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February 2018 Cover Story

Published on: 2018-02-20 10:40:09     1741 times read    0  Comments
The Changing HR Dynamics in Nepal

People management is a very challenging task to achieve organisational objectives. While many organisations in Nepal are yet to adopt modern scientific practices in this regard, some are already ahead by leaps and bounds in terms of efficient HR management. 

--BY SANJEEV SHARMA AND NIKEETA GAUTAM

Managing people effectively has become a factor of utmost importance for organisations in order to have a competitive edge. While businesses and institutions in developed and emerging economies have significantly progressed by developing and deploying best practices and strategies in human resource management, the HR ecosystem in Nepal is still in its infancy.

Nevertheless, Nepali companies and other organisations have been gradually adopting modern HR techniques over the last few years. There is a growing sense of realization among Nepali employers that focusing only on activities including production, sales and marketing, for example, are largely insufficient to meet the organisational objectives and to mitigate the existing and future challenges. “The increased sense of realisation about the importance of human resource management is due to the fact that people are the most important resource in any organisation. They are the ones who make things happen,” says Kumar Joshi, president of Human Resource Society Nepal (HRSN), an organisation of Nepali HR professionals which was established in 2013. 

Background 
The concept of HR management came to Nepal with the entry of some foreign joint venture companies, banks and development partners in the 1980s.The institutions brought in structured processes in areas ranging from recruitment to grievance handling of employees to ensure smooth day-to-day operations. HR management practices further gained momentum with the arrival of more foreign JVs and INGOs in the 1990s. By observing effective employee management in foreign organisations, Nepali businesses too slowly began to adopt such practices. Until the 90s, administration departments in Nepali organisations used to oversee employee management. 

Meanwhile, Nepal Rastra Bank (NRB) also made it mandatory for all commercial banks to have a separate HR department and the years following 2000 saw the start of prudent HR practices in BFIs. Efficient HR management in BFIs was among the core objectives of reform programmes including Financial Sector Strategy Statement (2000) and Financial Sector Reform Programme (2004). 

“Till 2000, HR department as such did not exist in the form of a separate body in Nepali institutions,” shares HRSN President Joshi. 

In the mid and late 2000s, HR companies stepped into the scene initially as recruitment service providers and later entering into areas such as employee training and development, HR system formulation, and even HR process outsourcing in recent years. Mohan Ojha is among the few HR entrepreneurs in Nepal who have closely observed the changing people management scenario in Nepali institutions over the last two decades. “A decade ago, there were just around 55 organisations in Nepal practicing HR management,” recalls Ojha who is the managing director of HR firm Growth Sellers which was founded in 2008. According to him, now there are more than 500 organisations with separate HR departments and around 1,300 HR professionals are active in the country.

Meanwhile, many business schools over the last 10 years or so have started BBA and MBA programmes in human resource management, thereby producing a skilled workforce for institutions.

Current Scenario
Nepali companies are catching up with the world in managing human resources better to meet their organisational objectives, albeit slowly. Some top institutions have been efficiently practicing HR techniques for better productivity. Nepali companies and business groups including Sipradi Trading, NIC Asia Bank, Nabil Bank, Vishal Group, Shanker Group, Chaudhary Group, MV Dugar Group, KL Dugar Group, Subisu Cablenet, Soaltee Crowne Plaza, CE Construction, Nimbus Holdings, MAW Enterprises, Buddha Air, Yeti Airlines, Ace Travels, Butwal Power Company, Jawalakhel Group of Industries, and foreign JVs such as Standard Chartered Bank Nepal, Unilever Nepal Limited, Nepal SBI Bank, Surya Nepal, Dabur Nepal and Ncell are considered to have been using some of the most efficient practices in people management. 

“MNCs operating in Nepal have been practicing HR management at exceptional levels. So are banks and INGOs and few business houses. In the rest of the organisations, HR management is still in a primitive stage,” observes Shailendra Raj Giri, founder and managing director of Merojob. Established in 2009, Merojob is now a major force in the recruitment and HR solutions business in Nepal. Giri sees lack of internalisation of HR concept in many institutions here. “Even at big organisations with huge sales turnovers, people management is stuck at simply implementing basic HR functions that include tasks such as managing daily activities like payroll management, salary disbursement, employee attendance and leave management,” says Giri. 

Ojha of Growth Sellers says that only 10 percent of the Nepali organisations at present are effectively practicing HR management. “One of the reasons on not following the HR practice in an organisation is because of lack of awareness among the top level management and absence of effective people management trends in the country,” he opines. 

As HR management is a very systematic process, proper policies are necessary to govern the activities.  A quick survey conducted by New Business Age magazine among six major corporate entities in Nepal found that all of them have well documented HR policies.

Right Person for Right Job
Over the last decade, the Nepali HR fraternity has seen a sea change in terms of recruitment and hiring. Presently, private sector institutions and other organisations in the country are fulfilling their workforce needs through structured and systematic processes in hiring so as to find the right person for jobs. 

“We have benchmarked criteria for different positions. The criteria include not only qualifications but also additional skills of the job applicants,” says Sharda Rana, head, Human Resource and Training at Sipradi Trading. “For instance, hiring someone for the accounts department will ask for not only skills in accounting and using general accounting software. The candidates are also expected to be positive and a team player and possess a learning attitude,” she adds. 

The classic practice of posting job openings in newspapers still persists. But new practices have gained noticeable momentum in recent years. For instance, outsourcing of recruitment to HR solution companies has become a popular choice. This helps to alleviate the hassles in finding, selecting and employing the right candidates saving precious time and energy that they can then utilise in other important aspects of HR management. 

“When organisations need a quick hiring service, they look forward to receiving professional HR agency services as we have a repository of CVs stored with us. It’s a tedious and time consuming task to process hundreds of applications for a single position,” says Bimal Kandel, managing director of Frontline Consult which operates the job portal froxjob.com. According to him, the attraction of employers towards recruitment services is because the likelihood of finding the best candidate without their help is not always there. “It doesn’t make sense to go ahead with trial and error when organisations recruit people,” mentions Kandel. Job portals like merojob.com, growthsellers.com, froxjob.com, jobsnepal.com, kantipurjob.com, ramrojob.com and kumarijob.com are providing recruitment services to a large number of employers of different sectors. The recruiters carefully scan the profile of job applicants and match jobs accordingly, thus also increasing the employability factor of talented jobseekers.

According to Sachendra Gurung, vice president of Human Resource at Subisu Cablenet, among the company’s 1,200 staff, 300 have been hired through the recruitment agencies. “The work of HR companies enables us to get the right person in the right place because they carry out all interviews and necessary procedures and select only the capable people,” he says. 

Besides the job portals, employers and recruitment agencies in Nepal also use social media and personal references as other recruitment means. Over the last few years, the professional networking site LinkedIn has become a prime avenue for them to find desired individuals for the jobs. Likewise, headhunting and employee poaching are also commonly practiced to fill in the key vacancies. The rising competition has led Nepali businesses to find talent who can be future executives, leaders and specialists for their organisations.  At present, there is a trend of appointing talent acquisition specialists in HR departments who are assigned with identifying and hiring talent. 

Measuring Employee Performance
Gone are the days when personal bias of the boss was the major determinant in employee evaluation. In the past, nepotism and favouritism used to play a major role when climbing the corporate ladder ultimately diminishing the career prospects of many honest and determined workers in Nepali organisations. Such factors still prevail in organisational politics, but to a lesser extent due to the increasing use of modern performance evaluation techniques. Nowadays, HR departments of institutions here practice the performance appraisal (PA). Basically, PA refers to a system or a process that aligns employees to the mission, vision and goals of the organisation. The New Business Age survey of six Nepali businesses found staff promotion, pay rise, individual training need identification, reward and recognition, contract renewal/termination as the main applications of PA. 

Globally, different companies use different PA tools and techniques, some of the most common being Peer-to-Peer Review, Self Evaluation, 360° Feedback, Rating Scale and Quantitative Evaluation.  Among these, 360° Feedback and Self Evaluation are more widely used in Nepali organisations with some modifications. Such techniques are based on certain gauges known as Key Performance Indicators (KPIs) that organisations have been utilising in order to measure the performance of individuals. Such techniques have become instrumental not only in monitoring and evaluating employee performance, but also in identifying problem areas and addressing them properly.  

“We have an annual appraisal system in place which is totally based on KPIs. Each year, our staff are assigned with key tasks and objectives. At the end of the year, they are evaluated on the basis of the achievement of the objectives. We also evaluate their performance based on other measurable criteria but a major chunk of scores is reserved for KPI.  Other skills like judgmental skills carry less weightage,” informs Rana of Sipradi Trading. According to her, those who score higher in the evaluation are incentivised with salary increments and promotions. Sipradi’s HR department also conducts a half-yearly appraisal of the employees, which is basically a feedback system. 

NIC Asia Bank has a fully automated evaluation system in place. The bank’s employees are required to do their evaluation by themselves. “Every staff’s workload carries weightage. As per our policy, employees rate themselves according to their performance and the objectives with the completion of the fiscal year,” mentions Gautam Dongol, head of Human Resource Department at NIC Asia Bank. 

Soaltee Crowne Plaza has been following an evaluation policy which is uniform for all IHG South West Asia hotels. “Our Overall Performance Rating (OPR) is measured from 1 to 5 points based on one's performance over the Key Job Responsibilities (KJR) and Winning Ways,” says Sarju Ranjit, director of Human Resources at Soaltee Crowne Plaza.  

United Distributor Nepal (UDN), a part of Vishal Group, has been practicing Self Evaluation for PA. “In the future, we plan to implement 360 degree feedback where peers, subordinates, superiors and even clients will assess the employees’ performance,” shares Bhuban Raj Joshi, general manager of HR at UDN.  

Meanwhile, Key Performance Indicators (KPIs) and Key Result Areas (KRAs) are being used at the Shanker Group. “KPI is used for top-level managers who are assigned targets and is the basis for their quarterly, half-yearly or yearly evaluation,” says Tanka Prasad Bhattarai, vice president of Human Resources and Administration at Shanker Group. To evaluate the performance of the other employees, the group has been using 360°Feedback. “For ground level staff like janitors, drivers and security guards, we conduct competency-based appraisal that evaluates their technical skills required to perform the assigned tasks,” informs Bhattarai. 

The Age of HR Automation
HR management, which used to be considered as a non-innovative and paper-intensive area of organisational management in the past, has grown with new technology over the years. The world over, new technologies have been helping institutions to mitigate various challenges in human capital management in terms of employee engagement, competitive pay, talent retention and succession planning. 

While institutions in developed countries are focusing on the next frontiers in HR management such as using artificial intelligence (AI) in workplaces to measure the performance of employees more effectively, Nepali organisations have also started to use modern technologies for better evaluation of their staff and cost-benefit analyses. At present, digitization and use of HR software are useful tools for organisations to reduce the paper-work and manual hassles in record keeping, monitoring and evaluation, say HR managers and experts.   

“The traditional belief and mindset of people used to be limited to capital investment in the past. Sufficient income and investment in business used to mean that it would supersede other resources such as people, technology and so on,” says Joshi, adding, “Then the technology came into the picture above all and now they have started utilising technology for recruitment, development, motivation, and retention aspects of human capital.” 

The use of IT has eased the hassles for HR managers in performance evaluation.  “Use of HR software has become one of the key trends now among large corporate houses. Even performance is measured in quantitative terms even when there are qualitative outcomes. Yet the manual way of doing things hasn’t lost its use in Nepali organisations,” observes Frontline Consult MD Kandel.  

MNCs operating in Nepal have their own HR software and Nepali private sector companies are showing their interest in integrating IT into their HR systems. For instance, biometric systems are common in many large and medium level offices in Nepal. Commercial banks and some large organisations have been using Human Resource Information System (HRIS) to track the daily performance of employees to conduct performance appraisals. Different Enterprise Resource Planning (ERP) software and HR software form a part of HRIS in terms of HR automation. “The use of technology in this department has further helped us manage the organisation better. Today, software like Decision Support System (DSS) tracks the activities of employees and their performance very efficiently,” says Gurung of Subisu Cablenet. The company has been using HRMS as its HR management software.

 Similarly, Sipradi Trading, NIC Asia Bank, United Distributors, Soaltee Crowne Plaza and Shanker Group have been using Microsoft Navision (ERP), Izone and HRIS, BeeHRM, Empower and Nimble Office HRM, respectively. Many of these types of software are developed in Nepal, thus providing business and job opportunities for Nepali developers and they are tailored to suit the requirements of their clients.  Real HR Software developed by Merojob is one such HRIS software which is currently being used by 10 major companies and some INGOs. “With the use of this software, institutions can analyse their human resource through different dimensions and even monitor the business. It can be also used for entire internal communication,” says Merojob MD Giri. 

The Employee Turnover Challenge
At present, the global employee turnover rate is estimated to be hovering at 10 percent. Though no such data is available in the case of Nepal due to the lack of research, the turnover is thought to be very high. From dissatisfaction over salary and remunerations to career/personal growth opportunities, work environment in offices, and personal issues, the reasons for leaving jobs differ from people to people.  Over the last 15 years, the abroad attraction for jobs among many Nepalis has amplified the employee turnover making employee retention even more challenging. 

There are other reasons also, such as the increasing spirit for entrepreneurship among Nepali youths.  “Over the years, we have seen that the new generation is equipped with good entrepreneurial skills and they don’t want to stick to a company for long. They come to companies to learn and start their own business,” says Gurung. He sees a high turnover among lower level staff than in the higher level in Nepali organisations. 

Retaining the Talent 
It’s been quite a challenge for Nepali HR managers and experts to find ways to make people work in organisations for a long time. A recent study conducted by The Wharton School of University of Pennsylvania professor Adam Grant and Facebook’s HR team found that organisations can have more satisfied and committed employees when managers can tailor jobs according to the passions, talents and work-life priorities of workers rather than forcing them into predetermined roles. 

At present, talent retention has become a tough job for HR executives. Besides increasing salaries and perks, institutions are gradually adopting techniques such as employee engagement. In recent years, employee engagement has found an important place in organisational management in Nepali institutions. Employee engagement is a qualitative and quantitative management concept which is comprised of elements like training and development, awards and recognition, accountability and performance, refreshment and recreation, and CSR activities. According to a 2013 Gallup Organization report, employee engagement has become essential to boost the productivity of staff and also to improve their quality of work and health.

Happiness in work is what adds to the dynamism and vigour of employees in their responsibilities. “Organisations can’t create organisational value in the market without employee satisfaction and motivation. What they miss out is ‘if you keep your employees happy, they will keep your customers happy’,” thinks Frontline Consult MD Kandel. There is a common saying in the HR community that ‘people don’t leave their jobs but their bosses’. 

Dongol of NIC Asia says that the work environment plays a vital role in retaining staff. “BFIs need to look into different aspects more than the remuneration for higher staff retention,” stresses Dongol.

Some institutions like Shanker Group have been carrying out surveys to measure the satisfaction of employees. “Happy and satisfied employees are more productive, better leaders, more creative and efficient team players,” opines Bhattarai. According to him, the surveys are conducted to make sure that staff are satisfied and that there is good coordination between the employees and the HR department. “We ensure employee satisfaction by being flexible while dealing with them,” Bhattarai adds. 

Producing Future Leaders 
It is a risky proposition for organisations to leave key positions vacant for a long time in case of resignation, retirement or even death of high-level executives. There are instances where institutions have found themselves in between a rock and a hard place because of the absence of leadership personnel.  Succession Planning is vital to avoid such situations. 

According to the Indian HR veteran Aquil Busrai, any company should identify critical organisational positions and have a plan in place where trained people can immediately take the positions if needed. “Succession planning is a factor of absolute importance for the sustainability of any organisation,” Busrai said in an interview with New Business Age during his visit to Nepal in July, 2017. He stressed that there must be successors who will immediately fill in the critical positions and there should be plans for bringing other people as well who can come to the positions in the next two to three years. “So, this is a process of continuous training for institutions to have skilled and qualified professionals,” he noted. 

Various international researches have clearly identified the importance of succession planning. According to a 2014 study conducted by the talent management and research company Bersin by Deloitte, a part of the British multinational accounting firm Deloitte, organisations that use sophisticated processes to identify successors in key job responsibilities have significant employee engagement and  retention rates. 

Major business organisations in Nepal have found succession planning an important management strategy to produce better future leaders. “Earlier, organisations avoided long term planning for their employees because they used to assume it involved costs. Nowadays, large institutions plan for 5-10 years when they hire someone,” notes Ojha of Growth Sellers. 

Vishal Group is one such business house which has been practicing succession planning for many years. “Now, we are planning to work on the Individual Development Plan. We believe it will widen the concept of succession planning,” says Joshi of UDN.

Similarly, Sipradi Trading is also well ahead in this regard.  “There are many people whom we consider role models in Sipradi. Starting their careers at entry level positions years ago, they have succeeded in reaching the top management positions. For this, we identify key talents and plan their growth and development accordingly,” shares Rana of Sipradi Trading.  

Sarju Ranjit of Soaltee Crowne Plaza views that this type of strategy is all about meeting the future demands of an organisation. “Succession planning is, thus, one of our major focuses. We view it as highly important and regularly update our succession plans for the key positions, once a year in each department,” he says. 

Nevertheless, experts point out that one prerequisite needed for the successful implementation of succession planning.  “Succession planning works if there is a strong retention strategy,” says Giri. 

Youths Want Independence and Decision Making Authority at Workplace
Govt & NGO/INGO Best Preferred Employers

Nepali college and university students want independence at the workplace and decision making authority, a recent study has found. According to a recently conducted survey by Minds Nepal Pvt Ltd, the research wing of New Business Age Pvt Ltd, to understand the critical dimensions that business school students consider when joining an organisation, the students value greater independence at work and in the decision making process. 

The survey was conducted among 228 MBA students, aged between 22 to 26, from three colleges, namely Kathmandu University School of Management (KUSOM), Ace Institute of Management (ACE) and South Asian Institute of Management (SAIM). 

The key findings of the survey showed that students saw(i) independence at work and decision making (ii) market reputation of the company (iii) opportunities to work with and learn from the top talent in the organisation(iv) growth prospects within the company and v) opportunity for a good work-life balance as the top five critical dimensions to consider before joining an organisation. 

Out of the 228 students, 49 ranked independence at work and decision making as the most critical dimension while 25 ranked opportunities to work with and learn from the top talent in the organisation as their first priority. 24 students ranked market reputation of the company while 18 each ranked growth prospects within the company and opportunity for good work-life balance as their top critical dimension. 

Only 15 of the 228 respondents believed the total salary package offered as the most critical dimension while 13 of them pointed to job security as the essential factor for joining an organisation. Likewise, 12 respondents said that they would evaluate benefits of skill enhancement and career development training programmes before taking a job. Meanwhile, 11 students sought environment for creativity and out-of-the-box thinking as the most important factor. 

Among the other critical factors were good starting designations, organisational values, social status enhancement, company’s innovativeness and vision, organisational transparency, HR policies, job location, employability, approachability of senior management, take-home salary packages, opportunities for international exposure through overseas postings, opportunities for cross function mobility and the performance-based culture of an organisation. Interestingly, one of the highlights of the survey was fading of attraction of the new generation youths towards private sector jobs. Minds Nepal researchers found that a vast majority of the respondents showed their keen interest in joining government and NGO/INGO sector jobs after completion of their study. 

(With inputs from Sabin Jung Pandey)

Experts Views on HR Management in Nepal 1

Experts Views on HR Management in Nepal 2


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