Linking Hr Practices to Increase Productivity and Profitability

8/4/2019 Linking Hr Practices to Increase Productivity and Profitability

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LINKING HR PRACTICES TO

INCREASE PRODUCTIVITY

AND PROFITABILITY


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HR PRACTICES,PROFITABILITY

AND PRODUCTIVITY

The hi-tech industry dominates the shopfloor. The role of the people in today'sproduction process is critical.

Production practices in today's industryare assigning the total work to teams ofworkers and empowering them. Theempowered teams produce the qualitative

products. The knowledgeable workers withthe help of advanced technology improvethe productivity beyond the normal levels.


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AND PRODUCTIVITY Because of the global pressures Companies are forced to improve

the quality of products, quality of pre-sales and post-salesservice, customer-producer interface and the like. Added to this,service sector has been enlarging its scope in the global economyresulting 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 butin distinctive expertise and knowledge pool and skills of theirpeople.

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.


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AND PRODUCTIVITY

People provide knowledge to organisations.

People spread knowledge across the company.

People convert knowledge into efficient action.

Continuous innovation is possible only withknowledgeable employees, which helps incoping with change.

Organisational capabilities can be Leveragedthrough knowledgeable employees to increase

profitability and productivity.


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STATEMENTS OF CORPOTATES

CHIEF EXECUTIVES

As Adi B. Godrej, Chief Executive Officer,Godrej soaps puts it, all Corporatestrengths are dependent on people.

In the words of Thaygarajan, ManagingDirector, Glaxo,organisations that haveworld class ambitions will need to nurtureknowledge workers.

According to Aspi Balsara, CEO of BalsaraHygiene,easy access to technology hasmade people the differentiating factor intodays environment.


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TATA Steels Personnel Policy:

The personnel policy of Tata Steel, as contained in the Statement of objectives, is given below. TheCompany 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 in-company and external programmes.

by treating them as individual. Giving them a sense of self-respect and better understanding oftheir role in the organisation and satistying their urge for self expression through closer associationwith management;

by creating a sense of belonging through human and purposeful activities in an integral part ofhuman relations ensuring their willing co-operation and loyalty ,

Everv organisation should have personnel policies in order to accomplish the objectives of thepersonnel 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 resource1. Delegation2. Uniformity3. Better Control4. Standards of Efficiency5. Confidence6. Speedy Decision7. Co-coordinating Devices


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HR IS A PROFIT CENTER, ANDHERES HOW TO PROVE IT

The goal of every corporate department head should be to become theleadingprofit centerfor their corporation

For the past decade the human resource function has operated under themyopic focus that process efficiency was the most critical deliverable inthe enterprise. While this misguided focus can be partially attributed toexternal 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 humanresource function continues to make trade offs between quality and costthat carry on the lowest common denominator of deliverables at a slightlylower cost. This never ending focus, while easy to accomplish andattractive to some, fails to address or solve critical business problemsfacing the organizations that could be remedied via HR. Cost containmentis much like periodically replacing water stained acoustic ceiling tilesversus calling out a roofer to fix the root of the problem; in the endreplacing the tiles periodically will cost you much more.

The other way to look at cost containment in HR is that of a race carspinning its wheels; it requires a lot of effort but produces littleresult. When cost containment efforts are first undertaken the results canbe fairly significant, however as time passes and the efforts continue thevalue of the savings diminish. Today, cost containment efforts pertainingto the activities of the human resource function impact such a minisculeportion of the overall corporate budget, that the savings produced areinsignificant to say the least. This is because the total HR budget in manyorganizations is less than 4% of all corporate expenditures.


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

It's not enough to "believe" that HR activities and programs actually work; you mustalso be able to demonstrate to any critics (particularly the CFOs) satisfaction thatthey positively impact employee productivity, revenue and profit. Unfortunately,most HR professionals go about proving that impact the wrong way. The process ofdemonstrating business impact should start by assessing all current HR programs toestablish a baseline and foundation point for future analysis. Once you have caughtup, then step two is to keep current by evaluating all newly proposed programs usingthe 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 aretested. The most effective ones are listed first.

Split sample contrast -- Use a split sample or a control group. Instead of applyinga new HR program to the entire team or division, apply it to only half to demonstratethe relative impact of the program

Before and after contrast Measure employee performance just prior to programimplementation and again after implementation, show the contrast in performance.

Demonstrate a correlation -- Show a direct correlation between the increasedusage of a tool by managers and employees and an increase in productivity, revenueor profit. Also demonstrate that when usage goes down, so does productivity

Results after implementation -- Show that employee performance is highimmediately after the program is implemented (In this case you do not have beforeperformance data (as in #2) for precise comparisons)


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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 thosewith increased training and the sales people without the additional training

Demonstrate that there is a high correlation or connection between the number ofhours a worker receives in training and their productivity

Show that lower training hours correlates with increased error rates, accidents andlower product quality. Calculate the costs of errors and accidents to prove thebusiness impact

Assess worker performance before training and then show that worker productivityincreases 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 iseasily measurable. For example, demonstrate that the sales people you hire under

your "recruiting system" produce significantly higher average sales than your currentemployees. Next calculate the Rupee differential in output between the new hires andthe average existing employee. Next multiply that dollar differential amount by thenumber 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 thedecreased costs and increased quality of hires that result from the pilot program


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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 paidworker)

Calculate the ratio of the Rupee value of employee output per dollar spent in compensation andbenefits. Compare the difference between this year and last year. Show that you are continuallygetting more for your compensation dollar and also demonstrate that your output per comp dollaris 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 anaverage rated manager in a business unit (and vice versa). Next, show that your employeerelations and training efforts significantly increase the rating" of previously poorly rated managers

Demonstrate that your bad manager" identification program identifies, fixes or removes badmanagers months faster than the industry average


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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 theirdecision 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 thatemployees and managers report that they spend looking" for answers within the HRdepartment. 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 answersreceived from (the significantly more expensive) HR generalists

Linking Hr Practices to Increase Productivity and Profitability

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