In the early years of India Inc, employee retention wasn’t a matter of great concern, and neither was HR, in general. But things have changed. How have they changed and what is the way forward?

First, let us look at it from an employee’s perspective. You can characterise the change since the reforms in 1993-94, on the paradigm of choice. The number of options for employees has gone up exponentially. With choice comes a supply-demand gap, so compensation increased. For the first time there’s been a real effort by corporates to make the workplace more exciting, engaging and interesting.

And this, in turn, has resulted in employee productivity going up, giving them a much larger say in the way corporates get built out. In the IT sector, for instance, a large number of employees are option owners, and as a collective body, employees could own about 9-30 per cent of the entire firm.

In the corporate world, there’s been an increased competition and there is easier access to international markets.

You are working with and competing against a much wider pool of people, so you have to sharpen your skills. There are enough documented studies to show how the best of Indian entrepreneurs have been able to compete and beat the top leaders of more developed countries. The entire evolution of corporates around competition, practices, governance and integration with the world economy has been well documented.

If you look at HR, again, there’s been a fair degree of dispersal. HR has come a long way since its birth as a sector. Even in the early 90s, FMCG companies were fairly evolved on the HR practice front. In 1993, I joined Marico, and they were exceedingly progressive with the kind of HR interventions they deployed.

There was a policy of no casual leave, you just took time off when you wanted to. The kind of leadership and training interventions they were driving were very sophisticated. They were looking into TQM. They set up a factory in Kozhikode in Kerala (which was not unionised because of the practices they had put in place). It was very non-hierarchical, with an open-door policy. The whole office construction was glass and chrome. And HR played a leading role in driving a lot of these initiatives.

And to think that Marico was part of the Bombay Oil Group. Harsh (Mariwala) has really been an extremely evolved promoter-CEO, and he has paved the way for a lot of these practices.

The way Marico is run is really an expression of his managerial style. And then there have been significant leaders such as Jaswant Nair, former head of HR, who played a stellar role in building the company.

But largely, if you wanted to characterise HR, it broadly managed personnel and payrolls- making sure salaries were paid, deductions happened, hours were clocked in-and (acted as) the legal interface between the organisation and regulatory bodies. Today, HR has evolved because realistically the only differentiator that corporates have is people. All other differentiators of competitive advantage have been equalised, whether it's technology, capital or innovation. That is why HR has evolved from being a regulator to becoming a function that is tasked with the responsibility of protecting and enhancing the human capital of a firm.

(The author is Group Head (HR & Corporate Services), IDFC and Co-CEO, IDFC Foundation)

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