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International Journal of Management (IJM) Volume 7, Issue 7, November–December 2016, pp.153–161, Article ID: IJM_07_07_016 Available online at http://www.iaeme.com/ijm/issues.asp?JType=IJM&VType=7&IType=7 Journal Impact Factor (2016): 8.1920 (Calculated by GISI) www.jifactor.com ISSN Print: 0976-6502 and ISSN Online: 0976-6510 © IAEME Publication ROLE OF HRM PRACTICES IN KNOWLEDGE MANAGEMENT OF IT/ITES ORGANISATIONS Mr. R. Anbu Ranjith Kumar Research Scholar, Department of Management Studies, Karpagam University, Coimbatore, India Dr. S. Balasubramanian Chief Editor, IAEME Publication, Chennai, India ABSTRACT Human Resource Management (HRM) involves all the management decision and practices that directly affects the people, or human resources, who work for the organization. The present study explores and compare the various HRM practices in, two different organizations—IT/ITES based organization. The present study aim at assessing the commitment of the two industries attribute to the HRM practices. The present study aim at role of the HRM practices in knowledge management of this organization. Key words: HRM, IT/ITES Cite this Article: R. Anbu Ranjith Kumar and Dr. S. Balasubramanian, Role of HRM Practices In Knowledge Management of IT/ITES Organisations. International Journal of Management, 7(7), 2016, pp. 153–161. http://www.iaeme.com/IJM/issues.asp?JType=IJM&VType=7&IType=7 INTRODUCTION The key issues of any HR department in IT organizations are employee acquisition, retention, training and development, performance management, talent management and keeping talent is a big challenge for today’s organizations because of more opportunities available outside. This is especially true for the Indian IT organization. Salaries of the Indian IT workforce increased 10 to 15% or more annually from 2002 to 2014. But the attrition level also increased with an approximate increase of 15% to 30% every year From 2002 to 2014 Employee turnover is one of the major challenges of an IT organization. Therefore, retention of talented and skilled manpower becomes crucial because it creates a competitive advantage for the organization. RESEARCH METHODOLOGY AND SAMPLING The question survey technique is used to solicit the data. The questionnaires are answered by managerial personnel of IT and IT Enabled companies located in India. A total of 250 sets of usable questionnaires were successfully collected and analysed. http://www.iaeme.com/IJM/index.asp 153 editor@iaeme.com R. Anbu Ranjith Kumar and Dr. S. Balasubramanian Six different sections of questions are developed in the questionnaire, which are (1) Recruitment (selection), (2) Training, (3) Employee Involvement, (4) Performance Assessment, (5) Compensation, and (6) Retrenchment. Several behavioural factors and non-behavioural factors are stipulated and respondents are asked to indicate the importance of these factors in selecting the employees. The data is collected from all the organization by person. The respondents are any operational or managerial people working in the software organization. The respondents are asked to fill the questionnaires. 1. SELECTION PROCESS 1. Preliminary Interview: The purpose of preliminary interviews is basically to eliminate the unqualified applications based on information supplied in the application forms. The basic objective is to reject misfits. 2. Selection Tests: There are various types of tests conducted depending upon the jobs and the company. These tests are Aptitude Tests, Personality Tests, and Ability Tests which are conducted to judge how well an individual performs the tasks related to the job. Besides this there are some other tests like Interest Tests (activity preferences), Graphology Test (Handwriting), Medical Tests, Psychometric Tests etc. 3. Employment Interview: The next step in the selection is employment interview. Here interview is a formal and in-depth conversation in the applicant’s acceptability. It is considered to be an excellent selection device. Interviews can be One-to-One, Panel Interview, or Sequential Interviews. Besides there are Structured and Unstructured interviews, Behavioural Interviews, Stress Interviews. 4. Reference & Background Checks: Reference checks and background checks are conducted to verify the information provided by the candidates. Reference checks are through done the formal letters, and telephone conversations. However it is merely a formality and selections decisions are seldom affected by it. 5. Selection Decision: After obtaining all the information’s, the most critical step in the selection is decision making. The final decision has to be made out of applicants who have passed in the preliminary interviews, tests, final interviews and reference checks. The views of line managers are considered generally because it is the line manager who is responsible for the performance of the new employee. 6. Physical Examination: After the selection decision is made, the candidate is required to undergo a physical fitness test. A job offer is often contingent upon the candidate passing the physical examination. 7. Job Offer: The next step in the selection process is job offer to the applicants who have crossed all the previous hurdles. It is made by way of letter of appointment. 2. TRAINING AND DEVELOPMENT There is no pre-determined "check list" regarding the type of training needed for the employees who meet the performance expectations. Since each individual is different, supervisors have to make a thorough assessment of the type of training needed. Human Resource Management Services conduct a yearly training needs assessment to ensure the programs which are being offered to meet the agency’s requirements. Agencies can also contact Human Resource Management Services to arrange for a specific training based performance on management review, revised missions and vision, etc. There are core or basic training programs needed when a person accepts supervisory or management positions, such as: • • • • • • • • Understanding management, organizational and motivational theory, and application Planning, setting, and carrying out organizational objectives Planning and leading effectively Specific training needed when an individual enters a supervisory position is: Planning, scheduling, and delegating work assignments. Communicating, handling conflict, and handling grievance procedures. Understanding various state and federal employment laws. Interviewing and completing performance management reviews. http://www.iaeme.com/IJM/index.asp 154 editor@iaeme.com Role of HRM Practices In Knowledge Management of IT/ITES Organisations • Setting unit goals and objectives. 3. STUDY OF EMPLOYEE’S INVOLVEMENT IN AN ORGANISATION A place where individuals from different backgrounds, religions, communities come together on a common platform to work towards a predefined goal is called an organization. Every organization has a set of principles and policies mandatory for all the employees to follow. The beliefs, ideologies and practices of an organization form its culture which gives a sense of direction to the employees. The work culture goes a long way in creating the brand image of the organization and making it distinct from its competitors. The employees are the true assets of an organization. They are the ones who contribute effectively towards the successful functioning of an organization. They strive hard to deliver their level best and achieve the assigned targets within the stipulated time frame. The employees play an important role in deciding the culture of the workplace. Their behaviour, attitude and interest at the workplace form the culture. The factors which affect the employees work culture is given below: Organization A The employees are least bothered about the policies of the organization and attend work just to sustain their job. For them the workplace is nothing but a mere source of earning money. In such a scenario, people seldom get attached to their organization and thus move on in a very short span of time. Organization B In the organization B, employees are particular about the rules and regulations of the organization and adhere to the set guidelines. The individuals focus on their work and look forward to achievie it well ahead of the deadlines. People stay away from the unnecessary gossips and prefer sitting at their workstations rather than loitering around. Organization C Organization C is a male oriented organization where male employees dominate their female counterparts. Frequent late sitting is a regular feature of the organization culture. Employees prefer staying back late to finish off their pending work. No organization expects its employees to stay back; it is the employee for his own convenience adjusts the timings and makes it as the culture of the workplace 4. PERFORMANCE ASSESSMENT OF THE EMPLOYEE Performance Management began around 60 years ago as a source of income justification and was used to determine an employee’s wage based on performance. Organisations used to drive behaviours from the employees to get specific outcomes. In practice this worked well for certain employees who were solely driven by financial rewards. However, where the employees were driven by learning and development of their skills, it failed miserably. The gap between the justification of pay and the development of skills and knowledge became a huge problem in the use of it. This became evident in the late 1980s; the realisation that a more comprehensive approaches to manage and reward the performance was needed. This approach of managing the performance was developed in the United Kingdom and the United States much earlier than it was developed in Australia. In recent decades, however, the process of managing people has become more formalised and specialised. Many of the old performance apparel methods have been absorbed into the concept of Performance Management, which aims to be a more extensive and comprehensive process of management. Some of the developments that have shaped Performance Management in recent years are the differentiation of employees or talent management, management by objectives and constant monitoring and review. Its development was accelerated by the following factors: http://www.iaeme.com/IJM/index.asp 155 editor@iaeme.com R. Anbu Ranjith Kumar and Dr. S. Balasubramanian • • The introduction of human resource management as a strategic driver and integrated approach to the management and development of employees; and The understanding that the process of Performance Management is something that's completed by line managers throughout the year - it is not a once off annual event coordinated by the personnel department. 5. COMPENSATION To maintain high standard of productivity and service, the organization must motivate employees. A suitable compensation, incentives and rewards program is the key motivator in any organization today. In order to motivate employees and boost their morale to achieve desired performance levels and goals, compensation plays a key role. In order to achieve more incentives and compensation, employees raise their performance levels 6. DATA ANALYSIS AND INTERPRETATION Selection of Employees TABLE 1 Selection of Employees Behavioural factors Mean Ability to communicate effectively 4.51 Able to work in team or group efficiently 4.40 Interest or affinity for that job 4.15 Willingness to exchange ideas 3.90 Creative and innovative 3.91 Values that fit in with organization 3.90 Dare to challenge exiting assumptions 3.75 Multilingual ability 3.40 Non-behavioural factors Knowledge currently seeks by organization 4.10 General computer literacy 4.00 Marketing capabilities 3.90 Related professional experience 3.85 Strong commercial awareness 3.83 High level of ICT knowledge 3.70 Knowledgeable on others disciplines 3.65 Good command of written and spoken English 3.40 Active in external professional network or association 3.25 Source: Data analysis report from Primary Data Collected through Questionnaire Method S.D 0.72 0.73 0.78 0.79 0.79 0.85 0.96 1.00 0.81 0.84 0.91 0.92 0.90 0.91 0.85 1.01 1.05 Training and Approaches This section covers the areas where training is conducted, and the approaches taken during the training. The Table 2 documents the training areas investigated and statements pertaining to train the approaches. http://www.iaeme.com/IJM/index.asp 156 editor@iaeme.com Role of HRM Practices In Knowledge Management of IT/ITES Organisations Table 2 Training Areas and Approaches Types of Training Conducted Mean S.D. Documentation of procedures and processes Problem solving skills and techniques Industry and business knowledge Quality initiatives Interpersonal communication 3.55 3.53 3.50 3.40 3.35 1.20 1.21 1.15 1.21 1.22 Customer relationship management 3.25 1.30 Team concepts/working in groups Managing performance 3.25 3.22 1.30 1.30 Leadership Company mission and values 3.15 3.12 1.25 1.29 Skills to build teams Information Communication Technology (ICT) Skills to build empowerment Managing change Creativity/innovation Coaching skills 3.13 3.00 2.92 2.92 2.80 2.81 1.30 1.31 1.32 1.30 1.31 1.50 Stress management Approaches in Training Making sure that trainees understand the general principles and rationale behind the skills they are learning Ensure that what is being learned in training will be supported by colleagues, peers, and top management Many examples are being used during training by presenting various contexts in which trainees can expect to use the skills and knowledge learned in training Varying the training setting to show trainees that classroom is not the only place where knowledge and skills can be learned Open and supportive organization policies in rewarding and recognizing trained staff Intensive drills and practice techniques for trainees to reach a level of automatic implementation on the job Visual displays of information are offered to boost training transfer Letting trainees explore the training content before training actually begins 2.42 1.60 3.58 3.33 1.20 1.23 3.30 1.24 3.27 1.27 3.25 1.27 3.20 1.20 3.19 2.85 1.31 1.40 Source: Data analysis report from Primary Data Collected through Questionnaire Method Performance Appraisal This section investigates the degree of matches between the characteristics of performance and appraisal system with the surveyed companies as shown in the Table 3 http://www.iaeme.com/IJM/index.asp 157 editor@iaeme.com R. Anbu Ranjith Kumar and Dr. S. Balasubramanian TABLE 3 Basis of Performance Appraisal Mean Feedback useful for improvement 3.79 Give direction to the work force 3.68 Feedback used for ratings, rewards, and sanctions 3.60 Controlling processes 3.59 Directing individual employee 3.50 Feedback based on needs of customers and the key process indicators 3.36 Employees receiving systems/processes 3.36 Feed-down from the next layer up in the hierarchy 3.37 Controlling people 3.29 Feedback from parts of the system that receive one’s work (internal customers) 3.24 Employees receiving judgement on themselves 3.21 Feedback based on personal characteristics not relevant to work 2.80 Source: Data analysis report from Primary Data Collected through Questionnaire Method S.D 1.00 0.99 1.12 0.98 0.99 1.22 1.02 1.06 1.05 1.07 1.10 1.30 Compensation and Reward System This section covers seven dimensions of successful reward plans which are listed in the questionnaire, and respondents are asked to indicate their degree of matches between their company and compensation systems. The Table 4 documents the seven dimensions TABLE 4 Compensation and Reward System Mean S.D Pay for performance that tied to successful achievement of critical business goals Reward for measurable competencies 3.70 1.04 3.65 1.05 The extent of contribution in knowledge sharing in a work team 3.40 1.02 Keep group incentives clear and simple 3.36 1.03 Link rewards to other levels of organizational change 3.35 1.04 Initiating new approaches and tactics in daily work 3.34 1.05 Work or task itself provides the greatest incentive 3.30 1.03 Match incentives to culture 3.00 1.04 Over-communicate (compensation and incentives system) for best results 3.01 1.04 Source: Data analysis report from Primary Data Collected through Questionnaire Method Retrenchment Policy This section on Retrenchment attempts to discover the conditions or circumstances of a company which release their employee from the duty. Ten situations are listed in the questionnaire, which are shown in the Table 5 http://www.iaeme.com/IJM/index.asp 158 editor@iaeme.com Role of HRM Practices In Knowledge Management of IT/ITES Organisations TABLE 5 Retrenchment Policy Disclosure of information to customers and suppliers Destroying established relationship with customers and suppliers Values that do not fit with organizational values Low level of loyalty toward organization Conflict with supervisor or top management Opposes organizational change or restructuring Demoralise his/her team mates Unable to follow predetermined procedures and documentation Lack of self-initiative while interacting with others Fail to display positive reaction toward contributing ideas Mean 3.78 3.75 3.50 3.45 3.40 3.38 3.27 3.20 3.06 3.06 S.D 1.07 1.09 0.99 1.08 1.04 1.06 1.10 1.04 0.99 1.02 Source: Data analysis report from Primary Data Collected through Questionnaire Method The questionnaires are answered by the managerial personnel of IT and IT Enabled companies located in India. A total of 250 sets of usable questionnaires are successfully collected and analysed. The companies are grouped in terms of paid-up capital: less than Two Crore (40 %), 2 to 5 Crore (20%), 5 to 50 Crore (10 %), 50 to 200 Crore (10 %), and greater than 200 Crore (20 %). In terms of sector, they are: IT Services (30 %), Software Products (24%), ITES (26 %), E-Business (8 %), and others (12 %). On the behavioural aspect in the employee selection, many companies emphasize the interpersonal communication skill. This is shown by a high mean score of “ability to communicate effectively" and “able to work in team or group efficiently”. Interest or affinity of an applicant towards the job exhibited during the selection process is an another important behavioural factor that is considered important by the companies. In terms of the non-behavioural factors, applicants who possess knowledge currently required by the companies are highly preferred. On the whole, the weightage on the behavioural factor compared to the non-behavioural factor is much higher during the selection process. The training and development of the employee deal more with the knowledge of documentation of processes and procedures, problem solving skills and techniques, and industry and business knowledge. However, training related to creativity, information communication technology and customer relationship management are not extensively covered. The principles and rationale of training are thoroughly covered during the training. In addition, all parties in the companies express support for the training by encouraging the trainees to practise and apply what they learned during the training. The results of the performance appraisal suggest that the majority of the companies value the practice of providing useful feedback to the employee after the performance appraisal. The practice of giving feedback that is not relevant to the work is strictly contained by the majority of the companies and unconstructive comments or judgements on the employees are shunned. This is also supported by the fact that another important aim of the performance appraisal is to direct the employees toward the attainment of the critical business goals. Regarding the compensation and reward system, the majority of the companies reward their employees based on the employees' ability to achieve the company’s critical business goals. The second important element of the compensation system, “reward for measurable competencies”, is in parallel with the first mentioned. However, the system is not communicated effectively to the employees, and so the system failed to match the company culture. It is also found that not many companies could significantly instil the joy of working for the employee in performing the duties and responsibilities. Finally, an employee will be laid off if he or she discloses the information to outside parties, and destroy the company relationships with the customers and suppliers. In contrast, an employee will not be retrenched if he or she is unable to perform his or her task effectively, and the company is willing to train them. This http://www.iaeme.com/IJM/index.asp 159 editor@iaeme.com R. Anbu Ranjith Kumar and Dr. S. Balasubramanian is reflected on the low mean score of “unable to follow predetermined procedures and documentation". Employees who did not contribute their ideas or actively communicate with their colleagues were not penalized for the act. On the whole, the issue of employees’ ethical conduct was strongly emphasized in retrenchment practices compared to their capacity or ability in performing their duties and responsibilities. The results discussed in the previous section suggest that many companies were starting to establish the foundation of KM implementation. Such a move was apparent in the screening and selection process of new employees. In particular, the results in this work suggest that employers value that have good interpersonal communication skill, and capable of working as a team, and possess knowledge that is relevant to company needs. By recruiting these people into the company will help in building a pool of strong human resource that is ready for knowledge creation and application. Other signs that suggest that knowledge is gaining importance in Indian IT and ITES Organisations are: (1) rewarding employees that contribute new knowledge to company, (2) greater weight on team performance than the individual performance during the performance evaluation, and (3) tight control of knowledge and information through company’s retrenchment policies. The first and second exercises act as a stimulus for the creation of a knowledge-sharing culture. The third exercise reminds the employees on the consequence of exposing the company’s critical knowledge on external parties. However, it seems that many employers felt that their existing pool of human resource lacked the required skills and expertise for implementation of KM. However, as the business environment became more demanding and stiff, companies and employees needed to be more efficient in order to survive. As a result, the focus of current training is placed on enhancing the employees' basic skills and expertise. The principles and rationale of training are being emphasized in order to give the trainees a complete picture of their future role in the company's operation. Companies realized that providing a training alone would not be sufficient in preparing their current employees for KM implementation. Various kinds of support and incentives were given to the employees to ensure the success of employee transformation. For example, the reward and compensation of employees strongly hinged upon employees' individual ability in meeting the critical business goals. In other words, employees must quickly equip themselves with the necessary skills and knowledge that are critical to the attainment of the company’s goals. Top management and other parties in the company also encouraged the trainees to apply what they had learned in training in daily operations. Performance appraisal is another area that was designed to direct the employees to meeting the company’s goals, whether as a team member or an individual player 7. FINDING AND SUGGESTIONS The results on performance appraisal suggest that the majority of companies valued the practice of providing useful feedback to employee after the performance appraisal. The results discussed in the HR Practice section suggest that many companies were starting to establish the foundation of KM implementation. Such a move was apparent in the screening and selection process of new employees. Companies realized that providing training alone would not be sufficient in preparing their current employees for KM implementation. Top management and other parties in the company also encouraged trainees to apply what they had learned in training in daily operations. Performance appraisal is another area that was designed to direct employees to meeting the company’s goals, whether as a team member or an individual player 8. CONCLUSION The study of the role of HRM practices in knowledge management of IT/ITES organisations have been conducted and this study undergoes six steps which are recruitment(selection), training, employee involvement, performance assessment, compensation, retrenchment and comparative values are clearly listed in the above table. http://www.iaeme.com/IJM/index.asp 160 editor@iaeme.com Role of HRM Practices In Knowledge Management of IT/ITES Organisations REFERENCES [1] Edwards M.R. (2009), HR, perceived organizational support and organizational identification: an analysis after organizational formation, Human Resource Management Journal, 9(1), pp. 91-115. [2] Barney J. (1991), Firm resources and sustained competitive advantage, Journal of Management, Volume. 171 pp. 99-120. [3] Wright P.M. and McMahan G.C. (1992), Theoretical perspectives for strategic human Resource management, Journal of Management, Volume 18 pp. 295-320. [4] Lado A.A. and Wilson M.C. 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