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The human resource challenge

Arvind Singhal | January 24, 2004

The good news about the prospects of the Indian economy in the near future continues. Some respected economic think-tanks now confidently talk about growth rates in the GDP in excess of 8 per cent not only for 2004-5 but well onto 2008-09.

The optimism arises out of a combination of several factors, but a notable one is the likely jump-start of investment across a wide spectrum of industries -- both in manufacturing and in services.

This investment will also, finally, spur an unprecedented wave of employment creation (though it is a subject of conjecture if enough jobs can be created at the grassroots level to provide employment to the estimated 40 million or more currently unemployed Indians).

Ironically, though, one of the biggest hurdles likely to be faced by resurging India is an impending crunch in availability of human resources required to start up and operate/manage these new business start-ups.

This conundrum can be explained relatively easily. Never in the history of modern India has there been a situation where supply creation is likely to outstrip demand, and where the competition is not only from other Indian companies but also from international ones.

Add to this, the spectre of an increasingly more assertive and more demanding group of customers and consumers, and it is fairly obvious that in the coming years, the real competitive edge for a business in almost any industry would be the quality of its human talent.

Product and process innovation will be imperative for sustained survival and success, and this can be managed only through the availability of well-qualified and well-trained human resources.

Indian industry, unfortunately, has usually given human resource development practically no priority. Even today, barring new economy companies and a handful of traditional business enterprises, most Indian companies do not even have an HRD department or a qualified HR professional heading the HR function.

In most cases, the HR function continues to be limited to labour/personnel management.

Training, and retraining of a wide range of middle and senior level production and management professionals hardly exists.

Very few companies have any significant HR development budgets, and HR department heads are rarely called upon to participate in business planning process at the board levels.

As companies now plan expansion or new business start-ups, they find themselves scraping at the bottom of their very shallow existing HR talent pool and then resorting to poaching perceived talent from competitors.

In most cases, the 'talent' is actually non-existent and the resume - of many of these new hires only indicates years spent working rather than true skills as needed to succeed in the new, fast changing, and highly competitive business environment.

Several skill sets such as product development, research & development, logistics and supply chain management, national and global strategic sourcing (rather than 'purchasing'), and even marketing and brand management are conspicuous by an almost total absence.

Many industries such as textiles, consumer durables, logistics, retail, pharmaceutical and even FMCG are already feeling the pinch. The constraints are only going to become worse in the coming years, even as management compensation reaches stratospheric levels in India endangering the overall cost competitiveness of some of these industries (and businesses).

Unfortunately, there are no shortcuts for overcoming this challenge. The starting point for various companies, especially those who need a very large number of production and business operation management cadres, has to acknowledge that there is a problem and that they need to allocate substantial corporate attention and financial resource for developing the human talent for their future growth needs.

Poaching from competition will just not be an option. In the 1960s and 1970s, leading business houses of those times (such as DCM Shriram, Tata Group) had various executive/management trainee schemes that ensured a very regular induction and on-the-job training of young talent.

Many companies now need to start this process again and rely on building up a trained talent pool from these internal efforts. Board level appointments must be made for HR professionals, and their input needed for assessing the future needs and developing future plans for maintaining a steady intake of various skill sets.

CEOs and heads of HR function must find time to work very closely with various academic institutions to help them develop curricula more suited for the current and future skill set needs. Otherwise, a nation of a billion inhabitants may soon have to start importing managers as well!

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