Important lessons for HR managers

As the curtain comes down on 2006, HR managers and consultants do not expect any great improvement in the current mismatch between the demand for and supply of talent.

They believe existing trends will continue into 2007 and beyond. Soumen Basu of Manpower Services reckons that given the buoyancy of the economy, increased hiring activity will continue in 2007.

But in the absence of systemic solutions that could augment the supply of trained manpower, companies will have to improvise and innovate.

Says Anita Ramachandran of Cerebrus: "I see the talent crunch continuing for another two years at least and companies will continue to have to come up with their own training programmes."

Ashok Reddy of TeamLease believes companies will have to gear up on four fronts, by "providing adequate training, retaining manpower, working out long-term compensation plans and constantly redefining dynamic work cultures."

And strategic HR consultant Hema Ravichandar expects three key trends to emerge in 2007: Remote working and related practices like flexi time and satellite hubs; retention bonuses; and the recall of retired professionals in the face of inadequate middle management maturity.

Balaji of Ma Foi reckons that even if a slackening of growth in the US economy slows down the migration of jobs to India, skill-intensive jobs such as engineering design, equity research, statistical modelling and business intelligence - where India has an abundant talent pool - will continue coming.

He expects 'temping' and outsourcing to see phenomenal growth if there are labour reforms. If the retail forays of Reliance Retail, Bharti-Wal Mart and other hopefuls take off as planned, "there will be massive jobs growth," says Balaji.

But he warns that in the West the big retailers pay only the minimum wage, and "unlike investment banking, there will be big bucks only for a few senior managers."

Balaji also notes: "Internationally, retail is a localised business, and there are just a handful of multinational players. Carrefour of France has a presence in only 30 countries, whereas in drugs and pharmaceuticals or FMCG, the global players are in more than 100 countries each."

If in 2006 the realisation dawned that "we lack the 'right' talent - by which I mean people who are ready to play effective roles in their employer organisations to fuel growth in a whole range of sectors," notes Mohinish Sinha of PwC, in 2007 senior managers will need to step out of their skins and play the role of effective leaders in getting work out of others.

Only leaders who are ready to operate in a more competitive environment, he reckons, will thrive: "Senior management who know how to rally organisations will be key. Also key will be mid-level managers who know how to develop people under them more effectively."

Forward-looking companies, Sinha says, have started questioning the notion that only MBAs and IIT graduates constitute good talent.

"Companies have realised that they need to 'ready' people for their own needs. NASSCOM has talked of the need for a finishing school and firms like Infosys, Accenture and Genpact have started their own institutes," says Sinha.

He sees companies demanding stronger performances from employees, "keeping only the best and encouraging the non-performers to leave."

This in turn will reinforce the role of variable pay. "Companies are thinking of structuring long-term incentives such as three-year bonuses and stock options in ways that will ensure that high-performers stay," says Sinha.

Compensation structures, which vary with the vintage of the industry sector, are already changing, according to Hewitt Associates. Banking, traditionally a benefits-heavy structure, is developing a cash orientation.

FMCG and manufacturing have simplified their compensation structures but still retain key benefits, given their older vintage and relatively older employee population.

However, new and emerging sectors like retail, telecom, aviation, IT/ITeS and AMCs, which do not have the disadvantage of legacy issues and also have a younger employee profile, have adopted simplified structures at the outset.

Hewitt also expects that the bid to contain the pressure that growth is putting on India Inc's wage bill will boost the pay-for-performance trend, spawning innovative variable pay programmes.