Role of human resource management in Organisational redesign

Abstract

In the era of rapid change, one of the crucial issues facing organizations is to cope with uncertainties. Changing environment necessitates a change in strategic intent and/or a change in business focus. The change in strategy or in business focus galvanizes many other changes. This calls for re-designing the organization. This study is an attempt to investigate the role of human resource strategies required during organizational redesign process in response to economic liberalization. Human Resource Strategy has become an important topic for discussion both in academic and business circles. Current research shows that HRM functions are important in implementing strategic initiatives but little has been reported on the linkages of HRM strategies with organization redesign. To be competitive, organizations are going through redesigning processes involving mechanisms of uncertainty reduction, differentiation and integration. Appropriate human resource management needs to be conceptualized to emplace these changes and execute changes in strategic initiatives and focus. To address this gap, research into the changes and role of HRM strategies during an organizational redesign is needed. Accordingly the research objective is to understand the role of HRM strategies and specifically to understand how the HRM components (role and structure of HRM department, requirement, promotion, retaining and redeployment, performance appraisal, compensation, and rightsizing) interact with the redesign process in response to changes in strategic initiative. The model tested is: changes in business environment via-a-vie turbulence and hyper competition, necessitate a change in comprehensive strategic initiatives (mergers and acquisitions, joint ventures, new products/markets) followed by organizational redesign (uncertainty reduction, differentiation and integration mechanisms), which if not reinforced by adequate changes in HRM systems, tends to create a failure and depress performance. To test the above model a triangulation design involving a combination of qualitative, quantitative methods and archival data were used. The research was carried out in two phases. The first phase of research involved developing a research model through in-depth exploratory case studies of three corporate organizations in India, one each from the Cement, Automobile and petroleum industries. Tow detailed case studies were done in the cement and automobile industry in France, to have a comparative perspective, reinforce the findings in India, and benchmark HRM systems of Indian organizations with those of successful French organizations in the same industry. In the second phase, a questionnaire was developed and a survey conducted in India to further examine the model and propositions. In the first phase of the research, three organizations from different industries were chosen. Data on HRM functions and organizational redesign processes were collected through in-depth, semi-structured interviews with seventy-one executives and through a review of archival data. This yielded information on seventy-four HRM variables used by the three organizations. The HRM functions within the framework of the contextual variables were analyzed to explore the linkages between contextual variables and the role these linkages play in the effectiveness and the overall performance of the organization. This qualitative analysis yielded a number of propositions linking the context, process and performance of the organizations. In the second phase of research, a survey was conducted among the top and middle management executives of organizations that have undergone a redesign process as reported in the literature, business press and by the executives of those organizations. Before conducting the survey, the research model, as well as the research instrument were pilot tested with 30HR/OB researchers, academicians, consultants and HR executives. Out of 194 organizations requested to participate, 134 of them agreed to participate. Each organization was sent 6 questionnaires. Out of the 804 questionnaires sent 196 usable responses from 69 organizations were obtained. A single response was received from each of 15 organizations. We dropped those15 organizations from our sample to ensure that there were at least two responses from each organization in the sample used for the study. The final sample consisted of 54 organizations with 181 responses. Responses from each organization were averaged to obtain organizational scores for each item in the questionnaire. These responses yielded a variety of HRM variables relating to role and structure of the HRM department, recruitment, performance appraisal, retraining and redeployment and rightsizing. Data from these 54 organizations were analyzed using various bivariate and multivariate statistical techniques. Some key findings from our study of 54 Indian organizations in the post liberalization scenario are:  Greater the change in comprehensive strategic initiatives, greater is the change in human resource management functions and redesign mechanisms, greater is the change in organizational performance.  Redesign mechanisms of uncertainty reduction, differentiation and integration are strongly and significantly correlated with human resource management functions and organizational performance.  Integration mechanisms are the key factors in a redesign process and have the strongest positive effect on organizational performance.  Formulation of successful HRM strategies is characterized by extensive information gathering, information dissemination and communication exercises and has direct correlation with the success of the organizational redesign process.  The HRM function of performance appraisal is one of the key drivers of the change during an organizational redesign process. Performance appraisal is strongly and significantly correlated with comprehensive strategic initiatives (mergers and acquisitions, joint ventures, new products/markets) of the organizations.  Role of HRM department and the HRM functions of recruitment, retraining and redeployment and compensation are positively correlated with organizational performance.

This study has implications for improving and managing change process successfully during an organizational redesign process. This study is of relevance to line managers, HR executives, HR consultants and top managers of organizations trying to respond effectively to changes in the global workplace.