The evolution of HR dynamics in Nepal

Efficiently managing personnel has become crucial for organizations to gain a competitive edge. In developed economies, businesses and institutions have made substantial advancements by implementing effective HRM practices and strategies.  However, in Nepal, the HR ecosystem is still in its nascent stages, lagging behind in terms of development and implementation. Employee management in Nepali organizations was traditionally overseen by administration departments until the 1990s. In addition, Nepal Rastra Bank (NRB) enforced the requirement for commercial banks to establish dedicated HR departments. Subsequently, the period after 2000 marked the initiation of sound HR practices in banking and financial institutions (BFIs). Over the past decade, numerous business schools have introduced BBA and MBA programs specializing in human resource management.  As a result, it has been effectively generating a competent workforce to meet the needs of various institutions. Over the years, the HR dynamics in Nepal has evolved, adapting to the changing needs of organizations and the workforce. In the past, HR practices in Nepal were primarily focused on administrative tasks such as attendance management, payroll processing, and employee record maintenance. The HR department was often seen as a support function with limited involvement in strategic decision-making. However, with globalization and the increasing complexity of business operations, organizations in Nepal realized the importance of aligning HR practices with their overall objectives. Today, the HR dynamics in Nepal has shifted toward a more strategic and holistic approach. HR departments are now actively involved in talent acquisition, performance management, employee engagement, and learning and development initiatives. They are recognized as crucial drivers of organizational success, responsible for attracting, developing, and retaining top talent. 

In the past, nepotism and favoritism have significantly influenced career progression within the Nepali organization. But, in the current scenario HR departments are practicing the performance appraisal (PA) for actual performance measurement. Basically, PA refers to a system or a process that aligns employees to the mission, vision and goals of the organization. Different PA tools are popular in the world and some of them are highly used in the Nepali organization too. Tools like Self Evaluation, 360° Feedback, Rating Scale are widely used in Nepali organizations. Organizations have been employing Key Performance Indicators (KPIs), which serve as benchmarks, to evaluate the performance of individuals.

Despite these positive developments, HR departments in Nepal still face several challenges. One significant issue is the lack of qualified HR professionals. Many organizations struggle to find HR experts who possess the necessary knowledge and skills to navigate the changing HR landscape. This shortage of skilled professionals often leads to inefficient HR practices and limits the department's ability to contribute strategically to the organization. Another challenge is the absence of standardized HR processes across industries. While some progressive organizations have implemented modern HR practices, many others still rely on outdated methods. This inconsistency in HR practices makes it difficult to benchmark and compare HR performance across organizations. To address these challenges, many organizations in Nepal have started adopting HR software solutions for performance evaluation. These software applications enable systematic tracking of employee performance, goal management, and feedback collection. They provide real-time insights into individual and team performance. It helps in facilitating informed decision-making and fostering a culture of continuous improvement. Some popular HR software used in Nepal include BambooHR, Darwinbox, and Zoho People. At present, biometric systems have been installed in almost every private sector; even public sectors are widely using it. Furthermore, recruitment agencies play a vital role in supporting HR practices in Nepal. These agencies specialize in sourcing and screening candidates for various job positions. They employ effective recruitment strategies, including talent mapping, candidate profiling, and skill assessments. At present, digitization and use of HR software are useful tools for organizations to reduce the paper-work and manual hassles. 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 of talented jobseekers. In addition to job portals, employers and recruitment agencies in Nepal utilize social media and personal networks for recruiting purposes. LinkedIn, a professional networking site, has emerged as a prominent platform for finding suitable candidates. Moreover, headhunting and employee poaching are prevalent methods to fill crucial vacancies. If we track the last few decades’ data, it is found that there has been a significant increase in the allure of overseas job opportunities. It can result in higher employee turnover rates and present even greater challenges for employee retention. In the current scenario, freshers want independence in the workplace and decision making process. They are more guided by financial benefits and search for better opportunities. It has created a headache for Nepali organizations to retain its employees. While Nepal has made significant strides in its HR practices, there are valuable lessons to be learned from countries like the USA, the UK, and other European nations. These countries have advanced HR frameworks that emphasize employee empowerment, workplace diversity and inclusion, and robust talent management strategies.