HUMAN RESOURCE MANAGEMENT (UNIT 1: Introduction to Human Resource Management)

Concept of Human Resource Management (HRM)

 According to the Invancevich and Glueck, HRM is concerned with the most effective use of people to
achieve organizational and individual goals. It is the way of managing people at work, so that they
give their best to the organization.
 HRM can be defined as a process of procuring, developing and maintaining competent resources in
the organization so that goals of an organization are achieved in an effective and efficient manner. In
other words, HRM is an art of managing people at work in such a manner that they give best to the
organisation.

Functions of Human Resource Management

Human Resources management has an important role to play in equipping organizations to meet
the challenges of an expanding and increasingly competitive sector. Increase in staff numbers,
contractual diversification and changes in demographic profile which compel the HR managers to
reconfigure the role and significance of human resources management. The functions are responsive to
current staffing needs, but can be proactive in reshaping organizational objectives. The
functions of HRM can be discussed under two heads: (i) Managerial Functions, and (ii) Operative
Functions.
Managerial Functions of HRM
 Planning: Planning is necessary to determine the goals of the organisation and lay down policies
and procedures to reach the goals. For a human resource manager, planning means the
determination of personnel programs that will contribute to the goals of the enterprise, i.e.,
anticipating vacancies, planning job requirements, job descriptions and determination of the sources
of recruitment.
 Organizing: Once the human resource manager has established objectives and has developed
plans and programs to reach them, he must design and develop organisation structure to carry
out the various operations. The organisation structure basically includes grouping of
personnel activity logically into functions or positions, assignment of different functions to different
individuals etc.
 Directing: The direction function is meant to guide and motivate the people to accomplish
the personnel programs. The personnel manager can motivate the employees in an organisation
through career planning, salary administration, ensuring employee morale, developing cordial
relationships and provision of safety requirements and welfare of employees.
 Staffing: Staffing is the process of hiring eligible candidates in the organization or company
for specific positions. In management, the meaning of staffing is an operation of recruiting the
employees by evaluating their skills, knowledge and then offering them specific job roles
accordingly.
 Controlling: Controlling is concerned with the regulation of activities in accordance with the plans,
which in turn have been formulated on the basis of the objectives of the organisation. It involves the
observation and comparison of results with the standards and correction of deviations that may
occur. It involves performance appraisal, critical examination of personnel records and
statistics and personnel audit.
Operative Functions of HRM

 Procurement: It refers to a series of activities undertaken by the HR manager for filing the present and
future vacancies of the organization. The activities include job analysis and designing, HR planning,
recruitment and finally, the selection of suitable employees.
 Development: It refers to both employees’ training and management development. HR managers
are responsible for conducting and supervising training and development programmes for
employees. The purpose of a training and development programme is to increase the employees’
competencies in their job by improving their knowledge, skills and abilities.
 Compensation: It refers to the determination of the pay scale and other benefits for the employees.
Establishing and maintaining the pay system of an organization is one of the principal jobs of the HR
managers. They must devise ways to ensure fair and equitable pay rates. They must also regularly
manage the performance evaluation system of the organization and continuously design
reward systems such as performance-linked incentive plans and bonus and flexible work schedules.
 Maintenance: This function aims at retaining efficient and experienced employees in the
organization. This calls for creative HR practices. In this regard, HR managers are responsible for
offering a wide range of HR programmes covering occupational safety, health promotion and
physical fitness, canteen facilities, recreation activities, transportation programmes, employee
suggestion schemes, career counselling and growth for creating a positive work environment.
 Integration: It consists mainly of industrial relations and aims at ensuing good relations between
the management and employees. HR managers have to implement industrial relations programmes
that would ensure ethical and fair treatment in disciplinary action, grievance redressal, and
career management processes. They should also counsel the employees and the management to
prevent, and, when necessary, resolve disputes over labour agreements or other labour relations
issues.
 Emerging issues: Effective management of human resources depends on refining HRM practices to
changing conditions. Hence the need to look at other important issues that can motivate people
to give their best in a dynamic and ever-changing environment.

Evolution of Human Resource Management

The early part of the century saw a concern for improved efficiency through careful design of work.
During the middle part of the century emphasis shifted to the availability of managerial personnel and
employee productivity. Recent decades have focused on the demand for technical personnel,
responses to new legislation and governmental regulations, increased concern for the quality of working
life, total quality management and a renewed emphasis on productivity. Let us look into these trends
more closely by examining the transformation of personnel function from one stage to another
in a chronological sequence.
 Concept Explanation
Labour was regarded as a commodity to be bought and sold.
Commodity Concept Wages were based on demand and supply. Government did
very little to protect workers.
Factor of Production Labour is like any other factor of production, viz, money, materials, land,
Concept etc. Workers are like machine tools.
Welfare measures like safety, first aid, lunch room, rest room will have a
Goodwill Concept
positive impact on workers’ productivity.
Management must assume a fatherly and protective attitude towards
employees. Paternalism does not mean merely providing benefits but it
Paternalistic Concept
means satisfying various needs of the employees as parents meet the
requirements of the children.
To improve productivity, physical, social and psychological needs
of workers must be met. As Mayo and others stated, money is less a
Humanitarian Concept factor in determining output, than group standards, group
incentives and security. The organisation is a social system that has
both economic and
social dimensions.
Employees are the most valuable assets of an organisation. There
Human Resource Concept should be a conscious effort to realise organisational goals by satisfying
needs and aspirations of employees
Employees should be accepted as partners in the progress of a
company. They should have a feeling that the organisation is their
Emerging Concept 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.

Growth of HRM in India

 Early phase: Though it is said that P/HRM a discipline is of recent growth; it has had its origin dating
back to 1800 B.C. For example: the minimum wage rate and incentive wage plans were included in
the Babylonian Code of Hammurabi around 1800 B.C. The Chinese, as early as 1650 B.C.
had originated the principle of division of labour and they understood labour turnover even in
400 B.C. The span of management and related concepts of organisation were well
understood by Moses around 1250 B.C. and the Chaldeans had incentive wage plans around 400
B.C. Kautilya, in India (in his book Arthasastra) made reference to various concepts like job
analysis, selection procedures, executive development, incentive system and performance
appraisal.
 Legal phase: The early roots of HRM in India could be traced back to the period after 1920. The
Royal commission on labour in 1931 suggested the appointment of labour officer to protect
workers’ interests and act as a spokesperson of labour. After Independence, The Factories Act 1948,
made it obligatory for factories employing 500 or more workers. “In view of legal
compulsions and the enumeration of duties the entire approach of organisations toward their
personnel was to comply with the laws and keep the welfare officers busy with routine functions”
Meanwhile two professional bodies, viz., the Indian Institute of Personnel Management (IIPM) Kolkata
and the National Institute of Labour Management (NILM) Mumbai have come into existence in
1950s.
 Welfare phase: During the 1960s the scope of personnel function has expanded a bit, covering
labour welfare, participative management, industrial harmony, etc. “In this period, the human
relations movement of the West had also had its impact on Indian organisations”. The legalistic
preoccupations slowly gave way to harmonious industrial relations and good HR practices.
 Development phase: In 1960s and 70s the HR professionals focused more on developmental
aspects of human resources. The emphasis was on striking a harmonious balance between
employee demands and organisational requirements. HRD has come to occupy a centre stage and a
focal point of discussion in seminars, conferences and academic meets. The two professional bodies,
IIPM and NILM, were merged to form the National Institute of Personnel Management (NIPM) at
Kolkata.
 Growth-oriented phase: During the 1990's, organisational restructuring and cost cutting efforts have
started in a big way-thanks to the pressures of liberalisation, privatisation and globalisation (LPG era)
forcing companies to focus attention on employee capabilities product/service quality,
speedy response, customer satisfaction etc. Changing demographics and increasing shortages of
workers with the requisite knowledge, skills and ability have grown in importance. The issue of
workforce diversity has assumed greater importance-in view of the cultural, religious social,
regional backgrounds of workers, especially in global sized companies such as Reliance, Ranbaxy,
Asian Paints, TISCO, etc.
Period Emphasis Status Roles
 Welfare management  Welfare administrator
1920-30 Clerical
 Paternalistic practices  Policeman
 Appraiser
Expanding the role to cover
 Advisor
labour, welfare, industrial
1940-60 Administrative  Mediator
relations and personnel
administration  Legal Advisor
 Fire fighting
 Efficiency, effectiveness
 Change agent
dimensions added
 Integrator
1970-80  Emphasis on human values Developmental
 Trainer
 Aspirations, dignity,
 Educator
usefulness
 Developer
 Counsellor
Incremental productivity gains Proactive, growth-
1990s-Present  Coach
through human assets oriented
 Mentor
 Problem solver

Distinction between HRM and Personnel Management (PM)

The difference between HRM and Personnel Management is listed below:

Basis HRM PM
HRM is proactive in nature. It is not only
PM is mainly reactive in nature. It satisfies
concerned with the present organizational
Nature itself by ensuring peaceful labour-
conditions but foresees future necessities
management relations in the present.
and then acts appropriately.
HRM is a resource-centric activity, focusses
PM, which is basically employee-centric,
more on the managerial aspects, in terms
Scope/ aims at hiring, training, compensating and
Focus of delegating the responsibility of HRM to maintaining the existing workforce of the
line authority and management organization.
development.
HRM emphasizes open-ended contracts,
which can be modified depending upon PM emphasizes the strict observance of
the demands of the business. Management defined rules, procedures and contracts
Emphasis
assumes the responsibility to motivate the that govern the relationship between the
employees and constantly inspires workforce and the management.
performance based on team spirit.
PM considers job satisfaction and morale as
HRM is based on the principle that better
a source of better performance. It works on
Principles performance itself is a cause of job
the foundation that a contended worker
satisfaction and morale.
us
a productive worker.
HRM seeks to develop the competencies of
PM is a regular, status quo-based
the employees on a sustained basis. Skill administrative function: Employees get
Functions formation and development are uniform rewards based on job evaluation
recognized as the main characteristics of and job worth.
HRM.
Distinction between HRM, PM and Human Capital Management (HCM)

Benchmarks PM HRM HCM

Succeeded PM and ruled
Represents the latest
Succeeded Industrial roost for a long period.
development but yet to
Relations (IR) but Gained worldwide
Evolutionary gain wide acceptance in
preceded HRM. recognition. Started
management and
Dates roughly during during 1980s and carried
academic circles.
1960s. acceptance even today.
Predominantly emphasis Human resources are not
Treat human beings as
on mundane activities the company’s property,
valued assets to be
Emphasis such as employee hiring, are owned by employees
valued, used and
remunerating, training but given on rent to
preserved
and harmony. companies
Outcomes
of People Value for money Added value Created value
Management
Strategic differentiators,
Efficiency of HR activities, Effectiveness of HR output organizational capability,
Measurement
compliance against business plan potential for
transformation
Investors and Board, managers and
Reporting Regulators
stakeholders employees

Objectives of Human Resource Management

The principal objectives of HRM may be listed as follows:

 To help the organisation reach its goals: HR department, like other departments in an organisation,
exists to achieve the goals of the organisation first and if it does not meet this purpose, HR
department (or for that matter any other unit) will wither and die.
 To employ the skills and abilities of the workforce efficiently: The primary purpose of HRM is to
make people’s strengths productive and to benefit customers, stockholders and employees.
 To provide the organisation with well-trained and well-motivated employees: HRM requires that
employees be motivated to exert their maximum efforts, that their performance be evaluated
properly for results and that they be remunerated on the basis of their contributions to the
organisation.
 To increase to the fullest the employee’s job satisfaction and self-actualisation: It tries to
prompt and stimulate every employee to realise his potential. To this end suitable programmes
have to be designed aimed at improving the quality of work life (QWL).
 To develop and maintain a quality of work life: It makes employment in the organisation
a desirable, personal and social, situation. Without improvement in the quality of work life, it is
difficult to improve organisational performance.

Nature of Human Resource Management

Human Resource Management is a process of bringing people and organisations together so that the
goals of each are met. It tries to secure the best from people by winning their wholehearted cooperation.
In short, it may be defined as the art of procuring, developing and maintaining competent workforce to
achieve the goals of an organisation in an effective and efficient manner. It has the following features:
 Pervasive force: HRM is pervasive in nature. It is present in all enterprises. It permeates all levels
of management in an organisation.
 Action oriented: HRM focuses attention on action, rather than on record keeping, written
procedures or rules. The problems of employees at work are solved through rational policies.
 Individually oriented: It tries to help employees develop their potential fully. It encourages them
to give their best to the organisation. It motivates employees through a systematic process
of recruitment, selection, training and development coupled with fair wage policies.
 People oriented: HRM is all about people at work, both as individuals and groups. It tries to put
people on assigned jobs in order to produce good results. The resultant gains are used to
reward people and motivate them toward further improvements in productivity.
 Future-oriented: Effective HRM helps an organisation meet its goals in the future by providing for
competent and well-motivated employees.
 Development oriented: HRM intends to develop the full potential of employees. The reward
structure is tuned to the needs of employees. Training is offered to sharpen and improve their skills.
Employees are rotated on various jobs so that they gain experience and exposure. Every attempt is
made to use their talents fully in the service of organisational goals.
 Integrating mechanism: HRM tries to build and maintain cordial relations between people working
at various levels in the organisation. In short, it tries to integrate human assets in the best possible
manner in the service of an organisation.

Scope of Human Resource Management

The scope of HRM is very wide. Research in behavioural sciences, new trends in managing
knowledge workers and advances in the field of training have expanded the scope of HR function in
recent years. The Indian Institute of Personnel Management has specified the scope of HRM thus:
 Personnel aspect: This is concerned with manpower planning, recruitment, selection, placement,
transfer, promotion, training and development, lay off and retrenchment, remuneration, incentives,
productivity, etc.
 Welfare aspect: It deals with working conditions and amenities such as canteens, creches, rest and
lunch rooms, housing, transport, medical assistance, education, health and safety, recreation facilities,
etc.
 Industrial relations aspect: This covers union-management relations, joint consultation, collective
bargaining, grievance and disciplinary procedures, settlement of disputes, etc.

HR Policies

Human resource policies are continuing guidelines on the approach of which an organization intends to
adopt in managing its people. They represent specific guidelines to HR managers on various
matters concerning employment and state the intent of the organization on different aspects of Human
Resource Management such as recruitment, promotion, compensation, training, selections etc. They
therefore serve as a reference point when human resources management practices are being
developed or when decisions are being made about an organization’s workforce.
In developing HR Policies, there should be clear and consistent statement of the organization’s policies
regarding all conditions of employment and procedures for their equal and fair implementation. In order
to fulfil this objective, policies and procedures should be:
 Clear and specific, but provide enough flexibility to meet changing conditions.
 Comply with all appropriate law and regulation.
 Consistent amongst one another and reflect an overall true and fair view approach to all employees.
Types of HR Policies (on the basis of description):
On the basis of description, policies may be general (these policies do not relate to any specific issue in
particular, and are formulated by an organization’s leadership team) or specific (these policies are
related to specific issues like staffing, compensation, collective bargaining, etc. and specific policies
must confirm to the pattern laid down by the general policies).
Factors affecting development of HR Policies
HR policies are developed by making decisions and taking actions on the day-to-day problems of the
organization. The process of developing HR policies involves the assessment of the following factors:
 Identify the purpose and objectives, which the organization wishes to attain regarding its
Human Resources department.
 Analysis of all the factors under which the organization’s HR policy will be operating.
 Examining the possible alternatives in each area which the HR policy statement is necessary.
 Implementation of the policy through the development of a procedure to support the policy.
 Communication of the policy and procedures adapted to the entire organization.
Advantages of setting up HR Policies
The following advantages are achieved by setting up HR policies:
 They help managers at various levels of decision making to make decisions without consulting their
superiors. Subordinates are more willing to accept responsibility because policies indicate what is
expected of them and they can quote a written policy to justify their actions.
 They ensure long term welfare of employees and makes for a good employer-employee relationship
as favouritism and discrimination are reduced. Well-established policies ensure uniform
and consistent treatment of all employees throughout the organization.
 They lay down the guidelines pursued in the organization and thereby minimizes the personal bias of
managers.
 They ensure prompt action for taking decisions because the policies serve as standards to be
followed. They prevent the wastage of time and energy involved in repeated analyses for solving
problems of a similar nature.
 They establish consistency in the application of the policies over a period of time so that each one in
the organization gets a fair and just treatment. Employees know what action to expect in circumstances
covered by the policies. Policies set patterns of behavior and permit employees to work
more confidently.

Human Resource Development (HRD)

The concept of Human Resource Development (HRD) was first introduced by Leonard Nadler in 1969 in a
conference in US. “He defined HRD as those learning experience which are organized, for a specific time,
and designed to bring about the possibility of behavioural change”.
According to Prof. T.V. Rao, HRD is a process by which the employees of an organisation are helped in a
continuous and planned way to (i) acquire or sharpen capabilities required to perform various functions
associated with their present or expected future roles; (ii) develop their journal capabilities as individual
and discover and exploit their own inner potential for their own and /or organisational
development purposes; (iii) develop an organisational culture in which superior-subordinate
relationship, team work and collaboration among sub-units are strong and contribute to the professional
well-being, motivation and pride of employees.”
Difference between HRM and HRD
Both are very important concepts of management specifically related with human resources
of organisation. Human resource management and human resource development can be differentiated
on the following grounds:
 Orientation: The human resource management is mainly maintenance oriented whereas
human resource development is development oriented.
 Organisation structure: Organisation structure in case of human resources management
is independent whereas human resource development creates a structure, which is inter-dependent
and inter-related.
 Aims: Human resource management mainly aims to improve the efficiency of the employees
whereas aims at the development of the employees as well as organisation as a whole.
 Responsibility: Responsibility of human resource development is given to the personnel/
human resource management department and specifically to personnel manager whereas
responsibility of HRD is given to all managers at various levels of the organisation.
 Motivation: HRM motivates the employees by giving them monetary incentives or rewards whereas
human resource development stresses on motivating people by satisfying higher-order needs.

Sources:

 Ashwathappa, K. Human Resource Management:L Text and Cases, McGraw Hill Education, New Delhi.
 VSP Rao, Human Resource Management: Text and cases, First edition, Excel Books, New Delhi.
 Gary Dessler, “Human Resource Management”, Seventh edition, Prentice-Hall of India P. Ltd., Pearson.