India has the highest percentage of family businesses in Asia, states the Asian Family Business Report of 2011 by the Credit Suisse Emerging Markets Research Institute. The study finds that India has the highest percentage (67%) of family businesses and that family businesses contribute significantly to investments and employment. Also according to an ASSOCHAM study, SMEs contribute over 22 percent to India’s GDP. But majority of the Family Managed Businesses (FMBs) do not survive beyond the third generation and SMEs do not grow due to variety of reasons, one of them being failure of FMBs and SMEs to harness the full business potential of their set-ups through integrated HR systems.
Currently, most organisations consider HR as only a support function and fail to recognise its importance as a business function. It is also a fact that HR teams do not fully comprehend the business objectives or goals of an organisation and in some cases the business itself. They are unable to identify the gaps that hinder the organisation from fulfilling its business objectives. This in turn leads to hiring of talent that does not have the requisite skill set for a particular position or that not equipped to provide real solutions to the actual business challenges.
HR should see itself as the capacity builder where it helps and defines organisational capabilities. It should understand global business context and build relevant organisational capabilities around that. It is crucial for companies to train and develop HR systems that understand the business and its objectives first, identify problems that hinder growth and then provide solutions to eliminate the existing problem. This step will ultimately lead to the growth of the business. The role of HR is not only limited to talent acquisition and performance management but also to integrate itself with the overall functioning of a business.
An organisation may achieve business goals by replacing traditional HR processes that are holding back its potential, with modern, business-linked HR processes. There are HR consultancy firms that act as a tool in structuring and streamlining processes while making use of the existing data and insights into the organisation. They provide solutions at a deeper and integral level through data capturing, identifying gaps and problems across verticals, laying out management processes for various services and helping in best implementation of their available resources.
It is important to understand that HR services although inevitably linked to the operational functioning of an organisation can also be integrated in the business outcomes of the organisation. Companies should stop perceiving HR as merely an external operational support function and also explore its potential as a strategic partner in business processes. They should position it as a value-adding function. An organisation will be able to achieve both- operational and strategic results if HR services are maximised by using it as a strategic business partner that can provide strong inputs and direction to the business strategy in a more structured manner.
The author is co-founder and managing partner of Stratum Consulting, HR advisory firm.