feeling that the need to stretch and work without economic rewards is over.

The downsizing programs during the recession leave the organizational 'survivors' uncertain of the basis of their new employment relationship (Herriot and Pemberton, 1995a and 1995b). HRM practices and approaches adopted in the post-recession and post-downsizing situations have been reported (Cameron, 1994; Emshoff, 1994; Tyson and Witcher, 1994; and Hiltrop, 1995), establishing the importance of HR in the strategic concept as concept of core competence (Hamel and Prahalad, 1994), and also based on the models of excellence (Peters and Waterman, 1982; and Peters and Austin, 1985). …

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