"Navigating Business Dynamism: The Strategic Evolution of HR"
Sumitra Mishra (nee Balakrishnan)
Communication Educator l Assistant Professor XIM Bhubaneswar (XIMB) l Communication, Adult Education & Organization studies researcher l GDPI Mentor l Career Coach l PhD - Submitted (XIMB) l MBA (SIMC-Pune)
Sumitra Mishra
Terms like VUCA, agile, transformative, and adaptive are tossed around a lot in conversations and talks nowadays to label the current state of affairs and label it as dynamic. But, when have businesses and markets actually been stable and non-adaptive?
Business dynamism refers to the degree of change and innovation within the business environment, typically characterized by factors such as the entry and exit of firms, job creation and destruction, the introduction of new products and services, and changes in market structures (Economist, 2017, Cherif, & Hasanov, 2021). It reflects the pace of economic and entrepreneurial activity within a given region or industry and is often used as an indicator of the health and vibrancy of an economy or business sector (Haltiwanger et al., 2013).
A vibrant corporate environment accommodating changes frequently exhibits high levels of entrepreneurship, with entrepreneurs playing an important role in driving economic growth and innovation (Shane, 2008). An effective allocation of resources, including labour and capital, is critical for economic dynamism because it ensures that these resources go to the most productive and innovative enterprises (Schumpeter, 1942). The regulatory framework and finance access are other important considerations. A favourable regulatory environment can foster entrepreneurship and innovation, while access to funding is critical for enabling company growth and innovation (Djankov et al., 2010).
Globalization and technical improvements have intensified the consequences of economic dynamism, allowing organizations to grow globally and introducing quick technological innovations that disrupt conventional sectors (Brynjolfsson and McAfee, 2014). Market competition encourages firms to constantly improve and innovate, while efficient resource allocation is crucial. Higher levels of corporate dynamism are likely to make economies more resilient and better able to react to changing market conditions and technological improvements (World Bank, 2019). Monitoring and fostering business dynamism is essential for policymakers, economists, and businesses, as economies with higher levels are more resilient.
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In changing times, the main idea has been to change the positioning of HR from a people (only) or a service function to a wholesome strategic function. For e.g.: a report by McKinsey about “Reimagining HR” states that though HR transformation is difficult, it is worthwhile (McKinsey, 2021). HR specialists are frequently at the forefront of change management efforts. They assist employees in understanding the reasons for change, give assistance throughout transitions, and seek to reduce resistance. It is critical to have effective change management. If we see recent times, Human resources have been crucial in assisting organizations in responding to the COVID-19 epidemic. Chief human resource officers anticipate that the impact of this will continue and the role of HR will continue to evolve.
In recent years, the DNA of the office environment has evolved in a variety of ways. Emerging models are innovative, adaptive, and resilient. Corporate purpose drives bold business decisions. HR may help to define the meaning of terms like purpose, value, and culture to imbibe more vibrancy in the corporate environment. Companies that execute with purpose have a better chance of generating significant long-term value, which may lead to improved financial performance, enhanced staff engagement, and increased consumer trust.
Shifting to new HR operating models is sought, in which the HR function has a real place at the leadership table and is acknowledged for the essential role it plays- strategically and operationally. We are seeing significant transformation required to transition to this new HR operating model. Many functions and roles will need to change from assistance or support to parallel functions and those of leadership (Mer & Srivastava, 2023). Business leaders equally opine that working in the HR function now will require a drive to contribute to the larger ‘business’ function using knowledge about people functions, relate business to people and related functions, be ready to provide ‘end-to-end solutions’ and understand how to make a difference to revenue and overall growth of the organization.
HR will be the driving force behind many initiatives as the organization of the future takes shape, including mapping talent to value, making the workforce more flexible, prioritizing strategic workforce planning, performance management, reskilling, building an HR platform, and developing an HR tech ecosystem (Kiradoo, 2021; Komm et al, 2021; Li, 2022) . HR may assist C-suite management with various efforts such as developing and radiating purpose, enhancing employee experience, driving leadership and culture, and simplifying the business. The epidemic has provided a chance for HR to expedite its transformation from a service to a strategic role, assisting in the formation of a more dynamic company. Developing methods to combine business and human skills should come as a priority thought. Companies should personally accept the challenge, commit, and begin the execution of a plan for a reimagined future.
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