Definition of HRM According to Flippo

1. Human Resource Perspective: Flippo defines HRM as the process of procuring,

developing, compensating, integrating, maintaining, and separating human resources
to achieve individual, organizational, and societal objectives.
2. Comprehensive View: HRM covers all aspects of personnel management,
emphasizing a harmonious relationship between the organization and its employees.

Nature of HRM

1. Universal Application: HRM is applicable across industries, irrespective of size,

type, or location.
2. People-oriented: The focus is on managing people, their needs, and their aspirations
effectively.
3. Continuous Process: HRM is ongoing and dynamic, requiring regular evaluation and
updates.
4. Goal-oriented: It aligns individual goals with organizational objectives to create a
cohesive work environment.
5. Integrative Function: HRM connects various departments and ensures seamless
interaction among employees.
6. Multidisciplinary Approach: It uses concepts from various fields like psychology,
sociology, and labor laws.
7. Developmental Role: HRM emphasizes employee development through training,
learning, and career progression.
8. Regulatory Framework: HRM operates within the boundaries of labor laws and
ethical practices.

Managerial Functions of HRM

• Planning: Forecasting workforce requirements and designing strategies to meet future

needs.
• Organizing: Structuring roles and responsibilities to ensure effective workflow.
• Staffing: Recruiting, selecting, and placing the right talent in the right roles.
• Directing: Guiding and motivating employees to achieve organizational goals.
• Controlling: Monitoring employee performance and ensuring adherence to policies.
• Coordinating: Harmonizing activities across departments for efficient operation.
• Decision-making: Addressing workforce-related issues and implementing strategic
decisions.

Operative Functions of HRM

1. Procurement: Attracting and hiring skilled employees through recruitment and

selection processes.
2. Development: Enhancing employee capabilities via training, coaching, and mentoring
programs.
3. Compensation: Designing and managing salary, incentives, and benefits to motivate
employees.
 4. Integration: Building strong relationships among employees and management to
foster teamwork.
5. Maintenance: Ensuring employee satisfaction through workplace safety, health, and
welfare programs.
6. Employee Relations: Managing grievances, disputes, and fostering positive labor
relations.
7. Separation: Handling employee exits, retirements, and terminations in a smooth and
ethical manner.

History of Human Resource Management in India

The development of Human Resource Management (HRM) in India is relatively recent.

However, traces of HRM practices can be found in ancient times, as early as 400 B.C., when
Kautilya addressed HRM aspects in his renowned work, Arthashastra. The rulers of that era
implemented many of Kautilya's HRM techniques.

In its modern form, HRM began gaining recognition and popularity post-independence. The
importance of labor officers was highlighted as early as 1929 in the Royal Commission
Report on Labor in India, which recommended the appointment of labor officers to address
labor and welfare issues. Significant progress occurred after the enactment of the Factories
Act of 1948.

Key Milestones in HRM Development in India:

1. Factories Act of 1948:

o Section 49 mandated the appointment of welfare officers in companies
employing more than 500 workers.
o Initially, the government focused on limited labor welfare aspects.
2. Early Labor Legislation (1830):
o The earliest legislation in India aimed to regulate the recruitment, forwarding,
and employment of Indian laborers sent to British colonies.

Recent Developments in HRM

HRM in recent decades has evolved to treat employees as multidimensional individuals—

economic, social, psychological, and spiritual beings. Key developments include:

• 1995: Shift towards Human Resources Development (HRD).

• 1998: Continued focus on HRD, cultural diversity, teamwork, and participative
management. Emerging areas included total quality management (TQM) in HR,
employee empowerment, team development, and integrating HRM with strategic
management.
• 1999: Establishment of the Second National Commission on Labor to examine labor
conditions.
• 2001: Emphasis on "smart sizing" organizations to enhance efficiency.
• 2002: Greater focus on candidates' positive attitudes over technical skills and
knowledge.
• 2003: Shift from Intelligence Quotient (IQ) to Emotional Quotient (EQ) in evaluating
employees.
• 2004: Transition from skilled workers to knowledge workers in the workforce.
 • 2005: Shift from rigid hierarchical structures to flexible and virtual organizational
structures.
• 2006: HRM became integral to strategic management, recognized as a core
competency of modern corporations.
• 2007: The concept of HRM transitioned to Human Capital Management.
• 2008: Focus shifted to retention management and fostering company-specific talent
development through collaborations with educational institutions. The global
economic recession caused a decline in business operations.
• 2009: Continuation of job cuts, pay reductions, and layoffs due to the prolonged
economic downturn.
• 2014: Emphasis on talent management and the adoption of flexible HR policies and
practices to adapt to changing work environments.

This timeline reflects the dynamic and evolving nature of HRM in India, aligning with global
trends and economic conditions while addressing the specific needs of Indian organizations.

Human Resource Planning Process

Human Resource Planning (HRP) is a strategic process to ensure the right number and type
of employees are available to achieve organizational goals. It involves forecasting future HR
needs, assessing current resources, and creating plans to bridge the gaps. Below is a step-by-
step guide to the HRP process:

1. Analyzing Organizational Objectives

• Objective: Understand the organization's long-term and short-term goals.

• Details: This step aligns HR requirements with business objectives like expansion,
diversification, or restructuring.

2. Assessing Current Human Resources

• Objective: Evaluate the existing workforce in terms of numbers, skills, experience,

and performance.
• Details: Conduct an inventory of employees using HR databases, personnel files, and
performance appraisals.

3. Forecasting HR Demand

• Objective: Predict future human resource needs based on organizational goals and
market trends.
• Details: Use techniques like trend analysis, workload analysis, and managerial
judgment to estimate staffing requirements.
4. Forecasting HR Supply

• Objective: Estimate the availability of qualified personnel from internal and external
sources.
• Details:
o Internal Supply: Promotions, transfers, retirements, and attrition rates within
the organization.
o External Supply: Labor market trends, educational institutions, and
competitors.

5. Identifying HR Gaps

• Objective: Compare HR demand and supply to identify surpluses or shortages.

• Details: Analyze mismatches in quantity, quality, or timing of human resources
required.

6. Developing HR Plans

• Objective: Create strategies to address identified gaps.

• Details:
o For shortages: Recruit, train, promote, or retain employees.
o For surpluses: Offer redeployment, retraining, or voluntary retirement
schemes (VRS).

7. Implementing HR Plans

• Objective: Execute the developed strategies effectively.

• Details: Recruitment campaigns, training programs, and succession planning are
examples of actions during this phase.

8. Monitoring and Evaluation

• Objective: Ensure the HR plan aligns with organizational goals and adapt to changes.
• Details: Regularly review the effectiveness of HR strategies and make adjustments as
needed.
By following this structured process, organizations can ensure a proactive approach to
managing human resources, maintaining a balance between workforce demand and supply.

Cost Low High

Supervision Direct (by seniors/mentors) Indirect (trainers/facilitators)
Applicability Immediate May require adaptation
Examples Job rotation, mentoring Seminars, case studies, e-learning

Methods of Performance Appraisal

Traditional Methods

1. Ranking Method
o Employees are ranked in order of their performance, from best to worst.
2. Paired Comparison Method
o Each employee is compared with every other employee in pairs to evaluate
relative performance.
3. Grading Method
o Employees are categorized into predefined grades, such as excellent, good,
average, or poor.
4. Checklist Method
o A checklist of attributes or behaviors is used, with responses marked as "yes"
or "no."
5. Graphic Rating Scale
o Employees are rated on a numerical scale for specific traits, such as
punctuality or teamwork.
6. Forced Distribution Method
o Employees are placed into predetermined performance categories (e.g., top
10%, middle 70%, bottom 20%).
7. Critical Incident Method
o Evaluates employees based on significant positive or negative events during a
specific period.
8. Essay Method
o Managers write detailed qualitative descriptions of employees’ performance.

Modern Methods

1. Management by Objectives (MBO)

o Goals are set collaboratively between managers and employees, and
performance is evaluated based on goal achievement.
2. Behaviorally Anchored Rating Scales (BARS)
o Combines rating scales with specific examples of behaviors for detailed
performance evaluation.
3. 360-Degree Feedback
o Feedback is collected from multiple sources, such as peers, subordinates,
managers, and clients, for a holistic view.
 4. Assessment Centers
o Employees are evaluated through simulations, group discussions, and role-
playing exercises to assess competencies.
5. Human Resource Accounting Method
o Evaluates employees based on the monetary value they add to the
organization.
6. Psychological Appraisal
o Focuses on assessing employees' potential through cognitive, emotional, and
interpersonal evaluations.
7. Balanced Scorecard
o Integrates financial and non-financial metrics to align employee performance
with strategic goals.
8. Electronic Performance Monitoring (EPM)
o Uses technology to monitor and evaluate employees’ performance in real time.

These methods, whether traditional or modern, help organizations evaluate employee

performance and guide decisions related to promotions, training, and development.

Wage and Salary Administration

Wage and salary administration refers to the process of developing and managing a structured
pay system for employees. It involves establishing equitable compensation structures to
attract, retain, and motivate employees while aligning with organizational objectives and
external labor market trends.

Objectives of Wage and Salary Administration

1. Attract and Retain Talent

o Ensures competitive pay to attract skilled employees and retain existing talent.
2. Equity and Fairness
o Maintains internal and external equity by providing similar pay for similar
roles.
3. Motivation and Productivity
o Motivates employees by linking pay to performance and rewarding
achievements.
4. Compliance with Laws
o Adheres to labor laws and regulations related to minimum wages, overtime,
and equal pay.
5. Cost Control
o Balances employee satisfaction with organizational budget constraints.
6. Adaptability
o Adjusts pay structures to accommodate changes in the business environment
and labor market.
Components of Wage and Salary Administration

1. Basic Wage/Salary
o Fixed remuneration paid for work performed.
2. Allowances
o Additional payments for housing, transportation, medical needs, or other
expenses.
3. Incentives
o Performance-linked pay to reward individual or team achievements.
4. Bonuses
o One-time payments for meeting targets, festivals, or exceptional performance.
5. Benefits
o Non-monetary compensation like insurance, pensions, or paid leave.
6. Deductions
o Contributions to taxes, retirement funds, or insurance plans deducted from
gross pay.

Principles of Wage and Salary Administration

1. Fairness and Equity

o Equal pay for equal work to avoid discrimination.
2. Ability to Pay
o Compensation based on the financial strength of the organization.
3. Cost of Living Adjustment
o Adjust wages to reflect changes in inflation or living costs.
4. Industry Standards
o Align pay structures with industry benchmarks to remain competitive.
5. Performance Orientation
o Link salary growth to employee performance.
6. Legal Compliance
o Ensure adherence to wage-related labor laws and regulations.

Process of Wage and Salary Administration

1. Job Analysis
o Identify and evaluate job roles and responsibilities.
2. Job Evaluation
o Compare jobs to determine relative worth within the organization.
3. Wage and Salary Survey
o Analyze industry pay standards and market trends.
4. Pay Structure Design
o Develop a structured pay system with grades and bands.
5. Implementation
o Communicate and apply the pay structure across the organization.
6. Monitoring and Review
 o Regularly evaluate and update the pay system based on feedback and market
changes.

Importance of Wage and Salary Administration

1. Enhances employee satisfaction and loyalty.

2. Improves productivity and morale through fair compensation.
3. Reduces turnover by maintaining competitive pay.
4. Ensures compliance with legal and ethical standards.
5. Supports organizational growth by attracting top talent.

Effective wage and salary administration is essential for maintaining a motivated workforce
and achieving organizational goals.