Building HR Ecosystems in Nepali Organizations

In any organization, HR systems and practices must speak the same language as the organization

Till the early 2000s, most organizations in Nepal did not have an HR department and the few organizations that did lack a fully-fledged HR setup. Over the past 20 years, organizations in the country have recognized the need for an HR department, and now most organized organizations have an HR department. What are the basic requirements to form an HR department in any organization? Let me share my learning over the last two decades in forming an HR ecosystem in various organizations.

There are four modalities to form an HR department in any organization:

i.      Ctrl C and Ctrl V of HR Best Practices: This is a modality that could yield significant results. The HR department could simply be planned and formed based on the best practices available in Nepal, outside of Nepal, and/or details available on the internet. The HR experts responsible for the formation of the HR department could create the department based on this practice.

    ii.         Vertical Linkage: The second modality is to form the HR department in alignment with the objectives and needs of the organization. The HR department could be focused on the stage of the organizational life cycle or designed to address the specific needs of the organization. This modality is considered better than the first one as it is closely linked to organizational requirements, and the HR department would work to resolve the organization’s needs.

iii.         Vertical and Horizontal Linkage: Simply aligning the department with the organizational objectives may not be productive unless all the systems and practices are internally aligned with each other. This will require a detailed effort in creating various HR systems and practices and aligning them horizontally. This modality will ensure a better HR ecosystem internally, enabling business entities to achieve their objectives.

iv.         Overall Ecosystem: HR systems must not only align internally but also understand external environmental factors to ensure that all internal and external factors are considered when forming any HR ecosystem. If external factors are not considered, the HR department may not be foolproof in helping business entities achieve their objectives.

Considering the 4th modality (Overall Ecosystem), organizations must consider the following to design and institutionalize an HR ecosystem.

I. Prerequisites
a.    Business Alignment
Understand the overall objectives of the organization in terms of vision, mission, and long-term and short-term plans so that the HR direction can be planned to align with them. Experts planning the HR ecosystem must have a good understanding of the business to enable it to meet its objectives.

b.   Alignment with Core Values and Corporate Identity
It is necessary to have a clear understanding of the organizational core values and corporate identity, which must be aligned with HR systems and practices within the organization.

c.    Cultural Alignment
Many organizations limit their Core Values to their walls only, but it is imperative to align all HR systems and practices with them as they serve as the baseline for any activities or decisions within the organization.

d.   Corporate Identity Alignment 
In any organization, HR systems and practices must speak the same language as the organization. It cannot happen that the organization portrays itself as something while the systems and practices within the organization focus on something else.

e.    Environmental Assessment 
Organizations operate in diverse environments, and the same organization in two different geographical locations may have to design its HR systems and practices differently. Therefore, it is necessary to understand the environment, and while doing so, HR Experts must be able to leverage the positive/favorable points while having clear and robust plans in place to manage unfavorable points while designing HR systems and practices.

f.     Legal Framework 
It is also necessary to understand applicable provisions within the legal framework related to employment and people-related processes in the country. HR Experts must not design any HR systems and practices that do not align with the laws of the land. It is advisable to prepare a list of compliance requirements that must be ensured from HR systems and practices from the beginning so that they are checked regularly.

g.    Governance Framework 
It is advisable to develop a governance framework that would guide HR Experts in designing, and HR Professionals in institutionalizing HR systems and practices in the organization.

II. Designing HR Systems and Practices
Generally, organizations must have the following major HR systems and practices in place to manage the employee lifecycle and ensure a good employee experience:

a.    Organizational Design 
HR experts must plan to address the following major questions, among others:

1. What are the major activities/processes required by the business?
2. How can these activities be optimized to ensure a lean process?
3. How many headcounts will be required to carry out these activities and processes within the organization?
4. How could the headcount be lean and productive?
5. How will information, direction, and guidance flow within the organization?
6. What will be the hierarchy levels that HR Experts would like to introduce in the organization?
7. What positions will be required to start the operations?
8. What will be the major responsibilities and key specifications for each position?

Some HR Experts may wonder why HR should be involved in organizational processes and activities, but it is imperative for HR Experts to understand and, if necessary, make changes to ensure that the organization is productive.

b. Compensation and Benefits 
HR Experts must check all legal compliance and industry practices before designing any systems related to compensation and benefits. In this context, the following major questions must be addressed, among others:

1. Have I conducted an industry survey to understand external parity?
2. At what level does the organization want to position itself within the industry? For example, 75th percentile or 50th percentile, etc.
3. Is there a compensation and benefits strategy in place? What does it look like?
4. Is there a list of legal compliance activities?
5. How will information be stored, documented, and necessary processing be done once employees are onboarded?

c. Recruitment and Selection
HR Experts must be able to understand the talent industry in the location, which must be available from an environmental assessment done as part of the prerequisites for designing any HR systems and practices. Some major questions to be addressed include:

1. Is the recruitment and selection strategy in place?
2. What are the sources of candidates based on the organizational requirements?
3. Is there a sourcing plan for employees to ensure that talents are onboarded before Day 1 of operations?
4. What skills and competencies will be assessed? What business-level skills and competencies are required?
5. Based on the organizational core values, what cultural fit parameters are required among employees, and how will they be assessed?
6. Are the skills, competencies, and cultural fit requirements aligned to deliver organizational objectives?

d. Learning and Development
Major questions that the HR expert should consider include:

1. What are the current and future lists of skills and competencies required from a business perspective?
2. How will employees be inducted within the organization?
3. How will the selection details be used to bridge the skills and competency gap of any employee?
4. Is it advisable to prepare a skill matrix for each position mapped with employees for future learning and development plans?

e. Performance Management System
It is important to align the performance management system with the objectives of the organization. Major questions that must be addressed by HR experts include:

1. Is there any performance management system in place?
2. What kind of performance management system does the organization need to institutionalize? This must be aligned with the objectives of the organization.

f. Employee Engagement 
Employee engagement is much more than general employee welfare activities, which most organizations in Nepal are confused about. It goes beyond that, aligning with the objectives and needs of the organization, and ensuring that the organization is productive enough through an engaged workforce. Major questions that must be addressed include:

1. Is there a tool or system in place to understand the engagement level of employees?
2. It is important to co-create the terms of engagement within the organization by engaging with employees. How can this be co-created before the commencement of the organization?
3. What initiatives are required, aligning with the core values and corporate identity of the organization?

g. Employee Relations
Nepal has stringent legal provisions related to employee relations. Some major questions that must be addressed include:

1. Is the strategy related to employee relations clearly defined?
2. Are the employee bylaws in place, aligned with the HR systems and practices?
3. It is necessary to have a principle-based employee relations initiative. Is this finalized, and aligning with the overall employee relations strategies?

The above can be considered as major guidelines for developing HR systems and practices in any organization. As mentioned earlier in the article, HR systems and practices must be aligned with the overall HR ecosystem to ensure that business objectives can be achieved. For any professional HR function, it is imperative to understand the business of the organization and participate in business decisions from a people perspective.

Shrestha is an HR professional. He can be reached at dipeshmshrestha@gmail.com.