HUMAN RESOURCE MANAGEMENT-18MBA21

INTRODUCTION
UNIT 1 Notes

Unit 1: (8 hours)
Human Resource Management:
Introduction, meaning, nature, scope of HRM - Importance and Evolution of the concept of HRM - Major
functions of HRM - Principles of HRM

HUMAN RESOURCES:
• Human resources may be defined as the total knowledge, skills, creative abilities, talents and aptitudes of
an organization's workforce, as well as the values, attitudes, approaches and beliefs of the individuals
involved in the affairs of the organization.
• It is the sum total or aggregate of inherent abilities, acquired knowledge and skills represented by the
talents and attitudes of the persons employed in the organization.

HUMAN RESOURCE MANAGEMENT: DEFINITION

• “The Process of bringing people and organization together so that the goals of each are met”
• “The art of Procuring, developing and maintaining competent workforce to achieve the goals of an
organization”
• Human resource management is a process consisting of four functions that is acquisitions,
development, motivation and maintenance & retaining potential workforce of an organization

FACULTY-Prof MAHAK BALANI, DEPARTMENT OF MBA, AIT 1

MEANING OF HRM:
It is the process of recruitment, selection, development, utilization, compensation and motivation of human
resources by the organization.
HRM is a tool that helps managers to plan, recruit, select, train, develop, remunerate, motivate and make
maximum utilization of human and non human resources for the organization and society at large.

NATURE OF HRM:

1. Pervasive force:
a. It is pervasive in nature as it is present in all enterprises. The presence of HRM in all the levels
and department of organization.
2. Action oriented:
a. HRM not only focus on the developing rules and regulation, it actually focuses on the
implementation of rules and regulations and tries to solve the problems of the employees at
work using policies.

FACULTY-Prof MAHAK BALANI, DEPARTMENT OF MBA, AIT 2

 b. Its focus is on results rather than on rules
3. Individual oriented:
a. It not only focuses on enhancement of organization but also pays attention towards individual
development through the means of training and development.
b. It tries to help employees to develop their potentials and encourages to give the BEST to the
organization.
c. Focuses on Individual development
4. People oriented:
a. HRM is all about people at work. It tries to co-ordinate the individual as well as group
activities towards attainment of organizational goal. The profits generated through the means of
human resource are returned to the employees in form of reward to future motivate them to
deliver effective performance.

5. Future oriented:
a. It helps organization to meet its goal in future by providing competent and well motivated
employees.
6. Development oriented:
a. It focuses on employee development in the organization as it motivates the employees to
perform better through the means of timely reward and incentives and also provides required
training and development which helps the employees to be flexible in terms of coping up with
the changes around.
7. Integrating mechanism:
a. It tries to put people on assigned jobs in order to produce good results.
b. It tries to build and maintain cordial relations between people working at different levels in the
organization.
c. Focuses on integrating Human Asset.
8. Comprehensive mechanism:
a. HRM is concerned with anything & everything which is related to workforce.
b. HRM covers all the aspects of organization, from all levels of management, human relations,
utilization of human resource
9. Auxiliary service:
a. HRM assist & advice the line managers to work more effectively.
b. HRM does the auxiliary service, which assist other people in the organization.
c. Along with the HR functions HRM also plays role of special advisor in helping other
department in accomplishment of their activities.
10. Team oriented: The Prosocial behavior need to be exhibited to work along with people in a group to
achieve the objectives. The organization exhibit the collectivism culture.
11. Inter-disciplinary function:
a. It is a multidisciplinary activity, utilizing knowledge and inputs drawn from psychology,
economics, etc.

FACULTY-Prof MAHAK BALANI, DEPARTMENT OF MBA, AIT 3

THE SCOPE OF HRM:

1. Personnel aspect- Aspects covers the activities from hiring to retaining the competent employees. This is
concerned with manpower planning, recruitment, selection, placement, transfer, promotion, training and
development, layoff and retrenchment, remuneration, incentives, productivity etc.
2. Welfare aspect- Aspects covers the well being of the employees at work place. It deals with working
conditions and amenities such as canteens, rest and lunch rooms, housing, transport, medical assistance,
education, health and safety, recreation facilities, etc.
3. Industrial relations aspect-the relationship exist between employer, employee, government. This covers
union-management relations, joint consultation, collective bargaining, grievance and disciplinary procedures,
settlement of disputes, etc.

IMPORTANCE/SIGNIFICANCE OF HUMAN RESOURCES MANAGEMENT:

FACULTY-Prof MAHAK BALANI, DEPARTMENT OF MBA, AIT 4

¢ Attract and retain employees: HRM main challenge is to attract and retain the competent employees.
Increasing competition in market has made it difficult for companies to attract and retain efficient
employees for which an effective HR policy will help company to motivate and be loyal towards
organization by providing employees with good career opportunity.

¢ Train people for challenging roles: HRM tries to train the employees and improve the performance
of the employee and train the competent employee for the future role which is challenging roles for
them

¢ Develop skill and competencies: HRM gives proper training program and develop their skills and
knowledge. And make the employees more competitive

¢ Promote team spirit: Most of the organizations provide team based task or projects as these days
activities in organization are more of team oriented rather than individual oriented. Organizations
improve team spirit by providing proper training and orientation programs.

¢ Develop loyalty and commitment: By providing remunerations and benefits company tries to satisfy
employee and which in turn increases the loyalty and commitment. HR department ensures proper
recognition to employees delivering efficient performance at workplace and takes care about
employees’ welfare which builds a strong bonding between employees and company where employees
take personalized interest in accomplishing their task.

¢ Increased productivity and profits: employee loyalty at workplace leads to effective utilization of
resources which in turn increases productivity and profitability for the organization.

¢ Improved job satisfaction: HRM ensures proper working conditions in terms of hygiene factors and
ensure proper employee development opportunity which increases level of job satisfaction among
employees.

¢ Enhance standard of living: when level of remuneration given to employees are in line with their
expectation and proper infrastructure facilities ensure better standard of living.

¢ Generate employment opportunities: HRM department identifies skill requirement for organization
which creates job vacancies and provide employment opportunity for candidates in job market.

FACULTY-Prof MAHAK BALANI, DEPARTMENT OF MBA, AIT 5

EVOLUTION OF HRM: It explains the history of HRM, with respect to the evolution of HR
concept.

Evolution of concept of HRM

The Commodity concept- Labour was regarded as a commodity to be bought and sold. Wages were based on
demand and supply. Government did very little to protect workers.

The Factor of Production concept- Labour is like any other factor of production, viz, money, materials,
land, etc. Workers are like machine tools.

The Goodwill concept- Welfare measures like safety, first aid, lunch room, rest room will have a positive
impact on workers’ productivity

The Paternalistic concept-Paternalism Management must assume a fatherly and protective attitude towards
employees. Paternalism does not mean merely providing benefits but it means satisfying various needs of the
employees as parents meet the requirements of the children.

The Humanitarian concept -To improve productivity, physical, social and psychological needs of workers
must be met. As Mayo and others stated, money is less a factor in determining output, than group standards,
group incentives and security. The organization is a social system that has both economic and social
dimensions.

The Human Resource concept- Employees are the most valuable assets of an organisation. There should be
a conscious effort to realise organisational goals by satisfying needs and aspirations of employees.

FACULTY-Prof MAHAK BALANI, DEPARTMENT OF MBA, AIT 6

 The Emerging concept- Employees should be accepted as partners in the progress of a company. They
should have a feeling that the organisation is their own. To this end, managers must offer better quality of
working life and offer opportunities to people to exploit their potential fully. The focus should be on Human
Resource Development.

FACULTY-Prof MAHAK BALANI, DEPARTMENT OF MBA, AIT 7

FUNCTIONS OF HRM:

1. Managerial Function:
• Planning:
o It is the predetermined course of action
o Planning means setting an organization’s goals and deciding how best to achieve them. In other
words it is the process of selecting mission, goals and objectives of an activity or an
organization and determining a systematic process and actions for their accomplishment.
• Organizing:
o It is the process of establishing an organizational structure, assigning roles and responsibilities
and tasks to different positions, and establishing hierarchical, reporting and authority
relationships between different positions to implement plans and accomplish goals in a
coordinated manner. Specifically, organizing involves determining how activities and resources
are to be grouped.
• Directing:
o After planning and organizing is the execution of plan by motivating, commanding, leading
people to achieve the common goal.
o The next logical function after completing planning and organizing is the execution of the plan
.The basic function of personnel management at any level is motivating, commanding, leading
and activating people .The willing and effective co-operation of employees for the attainment
of organizational goals, is possible through proper direction.
• Controlling:
o After planning, organizing and directing various activities then the performance is verified.
o Controlling involves checking, verifying and comparing of actual with the plans.
o After planning, organizing and directing the various activities of the personnel management,
the performance is to be verified in order to know that thee personnel functions are performed
in conformity with the plans and directions. Controlling also involves checking, verifying and
comparing of the actual with the plans, identification of deviations if any and correcting of
identified deviations.

2. Operative Function:
• Acquiring / Employment: Employing people who possess necessary skills, knowledge and attitude
o Job analysis: it is the process of collecting the information relating to the operations and
responsibilities pertaining to specific job.
o Human resource planning: it focuses on providing adequate qualified human resource at time
that ensures delivering effective performance towards organization.
o Recruitment: process of searching for efficient employees and stimulating them to apply for
jobs.
o Selection: is process of making comparison between the skills required for job and asses
weather the candidate possesses the same abilities in him required to perform by job.
o Placement: is the process of placing right candidate for right job.
FACULTY-Prof MAHAK BALANI, DEPARTMENT OF MBA, AIT 8
 o Induction and orientation: is the process through which new employees get an overview
about the company (policies, rules, regulations etc.
• Development: Process of improving/changing the skills, knowledge, attitude of the workforce.
o Training: is a continuous process by which employees learn skills, knowledge to achieve
further individual as well as organizational goals.
o Executive development: process of developing managerial skills and capabilities through
appropriate programs.
o Career planning and development: it is concerned with the task of planning employee’s
career plans by the means of education, training etc.
o Human resource development: it aims at development of total organization. It creates
working environment where employees are required to update their knowledge at regular
interval of time to attain organization as well as individual goals.
• Compensation: Providing remuneration to the employees to inspire or motivate to improve the
performance.
o Job design: organizing task and responsibilities for making the work flow productive in the
organization.
o Work scheduling: it is an attempt to structure the activities incorporating physical,
psychological and behavioral aspects of work.
o Job evaluation : it refers to evaluating the value of job so as to fix proper wages to respective
jobs performed by the employees.
o Performance appraisal: refers to evaluating performance of employee at regular interval to
provide feedback to employees on their performance.
o Compensation administration: is the process of dividing how much an employee should be
paid. Main motto of compensation is to ensure effective pay plan which can attract new
employees and retain present employees in the organization.
• Welfare: It aims at protecting and preserving the physical & psychological health of employees
through the welfare measures.
o Health and safety: it ensures that the employees in the organization are protected from
physical hazards, unhealthy conditions and unsafe act of personnel.
o Employee welfare: includes amenities and facilities offered to within or outside the
establishment for their physical, psychological and social well being.
o Social security measures: these are security provided to employees in addition to fringe
benefits. Workmen’s compensation act.
• Industrial relations.
o Grievance redressed: it is concern with addressing problems related to wages, hours or
condition and of employment. It focuses on sorting issues between trade union and
management.
o Discipline: it abides the employees to follow rules and regulation set by organization to
monitor and control the activities of workforce.
o Team and team work: it focuses creating teams, groups in the organization and coordinates
their activities towards organization task accomplishment.
o Collective bargaining: it takes place in organization to get collective consent of management
as well as employees on certain terms and conditions. Agreement is mostly based on issues
related to wages, hours of work, promotion etc.
o Employee participation and empowerment: refers decentralized system of decision making
in the organization. It enhances employee’s performance as employees get feeling of belonging
towards organization.
o Trade unions and employees association: it is an association of employees or employers. It is
permanent body working in the organization to protect interest of employees in company.
FACULTY-Prof MAHAK BALANI, DEPARTMENT OF MBA, AIT 9
 o Industrial relations: it main object is to maintain harmony between employees and
management.
• Emerging Issues:
o HR Audit: Systematic analysis and evaluation of efficiency & effectiveness of HRM activities.
§ Refers to examination and evaluation of policies, procedures and practices to determine
the effectiveness of HRM in company.
o Human Resources Information System: It is a integrative system composed of software,
hardware and database used to take decision related to HR
§ It is designed to maintain HR information as serves as reference to top management to
obtain employee detail.
o Human resource research: evaluating the effectiveness of existing HR policies.
o HR Accounting: Measurement of HR activities, process of identifying & measuring data
about HR and communicating this information to the interested parties.
§ “Measurement of cost & value of people in the organization”

PRINCIPLES OF HUMAN RESOURCES MANAGEMENT

Principle is the fundamental truth established by research, investigation and analysis; many principles are
established through practice, experience and observation

Ø Principles of fair reward: Reward employees fairly based on their ability, performance, contribution
and experience.
Ø Principles of motivation: basic principles that will help you engage, encourage and energize your
team in real-world situations.
Ø Principle of communication: communication is the foundation of human interaction. Its importance
for innovation, information sharing and managing change.
Ø Principle of cooperation: HRM objective is to co ordinate and co-operate with the all the employees
in an organization.
Ø Principle of individual development: Provide employees with equal opportunity to be considered for
training and development based on their strengths and needs, to help them achieve their full potential.
Ø Principle of scientific selection: Recruit and select employees on the basis of merit (such as skills,
experience or ability to perform the job), and regardless of age, race, gender, religion, family status or
disability.
Ø Principle of dignity of labor: Treat employees fairly and with respect
Ø Principle of humanitarian treatment: Treat the employees as a human’s
Ø Principle of maintaining high morale: when morale is high, the employees tend to have more energy
and greater focus on achieving the organization’s goals
Ø Principle of Team spirit: to promote team spirit among employees, enabling them to cooperate and
work well together.
Ø The principle of merit means that decisions about appointments and pay are based on an unbiased
assessment of one's competencies (e.g. knowledge, skills and abilities).
Ø Transparency refers to policies that are clear, frank and accessible

OBJECTIVES OF HUMAN RESOURCE MANAGEMENT:

FACULTY-Prof MAHAK BALANI, DEPARTMENT OF MBA, AIT 10

Societal Objectives: To be ethically and socially responsible to the needs of the society
The basic objective of the HRM is towards the society. The HRM objective is to ensure that their organization
manages resources in ethical manner.
The company should follow the ethics and legal standards.
Organizational Objectives:
The main organizational objective focuses on the achieving the goals of the organization.
The HRM should recognize its role in bringing the organizational effectiveness.
Functional Objectives:
Effective utilization and maximum development of human resources is the functional objective of HRM and
to develop and maintain a quality of work life.
Individual/personal Objectives: To align individual goals with those of the organization.
The primary objective is to recruit, maintain, retain and motivate the employees and to increase to the fullest
the employee's job satisfaction and self-actualization.

Other objectives:
• To help the organization reach its goals.
• To ensure effective utilization and maximum development of human resources.
• To ensure respect for human beings.
• To identify and satisfy the needs of individuals.
• To achieve and maintain high morale among employees.
• To provide the organization with well-trained and well-motivated employees.
• To increase to the fullest the employee's job satisfaction and self-actualization.
• To develop and maintain a quality of work life.
• To be ethically and socially responsive to the needs of society.
• To develop overall personality of each employee in its multidimensional aspect.
• To enhance employee's capabilities to perform the present job.
• To equip the employees with precision and clarity in transaction of business.
• To inculcate the sense of team spirit, team work and inter-team collaboration

DIFFERENCE BETWEEN PERSONNEL MANAGEMENT AND HRM:

FACULTY-Prof MAHAK BALANI, DEPARTMENT OF MBA, AIT 11
The Personnel management is defined as “Personnel management is the planning, organizing, compensation,
integration and maintenance of people for the purpose of contributing to organizational, individual and
societal goals.”
The HRM is defined as Human resource management is a process consisting of four functions that is
acquisitions, development, motivation and retaining potential workforce of an organization

FACULTY-Prof MAHAK BALANI, DEPARTMENT OF MBA, AIT 12

NOTE-YOU NEED TO ELABORATE ON THE ABOVE POINTS.YOU CAN RESEARCH
AND ELABORATE

FACULTY-Prof MAHAK BALANI, DEPARTMENT OF MBA, AIT 13

Human Resource Management and Line Managers

• HRM can make significant contributions to the success of an

organization.

• HR manager and line manager represent links in the chain of

organizational success.

• Line managers have the final responsibility for achieving the

organization’s goals. They also have the authority to direct the work
of subordinates.

FACULTY-Prof MAHAK BALANI, DEPARTMENT OF MBA, AIT 14

The HR Competencies
Business Acumen

HR business leaders need to be well developed in terms of their Business Acumen. This includes
understanding business operations and functions, understanding how human resource management (HRM)
practices contribute to core business functions, and understanding the organization's external environment.
They should also recognize how internal and external factors (for example, the external competitive
environment and internal personnel resources) interact to influence organizational performance. Effective HR
business leaders need to be able to make the case for HRM to other business professionals—this includes
marketing HR within the organization and showing how HR can have a direct impact on firm performance.

Relationship Management

HR professionals regularly interact with clients and stakeholders; therefore, job success for an HR business
leader is largely a function of his or her ability to maintain productive interpersonal relationships and help
others do the same, or to display competence in Relationship Management. Research has documented positive
outcomes associated with productive and healthy interpersonal relationships in the work environment.

Consultation

Within their own organization, HR professionals often take on the role of an internal consultant or expert on
human capital issues. In this role, within the Consultation competency, HR professionals can help business
units address challenges related to human capital, such as staffing needs, training and development needs,
employee performance issues, and employee relations issues. To be a successful human capital expert, HR
professionals must not only possess requisite knowledge about HRM practices but must also be able to
provide guidance to internal stakeholders.

Critical Evaluation

HR can enhance the effectiveness and usefulness of human capital programs by informing their development
and monitoring their success with appropriate data through Critical Evaluation. One such source of data is
human capital metrics. Not only do human capital metrics add value to the role of HR in organizations, but
HR functions that collect and properly use HR metrics to inform HR activity are seen as more reliable
strategic partners.The rise of data-based HRM practices is clearly evident—one such example of this trend is
"big data" and its increasingly frequent use by HR departments. HR professional are currently being asked to
inform their decisions with data, and this trend is likely to continue and increase in the coming years.

Global and Cultural Effectiveness

Because many organizations are proactively attempting to increase the diversity of their workforce, and
because the workforce of today is increasingly global, successful HR leaders must be able to effectively and
respectfully interact with colleagues, customers and clients of varying backgrounds and cultures. HR
professionals are often tasked with developing, delivering and evaluating these diversity-related initiatives.

FACULTY-Prof MAHAK BALANI, DEPARTMENT OF MBA, AIT 15

Communication

When HR information is communicated well, employees better understand the purpose and value of policies
and practices. When managers effectively communicate HR practices and policies to their employees,
employees perceive the organization's HRM to be more effective, and, in turn, employee satisfaction and
business unit performance are positively affected.To effectively fulfill duties at each career level, HR
professionals must ensure that the messages they distribute are clear, concise and readily understood through
their expertise in Communication.

HRM and Firm’s Performance

effective HRM practices helps to develop knowledge, skills, and abilities of employees as the firm’s
competitive advantage. Firm performance is an accomplished result that can be defined based on the intended
outcome of transformation from inputs to outputs of a process in an organization. There are three types of
performance to measure longevity and wellbeing of the firm. These performances are financial,
organizational, and HRM outcomes. Financial performance refers to sales and profitability, organizational
performance measures productivity and quality, and HRM outcomes focuses on employees’ turnover and
individual growth. HRM practices have been compared and showed significant outcomes of practices that
proven to support firm performance. Training and development, recruitment and selection, and compensation
and benefits can increase employee motivation to support performance. It is found that HR roles act as a
medium that deliver results and achieving organizational excellence.

HRM Practices that have an impact of performance

1.Training and Development

2.Recruitment and Selection

3.Compensation and Benefits

4.Employee relations and Communication

5.Safety and Health

FACULTY-Prof MAHAK BALANI, DEPARTMENT OF MBA, AIT 16

 1. The Fombrun Model/MATCHING MODEL/MICHIGAN MODEL(Hard Model)
This is the model of HRM. It emphasizes four functions of management and their interrelatedness
Selection, Appraisal, Development and Rewards. These four constituent components of human resource
management and are expected to contribute to organizational effectiveness.

This model is incomplete as it focuses on only four functions of HRM and ignore all other
environmental and contingency factors. But, this model is simple and can serve as a exploratory
framework for explaining the nature and significance of HR activities.

2. The Harvard model(Soft Model)

The Harvard model claims to be comprehensive in as much as it seeks to comprise six

critical components of HRM. The dimensions included in the model are stakeholders,
interests, situational factors, HRM policy choices, HR outcomes, long-term
consequences, and a feedback loop through. The outputs flow directly into the
organization and the stakeholders.

FACULTY-Prof MAHAK BALANI, DEPARTMENT OF MBA, AIT 17

3. The Guest Model

FACULTY-Prof MAHAK BALANI, DEPARTMENT OF MBA, AIT 18

 GUEST MODEL

Yet another human resource management model was developed by David Guest in
1997 and claims to be much superior to other models. The details will justify the claim.
This model claims that the HR manager has specific strategies to begin with, which
demand certain practices and when executed, will result in outcomes. These outcomes
include behavioral, performance-related, and financial rewards.

The model emphasizes the logical sequence of six components: HR strategy, HR

practices, HR outcomes, behavioral outcomes, performance results, and financial
FACULTY-Prof MAHAK BALANI, DEPARTMENT OF MBA, AIT 19
consequences. Looking inversely, financial results depend on employee performance,
which in turn is the result of action-oriented employee behaviors. Behavioral outcomes
are the result of employee commitment, quality, and flexibility, which, in turn, are
impacted by HR practices. HR practices need to be in tune with HR strategies which are
invariably aligned with organizational strategies.

The claim of the Guest model that it is superior to others is partly justified in the sense
that it clearly maps out the field of HRM and delineates the inputs and outcomes. But
the dynamics of people management are so complex that no model (including the
Guest model) can capture them comprehensively.

The Warwick Model

This model was developed by two researchers, Hendry and Pettigrew of the University
of Warwick (hence the name Warwick model). Like other human resource
management models, the Warwick proposition centers around five elements

• Outer context (macro-environmental forces)

• Inner context (firm-specific or microenvironmental forces)
• Business strategy content
• HRM context
• HRM content
The Warwick model takes cognizance of business strategy and HR practices (as in the
Guest model), the external and internal context (unlike the Guest model) in which
these activities take place, and the process by which such changes take place, including
interactions between changes in both context and content. The strength of the model
is that it identifies and classifies important environmental influences on HRM. It maps
the connection between the external and environmental factors and explores how
human resource management adapts to changes in the context. Obviously, those
organizations achieving an alignment between the external and internal contexts will
achieve performance and growth.

FACULTY-Prof MAHAK BALANI, DEPARTMENT OF MBA, AIT 20

FACULTY-Prof MAHAK BALANI, DEPARTMENT OF MBA, AIT 21