Life cycle of a business enterprise During its life cycle, an enterprise grows on all three fronts – volume, variety and value. These vehicles are applicable to strategic human resource planning. Especially, the behaviour of these variables being inter-dependent, the composite impact at every stage of the life cycle could be drastically different. The other dimension of this complexity is the problem in defining the time-scale on which these stages of growth would actually materialise. Exact projection of time gap between two stages facilitates good assessment of the impact of cyclical changes. In other words, SWP depends on the stages of growth in the life cycle, but seriously and simultaneously impacted by the external factors e.g. socio-economic change, global environment etc. The impact of volume, variety and value on the SWP may be broadly viewed as follows considering the life cycle stages. Sr. no. Life cycle stage of an enterprise Impact on the SWP of volume, variety and value Volume (i.e. quantum of output and human resources Variety (i.e. variety of products, markets and employee competencies) Value (i.e. cost variations along with various value propositions presented to the customers) 1 Inception and promotion Select human resources with systemic support Entrepreneurial competency of the promotional team More of project related cost 2 Take off Reasonable product output, growing number of human resources with cautionary approach to expansion Limited variety and limited exposure Managed cost, focused value proposition and well defined deliverables from human resources 3 Consolidation – I Considerable size of product output, good influx of systemic employees and decision making executives Good variety of products and markets, bigger variety of employee competencies Volume-driven cost, ambitious value propositions and corresponding competency flexibility required by all
Inception and promotion To be written off in 3 years, low impact on IS To be written off in 3 years, low impact on IS Annual cost, low impact on IS Annual cost, low impact on IS Annual cost, low impact on IS Annual cost, no impact on IS Take off To be written off in 3 years, reasonable impact on IS To be written off in 5 years, reasonable impact on IS To be written off in 5 years, considerable impact on IS Annual cost, low impact on IS Annual cost, low impact on IS Annual cost, low impact on IS Consolidation I To be written off in 3 years, reasonable impact on IS To be written off in 5 years, reasonable impact on IS Annual cost, low impact on IS Annual cost, low impact on IS Annual cost, low impact on IS Annual cost, very low impact on IS Consolidation II To be written off in 3 years, considerable impact on IS Annual cost, low impact on IS To be written off in 2-3 years, considerable impact on IS To be written off in 2-3 years, considerable impact on IS To be written off in 2-3 years, considerable impact on IS Annual cost, low impact on IS Market leadership Annual cost, very low impact on IS Annual cost, low impact on IS Annual cost, reasonable impact on IS To be written off in 2-3 years, considerable impact on IS Annual cost, considerable impact on IS Annual cost, low impact on IS The CEO, CFO and the CHRO will have to always establish a balance between the ‘recurring wage cost’ incurred for short term tangible results and the ‘capital wage cost’ to be treated as a long term investment in human resources as company’s distinguishing assets. Challenges in making SWP a fool-proof exercise There are few major challenges companies normally face when bringing perfection to SWP. Different companies face them differently based on their priorities, conveniences of the promoters, market conditions etc. An organisation believing in long term, sustainable and all-round growth, views SWP as an important tool for retaining and enhancing the competitiveness of its human resources. The challenges may be narrated as follows. Striking a balance between ‘wages for yearly measurable results’ and ‘wages for long term goals’ has always been a challenge. Short term profitability and long term sustainability should be viewed as complementary and not contradictory. This could be achieved through a pragmatic performance management system. Choosing between the extremes of capitalist structure and socialist structure of wages is also a difficult act of balancing between entrepreneurial reward