HRM 220: HUMAN RESOURCE MANAGEMENT I (HRM1)

What is the purpose of Human resource management?

The purpose of human resource management is to make the job and deal with the job holder (employ-
ee). So as to perform a job in an organization, one needs to be identified. In order to identify the right
person for a particular job, notification should be issued which contains job description (duties and re-
sponsibilities) and specifications (academic and physical qualifications). So as to verify the correctness
of the candidates invited, they should be tested by the suitable selection methods for picking up the
right person. Subsequently selected candidates should be provided with the proper training for per-
forming duties and responsibilities. Later, assessment of employees' performance should be done to
know whether employees are performing to the desired standards set by management. Accordingly,
employees should be rewarded or paid for the job they did in the organization and their safety in the
job is the responsibility of the HR manager or safety officer who should instruct safety measures for
the employees and see that they are scrupulously followed. Health and welfare measures are im-
portant to keep employees happy and motivated. This has a direct impact on their productivity. Main-
taining proper and healthy relationships between employees and management avoids conflicts which
would affect the overall performance of the organization. Most importantly is adherence to employ-
ment and labour laws which govern all the above said activities. Contravention of employment laws
could heavily cost the organization and its image. The ten "Cs" of human resources management are:
cost effectiveness, competitive, coherence, credibility, communication, creativity, competitive ad-
vantage, competence, change, and commitment.
Definition of Human Resource Management (HRM)
 According to Armstrong (2006) Human Resource Management (HRM) is defined as a 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 its objectives.
 Human Resource Management is the utilization of human resources to achieve organizational objec-
tives.
 Human Resource Management is designing management systems to ensure that human talent is used
effectively and efficiently to accomplish organizational goals.
 Human Resource Management is the term used to refer to the philosophy, policies, procedures and
practices relating to the management of people within an organization.
 Human Resource Management is the process of achieving the best fit between individuals, jobs, the
organization and the environment. It is the process of bringing people and organizations together so
that the goals of each are met.
 Human Resources Management is the function performed in organizations that facilitates the most
effective use of people (employees) to achieve organizational and individual goals.
From this definitions, we can deduce that HRM or simply HR is a function in organizations designed to
maximize employee performance in service of their employer’s strategic objectives. HR is primarily
concerned with how people are managed within organizations, focusing on policies and systems. HR
departments and units in organizations are typically responsible for a number of activities, including
employee recruitment, training and development, performance appraisal, and rewarding (e.g., manag-
ing pay and benefit systems). HR is also concerned with industrial relations, that is, the balancing of
organizational practices with regulations arising from collective bargaining and governmental laws.
HRM Objectives
The primary objective of HRM is to ensure the availability of competent and willing workforce for an
organization. Specifically, HRM objectives are four fold: Personal, functional, organizational and socie-
tal.
Personal Objective: To assist employees in achieving their personal goals, at least insofar as these
goals enhance the individual's contribution to the organization. Personal objectives of employees must
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 be met if workers are to be maintained, retained and motivated. Otherwise, employee performance
and satisfaction may decline, and employees may leave the organization.
Functional Objective: To maintain the contribution of the department to the organization to fulfill the
organization’s needs.
Organizational Objective: To recognize that Human resource management exists to contribute to or-
ganizational effectiveness. HRM is not an end in itself; it is only a means to assist the organization with
its primary objectives. Simply stated, the department exists to serve the rest of the organization.
Societal Objective: To be socially responsible to the needs and challenges of society while minimizing
the negative impact of such demands upon the organization. The failure of organizations to use their
resources for society's benefit may result in restrictions. For example, societies may pass laws that limit
human resource decisions.
Other Objectives
 To accomplish basic organizational goals by creating and utilizing an able and motivated workforce.
 To establish and maintain a desirable working relationship among all the members of the organization.
 To develop co-ordination among individuals and groups within an organization to secure integration of
effort.
 To create facilities and opportunities for individual or group development so as to match it with the
growth of the organization.
 To attain an effective utilization of human resources in the achievement of organizational goals.
 To identify and satisfy individual and group needs by providing adequate and equitable wages, incen-
tives, employee benefits, social security and measures for challenging work, prestige, recognition, se-
curity, status, etc.
 To maintain high employee morale and human relations by sustaining and improving various physical
working conditions and facilities.
 To strengthen and appreciate the human assets continuously by providing training and development
programs.
 To consider and contribute to the minimization of socio-economic evils such as unemployment, under
employment, inequalities in the distribution of income and wealth and to improve the welfare of the
society by providing employment opportunities to women and disadvantaged sections of society.
 To provide an opportunity for expression of workers’ grievances and suggestions.
 To provide fair, acceptable and efficient leadership.
 To establish and maintain an effective organizational structure.
HRM Features
HRM has the following features:
1. Pervasive function: HRM is pervasive in nature. It is present in all enterprises and permeates all levels
of management in organizations
2. Individually oriented: It tries to help employees develop their potential fully. It encourages them to
give their best to the organization. It motivates employees through a systematic process of recruitment,
selection, training and development coupled with fair wage policies.
3. 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.
4. Future oriented: Effective HRM helps an organization meet its goals in the future by providing for
competent, highly trained and well-motivated employees.
5. Development oriented: HRM intends to develop the full potential of employees. The reward structure
is tuned to the needs of employees. Employees are rotated on various jobs so that they gain experi-
ence and exposure. Every attempt is made to use their talents fully in the service of the organization.

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6. Integrating mechanism: HRM tries to build and maintain harmonious relations between people work-
ing at various levels in the organization. It tries to integrate human assets in the best possible manner
for the service of an organization.
7. Comprehensive functions: HRM is concerned with managing people at work. It covers all types of
personnel. Personnel work may take different shapes and forms at each level in the organizational hi-
erarchy but the basic objective of achieving organizational effectiveness through effective and efficient
utilization of human resources remains the same. It is a method of developing potentialities of em-
ployees so that they get maximum satisfaction out of their work and give their best efforts to the or-
ganization.
8. Auxiliary service: The HR department exist to assist and advice the line or operating managers to do
their personnel work more effectively. The HR manager is an expert advisor, a staff specialist.
9. Inter disciplinary function: HRM is a multi-disciplinary activity, utilizing knowledge drawn from other
disciplines as psychology, sociology, economics etc. To understand human beings, managers need to
understand and appreciate the contributions of all such disciplines.
10. Continuous function: HRM is not a one shot deal. It cannot be practiced only one hour each day or one
day a week. It requires a constant alertness and awareness of human relations and their importance in
every day operations on a continuous basis.
Scope of HRM
Research in behavioral sciences, new trends in managing knowledge workers and advances in the field
of training have expanded the scope of HR functions in recent years. The scope of HRM includes:
1. Personnel aspect: This is concerned with manpower planning, recruitment, selection, placement,
transfer promotion, training and development lay off and retrenchment remuneration incentives
productivity etc.
2. Welfare aspect: It deals with working conditions and amenities such as canteens, crèches rest and
lunch room housing transport medical assistance education, health and safety recreation facilities etc.
3. Industrial relations aspect: This covers union management relations joint consultation collective
bargaining grievances and disciplinary procedures settlement of disputes etc.
Human Resource Management Functions
The HRM functions can be broadly classified into two categories:
 Managerial
 Operational
A. Managerial functions
The management functions of HRM involve, planning, organizing, directing, coordinating, and control-
ling.
1. Planning - It is a pre-determined course of action. Planning is the determination of personnel pro-
grammes and changes in advance that will contribute to the organizational goals. Planning involves ac-
quisition of human resources recruitments, selection, and training. It also involves forecasting of per-
sonnel need, changing values, attitudes and behaviour of employees and their impact on the organiza-
tion.
2. Organizing - An organization is a means to an end. It is a structure and a process by which co-operative
group of human beings allocates its tasks among its members, identifies relationships and integrates its
activities towards common objectives. Complex relationships exist between the specialized depart-
ments and the general departments as many top managers are seeking the advice of personnel man-
ager. This organization establishes relationships among the employees so that they can collectively
contribute to the attainment of company goals.
3. Directing - The basic function of HRM 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 tapping the maximum potentialities of the people is possible
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 through motivation and command. This direction is an important managerial function in that it helps in
building sound industrial and human relations besides securing employee contributions.
4. Co-ordination deals with the tasks of blending efforts in order to ensure a successful attainment of an
objective. The personnel manager has to co-ordinate various managers at different levels as far as per-
sonnel functions are concerned. Personnel management function should also be coordinated with oth-
er functions of management.
5. Controlling -This involves checking verifying and comparing the actual with the plans and identifying
deviations if any, and correcting the identified deviations. This action and operation are adjusted to
pre-determined plans and standards through control.
B. Operational Functions
These are related to specific activities of personnel management e.g. Employment, development, com-
pensation and relations. These functions have to be performed in conjunction with management func-
tions.
1. Employment - It is concerned with securing and employing the people possessing required kind and
level of human resources necessary to achieve the organizational objectives. It covers the functions
such as job analysis, human resource planning, recruitment, selection, placement, induction and inter-
nal mobility or transfers.
2. Job analysis is the process of study and collection of information relating to the operations and re-
sponsibilities of a specific job. This involves collection of data, information, preparation of job descrip-
tion, providing the guidelines to job design.
3. Human Resource Planning is the process for determining and assuming that the organization will have
an adequate number of qualified persons, available at proper times, performing jobs which would
meet the needs of the organization.
4. Recruitment -This is the process of searching for prospective employees and stimulating them to apply
for jobs in an organization
5. Selection - It is the process of ascertaining the qualifications, experience, skill, knowledge of an appli-
cant with a view to appraising his/her suitability to a job.
6. Placement - it is the process of assigning the selected candidate to the most suitable job. It is matching
the employees’ specification with job requirements.
7. Induction and Orientation - These are the techniques by which a new employee is rehabilitated in the
changed surroundings and is introduced to the practices, policies, purposes and people of the organi-
zation.
Responsibilities of the HR Director/Manager
The human resource Director or Manager is responsible for human resource management in the or-
ganization.
The HR Director is a top-level manager responsible for the administration of all human resource activi-
ties and policies. He oversees compensation, benefits, staffing, affirmative action, employee relations,
health and safety, and training/development functions and supervises professional human resources
staff.
Primary responsibilities of the Human resource manager/director are:
 To develop a thorough knowledge of corporate culture, plans and policies.
 To act as an internal change agent and consultant.
 To initiate change and act as an expert and facilitator.
 To actively involve himself in company’s strategy formulation.
 To keep communication lines, open between the HRD function and individuals and groups both within
and outside the organization.
 To identify and evolve HRD strategies in consonance with overall business strategy.

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 To facilitate the development of various organizational teams and their working relationship with other
teams and individuals.
 To try and relate people and work so that the organization objectives are achieved effectively and
efficiently.
 To diagnose problems and to determine appropriate solutions particularly in the human resources
areas.
 To provide co-ordination and support services for the delivery of HRD programmes and services.
 To evaluate the impact of an HRD intervention or to conduct research so as to identify, develop or test
how HRD in general has improved individual or organizational performance.
Role of HRM
Several roles can be fulfilled by HR management. The nature and extent of these roles depend on both
what top management wants HR management to do and what competencies the HR staff have demon-
strated. Three roles are typically identified for HR.
 Administrative
 Operational Actions
 Strategic HR
1. Administrative Role
The administrative role of HR management is oriented to recordkeeping including keeping records of
essential legal contracts, policies, rules and regulations
2. Operational Role
HR often has been viewed as the “employee advocate” in organizations, acting as the voice for em-
ployee concerns, and dealing with employee problems that are both work and non-work-related. This
helps to ensure fair and equitable treatment for employees regardless of personal background or cir-
cumstances. The operational role requires HR professionals to co-operate with various departmental
and operating managers and supervisors in order to identify and implement needed programs and pol-
icies in the organization. Operational issues include:
 Compliance with equal employment opportunity and other laws
 Processing employment applications
 Filling current openings through interviews
 Supervisor training
 Resolving salary, wages and benefits issues and answering to safety concerns.
3. Strategic Role
The strategic role of HR consists of being part of top management and contributing to the strategic top
level decisions and to the success of the organization. It means HR is involved in devising strategy in
addition to implementing it.
Philosophy of Human Resource Management
Human resource philosophy refers to the intention and belief to treat the human element in the pro-
duction process not as an instrument of work but as a resource that could be used to achieve an objec-
tive and therefore, the need to create an environment conducive for the supply of that resource. It is
also the ideas and belief that govern the perception and actions of managers towards the employees.
It implies the possession of a genuine workers’ interest, i.e., workers do not only possess hands but al-
so have hearts and minds. The following are some of the HR philosophies.
 Human resource is the most important asset in the organization and can be developed and increased
to an unlimited extent.
 A healthy work environment with values of openness, enthusiasm, trust, mutuality and collaboration is
essential for effective development of the human resource.
 HRM should be planned in ways that are beneficial both to the individual and the organization.

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  Employees feel committed to their work and the organization if the organization inculcates a feeling of
belongingness.
 Employees feel highly motivated if the organization provides for satisfaction of their basic and higher
level needs.
Human Resource Policies
They serve to guide the actions required to achieve HR objectives. Policies provide the means for carry-
ing out management processes and as such, they aid decision-making. HR objectives stipulate what is
to be done, HR policies explain how it is to be done.
Examples of specific HR policies:
1. Policy of hiring people with due respect to factors like sex, marital status etc.
2. Policy on terms and conditions of employment- compensation policy and methods, hours of work,
overtime, promotion, transfer, lay-offs etc.
3. Policy with regard to medical assistance like medical benefits.
4. Policy regarding training and development – need for, methods, frequency of training and develop-
ment.
5. Policy regarding housing, transport, uniform and allowances.
Formulating Policies
There are five major sources for determining the content and meaning of policies.
i. Past practice in the organization
ii. Prevailing practice in rival companies
iii. Attitudes and philosophy of founders of the company.
iv. Attitudes and philosophy of management.
v. Knowledge gained from past experience.
Human Resource Procedures
These serve to implement policies by prescribing the chronological sequence of steps to follow in car-
rying out the policies. The use of the concept “procedures” implies the existence of a process which is a
series of activities to be performed in sequential order. The procedure or process is a means to an end.
Human Resource Practice
This is the act of implementing the policies and procedures towards achieving HR objectives. The rela-
tionship between HR philosophy, Policies, Procedures and Practice could be best illustrated thus:

HR Practice

HR Procedure

HR Polices

HR Philosophy

The Human Resources Philosophy is the base on which the other variables are built upon.

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 Historical Evolution of Human Resource Management
Although human resource management as a discipline matured in the late 1980s, it did not suddenly
appear but evolved over time into its present form. The discipline of HRM is actually a synthesis of
themes and concepts drawn from over a century of management theory and social science research.
There are several landmarks that influenced the development of Human Resource Management as a
discipline. These include:
 Industrial Revolution;
 Scientific Management
 World Wars;
 Human Relations Management
The industrial revolution
The industrial revolution began in Great Britain in the late eighteenth century and spread to America in
early nineteenth century. The industrial revolution gave rise to the factory system of production. The
factory system:
 greatly expanded production and created a new class of workers and managers
 led to the shift from an agricultural based society to an industrial and manufacturing based society
 gradually replaced the cottage handcraft industries
 created a class of permanent wage earners
 brought together many workers
 brought rationalization of work and division of labour
The arrival of the Industrial Revolution laid the basis for a new and complex industrial society leading
to a significant change in the working conditions, social patterns, and the division of labour. Until the
time of the Industrial Revolution, organizations were small and there were no human resource profes-
sionals and departments. The owner of the business generally did the human resource functions of se-
lecting and training new employees and evaluating and paying them. Employers normally used fore-
man or supervisor to run the whole factory. The foreman was responsible for all personnel functions
including: hiring, placement, training, wage setting, grievance handling, and dismissing of workers. Em-
ployee riots became common, the employees started forming unions and governments started to in-
tervene with laws and statutory regulations that forced employers to set up formal mechanism to look
into workers’ wages and welfare. Employers responded to issues caused by industrialization by creat-
ing the post of the welfare officer. Welfare officers were supposed to assist workers by suggesting im-
provements in working conditions, housing, medical care, educational facilities and recreation. These
welfare officers are often considered to be the forerunners of human resource management specialists
and acted as a buffer between the organization and its employees. Robert Owen was regarded as crea-
tor and originator for introducing reforms for workers in his own Lanark cotton mills. He created a
principle of 8 hours’ day work, 8 hours’ rest and 8 hours sleep. Owen identified the importance of bet-
ter working conditions at workplace and its impact on the productivity and efficiency of the workers.
Owen after implementation of better working conditions at workplace, he observed change in the
productivity of his workers as their efficiency increased. He in those olden days implemented many so-
cial and welfare practices for his workers and saw his workers got happy, motivated and worked better.
Therefore, he was referred as father of Personnel management.
Scientific Management
The scientific management movement originated in America’s business and engineering schools in the
late 1880s as an effort to understand human behaviour in the workplace.
The key proponent of the scientific management movement is Frederick Taylor who endeavored to de-
velop theories of work organization which would improve effectiveness and raise productivity.
Taylor believed that:

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 The same techniques used by scientist in the laboratory experimentation could be used to improve
efficiency and effectiveness in the workplace.
 Production work needed to be systematically analyzed, studied and improved using the same scientific
approach engineers use to design machines.
 Efficiency and effectiveness could be achieved through application of a set of basic management
principles.
 There is “one-best-way” and the fastest time a worker could perform a particular task. This is what
became to be popularly known as time and motion studies.
 The scientific approach to organization and management would result in all parties getting what they
wanted i.e., higher output and higher profits for the employer and higher wage pay for the worker.
Scientific Management contributed to HRM in the following ways:
 Taylor showed the importance of job analysis as a basis for selection, training, job evaluation, job
change and compensation.
 He advanced the notion of variable pay; reward for workers on the basis of their productivity
 This approach advocated scientific selection, education, and development of workers and intimate,
friendly cooperation between management and the workers
 The effect of the scientific management on HRM was the idea that, there are principles of administra-
tion and a range of techniques that can be employed by organizations to deal with employee problems.
For instance, systems of careful job descriptions and job evaluations were introduced in an effort to
reduce worker dissatisfaction due to pay inequalities and favouritism
Criticism
However, despite its contribution to the field of management the scientific management approach has
been criticized for:
 Dehumanizing the worker through its person-as-machine
 Assuming that people’s main objective at work was to satisfy their economic needs;
 Emotional needs of workers are not taken into consideration;
 Assuming that the interest of the worker and the employer are mutual.
World Wars
The war environment had a great impact upon the management of human resources. During the World
Wars governments of countries involved in the war were forced to pay attention to personnel man-
agement. To support the war a lot of manpower was required to provide the necessary goods and ser-
vices. During this period there was wide spread labour shortage caused by workers being drawn to war
industries and the military. Labour turnover increased due to job opportunities for workers. Skilled
men joined the army and were replaced by semi-skilled workers including women. Governments en-
couraged war related industries to recognize trade unions in order to minimize strikes and production
disruptions. World War II increased the importance of keeping factories running, and with most work-
ers away in the war, the workforce now began to include the hitherto-absent women and people from
different racial backgrounds. This laid the foundation for a multicultural workforce, and along with it
new challenges for the personnel department.
The Human Relations Movement
Elton Mayo, the father of human relations management, had conducted his famous Hawthorne Studies
(1924 -1932) and concluded that human factors and non-monetary rewards were more important than
physical factors and monetary rewards in motivating employees. The Hawthorne studies shifted the
focus of human resource from increasing worker’s productivity to increasing worker’s efficiency
through greater work satisfaction. The studies and observations of Douglas McGregor’s Theory X and
Theory Y (1960) and Abraham Maslow’s Hierarchy of needs (1954) led to the transition from the ad-
ministrative and passive Personnel Management approach to a more dynamic Human Resource Man-
agement approach which considered workers as a valuable resource. Human resource management
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 became increasingly line management function, linked to core business operations. Trade unions now
began to challenge the fairness of Taylor’s scientific management theories, forcing employers to take a
more behavioral-oriented approach. Personnel programs now expanded to include new benefits such
as sick benefits, vaccinations, holidays, housing allowances, and similar measures.
The Historical Evolution of Human Resource Management can be simplified in the following stages:
1. Industrial Revolution Era
The basis for human capital management lies in making arrangements for the welfare of apprentices to
master craftsmen in the Middle Ages and colonial times. The first HR evolution came in the 18th centu-
ry, when factories needed to hire and train thousands of workers quickly. These employees initially
worked 16 hours a day, seven days a week in conditions even worse than those of medieval apprentic-
es. Soon, however, factory owners discovered that satisfied workers produced more and introduced
programs to meet their basic needs. At the same time, federal and state governments began to regu-
late working conditions.
2. Personnel Management Era
Increased government regulation and the rise of labor unions led to the creation of personnel depart-
ments. During this era, which lasted from around 1900 to the 1960s, personnel management was es-
sentially an administrative function tasked with tracking employee records, monitoring the perfor-
mance appraisal process and implementing workplace safety, training and anti-discrimination pro-
grams. Personnel specialists also enforced standards based upon scientific management principles,
such as those of Frederick Taylor, who believed jobs should be simplified so workers could perform
them in one best sequence of motions. Productivity increases or decreases provided a key measure-
ment of personnel department effectiveness.
3. Human Relations Era
In the last part of the 20th century, the term "human resources" became popular. Theories of behav-
ioral scientists such as Elton Mayo, Abraham Maslow and Douglas McGregor demonstrated that the
need for achievement, affiliation or self-actualization was a stronger motivator for many employees
than money. The American economy increasingly became service-oriented and knowledge-based, mak-
ing recruiting and retaining talented workers even more important. Human resource managers began
to suggest and implement changes such as more challenging work environments, active office social
communities and free time.
4. Strategic Human Resources Era
With increase in technology and knowledge based industries and as a result of global competition,
Human Resource Management is assuming a more critical role today. Its major accomplishment is
aligning individual goals and objectives with corporate goals and objectives. Strategic HRM focuses on
actions that differentiate the organization from its competitors and aims to make long term impact on
the success of organization. HR managers today are a key part of an organization's senior management
team, helping determine the company's overall business strategy. They partner with operations de-
partments to align the goals of employees with those of the organization and facilitate creativity and
innovation rather than simply train workers to perform a function the traditional way. They also offer
key advice on corporate culture as businesses merge, open offices internationally or recruit a diverse
workforce.
Differences Between Personnel Management and Human Resource Management
Some say that there are no basic differences between Human Resource Management and Personnel
management. These experts say that the two terms – HRM and Personnel management – have no dif-
ference in their meaning, and can be used interchangeably. But some distinctions exist between the
two.
1. Personnel management is a traditional approach of managing people in the organization while human
resource management is a modern approach of managing people in the organization.
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2. Personnel management focuses on personnel administration, employee welfare and labour relations
while human resource management focuses on acquisition, development, motivation and mainte-
nance of human resources in the organization.
3. Personnel management assumes people as an input for achieving desired output. Human resource
management assumes people as an important and valuable resource for achieving desired output.
4. Under personnel management, personnel function is undertaken for employee's satisfaction. Under
human resource management, administrative function is undertaken for goal achievement.
5. Under personnel management, job design is done on the basis of division of labour. Under human
resource management, job design function is done on the basis of group work/team work.
6. Under personnel management, employees are provided with less training and develop-
ment opportunities. Under human resource management, employees are provided with more training
and development opportunities.
7. In personnel management, decisions are made by the top management as per the rules and regulation
of the organization. In human resource management, decisions are made collectively after considering
employee's participation.
8. Personnel management focuses on increased production and satisfied employees. Human resource
management focuses on effectiveness, culture, productivity and employee's participation.
9. Personnel management is concerned with the personnel manager. Human resource management is
concerned with all level of managers from top to bottom.
10. Personnel management is a routine function. Human resource management is a strategic function.
11. Personnel management deals with employees, their payroll and employment laws while Human
Resources Management deals with the management of the work force, and contributes to an organiza-
tion’s success.
12. HRM basically deals with developing personnel management skills. It is Human Resources Management
that develops a team of employees for an organization.
13. While Personnel management is considered to be reactive, Human Resources Management is stated to
be proactive.
14. Personnel management focuses on administrating people or employees while Human Resources
Development is to build a dynamic culture.
15. Personnel management is independent from an organization. On the contrary, Human Resources
Management forms an integral part of a company or an organization.
Multidisciplinary Nature of HRM
HRM is a multidisciplinary field of study consisting of:
1. Psychology: This is the study of the individuals working in the organization under. It helps to study the
individual’s learning, personality, perception, leadership effectiveness, decision making power, job sat-
isfaction, attitude measurements and job stress. Psychology is concerned with the study of human be-
havior.
2. Sociology: It is the study of small group’s behaviors in the organization, like a group working together
on a project so that the group behavior can be analyzed. It helps to study the behavioral changes, atti-
tudes, ways of communication, group processes and group decision making powers of the individual in
a group. Sociology is more concerned with the study of social behavior, relationships among social
groups and societies, and the maintenance of order.
3. Anthropology: at the organizational level, it is the study of the corporate culture of the organization.
The main focus is on the cultural system, beliefs, customs, ideas and values within a group or society,
and the comparison of behavior among different cultures. People learn to depend on their culture to
give them security and stability and they can suffer adverse reactions to unfamiliar environments.
4. Economics: This refers to the rational decision making of the organization in order to effectively utilize
scarce resources.
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5. Political science: This is the study of human coalitions and alliances and the impact of power and
conflict to an organization and the environment in general.
Principles of Human Resource Management
A principle is a fundamental truth established by research, investigation and analysis.
1. Principle of individual development – to offer full and equal opportunities to every employee to realize
his/her full potential.
2. Principle of scientific selection – to select the right person for the right job.
3. Principle of free flow of communication- to keep all channels of communication open and encourage
upward, downward, horizontal, formal and informal communication.
4. Principle of participation – to associate employee representatives at every level of decision making.
5. Principle of fair remuneration- to pay fair and equitable wages and salaries commensurate with the job
done.
6. Principle of incentive – to recognize and reward good performance.
7. Principle of dignity of labour – to treat every job holder with dignity and respect.
8. Principle of labour management co-operation – to promote cordial industrial relations between
employees and employers.
9. Principle of team spirit – to promote co-operation and team spirit among employees.
10. Principle of contribution to national prosperity – to provide a higher purpose of work to all employees
and to contribute to national prosperity.
ETHICS AND PROFESSIONALISM IN HRM
Ethics are “rules of behaviour based on ideas about what is morally good or bad, right or wrong, espe-
cially in one’s dealings with other people.” Ethical behaviour is good for business and involves demon-
strating respect for key moral principles such as honesty, fairness, equality, dignity, diversity and indi-
vidual rights.
Professionalism is the conduct, aims or qualities that characterize or mark a profession or professional
person. It implies a quality of workmanship or service. Every organization knows that a professional
and ethical reputation is the difference between success and failure, and they seek to keep those staff
who are the most professional. Professionalism is all about ethical success and influence; having a rep-
utation for excellence. Being thought of as someone who exhibits professionalism under any circum-
stance can open doors for you either in the workplace or in your personal ambition.
Ethical Considerations in HR
1. Employment Issues: HR professionals are likely to face maximum ethical dilemmas in the areas of
hiring of employees. Major challenges in this area are:
 Pressure to hire a friend or relative of a highly placed executive.
 Faked credentials submitted by a job applicant.
 Discovery that an employee who has been with the organization for some time, is skilled and has
established a successful record, had lied about his educational credentials.
2. Cash and Incentive Plans: These include issues like basic salaries, annual increments or incentives, and
long term incentive plans: HR managers have to justify a higher level of basic salaries or higher level of
percentage increase than the competitors to retain some employees. In some situations, where the
increase is larger than normal they have to elevate some positions to higher grades. The fear of losing
some outstanding executives may force the HR manager to give higher incentives to them than what
the individuals actually deserve.
3. Employees Discrimination: A framework of laws and regulations has been evolved to avoid the prac-
tices of treatment of employees on the basis of their caste, sex, religion, disability, age etc. No organi-
zation can openly practice any discriminatory policies, with regard to selection, training, development,
appraisal etc. A demanding ethical challenge arises when there is pressure on the HR manager to pro-

Mr. Gerald Were HRM1 KIM Kisumu 11

 tect the firm or an individual at the expense of someone belonging to the group which is being discrim-
inated against.
4. Performance Appraisal: HR managers sometimes face the dilemma of assigning higher rates to em-
ployees who are not deserving them; based on some unrelated factors e.g. closeness to the top man-
agement. Some employees are given low rates, despite their excellent performance on the basis of fac-
tor like caste, religion or not being loyal to the appraiser.
5. Privacy: The private life of an employee which is not affecting his professional life should be free from
intrusive and unwarranted actions. HR managers face three dilemmas in this aspect:
 A firm’s need for information particularly about employees while on job may be at odds with the
employee’s privacy. Close circuit cameras, tapping the phones, reading the computer files of employ-
ees etc. breach the privacy of employees.
 The second ethical dilemma relates to the AIDS testing. AIDS has become a public health problem. HR
managers are faced with two issues: Whether all the new employees should be subject to AIDS test
and what treatment should be melted out to an employee who is affected with the disease. It is how-
ever generally understood that since AIDS cannot be contracted by casual and normal workplace con-
tract, employees with this illness should not be discriminated against and they should be allowed to
perform jobs for which they are qualified.
 The third ethical dilemma relates to Whistle Blowing. Whistle blowing refers to a public disclosure by
former or current employees of any illegal, immoral or illegitimate practices involving their employers.
Generally, employees are not expected to speak against their employers, because their first loyalty is
towards the organization for which they work. However, if the situation is such that some act of the
organization can cause considerable harm to society, it may become obligatory to blow the Whistle.
The HR manager is in the dilemma how to solve this issue between the opponents and defenders of
whistle blowing.
6. Safety and Health: Industrial work is often hazardous to the safety and health of the employees.
Legislations have been created making it mandatory on the organizations and managers to compen-
sate the victims of occupational hazards. Ethical dilemmas of HR managers arise when justice is denied
to the victims by the organization.
7. Restructuring and layoffs: Restructuring of the organizations often result in layoffs and retrenchments.
This is not unethical, if it is conducted in an atmosphere of fairness and equity and with the interests of
the affected employees in mind. If the restructuring company requires closing of the plant, the process
by which the plant is chosen, how the news is to be communicated and the time frame for completing
the layoffs is ethically important.
8. Race, Gender and Disability: Employees may be differentiated on the basis of their race, gender, origin
and disability. The evolution of laws and a regulatory framework has standardized employee behaviour
towards each other. Managers are trained to align behaviour and avoiding discriminatory practices.
Professional Conduct in HRM
1. Accountability: Human resources professionals are responsible for learning company policy and
procedures and employment law covering all aspects of human resources. They are also responsible
for training management and employees in critical human resources policy and procedures. As the au-
thority on HR administration for the company, they are accountable for faithfully carrying out these
responsibilities to the benefit of all employees in the organization. They are also responsible for keep-
ing current with changes in employment law or compliance issues and keeping management informed
of risk or possible exposure to liability.
2. Fairness: Human resources represents all employees, regardless of race, color, sex, national origin, age,
marital status, religion, disability or other protected class and at all levels of the organization. They are
responsible for fair and equitable treatment of all employees. Human resources must fairly administer
all company policies and procedures, regardless of an employee’s status or level in the organization. In
Mr. Gerald Were HRM1 KIM Kisumu 12
 disciplinary actions, compliance issues or grievances, human resources must conduct thorough investi-
gations and make recommendations and decisions based on facts without favoritism.
3. Integrity: Human resources professionals must adhere to the strictest code of ethics and integrity in all
employee interactions. They must model the highest level of ethical behaviuor. They must keep em-
ployee and company information in the strictest confidence, and protect the integrity of company pro-
prietary information when dealing with employees or individuals outside the company. Human re-
sources must be honest in dealings with representatives of government entities and make sure the
company is in compliance.
4. Professional Development: Human resources professionals are responsible for learning and under-
standing the entire body of knowledge required to carry out their many duties and responsibilities.
They must keep abreast of changes in employment law, company policies and employment issues.
They are also responsible for continuing education to remain experts in their field.
5. Professional Responsibility: HR professionals, should be responsible for adding value to the organiza-
tion and contribute to the ethical success of those organizations. They accept professional responsibil-
ity for individual decisions and actions. They should also be advocates for the profession by engaging in
activities that enhance its credibility and value.
6. Ethical Leadership: HR professionals are expected to exhibit individual leadership as a role model for
maintaining the highest standards of ethical conduct.
7. Conflicts of Interest: HR professionals must maintain a high level of trust with all stakeholders. They
must protect the interests of stakeholders as well as their professional integrity and should not engage
in activities that create actual, apparent, or potential conflicts of interest.
8. Maintain the Confidentiality of Privileged Information: Most information about employees, whether
it be medical, compensation or discipline, is considered confidential. In some cases, this may include
keeping information from an employee's manager or releasing information in a lawsuit or medical bill-
ing issue. These situations call for behaviors and actions that conform to the highest ethical principles.
Following the letter of the law in these cases may be the best decision. If company policies are written
accordingly, it will be much easier to follow the correct procedures.
Ethical Standards in an Organization
Ethical standards are principles that when followed, promote values such as trust, good behavior, fair-
ness, and/or kindness. There is not one consistent set of standards that all companies follow, but
each company has the right to develop the standards that are meaningful for their organization. Ethical
standards are not always easily enforceable, as they are frequently vaguely defined and some-
what open to interpretation ("Men and women should be treated equally, " or "Treat the customer
with respect and kindness."). Others can be more specific, such as "Do not share the customer's pri-
vate information with anyone outside of the company."
1. Macro Level: At a macro level, sometimes called the systemic level, ethics are defined and influenced
by the wider operating environment in which the company exists. Factors such as political pressures,
economic conditions, societal attitudes to certain businesses, and even business regulation can influ-
ence a company's operating standards and policies. Business owners and managers must be aware of
how these pressures affect operations and relationships, and how they may impact on markets locally,
nationally and internationally.
2. Company Level: At corporate level, ethical standards are embedded in the policies and procedures of
the organization, and form an important foundation on which business strategy is built. These policies
derive from the influences felt at macro level and therefore help a business to respond to changing
pressures in the most effective way. There can be a gap between the company policy on ethical stand-
ards and the conduct of those in charge of running the business, especially if they are not the direct
owners, which can present an ethical challenge for some employees.

Mr. Gerald Were HRM1 KIM Kisumu 13

3. Individual Level: Since businesses are run by people, the ethical standards of individuals in the busi-
ness are an important consideration. Individuals may well have a very different set of ethical standards
from their employer and this can lead to tensions. Factors such as peer pressure, personal financial po-
sition, and socio-economic status may all influence individual ethical standards. Managers and business
owners should be aware of this to manage potential conflicts.
4. Integrated Approach: Ethical standards flow through the entire structure of a business organization,
shaping how it plans its strategy, deals with customers, and manages its workforce. The standards have
a reach far beyond day-to-day operations, and should be considered in all aspects of a business, from
the boardroom to the shop floor and across all functional areas. Supporting this effort, businesses that
genuinely understand the value and importance of ethics have appropriate metrics in place to measure
achievement and identify problems before they become major issues.
The Role of Employees in Ethics
 Always strive for excellence. This is the first rule to achieving greatness in whatever endeavor you
undertake; this is the quality that makes you and your work stand out.
 Be trustworthy. In today’s society, trust is an issue, and any employee who exhibits trustworthiness is
on a fast track to professionalism.
 Be accountable. To be accountable is to stand tall and to be counted for what actions you have under-
taken; this is the blameworthiness and responsibility for your actions and its consequences, good or
bad.
 Be courteous and respectful. Courteousness is being friendly, polite, and well-mannered with a gra-
cious consideration toward others.
 Be honest, open and transparent. Honesty is a facet of moral character that connotes positive and
virtuous attributes such as truthfulness, straightforwardness of conduct, loyalty, fairness, sincerity,
openness in communication, and generally operating in a way for others to see what actions are being
performed.
 Be competent and improve continually. Competence is the ability of an individual to do a job properly;
it is a combination of knowledge, skills and behaviour used to improve performance.
 Always be ethical. Ethical behavior is acting within certain moral codes in accordance with the general-
ly accepted code of conduct or rules.
 Always be honorable and act with integrity. Honorable action is behaving in a way that portrays
“nobility of self, magnanimity and a scorn of meanness” which is derived from virtuous conduct and
personal integrity.
 Be respectful of confidentiality. Confidentiality is respecting the set of rules or promises that restrict
you from further and unauthorized dissemination of information.
 Set good examples. Applying the foregoing rules helps you improve your professionalism within your
organization, but it is not complete until you impart knowledge on those around and below you.
 Be Punctual. Being on time is one of the most fundamental qualities of professionalism. A professional
person comes to work before his shift, settles in and is ready to work for the duration. He is punctual
to appointments with clients and meetings with staff and management. His work is completed on time
and he meets all deadlines given to him.
 Have Professional Appearance and Good Hygiene: The employee who comes to work with his clothes
pressed, shirt tucked in and matching socks has taken the time to ensure his appearance meets the
standards for his job. His clothes are clean, his hair is combed and he has made sure to brush his teeth
and use deodorant. He'll use mints after lunch or brush his teeth again. He wants to make sure his first
impression in any situation is a positive one. People have more trust in someone who has taken the
time to ensure a professional appearance.

Mr. Gerald Were HRM1 KIM Kisumu 14

 Benefits of Managing Ethics in an Organization
1. Asset Protection: A strong ethical culture within your business is important in safeguarding your assets.
Employees who abide by workplace ethics would be able to protect and respect business’s assets.
Workers can only respect company property when you treat them with respect and dignity, which
makes them feel proud to be working for your business. It increases employee pride and discourages
them from stealing supplies or equipment.
2. Productivity and Teamwork: Workplace ethics is integral in fostering increased productivity and
teamwork among your employees. It helps in aligning the values of your business with those of your
workers. Achieving this alignment requires that you encourage consistent dialogue regarding the val-
ues of your business, which enhances teamwork, integrity and openness among employees. Ethics en-
able workers to feel a strong alignment between their values and those of the business. This increases
productivity and motivation.
3. Public Image: You earn a lot of respect and cultivate a strong image in the public domain when you
make ethical choices. The public would consider your business to be operating with honor and integrity
while valuing people over profits. Building a strong public image through ethical conduct also earns you
more clients. Customers would develop trust in you and want to continuously do business with your
organization.
4. Decision-Making: Ethical conduct in the workplace encourages a culture of making decisions based on
ethics. It also enhances accountability and transparency when undertaking any business decisions. Dur-
ing turbulent times, a strong ethical culture guides you in managing such conflicts by making the right
moves. Ethical conduct within the business sensitizes you and your staff on how to act consistently
even in difficult times.
5. A Happier Workplace: Running a company along ethical lines and training staff to treat each other
ethically is a win for employer and employees alike. If a company doesn't put up with bad behavior
such as harassment or discrimination, employees enjoy work more. Keeping employees happy reduces
turnover, increases productivity and makes it easier to attract talented new employees.
6. Staying Within the Law: When the company insists everyone do the right thing, that keeps operations
inside the legal lines. This includes not only "sins of commission," such as selling defective products,
but sins of omission – situations where it seems easier just to sit back and do nothing.
7. Creating a Better Company: Many of the best management practices are easier to achieve if the
company acts ethically. Good behavior makes it easier for managers and employees to trust each other,
and for investors to trust company management. Hiring and promoting employees fairly without plac-
ing discrimination leads to a more productive and diverse workforce.
8. Better for Everyone: It's not just the workers and the company who benefit from ethics. Customers
benefit if they know the products or services they buy are safe and dependable. The economy benefits
when companies refrain from using dirty tricks to crush competitors.
Benefits of Joining a Professional Body
1. Recognition: When you become a member of a professional body, you become truly recognized as a
qualified professional in your field. If you are a human resource practitioner and you apply for a job but
your curriculum vitae (CV) does not indicate that you are a member of the Institute of Human Resource
Management, then the recruiter has some doubts about your professional qualifications. If you cannot
be endorsed by your professional body, what would make others believe that you belong to that pro-
fession?
2. Continuous Professional Development: Most professional bodies conduct training sessions from time
to time and they offer discounted fees to their members. By joining your professional body, you will
directly enjoy this benefit. This will greatly enrich your CV, make you current and relevant in compe-
tences and skills and you will be ahead of your peers in your profession.

Mr. Gerald Were HRM1 KIM Kisumu 15

3. Leadership Development: When you become a member of your professional body, you have the
opportunity to volunteer towards helping organize their events and conferences, towards membership
development and so on. You can join some of their sub-committees and eventually compete for roles
on their main committee or the council. This gives you a unique chance to develop team work and
leadership skills which are vital for your professional development and greatly enrich your CV, especial-
ly early into your career. You may not be a manager at your office, but your being active at the profes-
sional body may give you good exposure to management and leadership which in turn can help you
accelerate your promotion into management positions.
4. Networking Opportunities: Institutions may have regional networking and professional development
events that you can attend, which can be useful for making new contacts and learning more about
what’s happening in the sector. Seminars and conferences also offer excellent networking and research
opportunities. If you wish to raise your profile you can volunteer to join committees and help organize
events.
5. Employment Opportunities: Professional bodies broadcast many relevant opportunities to their
members including opportunities for recruitment, consultancies, professional development and so on.
Why not enjoy this benefit as a bonus when you become a member of your professional body? If you
are not a member of your professional body, you may miss out on so many amazing opportunities.
6. Magazines: There are some excellent monthly or quarterly magazines produced by institutions, which
are normally included in the cost of the annual subscription. As well as industry news and articles, the
magazines often have a vacancies section – ideal for finding jobs relating to your particular industry
sector.
7. Career Development: Continuous professional development (CPD) is essential if you want to forge a
successful second career after leaving the current job. Professional Institutions may offer career de-
velopment programmes, training courses and assessments. There may also be the opportunity to up-
grade your membership to Chartered or Fellow level, via further assessment, which gives added pro-
fessional credibility.
EVALUATING THE HUMAN RESOURCE FUNCTION
Approaches to Evaluation
There are several approaches to human resource evaluation. The most prominent of them are: audit
approach, analytical approach, qualitative and quantitative approach, balanced scorecard perspective
and benchmarking.
1. Audit Approach
Human resource management audit is a process of evaluating the effectiveness of the HR function. The
HR audit may be partial or total. Where it is partial, HR audit covers a few areas of HR as for example,
compliance of managers and supervisors with the established HR principles and practices. In the com-
prehensive audit system, all HR activities such as HRP, employee hiring, training and development, per-
formance management, employee well-being, safety and health, Industrial Relations etc. will be cov-
ered. Better results from HR audit will be obtained where it is comprehensive.
An HRM audit offers several benefits:
 Provides verifiable data on the human resource management function
 Clarifies the HR function’s duties and responsibilities
 Identifies critical HR problems
 Helps align HR strategy with organizational strategy
 Improves the status of HR function
 Helps reduce HR costs
 Helps review and improve the HRIS.
Approaches to HR Audit
Auditors may adopt any of the five approaches for the purpose of evaluation:
Mr. Gerald Were HRM1 KIM Kisumu 16
 Comparative approach: Under here, auditors identify another company as the model. The results of
their organization are compared with those of the model company.
 Outside authority approach; this is where auditors use standards set by an outside consultant as
benchmark for comparison of own results.
 Statistical approach; statistical measures of performance are developed based on the company’s
existing information. Examples of such measures-are absenteeism and turnover rates. These data help
auditors assess the performance.
 Compliance approach; auditors review past actions to determine if those activities comply with legal
requirements and company policies and procedures.
 Management By Objectives (MBO) approach; is an approach where an operational manager creates
specific goals against which performance can be measured. Then the audit team researches actual per-
formance and compares it with the earlier objectives.
Irrespective of the approach, the data for assessment are provided by HR research.
2. Analytical Approach
This approach relies on cost-benefit analysis, also called the utility analysis. The analysis seeks to ex-
press evaluations in economic terms, which are more useful for decision makers. Several HR activities
have been evaluated with cost-benefit analysis, including appraisal systems, employee hiring, training
and turnover. Although this method has wide applicability and represents a quantitatively superior
means of evaluating HR activities, the process is difficult. Because of this difficulty, and the amount of
resources and effort required for analysis, its use has been limited to only certain specific situations.
3. Qualitative and Quantitative Indices Approach
A number of quantitative indices or metrics are available to determine effectiveness of HRM. For ex-
ample, one can calculate cost of turnover, absenteeism cost, cost of work-life programs, cost per hire,
HR expense factor, training costs etc. In retailing, for example, there is a chain of cause and effect rela-
tionship between employee behaviour to customer behaviour to profits. Human resource manage-
ment department itself can be treated as a profit centre. These and other indicators, when calculated
and compared with other firms, give a fair picture about the outcome of HR functions and activities.
4. Balanced Score Card Approach
Developed by Kaplan and Norton, the balanced score card helps evaluate HRM effectiveness. It con-
tains four dimensions: financial performance of an organization, its customer service, its internal busi-
ness processes, and its capacity to learn and achieve growth. Within these four dimensions, managers
need to identify key performance indicators the organization should track.
 The financial dimension reflects a concern that the organization’s activities contribute to improving
short-term and long-term financial performance.
 The customer service perspective measures such things as how customers view the organization, as
well as customer retention and satisfaction.
 The business process indicators focus on production and operating statistics, such as order fulfillment
or cost per order.
 The learning and growth perspective relates to the human resource-its potential to learn and grow.
This perspective seeks to focus on how well resources and human capital are being managed for the
company’s benefits.
The balanced score card provides a balanced picture of current performance as well as the triggers for
future performance. The score card helps managers align their business units, as well as their financial,
physical and human resources, to the firm’s overall strategy and objectives. But the HR evaluation
should not confine only to people dimension of the score card. The HR professional should be judged
on all the dimensions of the score card. HR executives tend to believe that their success should be
judged only by the extent to which they meet employee needs. As the score card indicates, employee

Mr. Gerald Were HRM1 KIM Kisumu 17

 commitment is only one criterion for effective HR performance, and HR professionals will be held ac-
countable for all the dimensions as other managers.
5. Bench-Marking
Benchmarking involves management learning and adopting the so-called “best practices” by comparing
their human resource management practices with those of other (more successful) organizations. It
essentially involves studying the practices followed in competing firms and evaluating own practices
with those thus collected. It enables managers to learn from other firms and adopt effective HR strate-
gies. In addition, benchmarking can help create and initiate the need for change because it identifies
what an organization needs to do to improve relative to the HR strategy in excellent companies.
Benchmarking involves seven sequential steps:
 Identify HR practices for benchmarking. Critical practices from organization’s perspective are identified
for benchmarking.
 Identify benchmarking partners-organizations from the same or different industry, competitors or non-
competitors or international firms-who are known to have tried best practices successfully.
 Collect data from each of the benchmarking partners (for example firms A, B and C).
 Analyze and interpret the data.
 Prepare a comprehensive report based on the data analysis and interpretation.
 Develop action plans to improve HR strategy and practices.
6. Management By Objectives
This is a method in which management and employees discuss and agree upon objectives that serve as
the basis for evaluation. By involving employees in the process, they are better motivated to achieve
these goals because the employees feel they have had a hand in creating the goals. It also improves
communication because employees work together with management to come up with the goals. Both
the employee and supervisor have a clear understanding of expectations and there are no misunder-
standings. The actual evaluation is simply based on whether the agreed upon goals are achieved.
Evaluation Criteria of the HR Function
An organization must decide what criteria it will use for evaluation. Does it want a system based on
evaluating individual traits, behaviors, or job results? This decision depends in part on who is being
evaluated and how the organization intends to use the performance appraisal.
The 4C’s of Evaluation of Human Resource Function
1. Commitment: Commitment means testing the employee’s personal motivation and loyalty to the
organization. If the employee works hard enough for the good of the company and his main aim is for
the company to gain competitive advantage over its rivals, then he is very committed to the company
thus the human resource department is very effective.
2. Competency: In this area one tests the employee’s skills and abilities to perform his tasks well. Hiring
and maintaining employees with very good skills proves that the human resource function in that com-
pany is very efficient. Skills are the tools with which an employee does his job. Skills can range from
basics like math and writing to using software or equipment. Certification in certain skill areas is a good
measure of competency.
3. Congruency: Congruency focuses on management and employees. It seeks to test and prove that the
management and employees share the same vision of the organization’s goals and work together to
attain them.
4. Cost Effectiveness: It is concerned with operational efficiency. The Human Resource Function in the
organization should be used to the best advantage.
Other Criteria for Evaluation
5. Trait: Initiative, aggressiveness, reliability, and personality are examples of traits on which employees
have been rated. One problem with trait rating is that the traits themselves are difficult to define and
may be subject to varying interpretation by evaluators.
Mr. Gerald Were HRM1 KIM Kisumu 18
6. Behaviour: Rating employees according to job behaviours is based on the assumption that there are
effective and ineffective behaviours and that these have been identified for each job or type of job.
Behaviours are judged effective or ineffective in terms of the results the behaviours produce (either
desirable or undesirable). For example, a customer service representative could be judged on the
amount of patience shown to irate customers. Evaluating employees along behavioural dimensions is
especially important for employee development purposes.
7. Job Result: Results indexes are often used for appraisal purposes if an employee's job has measurable
results. Examples of job results indexes are shilling volume of sales, amount of scrap, and quantity and
quality of work produced. Results indexes such as turnover, absenteeism, grievances, profitability, and
production rates can be used to evaluate the performance of organization units.
8. Knowledge: Employees can be evaluated on their knowledge of the organization, the job they perform,
regulations and other areas that impact ability to perform. Knowledge is not performance but adds to
the ability to perform the work.
Techniques/Methods for Evaluation of Human Resource Function
There are four ways to evaluate if the Human Resource Function in an organization is effective after
implementing it.
1. Achievement of Specified Goals: In this case one measures the achievement against agreed objectives.
2. Service Overall Evaluation: This is an agreement between the provider of services and the customers.
3. Subjective Overall Evaluation: This is another method of evaluation of Human Resource Function. One
measures the satisfaction index where concerns on whether an employee is happy and satisfied work-
ing in the organization and the Human Resource policies and practices as they affect them.
4. Bench Marking: In this evaluation of Human Resource Function one compares data from a competing
firm and the data in your organization. This provides information on where to improve in the HR strat-
egies.
Techniques for Evaluating Individual Employees
1. 360 Evaluation: Using this method, an employee is evaluated on the basis of feedback from his imme-
diate supervisors, peers, and from the members of the other departments with which he works on a
regular basis. By using this method, the acceptability and compatibility of an employee in the company
environment can be judged. It can also be judged whether an employee’s performance differs when he
deals with other departments or not. The multi-source data helps evaluate an employee’s interperson-
al and team building skills.
2. Checklist Method: Checklist is a set of performance evaluation questions that are given to the manag-
ers. The questions with the options of “yes” or “no” responses are asked in order to gain a better idea
of the manager’s opinion about every employee’s particular skills. Using this method, the opinions are
collected and evaluated by the HR department.
3. Performance Test Method: A test of knowledge and skills of the employees is taken with this method.
The test can be taken in written form or the employees can be asked to show the actual presentation
of their knowledge and skills in the practical field. The test needs to be valid, reliable, and efficient in
judging the employees’ performance level.
4. Self-Evaluation Method: The employee is asked to judge his own performance by using a form that
requires multiple choice answers, essay-type answers or a combination of the two. One of the benefits
of a self-evaluation is that you can compare the self-evaluation to your own appraisal and see the areas
where there is a discrepancy in an understanding of employee performance. This opens up conversa-
tions that can be beneficial to employee development.
5. Graphic Scale: The graphic scale of performance evaluation is commonly used by managers. The
employee's performance in various areas of his job duties is graded on a scale. The value in a graphic
evaluation system is that it allows you to compare the performance of several employees simultane-

Mr. Gerald Were HRM1 KIM Kisumu 19

 ously. The system can be done with numbers or letters, and usually consists of a range, running from
poor to excellent.
6. Management by Objectives (MBO) Method: This is one of the best methods for the judgment of an
employee's performance, where the managers and employees set a particular objective for employees
and evaluate their performance periodically. After the goal is achieved, the employees are also re-
warded according to the results. This performance appraisal method of management by objectives fo-
cuses on accomplishing the goal rather than how it is accomplished.
7. Critical Incident Method: In this method, the manager writes down the positive and negative behav-
ioral performance of the employees. This is done throughout the performance period and the final re-
port is submitted as the assessment of the employees. This method helps employees in managing their
performance and improves the quality of their work.
8. Field Review Method: This type of evaluation is conducted by someone outside the employee's
department. For example, if an employee is working for a manufacturing team, then someone who
deals with him regularly, say some sales personnel will conduct the appraisal. In most cases, the human
resources department undertakes the evaluation. While the bias of the department head is eliminated
in this form of appraisal, there is a risk that it may not be accurate. This is because the outsiders rarely
know about the deliverables of the employee and an honest observation is not possible.
9. Essay Evaluation Method: In the essay method of evaluation, the appraiser writes an elaborate state-
ment about the employee who is being evaluated. He mentions the employee's strengths and weak-
nesses. He also suggests ways to improve his performance and appreciates the good qualities. This es-
say can be prepared by the appraiser alone or together with the employee. As the criteria for evalua-
tion is not defined, it helps the appraiser to focus on the areas that actually need improvement. This
open-ended method accords flexibility and eliminates rigidity which is observed in criteria-driven eval-
uations. However, it is a highly time-consuming and subjective method, and may not necessarily work
for the benefit of the organization.
ORGANIZATIONAL STRUCTURES AND THEIR EFFECTIVENESS
Definitions of Organizational Structure
 An organizational structure is a system that outlines how certain activities are directed in order to
achieve organizational goals. These activities can include rules, roles and responsibilities. The organiza-
tional structure determines how information flows from one level to another within the company.
 It’s the plan that outlines who reports to whom and who is responsible for what. It’s usually recorded
and shared as an organizational chart that includes job titles and the reporting structure.
 An organizational structure is a system used to define each employee’s position, their function and
who they report to within the firm. It is the way in which a company or organization is organized, in-
cluding the types of relationships that exist between the directors, managers and employees.
Importance of Organizational Structure
1. Specialization: The structure is a network of relationships in which work is divided into units and
departments. This division of work helps in bringing about specialization.
2. Well Defined Jobs: The structure helps in putting the right person in the right job by selecting people
for various departments according to their qualifications, skill and experience.
3. Clarity of Authority: The structure helps in clarifying the authority of every manager and the way he
has to exercise the authority so that misuse of power does not take place.
4. Co-ordination: Organization is a means of creating co-ordination among different departments of the
enterprise. It creates clear cut relationships among positions and ensures mutual co-operation among
individuals and departments.
5. Internal Communication Is Easier: The right kind of organizational structure will make it possible for
employees to communicate effectively with their managers and each other. Information will flow easily
in all directions and the employees will feel heard and have a say in how the organization is run. A well-
Mr. Gerald Were HRM1 KIM Kisumu 20
 defined communication network can ensure that every person who needs to see a piece of information
has access to it in time to make an appropriate decision.
6. Business Decisions Become Easier to Make: Effective decision making requires an adequate amount of
information and that information can only be obtained where there is good communication. Managers
will have all the information they need to make the right business decisions and the company is likely
to be efficient.
7. Tasks Are Easier to Perform: When a company has the right organizational structure, every employee
knows which tasks are expected of them and have all the things they need to perform those tasks at
their disposal. This makes it possible for them to effectively carry out their tasks.
8. Customer Service: Customer service is the branch of your organization charged with finding the
balance between retaining customers and acting in the company's best interest. A well-defined organi-
zational structure can allow important customer service issues to escalate immediately while giving
individual customer service representatives the autonomy to take care of minor customer issues on
their own. An efficient structure prevents customer service issues from getting bounced from one per-
son to another and then possibly lost. This efficiency will help increase customer retention.
9. Growth: As the company grows, the structure needs to be revised continually to accommodate new
departments within the company and to create a controlled environment for employee training and
advancement. The growth of the company can get out of control if it is not maintained by an effective
structure.
Principles of Organizing
1. Principle of Specialization: According to the principle, the whole work of an organization should be
divided amongst the subordinates on the basis of qualifications, abilities and skills. It is through division
of work that specialization can be achieved which results in increased productivity.
2. Principle of Functional Definition: According to this principle, all the functions should be completely
and clearly defined to the managers and subordinates. This can be done by clearly defining the duties,
responsibilities, authority and relationships of people towards each other. Clarifications in authority-
responsibility relationships helps in achieving co-ordination and effective organization. For example,
the primary functions of production, marketing and finance and the authority responsibility relation-
ships in these departments should be clearly defined to every person attached to that department.
3. Principles of Span of Control/Supervision: Span of control depicts the number of employees that can
be handled and controlled effectively by a single manager. According to this principle, a manager
should be able to handle the number of employees under him and the subordinates should neither be
too many nor too few.
4. Principle of Scalar Chain of Command: A clearly defined chain of command or authority should flow
from top to bottom. With chain of command clearly defined, wastages of resources are minimized,
communication is affected, overlapping of work is avoided and easy organization takes place. As the
authority flows from top to bottom, it clarifies the authority positions to managers at all levels and that
facilitates effective organization.
5. Principle of Unity of Command: It implies one subordinate-one superior relationship. Every subordi-
nate should be answerable and accountable to only one boss at a time. This helps in avoiding conflict
and communication gaps, feedback and response is prompt.
6. Principle of Authority and Responsibility: The right to give orders is called authority. The obligation to
accomplish is called responsibility. Authority and Responsibility exist together. They are complemen-
tary and mutually interdependent. Authority delegated should correspond or be at par with the re-
sponsibility assigned. Responsibility for action cannot be greater than that implied by the authority
delegated nor should it be less.

Mr. Gerald Were HRM1 KIM Kisumu 21

 Span of Control
This refers to the number of subordinates under the supervision of one manager or supervisor or the
number of subordinates reporting to a single superior. It can also be defined as the number of subordi-
nates that can be effectively managed by a single superior.
There are two different types of span of control; a wide span and narrow span.
Wide Span of Control- It is one in which a manager can supervise and control effectively a large group
of persons at one time.
Narrow Span of Control-According to this span, the work and authority is divided amongst many sub-
ordinates and a manager doesn't supervise and control a very big group of people under him. The
manager according to a narrow span supervises a selected number of employees at one time.
Factors Affecting Span of Control
1. Managerial abilities: In situations where managers are capable, qualified and experienced, wide span
of control is possible.
2. Competence of subordinates: Where the subordinates are capable and competent, the subordinates
tend not to depend on their superiors for solving their problems. In such cases, the manager can han-
dle large number of employees, hence a wide span.
3. Level of decentralization: Decentralization refers to a situation where authority is delegated to subor-
dinates. With the required level of authority, a competent subordinate will be able to undertake a well-
defined task delegated by the superior. With decentralization, therefore, a superior can delegate tasks
and hence a wider span of control is possible. However, in a situation where an organization has a cen-
tralized system, the superior may not be able to delegate the required amount of authority to perform
a given task. The subordinate to whom the task is delegated will take an unproportioned amount of
the superior’s time and attention in guiding and controlling their actions and thus the superior will
have a narrow span.
4. Nature of work: In a situation where work involved repetitive, routine and standardized operations,
the subordinates require minimal supervision and thus the superior has a wider span. This is normally
the case in the lower levels of management thus low level managers have wider spans of control. In
the higher levels of management, work involves complex operations. The number of subordinates who
can be efficiently managed at these levels is small and thus the managers have narrow spans.
5. Control techniques: The philosophy of the superior is very key in determining their span of control.
Superiors who rely on daily or weekly reports and technology such as the use of CCTV (closed- circuit
television) cameras have wider spans of control as opposed to those who practice close supervision of
all work operations under their jurisdiction.
6. Distance between the supervisor and subordinates: The subordinates under a single superior may be
located within a single department, different departments or different branches of the same organiza-
tion. In a situation where the subordinates are found in the same department or within a single branch
of the organization then the superior can have a wider span since they can easily access all the subor-
dinates they are accountable for. However, in a situation where the subordinates are found in different
branches of the same organization, the superior has a narrow span. This is because movement from
one branch of the organization to another will put a strain on the time available for supervision.
7. Communication facilities: With faulty communication facilities, the superior will have a narrow span of
control. This is because lack of proper communication will put a strain on the time of the superior and
reduce effectiveness in giving the required guidelines to subordinates to perform their work satisfacto-
rily. On the other hand, an effective system of communication will enable a superior to have a wider
span of control. This is because there will be ease in passing information to the subordinates.
8. Time available for supervision: When the superior has a lot of time for supervision then they will have
a wider span of control. On the other hand, less time available for supervision will limit the span of
control of a given superior.
Mr. Gerald Were HRM1 KIM Kisumu 22
 Guidelines to Effective Organization Structure
1. Clearly defined objectives: The first step in developing an organizational structure is to lay down the
organization’s objectives in clear terms. This helps in determining the type and basic characteristics of
the organization. An organization structure is defined in terms of objectives to be achieved.
2. Determining activities: In order to achieve the objectives of the enterprise, certain activities are
necessary. The activities will depend upon the nature and size of the enterprise. For example, a manu-
facturing concern will have production, marketing and other activities. Each major activity is divided
into smaller parts. For instance, production may be further divided into purchasing of materials, plant
layout, quality control, repairs and maintenance, production research etc.
3. Assigning duties: The individual groups of activities are then allotted to different individuals according
to their ability and skill. The responsibility of every individual should be defined clearly to avoid dupli-
cation and overlapping of effort. Each person is given a specific job suited to him and he is made re-
sponsible for its execution. The right person is put on the right job.
4. Delegating authority: Every individual is given the authority necessary to perform the assigned activity
effectively. By authority we mean power to take decisions, issue instructions, guiding the subordinates,
supervise and control them. Authority delegated to a person should be at par with his responsibility.
An individual cannot perform his job without the necessary authority or power. Authority flows from
top to bottom and responsibility from bottom to top.
5. Coordinating activities: The activities and efforts of different individuals are then synchronized. Such
co-ordination is necessary to ensure effective performance of specialized functions. Inter-relationships
between different jobs and individuals are clearly defined so that everybody knows from whom he has
to take orders and to whom he is answerable.
6. Providing physical facilities and right environment: The success of an organization depends upon the
provision of proper physical facilities and the right environment.
7. Establishment of relationships: It is very essential to establish well defined clear-cut structural rela-
tionships among individuals and groups. This will ensure overall control over the working of all de-
partments and their coordinated direction towards the achievement of pre-determined goals of busi-
ness.
Types of Organizational Structures
An organizational structure defines how jobs and tasks are formally divided, grouped and coordinated.
The type of organizational structure would depend upon the type of organization itself and its philoso-
phy of operations.
1. Functional Structure
 The functional structure features separate hierarchies for each function creating a larger scale version
of functional departments. Jobs that relate to a single organizational function or specialized skill are
grouped together such as marketing, finance, production, etc.

Mr. Gerald Were HRM1 KIM Kisumu 23

 The chain of command in each function leads to a functional head who in turn reports to the top
manager.
 The functional design enhances operational efficiency because of specialists being involved in each
functional area and also because resources are allocated by function rather than being duplicated or
diffused throughout the organization.
 One of the main disadvantages of the functional design is that it encourages narrow specialization
rather than general management skills so that the functional managers are not well prepared for top
executive positions.
 Additionally, functional units may be so concerned with their own areas that they may be less respon-
sive to overall organizational needs.
2. Divisional Structure
 The divisional or departmental organization involves grouping of people or activities with similar
characteristics into a single department or unit. Departments operate as if they were small organiza-
tions under a large organizational umbrella, meeting divisional goals as prescribed by organizational
policies and plans.
 Decision-making is generally decentralized so that the departments guide their own activities. This
facilitates communication, coordination and control, thus contributing to organizational success. And
since the units are independent and semi-autonomous, it provides satisfaction to the managers that in
turn improves efficiency and effectiveness.
This division and concentration of related activities into integrated units is categorized on the following
basis:
a. Departmentalization by Product. In this case, the units are formed according to the type of product
and it is more useful in multi-line corporations where product expansion and diversification, and manu-
facturing and marketing characteristics of the product are of primary concern. The general policies are
decided upon by the top management within the philosophical guidelines of the organization.
b. Departmentalization by Customers. This type of departmentalization is used by those organizations
that deal differently with different types of customers. Thus, the customers are the key to the way the
activities are grouped. Many banks have priority services for customers who deposit a given amount of
money with the bank for a given period of time. Business customers get better attention in the banks
than other individuals.
c. Departmentalization by Geography. If an organization serves different geographical areas, the division
may be based upon geographical basis. Such divisions are especially useful for large scale enterprises
that are geographically spread out such as banking, insurance, chain department stores or a product
that is nationally distributed.
3. Project Structure
These are temporary organizational structures formed for specific projects for a specific period of time
and once the goal is achieved, they are dismantled. For example, the goal of an organization may be to
develop a new product. For this project, the specialists from different functional departments such as
production, engineering, quality control, marketing research, etc. will be drawn to work together.
When the project is completed, these specialists go back to their respective duties. The specialists are
selected on the basis of task-related skills and technical expertise rather than decision-making experi-
ence or planning ability. These structures are very useful when:
 The project is clearly defined in terms of objectives to be achieved and the target date for the comple-
tion of the project is set.
 The project is separate and unique and not a part of the daily work routine of the organization.
 There must be different types of activities that require skills and specialization and these must be
coordinated to achieve the desired goal.
 The project must be temporary in nature and not extend into other related projects.
Mr. Gerald Were HRM1 KIM Kisumu 24