Human Capital Management: A Case of xecuteHR Solutions Private Limited and Alcat el-Lucent Network Management Services India

Limited (Client) Fieldwork Project Submitted to Department of Social Work Jamia Millia Islamia New Delhi-110025 Submitted by Lamea Nehal Master of Arts in Human Resource Management (2009-11)

ACKNOWLEDGEMENT I would like to express my deepest gratitude to the entire team of xecuteHR Solu tions Private who helped me to complete my training and get an in-depth underst anding of the core Human Resource functions. I have undergone training as an HR trainee in the organization for a period of two months, from September 2010 to O ctober 2010 and February 2011. I have completed this report under the guidance a nd supervision of my Faculty Supervisor, Mr. Sigamani P and my Agency Supervisor s, Ms. Ruhi Arora Jhulka and Ms. Nikita Zutshi. The information contained in thi s report is based purely on my observations and discussions with the various mem bers of the team of the organization. Also I sincerely thank Mr. Kaustuv Mitra (Director), Ms. Dimple Bakshi (VP-HR De livery), Mr. Subeer Ranjan (Key Account Manager- Alcatel Lucent Network Manageme nt Services India Limited) for their tremendous support and guidance. I would li ke to thank these people for their guidance and enriching my thoughts in the fie ld of HR from different perspectives. My increased spectrum of knowledge in this field is the result of their constant supervision and direction that has helped me to absorb relevant and high quality information. I am extremely grateful to and sincerely thank all the people who have helped me in gathering all the information that I required for the preparation of this pr oject report. I owe enormous intellectual debt towards all my guides and, who ha ve augmented my knowledge in the field of HR. I would also like to extend my gratitude to the Department of Social Work, Jamia Millia Islamia for giving me this opportunity. Last but not the least, I feel indebted to all those persons who have provided h elp directly or indirectly in successfully completing my training. Lamea Nehal Department of Social Work, Faculty of Social Sciences, Jamia Millia Islamia, New Delhi-110025 CERTIFICATE This project entitled Human Capital Management: A Case of xecuteHR Solutions Priv ate Limited and Alcatel-Lucent Network Management Services India Limited (Client ) at xecuteHR Solutions Private Limited, Gurgaon is submitted for the partial ful fillment of degree of Master of Arts in Human Resource Management at Jamia Milli

a Islamia, New Delhi. This project has not been submitted for the award of any o ther degree or diploma of this university or any other university and this is my original work.

Lamea Nehal M.A. HRM (Semester IV) Index Chapter No. Title Page No. Chapter 1: Introduction 4 Chapter 2: Human Capital Management: A Measurement Approach 8 Introduction 9 Human Capital 9 Human Capital Management: Concept 11 Human Capital Measurement 11 A Model of Strategic Human Capital Management: A new tools for Agency Leaders (A US Government Study) 13 Emerging Issues 20 Chapter 3: Research Methodology 22 Chapter 4: Human Capital Management: A Case of xecuteHR Solutions Private Limited and Alcatel Lucent Network Management Services India Private Limited (Client) 27 Alcatel-Lucent Network Management Services India Limited 32 Human Capital Management and Measurement 33 Chapter 5: Findings and Discussions 37 Chapter 6: Summary and Conclusions 42 References 45 Appendix 47

Chapter 1

Introduction

Chapter-1 Introduction As the business environment becomes more competitive, firms Human Resources (HR) become more important to firms success. Strategic Human Resource Management (HRM) became an enabling tool in achieving market competitiveness. Strategic HRM is t he pattern of planned human resource deployments and activities intended to enab le the firm to achieve its goals The domain of strategic Human Resource Manageme nt, consists of the determinants of decisions about HR practices, the compositio n of human capital resource pool, the specification of the required human resour ce behaviours, and the effectiveness of these decisions given various business s trategies and/or competitive situations. Human Capital Management (HCM) is concerned with obtaining, analysing and report ing on data that inform the direction of value-adding people management, strateg ic, investment and operational decisions at corporate level and at the level of front line management. It is ultimately about value. HCM is concerned with purpo seful measurement, not just measurement. The defi ning characteristic of HCM is the use of metrics to guide an approach to managing people that regards them as assets and emphasizes that competitive advantage is achieved by strategic invest ments in those assets through employee engagement and retention, talent manageme nt and learning and development programmes. HCM provides a bridge between HR and business strategy. The concept human capital management (HCM) is based on the concept of human capita l. Human capital consists of the knowledge, skills and abilities of the people e mployed in an organization. The field of strategic human resource management has seemingly rediscovered human capital with increasing research focused on human capital as a mediator in the relationship between HR practices and performance. Human Capital is critical to organizational success. There is an overwhelming ca se for evolving methods of valuing human capital as an aid to people management decision making. This may mean identifying the key people management drivers and modelling the effect of varying them. The need is to develop a framework within which reliable information can be collected and analysed such as added value pe r employee, productivity and measures of employee behaviour (attrition and absen teeism rates, the frequency/ severity rate of accidents, and cost savings result ing from suggestion schemes). HCM is a measurement oriented process which is focused towards creating high per formance work systems which would impact and be related to corporate financial p erformance. HCM drives performance. The practice and challenges of HCM would be different when the HRM function of a n organization is being handled, either fully or partially, by a partner (Vendor ). It means that the in-house HR function of an organization is outsourced and b eing performed by an external vendor. In such a case, the responsibility of meas uring and managing the Human Capital is that of the vendor but it has to be defi ned by the organization itself. The organization has to set the performance, qua lity and delivery criteria in the contract agreement with the vendor. The approa ch taken by the vendor in measuring and managing the criteria, as defined in the contract agreement with the organization, can be a process tool in the delivery of HR processes and practices to the client organization. The Case Study developed by the researcher describes the Human Capital Managemen t Practices delivered by a vendor which has partnered with an organization to ma

nage their HRM function, either fully or partially. The Chapters in the Dissertation are summarized below. Chapter 1, titled, Introduction This chapter describes the changing role of HR in an organization. It states about the impact of HR on market competitiveness and the role of strategic HRM in achieving the firms objectives. It describes about H CM and its contribution in developing high performance work systems. It states a bout human capital and its measurement. Lastly, it says about delivering HCM pra ctices in an Human Resource Outsourcing (HRO) delivery model by a vendor to the client organization. Chapter 2, titled, Human Capital Management: A Measurement Approach This chapters presents the discussion on literature available on Human Capital Management. It describes the concept of human capital and its economic relevance. It discusses about the theoretical aspect of HCM. It presents a model HCM of United States Ge neral Accounting Office. Chapter 3, titled, Research Methodology, presents the research design and the meth odology employed to conduct the study. Chapter 4, titled. Human Capital Management: A Case of xecuteHR Solutions Private Limited and Alcatel-Lucent Network Management Services India Private Limited (C lient) presents a case of xecuteHR Solutions Private Limited, wherein they delive r HR services to their client Alcatel-Lucent Network Management Services India L imited through an outsourcing relationship. It describes the Human Capital Measu rement techniques developed by xHR which are fully or partially implemented at A LNMSI. Chapter 5, titled, Findings and Discussions discusses the various outcomes and ana lyses of the points that were presented in the case. Chapter 6, titled, Summary and Conclusion presents the summary of the study and gi ves a concluding remark to the case and its findings.

Chapter-2

Human Capital Management: A Measurement Approach

Chapter-2 Human Capital Management: A Measurement Approach Introduction Human Resource Management has become a highly evolved function which has partner ed with the organization to create long term impact on corporate financial perfo rmance. It focuses on creating high performance work systems which would support the organization in achieving market competitiveness. The HRM function is trans forming to a more strategic role. HR function is responsible for creating, devel oping and reporting the value and contribution of Human Capital in quantitative and financial terms. Human Capital

The concept of human capital has its origins in the economic literature. Becker (1964) defined human capital as the knowledge, information, ideas, skills, and he alth of individuals (Becker, 2002: 1). Comparing human capital to financial or ph ysical capital, he notes that all are forms of capital in the sense that they ar e assets that yield income and other useful outputs over long periods of time. O n the other hand, the uniqueness of human capital stems from the fact that peopl e cannot be separated from their knowledge, skills, health or values in the way they can be separated from their financial and physical assets (Becker, 2008). The economic view defines human capital in terms of knowledge, skills, etc. Psyc hologists, on the other hand, have approached the concept of human capital from an entirely different perspective. Steeped in the individual differences literat ure (Spearman, 1927), they have tended to equate human capital with the knowledg e, skills, abilities and other characteristics of individuals. In addition, rath er than using rough proxies such as education, psychologists have developed psyc hometrically sound assessments of these characteristics of individuals. For inst ance, a tremendous literature has developed around the assessment of cognitive a bility and its relationship with various aspects of job performance. In addition , rather than focus on the individuals choice to develop aspects of his/her human capital, psychologists have frequently examined the techniques organisations im pose on people (i.e. the HR practices such as training, performance feedback, et c.) through which human capital is developed in individuals (Ford and Fisher, 19 97; Bell and Kozlowski, 2008). Human capital represents the human factor in the organization; the combined inte lligence, skills and expertise that gives the organization its distinctive chara cter. The human elements of the organization are those that are capable of learn ing, changing, innovating and providing the creative thrust which if properly mo tivated can ensure the long-term survival of the organization. The concept of hu man capital is most usefully viewed as a bridging concept that is, it defines th e link between HR practices and business performance in terms of assets rather t han business processes. Thus, at the individual level, human capital consists of the characteristics pos sessed by an individual that can yield positive outcomes for that individual whi le at the unit level, human capital can refer to the aggregate accumulation of i ndividual human capital that can be combined in a way that creates value for the unit. Human Capital Theory The added value that people can contribute to an organization is emphasized by h uman capital theory. It regards people as assets and stresses that investment by organizations in people will generate worthwhile returns. Human capital theory is associated with the resource-based view of the firm as developed by Barney (1 991). This proposes that sustainable competitive advantage is attained when the firm has a human resource pool that cannot be imitated or substituted by its riv als. Boxall (1996) refers to this situation as one that confers human capital adv antage. A distinction should be made between human capital advantage and human proce ss advantage. The former results from employing people with competitively valuabl e knowledge and skills, much of it tacit. The latter, however, follows from the establishment of difficult to imitate, highly evolved processes within the firm, such as cross-departmental cooperation and executive development. Accordingly, h uman resource advantage, the superiority of one firms labour management over anoth ers, can be thought of as the product of its human capital and human process adva ntages. Human capital theory helps to: Determine the impact of people on the business and their contribution to shareho lder value; Demonstrate that HR practices produce value for money in terms, for example, of return on investment; Provide guidance on future HR and business strategies; Provide data that will inform strategies and practices designed to improve the e ffectiveness of people management in the organization. Human Capital Management: Concept

HCM is concerned with obtaining, analysing and reporting on data that inform the direction of value-adding people management, strategic, investment and operatio nal decisions at corporate level and at the level of front line management. It i s, as emphasized by Kearns (2005), ultimately about value. HCM is concerned with purposeful measurement, not just measurement. The defining characteristic of HCM is the use of metrics to guide an approach to managing pe ople that regards them as assets and emphasizes that competitive advantage is ac hieved by strategic investments in those assets through employee engagement and retention, talent management and learning and development programmes. HCM provid es a bridge between HR and business strategy. Human Capital Measurement Human capital measurement has been defined by IDS (2004) as being about finding l inks, correlations and, ideally, causation, between different sets of (HR) data, using statistical techniques. As Becker et al (2001) emphasize: The most potent action HR managers can take to ensure their strategic contributi on is to develop a measurement system that convincingly showcases HRs impact on b usiness performance. [They must] understand how the firm creates value and how t o measure the value creation process. The primary aim of HCM is to assess the impact of human resource management prac tices and the contribution made by people to organizational performance. Methods of measuring impact and contribution based upon human capital data have therefo re to be developed. There is an overwhelming case for evolving methods of valuing human capital as a n aid to people management decision making. This may mean identifying the key pe ople management drivers and modelling the effect of varying them. The need is to develop a framework within which reliable information can be collected and anal ysed such as added value per employee, productivity and measures of employee beh aviour (attrition and absenteeism rates, the frequency/ severity rate of accidents, and cost savings resulting from suggestion schemes). Approaches to Measurement The human capital index Watson Wyatt On the basis of a survey of companies that have linked together HR management pr actices and market value, Watson Wyatt (2002) identified four major categories o f HR practice that could be linked to increases in shareholder value creation. T hese are: Total rewards and accountability 16.5 per cent Collegial, flexible workforce 9.0 per cent Recruiting and retention excellence 7.9 per cent Communication integrity 7.1 per cent The organizational performance model Mercer HR Consulting The organizational performance model developed by Mercer HR Consulting is based on the following elements: people, work processes, management structure, informa tion and knowledge, decision making and rewards, each of which plays out differe ntly within the context of the organization, creating a unique DNA. If these ele ments have been developed piecemeal, as often happens, the potential for misalig nment is strong and it is likely that human capital is not being optimized, crea ting opportunities for substantial improvement in returns. Identifying these opp ortunities requires disciplined measurement of the organizations human capital as sets and the management practices that affect their performance. The statistical tool, Internal Labour Market Analysis used by Mercer draws on the running record of employee and labour market data to analyse the actual experience of employees rather than stated HR programmes and policies. Thus gaps can be identified betw een what is required in the workforce to support business goals and what is actu ally being delivered. The human capital monitor Andrew Mayo Andrew Mayo (2001) has developed the human capital monitor to identify the human v alue of the enterprise or human asset worth, which is equal to employment cost indi vidual asset multiplier. The latter is a weighted average assessment of capabilit y, potential to grow, personal performance (contribution) and alignment to the o

rganizations values set in the context of the workforce environment (ie how leade rship, culture, motivation and learning are driving success). The absolute figur e is not important. What does matter is that the process of measurement leads yo u to consider whether human capital is sufficient, increasing, or decreasing, an d highlights issues to address. Mayo advises against using too many measures and instead, to concentrate on a few organization-wide measures that are critical i n creating shareholder value or achieving current and future organizational goal s. A number of other areas for measurement and methods of doing so have been ide ntified by Mayo (1999, 2001). He believes that value added per person is a good measure of the effectiveness of human capital, especially for making inter-fi rm comparisons. But he considers that the most critical indicator for the value of human capital is the level of expertise possessed by an organization. He sugges ts that this could be analysed under the headings of identified organizational c ore competencies. The other criteria he mentions are measures of satisfaction de rived from employee opinion surveys and levels of attrition and absenteeism. Human Capital Measures and Their Possible Use Refer Appendix A Model of Strategic Human Capital Management: A New Tool for Agency Leaders (A US Government Study) The human capital model highlights the kinds of thinking that agencies should ap ply, as well as some of the steps they can take, to make progress in managing hu man capital strategically. The model consists of the following: The Critical Success Factors Table identifies eight critical success factors for managing human capital strategically, which embody an approach to human capital management that is fact-based, focused on strategic results, and incorporates m erit principles and other national goals. Each critical success factor is then p resented in a table, illustrating their development across three levels. Critical Success Factors Table The Critical Success Factors Table identifies eight critical success factors for managing human capital strategically. These factors are organized in pairs to c orrespond with the four government wide high-risk human capital challenges that our work has shown are undermining agency effectiveness (Figure 1). Taken togeth er, the eight critical success factors embody an approach to human capital manag ement that is fact-based, focused on program results and mission accomplishment, and incorporates merit principles and other national goals. When considering th e human capital cornerstones and the critical success factors, it is important t o remember that they are interrelated and mutually reinforcing. Any pairing or o rdering of human capital issues may have a sound rationale behind it, but no arr angement should imply that human capital issues can be compartmentalized and dea lt with in isolation from one another. Critical Success Factor Table Source: A Model of Strategic Human Capital Management, United States General Ac counting Office, Exposure Draft, March, 2002. All of the critical success factors reflect two principles that are central to t he human capital idea: People are assets whose value can be enhanced through investment. As with any in vestment, the goal is to maximize value while managing risk. An organizations human capital approaches should be designed, implemented, and as sessed by the standard of how well they help the organization achieve results an d pursue its mission. For each of the eight critical success factors, the table describes three levels : Level 1, Level 2, and Level 3 (Figure 2). Source: A Model of Strategic Human Capital Management, United States General Ac counting Office, Exposure Draft, March, 2002. The descriptions portray the approach to managing people that can be expected of an organization at each level. To understand the progression from level to leve l, it is best to keep in mind the two central human capital ideas just discussed . An agency at Level 1 is unlikely to have effectively put these two principles

into practice. At Level 2 an agency is clearly taking steps to apply them. An ag ency at Level 3 has made these principles an integral part of its approach to do ing business, and can see demonstrable results from having done so. Progressing to Level 3, which each agency should strive to accomplish, will take considerabl e time, effort, and resources on behalf of agency leadership to successfully man age the required organizational change. The use of this model requires a long-te rm commitment to valuing human capital as a strategic asset.

Source: A Model of Strategic Human Capital Management, United States General Ac counting Office, Exposure Draft, March, 2002. Maximizing the value of human capital is a function not just of specific actions but of cultural transformation. Accompanying the discussion of each critical success factor is a case illustrati on involving a federal agency that has taken positive steps toward addressing on e of its human capital challenges. They have also noted, where appropriate, the positive consequences that have resulted from such efforts. The fact that an org anization is profiled for a particular critical success factor is not meant to i mply complete success or lack of success in other dimensions. Furthermore, the e fforts highlighted in the case illustrations are not intended to exemplify all t he potential steps an agency may take to make progress under each critical succe ss factor. Emerging Issues Human Capital Management is an area which is concerned with measuring the value of Human capital in quantitative and monetary terms. The present literature stud ied by the researcher discussed about human capital and its economic relevance. It presents a discussion on defining HCM, the utility and the approach for measu ring human capital. The literature does not say anything about measuring human c apital in a human resource outsourcing delivery model. It does not describe the approach adopted by vendors delivering service (HR) to the clients with a HCM ap proach. Statement of the Problem Studying the Human Capital Management Approach adopted by a vendor to its client in Human Resource Outsourcing Service Delivery. Study Objectives General Objective To understand the Human Capital Management approach used by a vendor to deliver its services to a client in a human resource outsourcing service delivery. Specific Objectives First, understanding the Human Capital Management practices undertaken by organi zations in India. Second, developing a case on Human Capital Management practices of xecuteHR Solu tions Private Limited delivered to its client Alcatel Lucent Network Management Services India Limited. Third, identifying the parameters and units for measuring human capital. Scope and Significance of the Study The researcher studies the prevalent practices of Human Capital Management. It s hows the HCM practices by a human resource outsourcing vendor (xHR) to its clien t (ALNMSI). This would help in understanding the HCM practices in an Indian cont ext in a HRO service delivery model. The study would be relevant for HRM professionals to understand the practices of HCM to be adopted in client-vendor HRO service delivery. It will bring out the specific methods of measuring human capital.

Chapter-3

Research Methodology

Chapter-3Research Methodology Introduction The researcher has done her study on Human Capital Management practices and appr oaches. She is conducting the study on HCM approach by vendors who are providing Human Resource Outsourcing services to their clients. The study is focused on H CM. The researcher has used case study method to present the information. Theref ore, her research methodology is designed in such a manner which would make the study empirical, factual and avoid biasness. Study Area The researcher has conducted the study at xecuteHR Solutions Private Limited. Research Design The researcher has used case study method for conducting the study. She has cond ucted a study which is empirical in nature. She has used primary and secondary d ata and presented and analyzed the information in an exploratory way. This metho d was found suitable for conducting the study as information and data had to be analyzed and presented on Human Capital Management. It describes a particular ap proach by considering a particular event between xecuteHR Solutions Private Limi ted and Alcatel-Lucent Network Management Services India. Sampling The researcher has chosen purposive sampling, a type of non-probability sampling . The researcher has selected a specific set of professionals based on their rol e, profile, work experience and understanding of Human Capital Management approa ch in a HRO service model. The researcher has selected senior management profess ionals from xHR and ALNMSI. Research Tool The researcher has used Semi Structured interview method for collecting data and information on Human Capital Management approach from respondents. The research er developed an interview schedule which was given to the respondents. She provi ded the respondents themes in the interview schedule for extracting the informat ion. It was an open ended interview and the respondents could give additional in formation on the issue. Research Technique The researcher used case study method, a qualitative research technique for pres enting the information on HCM. She has used primary and secondary sources for c ollecting the data and relevant information on the subject. She has gathered, an alysed and presented the information on HCM approach of xHR to deliver service t o ALNMSI. It was relevant to use case study method as the researcher had to desc ribe the process. As the case study method was used, a small set of respondents were chosen to obt ain data and information on HCM approach of xHR. Respondent Class Respondents Functional Role Respondents Organization Nos. of respondents in each category Senior Management Director- Business Operations xHR (Vendor) 01 Senior Management VP-HR Delivery xHR (Vendor) 01 Senior Management Head-HR ALNMSI (Client) 01 Data for the study

The researcher has collected data and information on HCM, metrics used to analyz e the cost of delivery of service, metrics for measuring and reporting human cap ital and the process. The information has been sourced from primary and secondar y sources. Primary Data The researcher collected primary data and information on the above mentioned the mes through semi structured interview administered on the mentioned class of res pondents. The respondents were provided with an interview schedule. This helped the respondents in understanding the nature and objective of study; and keeping the interview focused and avoid deviations from the main theme. Secondary Data Secondary data and information on the above mentioned themes was collected throu gh research papers, business cases, journal articles and news articles. Pilot Study The researcher found it necessary to do a pilot study of the interview schedule. As the interview schedule was semi structured, there was a need to test for its relevance and validate the information derived from it with the theme of the st udy. The researcher conducted the study on a senior management executive of a co mpeting HRO service provider. The results showed that all desired aspects of HCM was covered in the interview schedule but she found that few themes were of hig hly confidential nature and the companies would not provide the desired informat ion. She removed those aspects from the theme. Data Analysis The researcher will present the analysis of the study thematically in the form o f a case study. She would be using cross case analysis of secondary data and cor roborating it with the primary data. Limitations of Study The researcher tried to conduct the study on HCM as extensively as possible. But she realized that the data and information on many issues was not shared by the client organization particularly. The researcher was not able to collect primar y data on some critical issues and had to use the information based out of secon dary data. Since the researcher has conducted a study on HCM and has focused on human capital measurement of xecuteHR Solutions Private Limited and Alcatel-Luce nt Network Management Services India Limited, she was not able to cover the HCM practices of other industry verticals. Operational Definition Human Capital Management: It is the practice and approach of managing the human capital of a client organization by a vendor organization, in a model where the client organization has either fully or partially outsourced its human resource function. It is used to quantify the human capital in quantitative and monetary terms. Human Capital Measurement: It is a system of developing and using those metrics which are used to manage the human capital in an organization. The researcher has used the case study method, a type of qualitative research, f or presenting the information and data gathered through primary and secondary so urces on Human Capital Management and Measurement. Since she has studied the pra ctice and approach of human capital management by xecuteHR Solutions Private Lim ited for Alcatel-Lucent Network Management Services India, she would be presenti ng a case on the same in the next chapter.

Chapter-4

Human Capital Management:A Case of xecuteHR Solutions Private Limited and Alcate l-Lucent Network Management Services India Private Limited (Client)

Chapter-4 A Case of xecuteHR Solutions Private Limited XecuteHR Solutions Private Limited (xHR) was founded in August, 2009 as a result of changing nature of Human Resource Delivery. xHR was founded by Koustuv Mitra . During his tenure with Bharti Airtel Limited as Global VP-Human Resource, he r ealized that the business of the business is to do its business. He believed tha t Human Resource is a critical function in an organization which can be divided into two segments- Business or Strategic HR function and Support Function. Strat egic HR function can be classified as, those functions which adds value to the c ustomer. Any function that has a direct impact on the topline and bottom line of a company, impact on the cost of service, impact on pricing of products or incr ease customer perception of value of products and services can be said to be of a strategic nature. He realized that it is the Strategic HR function that is add ing value to the business. He knew that many HR functions which fall under the S upport function do not create an impact on the business of the organization is o nly a cost. He knew that this HR function can be outsourced and should not be pe rformed in-house. As a result of outsourcing the transactional HR function, the HR leaders can focus on strategic objectives of business and integrate it with t he HR Strategy. The birth of xHR was a result of a coffee conversation of two friends, Koustuv M itra, Global VP-Human Resources (earlier) and Ronald Dsouza, Head- Human Resource s, South East Asia. Bharti Airtel Limited and Alcatel Lucent India Limited agree d on a joint venture for Bhartis Telemedia Business wherein Alcatel Lucent would be handling the entire end to end network management for Bharti Telemedia. The n ew entity was called Alcatel Lucent Network Management Services India Limited (A LNMSI). During the conversation, Koustuv told Ronald that the new entity should outsource its entire Human Resource function to a third party vendor wherein the vendor would handle the Support HR function and would also provide on-site manp ower for the HR SPOC (Single Point of Contact) position. Ronald showed apprehens ion as he knew that the present vendors do not have the right capabilities and s kill set to execute such an idea. It was then Koustuv decided that he would crea te a new HR Delivery model for the companies to consider. He told Ronald that he wanted to implement in this model at ALNMSI by starting his own company. Ronald agreed to his plan and thus xHR was formed with ALNMSI as its client. xHR was formed a vision to empower organizations through its unique end to end people services, processes and systems. He offered companies a new HR delivery m odel which would free them of performing the HR Support Activities and give them greater focus on strategic core business areas. xHR offers HR solutions to its clients which are technology based, developed inhouse at its Kolkatta centre. It offers to its clients modular solutions and an integrated Human Resource Outsourcing (HRO) Model which is a combination of all the models. Product and Service Offering xHR provides Recruitment Management service to its clients wherein they mention as a part of their Service Level Agreement (SLA) to deliver the service with agr eed standards of efficiency and cost to the client. They manage the entire recru itment cycle from the stage where a manpower requisition is raised by the client till the new hire on boards with the client. They do this by managing the requi sition by setting the Turn Around Time (TAT) for the requisition raised by the c lient, managing the sourcing channel through portals (Vendor, Career and Interna l), managing the interview process by providing a feedback and shortlisting syst em, interview scheduling, feedback sharing with the line managers and generating offer letters; providing floor coordination through coordinating with the HR ma

nagers and managing the paperwork for smooth joining of the new hires. They take care of Onboarding by providing joining reports, reporting the position status of the clients and managing the process quality. They handle the master vendor p ortal which is integrated with the Finance function of the client which assists in buying out notice period of new hires (if required), joining bonus payment an d also managing the vendor payment. The integrated recruitment management servic e they offer is Recruitment Process Outsourcing (RPO) in industry terminology. xHR provides Off Site Services to its clients by sourcing candidates, employee q uery management and providing employee help desk services wherein the HR help li ne for the client is managed off site at xHR location. It offers Contingency Rec ruitment Services to its client wherein they hire for certain specified position s only. xHR provides technology solutions to its clients which are based on cloud comput ing, wherein the software developed by xHR is hosted at Servers located at Kolka ta centre. They provide a Pay Per Usage service to the client where the client pay s to xHR to get access to the technology and is able to use its solutions for fu nctions like payroll administration, attendance and leave management, data stora ge, etc. xHR ensures Data Security and takes liability for the integrity of the data. They provide Human Resource Information Systems to the clients apart from providing On Boarding tool and a Hosted Performance Management System. xHR gives Performance HR Consulting to its clients which are project/time driven agreements with the clients. They help organizations optimize performance by me eting their most critical needs of managing, rewarding, engaging talent, buildin g leadership and ensuring intelligent remuneration design. The key areas under w hich consulting is provided are Organizational Design, Assessment Framework Desi gn, Culture Framework Design, Development Framework Design and Job Profile Desig n. As xHR believes that a company should focus on its strategic HR issues and outso urce its transactional and support HR functions, it provides specialized Payroll administration service. They help the client in reducing the time spent on prod ucing payroll information, preparing payroll registers, payroll reports, issues pertaining to Income Tax, Provident Fund and ESI, preparing returns. They offer customized solutions to the clients for payroll and salary administration proble ms as every business is unique. xHR offers a combination of different products where the client is provided with Pick and Choose approach. HR Process Management offered by xHR gives the client f lexibility to structure its HR function which suits their needs and budget. xecuteHR Solutions Private Limited Structure xHR has a lean structure with a team of 140 employees. At the top of the structu re is the Director, Koustuv Mitra. At the Second level, VP-HR Delivery is placed who is responsible for the HR and Recruitment Delivery. At the third level, the re are senior managers for HR, Recruitment, Shared Services (HRIS), Technology a nd Contingency Recruitment. Performance HR Consulting is lead directly handled b y Director. Every function has executives placed onsite and off site. Clients xHR offers its product and services to different industry verticals such as Tele com, Hospitality, IT, FMCG, Manufacturing, etc. Some of the clients are Ericsson India Limited, Alcatel Lucent Network Management Services India Limited, Sayaji Hotels Limited, Comviva Limited, General Electric India, Sweet Water Hospitalit y, Jindal Power,etc. Financials xHR started off as a nascent organization with one client and twenty employees, yet it achieved a turnover of Rupees Two Crores in the first year of its operati on. Now, it stands tall with 140 employees aiming at a turnover of Rupees Nine C rores in FY 2010-11. Business Development Strategy xHR has a tacit business development strategy wherein they identify prospective clients through the professional and social network of the leadership team (Dire ctor, VP-HR Delivery and Senior Managers). They approach the prospective clients

and discuss them about the products and services offered. xecuteHR Solutions Private Limited provides a differentiated delivery model of d elivering Human Resource Services by the HR function of a company. It has develo ped a model wherein a company can outsource the non-core and non-strategic HR fu nctions. It provides a service delivery model through its products and services to a company through which the HR function of an organization can focus on its c ore and strategic activities. This would help the client in turn to achieve busi ness excellence by providing the HR team of the company to focus on more strateg ic issues of Employee Engagement, Strategy Formulation, Performance Management, Compensation and Benefits, HR/Employer Branding, etc. Alcatel Lucent Network Management Services India Limited Alcatel Lucent Network Management Services India Limited (ALNMSI) is a joint ven ture (JV) between Bharti Airtel Limited and Alcatel Lucent. The JV was formed as a result of Bhartis Business Transformation Plans wherein the new entity, ALNMSI , would manage Bharti Airtels pan-India broadband and telephone services and help Airtels transition to next generation networks. Under the joint venture, Alcatel -Lucent will design, plan, deploy, optimize and manage Bharti Airtels broadband a nd telephone network across India, which is Bhartis Telemedia Business. It is the first managed services partnership for broadband and telephone services in Indi a where the JV will manage Airtels migration to next generation networks (NGN) to offer advanced services like high-speed internet, triple play, media-rich VAS, MPLS, VPN for both retail and business customers. This managed services partners hip will include all end-to-end activities service rollout, installation and fau lt repair, service continuity and transformation. The partnership will also driv e optimal capital investment and increase operational efficiency by moving voice and data traffic onto a single, packetized infrastructure. ALNMSI has got pan India presence with over five thousand employees. ALNMSI has outsourced its Support HR function to xHR where it is responsible for managing HR Services through its executives placed pan-India. The executives ar e placed on-site at every ALNMSI location and are called as HR SPOCs (Single Poi nt of Contact). xHR has a Key Account Manager for ALNMSI who is responsible for the HR Service Delivery at ALNMSI and is accountable to Director-HR of ALNMSI (i n-house HR Head) and Director of xHR. The entire organization is divided into th ree hubs, North, South and West (East hub is a part of North Hub due to lower em ployee strength in eastern region). Each Hub has one Team Leader handling HR SPO Cs placed at different locations in the hub. xHR is providing end to end HR serv ices to ALNMSI where they are handling the non-core HR activities which typicall y includes On-Boarding, Statutory compliances, Manpower tracking and routine HR activities like Query Resolution, problem intervention etc. xHR is handling the HR function at ALNMSI and bears the cost of operation. Eighty percent of the rev enue that is generated through ALNMSI by xHR is incurred as the cost of deliveri ng the service. Human Capital Management and Measurement xHR believes that the role of HR function has transformed, providing service to shareholders instead of individual employees; providing service to CEO instead o f regulatory authorities; creation of business performance tools instead of just workplace policies; guardian of core competencies instead of guardian of workfo rce stability; and being like a chief finance officer for human capital instead of a workforce administrator. Because of this transformed role of HR, xHR is pro viding a Human Capital Management (HCM) approach to its clients where its focus is to provide advanced measurement techniques for managing the human capital. Hu man capital management techniques would have a direct impact on critical success factors of organization such as product quality, product pricing, cost of labou r, people capability, product innovation and excellence in customer service. xHR uses the different metrics and measurement techniques as a part of their HCM strategy. Following HCM components are measured at xHR: Employee Headcount The people component of HCM KPIs most commonly will include employee headcount as a category for measurement. The detail associated with this reporting segment is

commonly influenced by the business cycle that the company has targeted in its o verall strategy. If the company is in expansion mode, it may not only be importa nt to track how many people, in which functional organizations and in which job roles, but also how much time and money it takes to augment the desired staff. A comparison of intended headcount and actual headcount is also of value to most companies. Additionally, the degree of goal attainment will assist decision make rs in determining if additional investment or remedial action is needed to assur e timely addition/ reduction to staff. Among the considerations for action could be assessment of talent acquisition investment (advertising, recruitment agenci es, internal recruiting additions) and, perhaps in the more extreme cases, merge r/ acquisition consideration with other players in the market. Performance Management There are many approaches to the development of a sound performance management s ystem within ALNMSI. A few basics which should be present: clear work plan objec tives that are aligned with the goals of the enterprise, measurements to assure whether an objective has been achieved, multiple performance categories that all ow for the relative ranking of performance within the enterprise, a predetermine d periodic assessment of an individuals achievement and, albeit somewhat controve rsial, an expected distribution of performance levels within the enterprise or o rganization. The value of such a system or process serves to deliver a variety o f value to both the enterprise and the person whose performance is being assesse d. A few such benefits are noted below: Work plans and performance targets can and will drive desired goal attainment Periodic performance assessment provides the opportunity to focus and develop ta lent needed to enhance career opportunity. Work plans and performance appraisal demonstrate personal interest in individual contribution and may foster a more unified and loyal workforce. Conscientious workers want to know where they stand and how to improve Businesses need a basis for assessment of relative contribution and reasonable r eward Work planning, performance assessment and employee coaching form the basis for s ound management practice and, if done properly, serve to enhance justification f or removal of unfit members of the enterprise Work planning, performance assessment, feedback, coaching and employee training form a strong basis for the enterprise to build, maintain or enhance competitive advantage and increase the probability for corporate goal attainment. In order to maximize the advantages of a well-founded performance management sys tem, reasonable methods for measuring compliance are recommended. Attrition Much can be learned about an enterprise by analysis of what leads to an unantici pated loss of human talent from a company or organization. One can discern the r elative quality of managerial talent within a company, how well a company reward s employee contribution as well as how employees view the culture and profession al opportunity within a given enterprise. By tracking common involuntary termina tion reasons and assessing the ways that such terminations could have been preve nted, organizations create the potential for significant cost savings and add or ganizational strength to the enterprise. By placing a cost on each termination a nd determining which of those terminations should have been avoidable and then, structuring a plan to deal with unnecessary termination, expense and organizatio nal turmoil can be reduced. Enterprise savings can be significant given that the typical cost of recruiting, interviewing, hiring, training, indoctrinating and bringing an employee up to speed costs an organization about $150,000 per professi onal hire (engineer, lawyer, accountant, etc.). By conducting root cause analysi s on each termination and taking remedial action, cost can be reduced and the re putation of the enterprise can be enhanced. Employee Satisfaction The measurement of employee satisfaction can take on a variety of forms and the company will need to select the methodology that provides the greatest value to the achievement of overall corporate objectives. The information measured in thi s segment can provide leaders with insight into several key areas such as:

An assessment of employee loyalty The perceived effectives of human capital focused programs such as training, car eer advancement, compensation/ benefits The importance or impact of investment into facilities improvements The perceived effectiveness of managerial talent The perceived effectiveness of inter/intra departments productivity One approach for such measurement utilizes a cross industry, standardized survey approach that permits a company to compare its internal level of employee satis faction against industry norms. Another approach is the use of custom-designed s urveys. This latter approach permits companies to create and update employee sur veys, which allow for more flexibility in monitoring key internal attributes tha t may be of unique importance to the enterprise. Additionally, the use of custom surveys provides companies with greater flexibility to explore not only the cur rent level of satisfaction within the employee population but also allows compan ies to assess employee loyalty. When properly designed and administered, either form of survey will provide keen insight into current problem spots and also ass ess the impact of remediation activities and programs that addressed previously identified hot spots in the organization. More advanced use of employee satisfaction data can be used to assess the impact of employee satisfaction on retention, productivity, customer satisfaction/loya lty, business growth and profitability. Human Capital Management KPIs Refer Appendix. The researcher has observed that xHR is exhaustively employing Human Capital Mea surement in delivering the services to ALNMSI. It has quantified the HR processe s. All the elements of the HCM approach of xHR are not deployed at ALNMSI, some of them are on paper.

Chapter-5

Findings and Discussions

Ch-5 Findings and Discussion Researcher has conducted a study on Human Capital Management practices of xHR an d ALNMSI in a HRO Service Delivery Model. She found the following issues relevan t for discussion Human Capital Management impacts organizational effectiveness Human capital is an important facet of strategic human resource management. This idea has important ramifications for financial and information management, busi

ness planning, and corporate governance. Human capital continues to be an import ant feature of innovation, organizational competitiveness, and economic performa nce. Current corporate annual reports and business reports do a reasonable job i n informing stakeholders about the physical assets and financial capital of a co mpany. Yet, they might not necessarily include information about human capital m easures. The lack of emphasis on human capital could be due to an unawareness, i ncomprehension, and intricacy of the indicators. Companies are encouraged to hav e the right mix of tangible and intangible assets to compete successfully. Argua bly, companies tend to keep their key strategic information secure because they do not want to reveal their competitive advantage. Companies with strong intelle ctual assets may be able to attract the attention and retention of their best st akeholders and investors. At the personal level, the human capital of an individ ual can make a difference in a company and also increase the individuals career a dvancement. Benefits to Organization Deploying Human Capital Metrics Organizations deploying human capital metrics have achieved great financial bene fits. Benefits can be described as, Better Business Results: Organizations have achieved demonstrably better organizational performance that can be directly attributed to improvements in th e rigor with which they measure and manage human capital. Better Leadership: Human Capital Metrics can quantify the impact that leade rship and managerial capabilities (and development) have on business results. Th is provides a degree of rigor to the assessment of leadership and that has till now been missing (and much needed), and serves as a catalyst for improvements. Leveling the Playing Field: By focusing on predictive human capital metrics, the human side of business benefits from the same type of tools, evidence, and ri gor as do the operations and finance sides of the business. Defeating Short Termism: Developing the capacity to rigorously identify t he human capital drivers of an organizations performance gets the attention (and respect) of senior executives. It helps to undo a chronic tendency to under inve st in human capital by compellingly documenting the financial and in financial c onsequences of doing so. Providing Meaningful Input for an Organizations Balanced Scorecard: The lear ning and development measures included in most organizations balanced scorecards are woefully inadequate. Meaningful (i.e. predictive) human capital metrics corr ects this situation. Launching a Quiet Revolution: When metrics are applied to human capital manage ment, stubbornly-resistant, industrial-era mindsets, processes, and managers are identified. This sets the stage for replacing them with their knowledge-era cou nterparts. Immediate Challenges seen by HR Professionals in Human Capital Measurement Metri cs The second generation of measures such as, performance metrics, employee product ivity, benefits and awareness and training effectiveness) has become more establ ished in the last five years, delivering HR business value as opposed to control and compliance, cost per hire, health care costs and workers compensation costs per employee. Third generation metrics like training ROI, revenue factor and yie ld ratio will gain importance in the coming years. HR professionals can help the ir organizations remain competitive by aligning their HR processes and skills in such a way that all HR services and Human Capital metrics are working towards t he overall business goals of the enterprise. HR Functions and Initiatives Currently Measured One of the most discussed topics in the HR industry today is measurement and met rics. The HR measurements most routinely performed and recorded on an individual basis are performance appraisal and exit reports. Some of the measurements that are routinely undertaken by organizations are: turnover rate, healthcare costs per employee, time to fill open position, cost per hire, workers compensation cos t per employee, absence rate, workers compensation incident rate, employee produc tivity, turnover costs, HR department spending per full time employee, cost of l abor by geographical location, vacancy rate, training investment factor, trainin

g ROI, Human Capital ROI, yield ratio, etc. Human Capital Internal Reporting The process of reporting the data internally and the inferences obtained from th em is therefore a vital part of HCM. It is necessary to be clear about what data is required and how it will be communicated and used. The factors affecting the choice of what should be reported in the form of metri cs are: The type of organization measures are context dependent; The business goals of the organization; The business drivers of the organization, ie the factors that contribute to the achievement of business goals, such as increases in revenue, control of costs, c ustomer service, quality, innovation, expansion through mergers and acquisitions , product development and market development; The existing key performance indicators (KPIs) used in the organization; The use of a balanced scorecard which enables a comprehensive view of performanc e to be taken by reference to four perspectives: financial, customer, innovation and learning and internal processes; The availability of data; The use of data measures should only be selected that can be put to good use in guiding strategy and reporting on performance; The manageability of data there may be a wide choice of metrics and it is essent ial to be selective in the light of the above analysis so that the burden of col lecting, analysing and evaluating the data is not too great and people do not su ffer from information overload; remember that the cost of perfection is prohibit ive, the cost of sensible approximation is less.

Chapter-6

Summary and Conclusions

Ch-6 Summary and Conclusions Businesses are racing to gain and sustain competitive advantage in todays globall y competitive business environment. The pressure for profitability, to decrease the cost of production and increase revenues, fuels the need to leverage all of the sources of capital a company can access- including human capital. HCM provid es decision support by combining business and workforce intelligence to the deve lopment of enterprise human capital strategies: how to leverage people and their ideas to achieve bottom line business goals such as growing the business, incre asing market share, margins, share price, as well as improving business processe s, benefiting from technology investments, and increasing productivity. Human capital is an important facet of strategic human resource management. This idea has important ramifications for financial and information management, busi ness planning, and corporate governance. Human capital continues to be an import

ant feature of innovation, organizational competitiveness, and economic performa nce. Current corporate annual reports and business reports do a reasonable job i n informing stakeholders about the physical assets and financial capital of a co mpany. Yet, they might not necessarily include information about human capital m easures. The lack of emphasis on human capital could be due to an unawareness, i ncomprehension, and intricacy of the indicators. A rigorous approach to reportin g and measuring human capital would require a number of indicators capable of ev aluating the intellectual resources of the company. Companies are encouraged to have the right mix of tangible and intangible assets to compete successfully. Ar guably, companies tend to keep their key strategic information secure because th ey do not want to reveal their competitive advantage. The connection between ext ernal parties and an organization is increasingly important. Yet, there is a dif ference between what internal and external audiences know about companies. Emerging organizations are by nature changing organizations; and it is during th e start-up phase that organizations are most vulnerable to extinction. Developin g and managing the right configuration of human capital in this phase of an orga nization is essential. The human capital configuration of an organization may be a source of competitive advantage; and the path dependent nature of a developin g HR architecture. As the markets keep changing, there would be pressure on organizations to quanti fy the human capital and the processes associated with it. By understanding the financial implications of the human capital the HR function will always be able to justify its relevance in the organizational structure.

References Barney, J B (1991) Firm resources and sustained competitive advantage, Journal o f Management Studies, 17 (1), pp 99120, New York. Becker, G. (1964). Human Capital, New York: Columbia University Press. Becker, B E, Huselid, M A and Ulrich, D (2001) The HR Score card: Linking people , strategy, and performance, Harvard Business School Press, Boston, MA. Becker, G.S. (2002). The age of human capital. Education in the Twenty-First Centu ry. , New York: Columbia University Press. Bell, B. and Kozlowski, S. (2008). Active learning: effects of core training desi gn elements on self-regulatory processes, learning, and adaptability. The Journal of Applied Psychology, 93: 2, 296316., Massachusetts. Boxall, P F (1996) The strategic HRM debate and the resource-based view of the f irm, Human Resource Management Journal, 6 (3), pp 5975, Cambridge. Ford, J.K. and Fisher, S. (1997). The role of training in a changing workplace an d workforce: new perspectives and approaches, in E. Kossek and S. Lobel (eds), Ma naging Diversity: Human Resource Strategies for Transforming the Workforce, Camb ridge, MA: Blackwell. Kearns, P (2005) Evaluating the ROI from Learning, CIPD, London. IDS (2004) Searching for the magic bullet, HR Study 783, IDS London.

Spearman, C. (1927). The Abilities of Man: Their Nature and Measurement, New Yor k: Macmillan. Watson Wyatt Worldwide (2002) Human Capital Index: Human capital as a lead indic ator of shareholder value, Watson Wyatt Worldwide, Washington DC. Mayo, A (1999) Making human capital meaningful, Knowledge Management Review, Jan uary/February, pp 2629, Washington D.C. Mayo, A (2001) The Human Value of the Enterprise: Valuing people as assets, Nich olas Brealey, London. Nalbantian, R, Guzzo, R A, Kieffer, D and Doherty, J (2004), Play to Your Streng ths: Managing your internal labour markets for lasting competitive advantage, Mc Graw-Hill, New York.

Appendix

Headcount Report Workforce Utilization Report Workforce Turnover Report Workforce Absenteeism Report Summary of Human Capital Measures and Their possible uses

Key Performance Indicators for Human Capital Measurement

Performance Management Completion rates for periodic company-wide performance appraisals Completion rate drill down by division, country, location, department, manager, work group, industry or product category Performance rating distribution by total company, division, country, department, etc. Headcount Population growth/reduction by total company, division, country, location, depar tment, manager, work group Organic headcount growth/acquisition headcount growth Headcount comparison vs. planned headcount by predetermined category Productivity Revenue per employee Revenue per sales representative Customer engagement per employee (transactions per employee) Customer satisfaction Cost per employee Patents granted Product delivery cycles Time to fill critical vacancies (e.g., opportunity costs associated with Sales R epresentative hire/train/full speed cycle) Cost of mis-hired employee Training Skills training completed Management training completed (possible measures of effectiveness include attrit ion/litigation/succession planning attainment) Induction process (recruit-to-fully productive) Attrition Attrition by company, division, country, department, manager, workgroup Attrition by performance rating Attrition of patent holders Attrition by organic/acquired, source of hire Attrition by division, country, department, manager, workgroup Attrition cost by company, division, country, department, manager, workgroup Attrition by category (planned/unplanned, etc.) Compensation Compensation budget distribution by company, division, country, department, mana ger, workgroup Compensation budget distribution by performance rating by company, division Compa ratio by salary grade level Compa ratio by performance rating Promotion increase assessment Commission payout/attainment MBO payout/attainment by performance rating Profit Sharing Bonus payout by performance rating and grade level (same could apply to bonus and stock distribution) Employee Satisfaction/Culture Assessment Employee satisfaction index and/or trend by company, division, country, departme nt, manager, work group Culture assessment index and/or trend by company, division, country, department, manager, work group Customer Satisfaction/Customer Loyalty Customer satisfaction/customer loyalty by company, division (if appropriate), co untry, department, location, manager work group. Staffing Assessment Cost per hire by company, division, country, location, department, manager, work group Source per hire Time to fill open requisitions (assessment by grade level and job title) by comp any, division

 Source of hire for patent holders Source of hire for high level performers Source of hire for high level Sales Representatives Tenure by source of hire Benefits Population eligible for benefit coverage by company, division, country, location Population enrolled for coverage by company, division, country, location Average cost of benefits by company, division, country, location Workforce Demographics Average tenure Tenure by performance ratings Grade level of high level performers Expected continued service of high level performers Average total cost of employment by company, division, country, location Potential Correlation Customer satisfaction, employee satisfaction, longevity, productivity, revenue g rowth, customer loyalty Source of hire-patent grants, longevity, training investment, revenue growth Source of hire-sales revenue attainment, longevity, training investment Attrition management training, litigation/settlement Culture index, corporate performance Employee training, productivity, customer satisfaction/customer loyalty Corporate strategic initiative results

Interview Schedule The interview schedule is designed to be administered on vendors and clients who are working together in a Human Resource Outsourcing Relationship Model. It bro adly covers thematic areas which the respondent will discuss. The thematic areas are mentioned below; The Role of Human Resource function in modern organizations. Challenges before Human Resource function in the changing nature of markets and increasing competitive pressures. Human Capital Measurement: Concept Relevance of Human Capital Management to Organizational Effectiveness Benefits of deploying Human Capital Metrics Key Performance Indicators for Human Capital Measurement HR functions being currently measured and the process of selecting those areas. The future of Human Capital Management.