HUMAN RESOURSE MANAGEMENT (HRM)

Human resource management is the strategic and coherent approach to

the management of an organization's most valued assets - the people
working there who individually and collectively contribute to the
achievement of the objectives of the business. The terms "human resource
management" and "human resources" (HR) have largely replaced the term
"personnel management" as a description of the processes involved in
managing people in organizations. In simple sense, HRM means employing
people, developing their capacities, utilizing, maintaining and compensating
their services in tune with the job and organizational requirement.

FEATURES
Its features include:

 Organizational management
 Personnel administration
 Manpower management
 Industrial management

But these traditional expressions are becoming less common for the
theoretical discipline. Sometimes even employee and industrial relations are
confusingly listed as synonyms, although these normally refer to the
relationship between management and workers and the behavior of workers
in companies.
The theoretical discipline is based primarily on the assumption that
employees are individuals with varying goals and needs, and as such should
not be thought of as basic business resources, such as trucks and filing
cabinets. The field takes a positive view of workers, assuming that virtually
all wish to contribute to the enterprise productively, and that the main
obstacles to their endeavors are lack of knowledge, insufficient training, and
failures of process.
Human Resource Management (HRM) is seen by practitioners in the field as
a more innovative view of workplace management than the traditional
approach. Its techniques force the managers of an enterprise to express their
goals with specificity so that they can be understood and undertaken by the
workforce and to provide the resources needed for them to successfully
accomplish their assignments. As such, HRM techniques, when properly
practiced, are expressive of the goals and operating practices of the
enterprise overall. HRM is also seen by many to have a key role in risk
reduction within organizations.
Synonyms such as personnel management are often used in a more restricted
sense to describe activities that are necessary in the recruiting of a
workforce, providing its members with payroll and benefits, and
administrating their work-life needs. So if we move to actual definitions,
Torrington and Hall (1987) define personnel management as being:
“a series of activities which: first enable working people and their employing
organizations to agree about the objectives and nature of their working
relationship and, secondly, ensures that the agreement is fulfilled"

Humans are an organization's greatest assets; without them, everyday

business functions such as managing cash flow, making business
transactions, communicating through all forms of media, and dealing with
customers could not be completed. Humans and the potential they possess
drive an organization. Today's organizations are continuously changing.
Organizational change impacts not only the business but also its employees.
In order to maximize organizational effectiveness, human potential—
individuals' capabilities, time, and talents—must be managed. Human
resource management works to ensure that employees are able to meet the
organization's goals.

"Human resource management is responsible for how people are treated in

organizations. It is responsible for bringing people into the organization,
helping them perform their work, compensating them for their labors, and
solving problems that arise". There are seven management functions of a
human resources (HR) department that will be specifically addressed:
staffing, performance appraisals, compensation and benefits, training and
development, employee and labor relations, safety and health, and human
resource research.
GOALS
The goal of human resource management is to help an organization to meet
strategic goals by attracting, and maintaining employees and also to manage
them effectively. The key word here perhaps is "fit", i.e. a HRM approach
seeks to ensure a fit between the management of an organization's
employees, and the overall strategic direction of the company.
The basic premise of the academic theory of HRM is that humans are not
machines, therefore we need to have an interdisciplinary examination of
people in the workplace. Fields such aspsychology, industrial relations,
industrial engineering, sociology, economics, and critical
theories: postmodernism, post-structuralism play a major role. Many
colleges and universities offer bachelor and master degrees in Human
Resources Management or in Human Resources and Industrial Relations.

One widely used scheme to describe the role of HRM, developed by Dave
Ulrich, defines 4 fields for the HRM function:

 Strategic business partner

 Change management
 Employee champion
 Administration

However, many HR functions these days struggle to get beyond the roles of
administration and employee champion, and are seen rather as reactive than
strategically proactive partners for the top management. In addition, HR
organizations also have the difficulty in proving how their activities and
processes add value to the company. Only in the recent years HR scholars
and HR professionals are focusing to develop models that can measure if HR
adds value.
Business practice
Human resources management comprises several processes. Together they
are supposed to achieve the above mentioned goal. These processes can be
performed in an HR department, but some tasks can also be outsourced or
performed by line-managers or other departments. When effectively
integrated they provide significant economic benefit to the company.

Staffing

Both the job description and the job specification are useful tools for the
staffing process, the first of the seven HR functions to be discussed.
Someone (e.g., a department manager) or some event (e.g., an employee's
leaving) within the organization usually determines a need to hire a new
employee. In large organizations, an employee requisition must be submitted
to the HR department that specifies the job title, the department, and the date
the employee is needed. From there, the job description can be referenced
for specific job related qualifications to provide more detail when
advertising the position—either internally, externally, or both.

Not only must the HR department attract qualified applicants through job
postings or other forms of advertising, but it also assists in screening
candidates' resumes and bringing those with the proper qualifications in for
an interview. The final say in selecting the candidate will probably be the
line manager's, assuming all Equal Employment Opportunity Commission
(EEOC) requirements are met. Other ongoing staffing responsibilities
involve planning for new or changing positions and reviewing current job
analyses and job descriptions to make sure they accurately reflect the current
position.

Performance Appraisals

Once a talented individual is brought into an organization, another function

of HRM comes into play—creating an environment that will motivate and
reward exemplary performance. One way to assess performance is through a
formal review on a periodic basis, generally annually, known as
a performance appraisal or performance evaluation. Because line managers
are in daily contact with the employees and can best measure performance,
they are usually the ones who conduct the appraisals. Other evaluators of the
employee's performance can include subordinates, peers, group, and self, or
a combination of one or more.

Just as there can be different performance evaluators, depending on the job,

several appraisal systems can be used. Some of the popular appraisal
methods include

(1) Ranking of all employees in a group

(2) Using rating scales to define above-average, average, and below-average

performance

(3) Recording favorable and unfavorable performance, known as critical

incidents.

(4) Managing by objectives, or MBO.

Compensation and Benefits

Compensation (payment in the form of hourly wages or annual salaries)

and benefits (insurance, pensions, vacation, modified workweek, sick days,
stock options, etc.) can be a catch-22 because an employee's performance
can be influenced by compensation and benefits, and vice versa. In the ideal
situation, employees feel they are paid what they are worth, are rewarded
with sufficient benefits, and receive some intrinsic satisfaction (good work
environment, interesting work, etc.). Compensation should be legal and
ethical, adequate, motivating, fair and equitable, cost-effective, and able to
provide employment security.

Employee and Labor Relations

Just as human resource developers make sure employees have proper

training, there are groups of employees organized as unions to address and
resolve employment-related issues. Unions have been around since the time
of the American Revolution (Mondy and Noe, 1996). Those who join unions
usually do so for one or both of two reasons— to increase wages and/or to
eliminateunfair conditions. Some of the outcomes of union involvement
include better medical plans, extended vacation time, and increased wages.
Today, unions remain a controversial topic. Under the provisions of the Taft-
Hartley Act, theclosed-shop arrangement states employees (outside the
construction industry) are not required to join a union when they are
hired. Union-shop arrangements permit employers to hire non-union workers
contingent upon their joining the union once they are hired. The Taft-Hartley
Act gives employers the right to file unfair labor practice complaints against
the union and to express their views concerning unions.

Not only do HR managers deal with union organizations, but they are also
responsible for resolving collective bargaining issues—namely, the contract.
The contract defines employment related issues such as compensation and
benefits, working conditions, job security, discipline procedures, individuals'
rights, management's rights, and contract length. Collective bargaining
involves management and the union trying to resolve any issues peacefully
—before the union finds it necessary to strike or picket and/or management
decides to institute a lockout.

Safety and Health

Not only must an organization see to it that employees' rights are not
violated, but it must also provide a safe and healthy working environment.
Mondy and Noe (1996) define safety as "protecting employees from injuries
caused by work-related accidents" and health as keeping "employees free
from physical or emotional illness". In order to prevent injury or illness, the
Occupational Safety and Health Administration (OSHA) was created in
1970. Through workplace inspections, citations and penalties, and on-site
consultations, OSHA seeks to enhance safety and health and to decrease
accidents, which lead to decreased productivity and increased operating
costs.

Health problems recognized in the workplace can include the effects of

smoking, alcohol and drug/substance abuse, AIDS, stress, and burnout.
Through employee assistance programs (EAPs), employees with emotional
difficulties are given "the same consideration and assistance" as those
employees with physical illnesses.
BEST PRACTICES IN HDFC BANK

The most important thing in HR is to hold the confidence of people. Talent

retention is a challenge today. Another challenge is managing expectations
of youngsters, who are looking for fast tracking their career and want
exposure quickly, they may not be lured by money alone, but the profile that
they work for.
We give ample opportunity to those who seek job rotation. If we have a
new opening, we advertise it internally. Our philosophy is that it is
better to lose a person to another department than to another bank.
Our performance management system is our ‘signature’ system. I
am proud to say that I personally know most of the people across
various levels in the organization. I have helped people move
internally and helped them make a better career with the bank. We
have one of the lowest rates of attrition. Middle management
onwards our salaries here are good. We are young - only 12 years old.
The average age in the bank is 27.
Women have been rising up the ranks in the bank. At the junior
level, over 33% of the workforce in consumer and retail banking
comprises of women. In the senior levels, it is about 12% and in the
top management, it is about 6 to 9%.
This organization was very cost conscious. Today we have foreign
tours, parties at national and regional levels, award nights and
outings. As an organization we have started celebrating success.
ORACLE in HRM

HDFC Bank uses A Comprehensive HR approach to respond to changing

resource needs.
Rapid growth in a burgeoning new market should be cause for celebration—
unless the organization that's growing can't keep up with the demands of an
expanding workforce or simplify the management of multiple databases. But
Mumbai, India-based HDFC Bank wasn't about to let that happen.
Initially the premier bank in the corporate sector, HDFC Bank began its
expansion into the retail market in 1995. Now, as it adds thousands of new
customers each day and manages dramatic increases in its retail loan
portfolio—22 percent in 2003 alone—the bank is facing the challenges that
come with rapid success.
"Today's competitive environment means that human resources [HR] must
refocus away from activities that sap value from the organization and instead
focus on achieving outcomes that improve company performance," says
C.N. Ram, head of information technology at HDFC Bank. HDFC was
already an established leader in eliminating the inefficiency traditionally
associated with resource planning and management, and bank management
knew just what to do.
"Due to significant growth in the number of our employees over the past few
years, we could no longer handle our human capital management on
Microsoft Excel spreadsheets and homegrown reports," says Ram. In
addition, management understood that high growth rates might have
jeopardized product quality, while tension about relative compensation
levels between the sales personnel in the branch and operations could have
threatened HDFC Bank's culture.
People Are Our Business, Too
The bank decided to implement Oracle Human Resources applications so
that HR planning and tracking could be handled more efficiently. "We had
already compiled large amounts of data about employees who had been with
us for awhile, but we lacked a workable way to store other kinds of
information, such as data about family members and career paths at HDFC
Bank," Ram explains. "We can now capture everything, which gives senior
management better data for performance evaluations and helps them do
better career planning." The solution also allows the bank to compensate on
the basis of performance and provide targeted career development, which
raises credibility with employees and helps the bank attract and retain top
candidates.
HDFC Bank has also implemented Oracle's applications for HR analysis and
reporting across the enterprise, providing management with the ability to
drill down into performance and cost on an exceedingly granular level. This
gives the bank the flexibility to tailor employee record-keeping while
remaining in compliance with employment laws. Additionally, the
automation of actions such as warnings, e-mail notifications, and vacation
hour balances gives the bank a complete profile for each employee. "The
comprehensive reporting capabilities save a lot of staff time and allow us to
handle profiles, skill sets, and training and integrate them with the payroll
system," continues Ram.
Towards HRM? A Case Study from Banking
Adrian Wilkinson

HRM has been much talked about and written about in recent years. For
some, it heralds a new age where human resource issues at last
become significant in the consideration of business strategy,
and HRpractitioners at last attain a place in the sun. However, much
of the debate has been conducted in purely theoretical terms
covering HRM definitions and meanings. But, what is happening on
the ground? Are HRMideas changing policies? Are policies translated
into practice?

This case study seeks to critically examine the development of HR strategy

in a bank. The experience suggests that whilst HR type policies are
being implemented, the outcomes can by no means be taken for
granted

INTRODUCTION
This paper sets out to explore the development of Human Resource
Management (HRM) in the Co-operative Bank. It briefly discusses the
literature on management strategy and employee relations and the rise of
Human Resource Management. An overview of employee relations in
banking is given to set the scene for the developments in the Co-operative
Bank. The case of the Co-operative Bank shows how the combination of
product market change, and increasing recognition of the inadequacy of the
old style approach to the management of labour led to the embracing of a
more pro-active role to managing human resources. But HRM is not a once
and for all matter of selecting an ‘appropriate fit’ from a ‘menu’ of HR
strategies. It is more a continual process of shifting priorities and policies as
the organisation adjusts to the stormy waves of the market environment.
Like a ship setting a course, but adapting to the weather, organisations have
to continually adjust to changing conditions.
This research draws on a three year ESRC funded project. The researcher
adopted a top-down, qualitative approach to the research, which allowed for
the “capture” of strategic change, as this way was deemed the most
appropriate method for examining the relationship between business strategy
and the management of labour. Following the concept of methodological
triangulation, interviews, documentary analysis and participant observation
were combined to provide a fuller and more accurate picture than that
provided by a single research method. The sponsorship of the research by
the organisation enabled a high access to be achieved. ‘While a case study is
not capable of statistical generalisation, the prospective generalisation of a
case study lies in analytical generalisation. As Yin puts it:
“Case studies , like experiments, are generalisible to theoretical propositions
and not to populations or universes. In this sense the case study, like the
experiment, does not represent a “sample” and the investigator’s goal is to
expand and generalise those theories (analytic generalisation) and not to
enumerate frequencies (statistical generalisation).”
Longitudinal data over this period provides insight into the process of
change.

Table 1
Stereotypes of personnel management and human resource management
PERSONNEL HUMAN RESOURCE
MANAGEMENT MANAGEMENT
Time and Planning Short-term reactive adhoc Long-term proactive
Perspective marginal strategic integrated
Psychological
Compliance Commitment
Contract
Control Systems External controls Self-control
Employee Relations Unitarist individual
Pluralist collective low trust
Perspective high trust
Bureaucratic/mechanistic
Preferred Organic devolved
centralized formal defined
Structures/Systems flexible role
roles
Largely integrated into
Roles Specialist/professional
line management
Maximum utilization
Evaluation Criteria Cost-minimization (human asset
accounting)
Source: Guest, 1987

EMPLOYEE RELATIONS IN BANKING

The banking sector has been characterised by apparently harmonious
industrial relations and has not suffered from the “British diseases” of
industrial action and demarcation issues associated with parts of
manufacturing industry). Banks have promoted unitarism encouraging an
ethos of teamwork, shared interest and loyalty, wanting commitment beyond
the cash nexus. While banks are generally seen as having a passive approach
to employee relations, paternalism did underpin the system and particularly
important was the system of internal promotion supported by an unwritten
agreement between the major UK banks on no poaching. The internal labour
market created two categories of employees: career and non-career which
equated to a male/female divide.
Retail banking is a highly labour intensive industry with labour costs
forming 70% of total operating expenditure and “involvement in funds
transmission meant that the majority of clerical staff have not been used as a
means of marketing the bank’s products nor directly for increasing business
but to process existing accounts. They have accordingly been regarded as an
overhead rather than a resource”. Until the 1980s competition between banks
has been limited, banks operating as an oligopoly and Government’s concern
with maintaining economic stability with limits to lending, and control over
interest rates facilitated this. The oligopoly fed through to the management
of staff as national wage bargaining minimised competition for labour.
However, deregulation led to the collapse of the national system and a
questioning of old employment practices.

Changing Strategies
By the mid 1980s, it became increasingly clear to some senior managers in
the Bank that there was a need to re-examine its entire policy towards
managing staff. There was little point in producing corporate plans with
major strategic changes envisaged unless the staff were committed to
achieving these. As one senior manager put it:
“It was beginning to register amongst management that unless the staff were
got up to scratch and on board with change, the bank was not going to get
there”.
It was felt that the entire bank culture needed to be changed to a more
performance orientated culture, a view which fitted in with the popular trend
towards emphasising the so-called “soft” aspects of management
exemplified by “In Search of Excellence”. With increasing competitive
pressure in the sector, and with stagnant profits and accounts and only a
small percentage of the current account market, there was a clear need to
grow the customer account base by adopting a new “focus strategy”
.Furthermore, it was recognised that any significant differentiation in
products was short- lived especially for small banks with limited resources
and to create sustained differentiation it was necessary to create a favourable
perception of the Bank by its customers. The Bank would emphasise a
“caring, sharing” image, and employee goodwill as well as technical
competence was required to project this.
There were several other reasons for the new approach to the management of
staff. Firstly, infrastructural problems - growth in the Bank had taken place
in the relatively “soft” markets of the 1970s and had to some extent hidden
rising costs associated with the clearing centre and Head Office which were
widely regarded as being overstaffed. Secondly, the increasing competitive
pressure in banking had led to greater attention to controlling labour costs
and increasing labour productivity. Thirdly, as we have noted, the nature of
change had moved the emphasis towards being a market driven rather than
an administratively driven organisation and the importance of staff quality
was being emphasized.
Hence, the need to manage human resources more effectively was formally
recognised in the Corporate plan of 1986 and in particular it was seen as
necessary to change the attitude of staff towards customers, create profit
awareness and to encourage a greater identification with the organisation. As
a senior manager put it:
“The staff had to see that it was the customer not the pieces of paper which
the bank were concerned with.”
However, the Corporate Plan, while recognising the need for changes in the
personnel area, did not explore in any detail what such changes would be, or
how they were to be brought about. Thus references were made to operating
with “maximum flexibility” and “maximum efficiency on optimum numbers
of staff” but only broad indication as to how this was to be achieved. Thus a
sales culture was required, but what did this mean in terms of personnel
policies and practices?
Rothwell writes that:
The starting point of a company employment policy must be corporate
policy: The employment policy must stem from the business policy and be
an integral part of it’s implementation.
However, the links between business strategy and employment policy are by
no means clear cut: one is not simply able to read off from company
objectives a set of corporate employee relations policies.

CONCLUSION
The case of the Co-operative Bank sheds light on the issues of human
resource management discussed in the management literature. It was
suggested that a shift from an administrative to a market driven organisation
would lead to a greater priority for the management of human resources. The
Bank case provides examples of greater attention to this subject at top level
management, including the appointment of a specialist human resources
manager and shows a broader range of issues being considered with an
emphasis on management-employee relations rather than management-trade
unions relations and a more pro-active and strategic role for the Personnel
department with operational issues being devolved to line management.
These are in line with the alleged change from personnel management to
human resource management .
Of course, the definition of what HRM involves is itself a matter of debate.
As Guest rightly points out it is a term “now widely used but very loosely
defined” . In the Bank we have seen much more than a re-titling of roles
which Guest suggests characterises much of the alleged HRM adoption. We
saw earlier that the policies officially embraced showed many of the
characteristics of HRM but were cautious in our assessment, since the gap
between policy and practice is often a large one. However, we have seen that
a great deal of the new policy was in fact implemented over a relatively
short period. If we refer back to the Guest typology we see that the Bank
has moved someway towards HRM but this is by no means clear cut. While
policies introduced appear to be in line with HRM ideals, this does not
necessarily translate into desired outcomes. Thus one consequence of the
Bank’s HRM policies was probably worsened employee relations, even if
bottom-line performance improved. However, one needs to bear in mind that
the ultimate aim of HRM is better business performance rather than
improved relations with the workforce. This may be something Personnel
and HR managers, whether in the UK or the Pacific need to come to terms
with.

CHETAN JOSHI
KABIR MAHESHWARI

SANDEEP NANGRE

AVINASH POTDAR

SHRENICK SANGHVI

KAPIL PRABHU
 A PROJECT ON

WHAT IS HRM? IMPOTANCE OF HRM IN BANKING

PROJECT GUIDE : PROF. VIJAYA GANGAL

PROJECT 1, SEMESTER V
BACHELOR OF COMMERCE (BANKING & INSURANCE)
ACADEMIC YEAR 2009-2010

SUBMISSION DATE:13-03-2010

LALA LAJPAT RAI COLLEGE OF COMMERCE AND

ECONOMICS
MAHALAXMI, MUMBAI-34
TELEPHONE-02223545240/41
 ACKNOWLEDGEMENT

With great pleasure I thank Mrs. Vijaya Gangal, professor of Lala

Lajpat Rai College of Commerce and Economics for being an inspiration in
the completion of this project.

I take the opportunity to express my profound gratitude to Mrs.

Vijaya Gangal, our professor for her valuable inputs and assistance. I have
benefited from her vast wealth of experience and guidance.
 I am also thankful for her valuable advice without which this project
would not have materialized.