Diversified portfolios and principles of Human Resource Management

I have been meaning to write for a long time now. But all I have been able to do is to get a few draft headlines. I keep thinking I will come back to them but that time never seems to come. Anyway, here is one thing I am itching to write about.

We were talking about valuations of companies in our Finance II class. The issue was whether a merger would increase the value of companies if there were no synergies to be had. One student recalled an earlier lecture where Ajay Pandey said that in an efficient market, people will not pay more for a diversified company because they can themselves hold a diversified portfolio anyway. Of course, this discussion assumed the absence of synergies. This discussion sort of set me thinking on tangential lines. Human Resources is one of my better favoured areas of study (ask anyone in my class and they can tell you :-)) and I applied this theory to principles of human resource management to come up with an interesting analogy.

When we receive our initial undergraduate education, we are trained to be specialists in our respective fields. Be it computer engineering or medicine or accountancy, the narrowness with which we deal with our respective areas of study is astounding. Once we go into organisations as specialists, we are valued for the specialisation that we bring in.

Then there are these people who decide to go in for doing a post graduate degree in management. This is where things become interesting. When we exit b-school and go out into the job market, expectations of the recruiters change dramatically. Of course, we are initially expected to work in the areas of our touted specialisation ( or, if the companies aren't that smart at sensing our aptitudes, for some area where they deem fit to put us in). If the companies think they need a different specialisation they will hire a different person. In that sense the HR process resembles efficient markets. But later, we are valued for the synergies we bring to the workplace; synergies in terms of our ability to integrate knowledge from various functional areas, synergies in terms of being able to get along with people and so on... This value is much harder to estimate and often companies spend a huge amount of resources trying to get the right person for the right job.

However, there is no denying the fact that, early on in one's career, be it as a techie or as a management student, the recruitment market behaves as if it expects little synergies from diversifying our initial portfolio of knowledge. But later, those very synergies become crucial for managerial success and significantly influence the money and respect we get. Basically, time can improve synergies depending on the extent of integration we achieve within ourselves. This again is a function of our willingness and ability to learn.

On a more personal note, I would like to achieve the abovementioned synergies as quickly as possible. But I wonder whether the job market would value me for that...

Bloggin' off
Sitan