Human resources in demand to win survival of fittest game

Judith Wirawan, Consultant, Accenture

It is common knowledge that Indonesia is currently in a dire economic situation where businesses are suffering in almost every sector.

This year, for example, the Indonesian Footwear Manufacturers' Association predicts exports to decline by at least 10 percent and the textile industry is foreseeing a 20 percent drop in revenue following a 25 percent revenue decline in 2001.

On the other hand, it is not commonly known that a lot of companies in Indonesia actually invest in human resources (HR) projects.

Skeptical readers might ask: "But why?" Why would companies invest their much-needed funds in an area not directly related to production, where the revenue is? After all, HR is merely a support function within an organization. The obvious answer would be because they realize that by shaping HR, they would be able to help themselves survive.

The most likely step that companies would take in the human resources area in times like this is to downsize.

For example, the textile industry, which employs around 1.2 million people, is threatening to lay-off up to 100,000 workers.

More than 12,000 laborers have already been let go in recent months.

True as it is that downsizing can help save a significant amount of money, companies should assess whether it is worth doing considering the significant amount of retrenchment compensation they have to pay.

If they forecast the market to be getting better in the near future, it is probably wiser to keep the extra human resources. Besides avoiding to pay out the retrenchment compensation, the company also gains employee loyalty, and has to engage in less recruitment effort and training work when the market is rebounding.

Another aspect in which HR can contribute to making the company more efficient is an integrated HR system.

Why is it needed? Two important reasons support this initiative.

One is because of the linkage from one HR process to the next. HR processes are basically a chain of events concerning the employees, starting from selection and recruitment, employee training, performance evaluation, promotion, and so on. The handing over of the process from one section within HR to the next will be made much more efficient if there is an integrated HR system within the company.

The second reason is because of the data sharing inherent within HR. A lot of HR data, such as personnel data, are shared across the processes mentioned above.

Unfortunately, in many cases, each section within HR owns their own system, be it paper-based or electronic. As a result, unnecessary double work is done to maintain similar sets of data, and frequently the data is not even synchronized. The readers may imagine how confusing it is to reconcile data and how difficult it is to produce an accurate and comprehensive HR report in such a situation.

Closely connected with the integration of HR systems are two twin sisters: HR process improvement and policy simplification. Both of these mainly serve to reduce redundancy in HR practices within the company, which in turn boosts efficiency.

Simple as it may seem, many companies do not realize how redundant their processes are. Usually, a company starts out with a fairly simple set of HR policies, and as the company grows, more policies are added to cater for the more complex organization.

However, often the new policies do not consider the old ones, creating a jumble of rules and exceptions that are difficult to operate.

It can be frustrating at the first attempt to untangle these, but as HR policies affect all employees in the company, the efficiency gained across the company will be worth the effort.

A little word of caution is that some sort of organizational realignment accompanies any process change, as different forms of processes require different ways of structuring the workforce to be able to serve the processes well. Having efficient processes in place may also mean a reduction in the administrative workforce, and thus costs.

In short, all the above factors (except downsizing) may be categorized as better HR management.

I purposely avoided mentioning it at the beginning of this article, as it is so easy to turn "better HR management" into a buzzword without knowing what is involved in making it a reality. With proper knowledge and implementation, better HR management can really help the company win the "survival of the fittest" game.