Is it the Best Time for HR?
Mohan: (The topic of our conversation is) ‘the state of human resource management: Where are we? Where do we want to go and how do we get there’? So, like a GPS, I would like you to play the role of a navigator in the VUCA (volatile complex, uncertain and ambiguous) world that we are in. Dave, you have tracked the evolution of HRM since 1990s, so let’s start with you. In your 1997 book on a new mandate for Human Resources, you had said that it was the best time to be in HR. It’s now 2023, so do you think the best time for HR has passed or do you think it is yet to come?
Dave: the best is always yet ahead. In 1997, when we did that book, it was a great time. In 2023, it’s an even better time and the reason for that is simple. The context is the setting of the Kingdom. The content is the king or the queen. In the post COVID VUCA world, companies can copy a strategy, they can access financial capital, they can get technology. The differentiator even more is your people in organization. So, if anything, the time for HR continues to get better.
Mohan: Santrupt, I have watched you up close and personal ever since we studied HR way back in the mid-80s. And you are the best person for today’s conversation because you did your PhD in Industrial relations, and you entered the corporate world later and today you are the CEO and board member of Aditya Birla Group. So, I guess in many ways, the career trajectory that you have had is the kind of aspirational trajectory that any HR person would like to have. Would you mind summarizing for us the way you have traversed the journey and what implications that might have for an aspiring HR professional?
Santrupt: Well, my career has been a blessing and a gift. It has been like the flow of a river from obscure origins. What’s my ocean? I do not know where I would end up, but I’m sure I’ve travelled through many remarkable institutions that have made a contribution to my evolution as a person and a professional. I am particularly grateful to the Aditya Birla Group where currently this is my 28th year. Perhaps you can characterize me as the longest serving CHRO of any Fortune 500 company in the world today.
The best times have got better for HR people for three reasons. One is that more and more CEOs, particularly in India, are coming from the HR stream. Two, more people are actively making choice to study a full-time program in HRM that is very encouraging and exciting, and 3rd is that historically we always believed that CHROs were paid less than CFO’s, at least in India, and (I am now) distinctly seeing that they are equally competitively paid or sometimes paid more than CFO’s. All these trends tell us that HR being recognized as a differentiator is coming to life … As you may know, I lead two businesses that are chemical engineering based and I’m not even a chemist, which goes on to show that leadership is not about domain expertise, but leadership is all about people and people is the heart of HRM.
Are we in an Asian Century?
Mohan: We have started on a very positive note, which is very encouraging. Now that we have looked at the rear mirror, let’s look ahead. When we all started our careers, it was mostly a unipolar world dominated by the USA and the Western world. But today, the indications are that this is going to be an Asian century dominated by China, India, and other emerging Asian nations, so we are well and truly, I believe in many ways in a multipolar world and that is a paradigm shift. So, how do you see this shift from the point of view of global economic and political perspective?
Dave: … What we found (in our study of) large global companies is that they compete with other large global companies. That if I’m in China, Tencent, Alibaba etc. compete with the large Latin American companies, they compete with the large North American companies. And once you begin to set a global standard, it’s a little bit like the Olympics. We sense that there’s a large global competition. And so, when we study global companies, we say who are you competing with globally? Who’s your biggest competitor? Our competitors today are global players, and we need to play HR in that global space.
Santrupt: It’s a fact that there is a certain dramatic shift in economic power happening in the world. But when we talk about Asian century, I do not think Asia represents one model. The Chinese model is one. The Indian model is one. Some are export led, some are productivity led like Korea, Singapore, some are kind of inclusive development lead, and like the Indian economy some are public sector led, some are public private partnership led. So Asian economies are creating multiple models of development. (What is important is that) there is space for conscious inclusive capitalism and coexistence of capitalism, along with social engineering and creating an inclusive model of growth.
… To say this is Asian century, Asia must do far more. To provide leadership in new models of social engineering, academic research institutions building governance standards, finding low-cost innovative solutions to problem solve emerging markets such as healthcare education. When Asia truly leads in all these sectors, then we can say it is Asia’s century rather than simply believing that there is an accelerated economic rate of growth that is higher than what the Western world is enjoying.
Indigenization of management models and boundaryless knowledge
Mohan: Let’s take that conversation further in terms of the implications of multipolar world from a management perspective. You know, for a long-time management research and practice have been led by the US, which has been the predominant power of the 20th century. That has led to some academic scholars and even practitioners questioning the validity of the US centric model for management practice and concept. So that really makes me wonder, shouldn’t we make some progress in terms of indigenization of management concept and practices?
Santrupt: … I have seen it from all sides. But what I’ve concluded in my mind is knowledge is boundary less and both its creation and consumption are global. Now, whether it is Greek knowledge, Roman, medieval, or ancient Vedic knowledge, people in the world are inspired by all different systems of knowledge that exist today.
Yes, successful models of capitalism came from the West. What is known as corporate and corporate management practices all emerged there and the west invested more into research and publication. So, I don’t think there is a reason to grudge why it is so. Nobody has restricted anybody to do foundational fundamental research to find answers and models and solutions to management issues and problems in other parts of the world. I see that emerging markets are (indeed)creating alternate models of development.
… the Internet and the digital medium have today made knowledge more accessible from any part of the world when it is created, it can go viral in no time. Obviously English has been a dominant medium of communication in the world and therefore a lot of Western literature reached others whereas there is literature in other languages which does not find an international audience automatically and naturally. But with speech recognition, Google Translator etc. the consumption of alternate research and practices will grow because there will be more access to it.
Dave: I don’t think it’s just knowledge. it’s ideas (too). I am finding LinkedIn as a global water cooler for ideas and so I post on LinkedIn. Knowledge is boundaryless. Second, our research found four things that can drive an effective organization. One is the country, second is the customer industry market. Three is the culture of the company and four is the competence of your business leaders. What we found is that culture or the country (account for) only 10 to 15%. It’s more because of the customer. Are you serving the customer wherever they are? It’s because of your culture, your values, your norms, and it’s because of the competence of your business leaders.
Changing demographics & workforce profile
Mohan: Yes, we have indeed moved on from the ethnocentric view of the world to being poly-centric view of the world where we take ideas from any part of the world, doesn’t matter what the source is. Let’s look at another fundamental change that is taking place which is the changing demographics. The Western world is ageing. The birth rate is falling and the supply of STEM talent in science, technology, engineering, and mathematics is going down, which is being filled by emerging economies such as India, Brazil and so on. Just like the goods and services and the money flowing around the world in a seamless supply chain management, even talent today is seamless in that sense. So, from labor market perspective, how do you see this emerging global management of talent? I would also like to pick your brain from a macro perspective that countries with very young population like India where you know more than 50% of the population is under 27. How are they going to address the unemployment of millions of people coming to the labor market, where automation and a lot of other things are sucking away employment growth?
Santrupt: … Reports seem to indicate that between 2022 and 2050, there will be 8% decline in working age population in the Western world. But there is nothing to be alarmed about unless we continue to play national boundaries to obstruct movement. The interesting aspect is that the growth of population in Sub Saharan Africa and Asia more than compensates for the falling rate of population in the developed world. Even though India’s fertility rates have dropped, India still is going to be in a very sweet spot for next three decades. Until 2050, with the working age population far exceeding the dependent age population, which is one of the major challenges that Western world is going to face, as Japan is facing for example or China is likely to face very soon because of the policy they adopted.
So, the point that you make is very important in that right policy interventions are critical. For example, India and many other countries are negotiating trade pacts between each other, regional, bilateral etc. But one of the things that gets stuck is the domestic politics prevents the trade agreements from allowing for movement and mobility of labor skill. Ever since Brexit has happened, there’s well documented how UK is experiencing challenges of having farm labor. There are similar problems in different parts of the world.
But the biggest challenge for the young population in any demographic is how do you skill and reskill them fast enough? Where do we get the resources – infrastructure, equipment, trainers to do that, and most importantly, how do we match these sectors in the economy that are emerging and what kind of skills that are required vis a vis these skills that are being impacted. I believe in many countries, including in India, there’s a mismatch and we need to find an answer to that. There’s no easy answer.
The last important point is that perhaps even Social Security policies are kind of sometimes be obstructive of people wanting to acquire new skills and do things because a lot of the time people say, alright, I don’t need to learn anything or work anymore because Social Security is taking care of me.
Dave: We wrote the book boundaryless organization, not at a macro level, but inside micro issues. Here’s my take on the demographics inside a company, why people work is as much the same across generations. They want autonomy. They want jobs. They want variety. They want work that gives meaning, that gives relationships. And one of the evolutions I see in the management of people is we’re moving from categories to personalization. What do you personally need in your job, in your space? Whatever your age, whatever your skill, whatever your background, how can our company scale personalization? That’s not easy to do.
Santrupt: The challenge is that … in the policy framework, is there enough understanding of adult learning principles and how do you get older age people to learn new age skills. So that’s going to be a challenge at both macro and micro level.
Dave: That’s what excites me about human capital and human capability. There is new stuff going on about personalizing work. How do you personalize 10,000 employees? I’m not sure, but that’s the kind of question that we need to begin to address.
Digital Divide
Mohan: That takes me to the next point of our conversation, which is about this emerging digital divide. You know, so far most of the best practices that we discuss in management come from developed countries and from companies like Google and Facebook and other resource rich multinationals. But we have a large part of the world, such as South Asia where 1/5 of humanity lives, which is extremely poor with a lot of unemployed youth. And our conversation indicates that you need to be digitally empowered and resourced in order to power ahead in the 21st century knowledge economy because it is creativity and innovation which are the only sustainable competitive advantage. So, does that put the less fortunate part of the world at a massive disadvantage? Are we going to move in the direction of seamless poverty because there is this digital divide that has been created?
Dave: I would go the other way. Digital normalizes the world. (Majority of the population in the emerging world), such as India, Indonesia, have access to cell phones and once you have access to a cell phone you have access to the same information that somebody in Seattle at Google or Amazon has. And to some extent, information digitally allows that knowledge to be distributed broadly. Now using that knowledge, scaling it becomes important. We will see a democratization because of information.
Santrupt: The emerging markets must get out of a scarcity mindset to move to growth. I believe that the emerging markets are very fortunate to have this digital revolution that provides them not only easy access but provides them an opportunity to quantum jump compared to many of their competitors. (The) combination of hunger in emerging society with this opportunity is going to create far more prosperity and growth. … in the emerging markets, you do not take anything for granted. You are grateful for the opportunity. You are hungry. You grab it and move on and so, we are in for some very exciting times.
Future of HR in a technology-driven World
Mohan: Both of you seem to strike a very positive note in terms of the potential of technology on the world at large. That takes me to the impact of technology on the HR profession. Dave, way back in 1997, one of the critical roles of HR your research team identified was being the employee champion. And in the debate between value versus values, HR seems to have lost out in the sense the credibility of HRM is in doubt in the minds of a lot of people. And now the intervention of technology has kind of made the situation murkier because believe it or not, ChatGPT itself asked me to ask you this question: how can HR professionals adapt to the ever-changing technological landscape while maintaining the human touch in their interactions?
Dave: We did those four HR roles in the 90s. They are out of date just as the technology of the 90s. (Today) HR is about the creation of value in a changing marketplace and one of the things that we are discovering is the (need for the) ability to navigate paradox. Should a company be long term, short term, top down, bottom up, inside out, outside in and the answer to every one of those is yes, we’ve got to manage quality and cost.
We’ve got to navigate the paradoxes between technology and human capability. If we get locked into technology as the solution to our problems and lose human touch, we lose. If we do human without technology, we lose. So, navigating that tension is saying where can technology enable it? Technology synthesizes what has been and builds some efficiency. It doesn’t create.
What’s next? A lot of people love to look back to learn. I love to look forward. Leadership is not about synthesizing the research and what others have said. It’s about creating a unique point of view and then helping the next generation create theirs. That may not be yours, and that’s what we try to do with technology. It enables us to synthesize what’s there, but then we in the human element create what’s not there. How do we use technology to enable the next agenda that comes from human creativity?
Santrupt: This has been an age-old debate that what technology really does to any profession. You know the debate around human resource professionals is a subset of that larger debate that’s happened. Incidentally, when ChatGPT came up recently in my review of my HR colleagues, I had urged them to have a look at (their) job description and ask which part of their job can equally be done by AI. And having looked at that, ask yourself, therefore, what is left of your job description for you to focus on and to be able to do that better. What new skills you need? Or what kind of mental readjustment or realignment you need.
It’s the biggest opportunity for the human resource profession today to reinvent ourselves. Recalibrate. Refocus to create even bigger value, because technology automation will take away a lot of things that were mundane. But today we are at an inflection point where really, we can have enormous amount of data with us to take really value adding long term decisions to make small experiments within organization.
The last important thing for me is to ask, what am I uniquely positioned for or capable of? What value only I can create that other functions cannot create. I believe with significant growth in technology, this question will come to the top of every HR leader’s agenda to say (as a function) what are we uniquely positioned to create that others cannot and therefore what’s the best way for me to do that? I believe the next 5-10 years are going to be very transformative for HR. If HR engages itself with those fundamental questions about its identity, its role, its focus, and what value it can add.
Dave: I totally agree that HR needs to continually reinvent and for me the reinvention is not what we do. It’s the value we create for others, and what we’re starting to see in HR, (is) an increasing movement that the value we create for others is not just the employee inside or the strategy, but our customer, our investor, our community outside. We’re building an internal culture that reflects our brand promise to the customer. We’re building a leadership competence model that is consistent with what we promised our customer. Our compensation system drives customer relationships. It drives investor value and so for me, one of the evolutions in HR is to start with the question that HR is not about HR, it’s about creating value for others who use the HR services, customers, investors. To me, that’s critical.
Santrupt: There are hundreds of unexplored areas in human resource management that are waiting to be explored imaginatively and differently. For example, a larger concern of employees and society as a whole post COVID is about wellbeing. If it is an integral part of human resource strategy to promote wellbeing, one of the major challenges is how do you develop a point of view on that and how do you convert every line manager into being a wellbeing manager without it being a bureaucratic nightmare of centrally administrated process, because a lot of the time our historical insights have been that people leave their managers and mental health is becoming important for employees. Productivity is linked to mental health and the entire identity of the organization is experienced by the employee through the manager. Now, at one level, the expectation from the line manager is to be a superhuman being who must be good at so many things to be able to create that value. Is it possible?
Mohan: Thank you both for this lovely conversation. In terms of your insights, observations, and advice to aspiring management professionals, I’m sure people can get a lot of takeaways from your very generous advice today. So, thank you so much.
