Unit 1

Human Resource Management – An Introduction

“Of all the baggage, Man is the most difficult to Transport”

Of all the M’s of management, like money, material, machine and men, the difficult to

manage aspect is human resources or human capital. The only most effective M which can think

differently, which is difficult to assemble like a machine do, which asks too many questions

which is difficult to answer, which never likes to listen whatever the organisation say, which do

just opposite of whatever the organisation want the resource to do. But what is ironical about it

is, the oragnisation cannot survive without the human resource in an organisation, the

organisation solely depend on the competency of the human resources to do remarkable things in

the organsiation, the organisation try to satisfy the needs, desires, motives of the human resource,

so that it can perform well in the organsiation. Here the oragnisation follow a policy of give and

take, they try to fulfill the expectancy of their human resources and in turn the human resources

inside the organisation try to fulfill the objectives of organisation. Some time they both strive to

overpower each other for their own survival.

Managing human resource is a herculean task for all organisations. Shedding some light

on how to manage this so called human capital is an art, art of making the human resources to

comply with the orgaisation’s requests. We call them human resource as it refers to the

knowledge, education, skills, training, and proficiency of the members of the organisation. The

effectiveness of an organisation depends on the bringing together both the physical and human

resources in the organsiation together to achieve optimum competency in the organisation.

Earlier the importance was given to physical resources as it involves huge outflow of funds in the
organisation, later organisations realized the need of developing the intellectual capital or the

human intellectual capital is critical to business success.

Human Resource Management (HRM) is a relatively new approach to managing people

in any organisation. People are considered the key resource in this approach. it is concerned with

the people dimension in management of an organisation. Since an organisation is a body of

people, their acquisition, development of skills, motivation for higher levels of attainments, as

well as ensuring maintenance of their level of commitment are all significant activities. These

activities fall in the domain of HRM.

Human resources management (HRM) is a management function concerned with hiring,

motivating and maintaining people in an organization. It focuses on people in organizations.

Human resource management is designing management systems to ensure that human talent is

used effectively and efficiently to accomplish organizational goals.

Definition – Human Resource Management

Many have defined management in various ways. The most appropriate one are as follows:

Human resources are “a whole consisting of inter-related, inter-dependent, and interacting

physiological, psychological and ethical components” – Michael J. Jucius.

“From the national point of view human resources are knowledge, skills, and attitude obtained in

the population, while for individual enterprises, they represent the total of the abilities,

knowledge and skills of its employees” – Leon C. Megginson.

HRM is concerned with procurement, development, compensation, integration and maintenance

of the personnel of an organization for the purpose of contributing towards the accomplishments
of the organization’s objectives. Therefore, personnel management is the planning, organizing,

directing, and controlling of the performance of those operative functions (Edward B. Philippo).

Invancevich and Glueck defines, “HRM is concerned with the most effective use of people to

achieve organizational and individual goals. It is the way of managing people at work, so that

they give their best to the organization”.

The nature of the human resource management has been highlighted in its following features:

1. Inherent Part of Management : Human resource management is inherent in the process of

management. This function is performed by all the managers throughout the organisation rather

that by the personnel department only. If a manager is to get the best of his people, he must

undertake the basic responsibility of selecting people who will work under him.

2. Pervasive Function: Human Resource Management is a pervasive function of management. It

is performed by all managers at various levels in the organisation. It is not a responsibility that

manager can leave completely to someone else. However, he may secure advice and help in

managing people from experts who have special competence in personnel management and

industrial relations.

3. Basic to all Functional Areas: Human Resource Management permeates all the functional

area of management such as production management, financial management, and marketing

management. That is every manager from top to bottom, working in any department has to

perform the personnel functions.

4. People Centered: Human Resource Management is people centered and is relevant in all

types of organisations. It is concerned with all categories of personnel from top to the bottom of
the organisation. The broad classification of personnel in an industrial enterprise may be as

follows: (i) Blue-collar workers (i.e. those working on machines and engaged in loading,

unloading etc.) and white-collar workers (i.e. clerical employees), (ii) Managerial and non-

managerial personnel, (iii) Professionals (such as Chartered Accountant, Company Secretary,

Lawyer, etc.) and non-professional personnel.

5. Personnel Activities or Functions: Human Resource Management involves several functions

concerned with the management of people at work. It includes manpower planning, employment,

placement, training, appraisal and compensation of employees. For the performance of these

activities efficiently, a separate department known as Personnel Department is created in most of

the organisations.

6. Continuous Process: Human Resource Management is not a ‗one shot‘ function. It must be

performed continuously if the organisational objectives are to be achieved smoothly.

7. Based on Human Relations: Human Resource Management is concerned with the motivation

of human resources in the organisation. The human beings can‘t be dealt with like physical

factors of production. Every person has different needs, perceptions and expectations. The

managers should give due attention to these factors. They require human relations skills to deal

with the people at work. Human relations skills are also required in training performance

appraisal, transfer and promotion of subordinates.

8. HRM Involves the Application of Management Functions and Principles. The functions

and principles are applied to acquiring, developing, maintaining and providing remuneration to

employees in organization.
9. Decisions Made Influence the Effectiveness of an Organization. Effectiveness of an

organization will result in betterment of services to customers in the form of high quality

products supplied at reasonable costs.

10. HRM Functions are not confined to Business Establishments Only but applicable to non

business organizations such as education, health care, recreation and like. HRM refers to a set of

programmes, functions and activities designed and carried out in order to maximize both

employee as well as organizational effectiveness.

Objectives of Human Resource Management:

The primary objective of HRM is to ensure the availability of competent and willing workforce

to an organization. The specific objectives include the following:

1) Human capital: assisting the organization in obtaining the right number and types of

employees to fulfill its strategic and operational goals

2) Developing organizational climate: helping to create a climate in which employees are

encouraged to develop and utilize their skills to the fullest and to employ the skills and abilities

of the workforce efficiently

3) Helping to maintain performance standards and increase productivity through effective

job design; providing adequate orientation, training and development; providing performance-

related feedback; and ensuring effective two-way communication.

4) Helping to establish and maintain a harmonious employer/employee relationship

5) Helping to create and maintain a safe and healthy work environment

6) Developing programs to meet the economic, psychological, and social needs of the

employees and helping the organization to retain the productive employees

7) Ensuring that the organization is in compliance with labour and other laws affecting the

workplace (such as human rights, employment equity, occupational health and safety,

employment standards, and labour relations legislation). To help the organization to reach its

goals

8) To provide organization with well-trained and well-motivated employees

9) To increase the employees satisfaction and self-actualization

10) To develop and maintain the quality of work life

11) To communicate HR policies to all employees.

12) To help maintain ethical polices and behavior.

The above stated HRM objectives can be summarized under four specific objectives: societal,

organizational, and functional and personnel.

Scope of HRM:

The scope of HRM refers to all the activities that come under the banner of HRM. These

activities are as follows

1. Human resources planning :-

Human resource planning or HRP refers to a process by which the company

moves from its current man power position to its desired man power position, Finds

surplus and shortages in man power and plan accordingly.

2. Job analysis and job design :-

Another important area of HRM is job analysis. Job analysis gives a detailed

explanation about each and every job in the company. Based on this job analysis the

company prepares advertisements.

3. Recruitment and selection :-

Based on information collected from job analysis the company prepares

advertisements and publishes them in the news papers. This is recruitment. A number of

applications are received after the advertisement is published, interviews are conducted

and the right employee is selected thus recruitment and selection are yet another

important area of HRM.

4. Orientation and induction :-

Once the employees have been selected an induction or orientation program is

conducted. This is another important area of HRM. The employees are informed about

the background of the company, explain about the organizational culture and values and

work ethics and introduce to the other employees.

5. Training and development :-

Every employee goes under training program which helps him to put up a better

performance on the job. Training program is also conducted for existing staff that have a

lot of experience. This is called refresher training. Training and development is one area

were the company spends a huge amount.

6. Performance appraisal :-
 Once the employee has put in around 1 year of service, performance appraisal is

conducted that is the HR department checks the performance of the employee. Based on

these appraisal future promotions, incentives, increments in salary are decided.

7. Compensation planning and remuneration :-

There are various rules regarding compensation and other benefits. It is the job of

the HR department to look into remuneration and compensation planning.

8. Motivation, welfare, health and safety :-

Motivation becomes important to sustain the number of employees in the

company. It is the job of the HR department to look into the different methods of

motivation. Apart from this certain health and safety regulations have to be followed for

the benefits of the employees. This is also handled by the HR department.

9. Industrial relations :-

Another important area of HRM is maintaining co-ordinal relations with the union

members. This will help the organization to prevent strikes lockouts and ensure smooth

working in the company.

Figure 1.2: Objectives of HRM

1) Societal Objectives: seek to ensure that the organization becomes socially responsible to the

needs and challenges of the society while minimizing the negative impact of such demands upon

the organization. The failure of the organizations to use their resources for the society’s benefit

in ethical ways may lead to restriction.

2) Organizational Objectives: it recognizes the role of HRM in bringing about organizational

effectiveness. It makes sure that HRM is not a standalone department, but rather a means to

assist the organization with its primary objectives. The HR department exists to serve the rest of

the organization.
3) Functional Objectives: is to maintain the department’s contribution at a level appropriate to

the organization’s needs. Human resources are to be adjusted to suit the organization’s demands.

The department’s value should not become too expensive at the cost of the organization it serves.

4) Personnel Objectives: it is to assist employees in achieving their personal goals, at least as

far as these goals enhance the individual’s contribution to the organization. Personal objectives

of employees must be met if they are to be maintained, retained and motivated. Otherwise

employee performance and satisfaction may decline giving rise to employee turnover.

Functions of Human Resource Management

Human Resource Management functions can be classified in following two categories.

 Managerial Functions, and

 Operative Functions.

The Managerial Functions of Human Resource Management are as follows:

1. Planning - In planning function of HRM, the number and type of employees needed to

accomplish organisational goals is determined. Human Resource Planning actually moves the

organization from current man power position to desired man power position through extensive

research, information is collected and analysed to identify current and future human resource

needs and to forecast changing values, attitude, and behaviour of employees and their impact on

organisation.

2. Organising – The organizing function helps the organsation in dividing the tasks and allocate

it among its members, reporting relationships are identified, and activities are integrated towards
a common objective. Relationships are established among the employees so that they can

collectively contribute to the attainment of organisation goal.

3. Directing - Motivating employees at different level and making them contribute maximum to

the organisation is possible through proper direction and activation. Trying to bring the

maximum potentialities of the employees is possible through motivation and command.

4. Controlling - After planning, organising, and directing, the actual performance of employees

is to be checked and verified, and compared with the plans. So as to identify any deviations and

corrective actions are required to come again in plan.

The Operative Functions of Human Resource Management are as follows:

1. Procurement: This involves Recruitment and Selection - Recruitment of candidates is the

function preceding the selection, which brings the pool of prospective candidates for the

organisation so that the management can select the right candidate from this pool. Job Analysis

and Design - Job analysis is the process of describing the nature of a job and specifying the

human requirements like qualification, skills, and work experience to perform that job. Job

design aims at outlining and organising tasks, duties, and responsibilities into a single unit of

work for the achievement of certain objectives.

2. Development involves Training and Development - This function of human resource

management helps the employees to acquire skills and knowledge to perform their jobs

effectively. Training and development programs are organised for both new and existing

employees. Employees are prepared for higher level responsibilities through training and

development. Performance Appraisal - Human resource professionals are required to perform

this function to ensure that the performance of employee is at acceptable level.

3. Compensation involves determining Wage and Salary Administration – Job evaluation

precedes Compensation, where we determine what the real worth of a job in monetary terms.

Human resource management determines what is to be paid for different type of jobs. Human

resource management decides employees compensation which includes - wage administration,

salary administration, incentives, bonuses, fringe benefits, and others.

4. Maintenance - Human resource is considered as asset for the organisation. Employee

turnover is not considered good for the organisation. Human resource management always try to

keep their best performing employees with the organisation. Maintenance is referred as

Employee Welfare function, various services, benefits, and facilities that are provided to

employees for their well being.

5. Integration is otherwise called as Labour Relations - This function refers to the integration of

human resource management with employees who are represented by a trade union. Employees

comes together and forms an union to obtain more voice in decisions affecting wage, benefits,

working condition, etc,.

6. Separation is done with the help of Personnel Research - Personnel researches are done by

human resource management to gather employees' opinions on wages and salaries, promotions,

working conditions, welfare activities, leadership, etc,. Such researches helps in understanding

employees satisfaction, employees turnover, employee termination, etc,. Personnel Record also

involves recording, maintaining, and retrieving employee related information like - application

forms, employment history, working hours, earnings, employee absents and presents, employee

turnover and other data related to employees.

History and Evolution of HRM:

HRM is a new term which emerged during 1970’s only. Earlier it was Personnel Management

and it is confined to a narrow meaning of managing Personnel in an organization. HRM is a new

terminology which denotes a holistic approach, a wider meaning administering the human

resources in an organization. Soon this term can also be replaced with either Human Capital or

People Resource Centre or Talent Management.

The evolution of the concept of Human Resource Management is presented below:

Period before industrial revolution – The society was primarily an agriculture economy with

limited production. Number of specialized crafts was limited and was usually carried out within

a village or community with apprentices assisting the master craftsmen. Communication channel

were limited.

Period of industrial revolution (1750 to 1850) – Industrial revolution marked the conversion of

economy from agriculture based to industry based. Modernization and increased means if

communication gave way to industrial setup. A department was set up to look into workers

wages, welfare and other related issues. This led to emergence of personnel management with

the major task as

– Worker’s wages and salaries

– Worker’s record maintenance

– Worker’s housing facilities and health care

An important event in industrial revolution was growth of Labour Union (1790) – The works

working in the industries or factories were subjected to long working hours and very less wages.
With growing un rest, workers across the world started protest and this led to the establishment

of Labour unions. To deal with labour issues at one end and management at the other Personnel

Management department had to be capable of politics and diplomacy , thus the industrial relation

department emerged.

Post Industrial revolution – The term Human resource Management saw a major evolution

after 1850. Various studies were released and many experiments were conducted during this

period which gave HRM altogether a new meaning and importance.

A brief overview of major theories release during this period is presented below

 Frederick W. Taylor gave principles of scientific management (1857 o 1911) led to the
evolution of scientific human resource management approach which was involved in

– Worker’s training

– Maintaining wage uniformity

– Focus on attaining better productivity.

 Hawthorne studies, conducted by Elton Mayo & Fritz Roethlisberger (1927 to 1940). –

Observations and findings of Hawthrone experiment shifted the focus of Human resource

from increasing worker’s productivity to increasing worker’s efficiency through greater

work satisfaction.

 Douglas McGregor Theory X and Theory Y (1960) and Abraham Maslow’s Hierarchy of

needs ( 1954) – These studies and observations led to the transition from the

administrative and passive Personnel Management approach to a more dynamic Human

Resource Management approach which considered workers as a valuable resource.

As a result of these principles and studies , Human resource management became increasingly

line management function , linked to core business operations. Some of the major activities of

HR department are listed as-

1. Recruitment and selection of skilled workforce.

2. Motivation and employee benefits

3. Training and development of workforce

4. Performance related salaries and appraisals.

Strategic Human Resource Management Approach

With increase in technology and knowledge base industries and as a result of global competition

, Human Resource Management is assuming 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.

HRM POLICIES, PROCEDURES AND PROGRAMS

Definition of HRM Policy

Each and every organization has laid down HRM policy depending upon their business activities

and policy followed by their competitors. A policy is a plan of action. Brewster and Richbell

defined HRM policies as a set of proposals and actions that act as a reference point for managers

in their dealings with employees. Personnel policies constitute guides to action. They furnish the

general standards or bases on which decisions are reached. Their origin lies in an organizational

values, philosophy, concepts and principles Personnel policies guide the course of action

intended to accomplish personnel objectives. The following example helps to understand the

personnel policy clearly.

Example: One of the personnel objectives of Indian Railways is to provide equal employment

opportunities to the people of minority sections.

Types of HRM Policy:

On the Basis of Source

On the basis of their source, policies could be classified into

 Originated Policies - These are the policies usually established by the senior managers in

order to guide their subordinates.

 Implicit Policies - These are the policies which are not formally expressed, they are

inferred from the behavior of managers, which are also known as the implied policies.

 Imposed Policies - Policies are sometimes imposed on the business by external agencies

such as government, trade associations and trade unions.

  Appealed Policies - Appealed policies arise because the particular case is not covered by

the earlier policies. In order to know how to handle some situations, subordinates may

request or appeal for the formulation of specific policies.

On the Basis of Description

On the basis of description, policies maybe general or specific.

1. General Policies - These policies do not related to any specific issue in particular.

General policies are formulated by the top management, this kind of policies are called

'general' because they do not related to any specific issue in particular.

2. Specific Policies - These policies are related to specific issues like staffing,

compensation, collective bargaining etc. Specific policies must confirm to the board

pattern laid down by the general policies.

What is HRM Procedure?

Policies are general instructions whereas procedures are specific applications. A procedure is a

well thought out course of action. It prescribes the specific manner in which a work is to be done.

Procedures are called as action guidelines. They are generally derived from policies. Where

policies define a broad field, procedures show a sequence of activities within that area. The

emphasis is on step-by-step sequence of required actions. The basic purpose of a procedure is to

spell out clearly the way one is to go about doing something. The policy, might be translated into

action through the procedure, given are a few examples:

Railway Policy
All zonal railways will fill 15% and 7.5% of their vacancies in Group C and Group D categories

from the candidates belonging to Scheduled Castes and Scheduled Tribes respectively. If suitable

candidates are not available from these communities, the vacancies such as loco driver, signaling

staff, station master will be filled by candidates belonging to other communities.

Another example of policy and procedure is as follows:

TATA Steels Personnel Policy

The personnel policy of Tata Steel, as contained in the Statement of Objectives, is given below.

The Company tries to take care of its employees—-

* By a realistic and generous understanding and acceptance of their needs and rights and

enlightened awareness of the social problems of industry.

* By providing adequate wages, good working conditions, job security, an effective machinery

for redressal of grievances and suitable opportunities for promotion and self-development

through in-company and external programs.

* By treating them as individual, giving them a sense of self-respect and better understanding of

their role in the organization and satisfying their urge for self-expression through closer

association with management.

* By creating a sense of belonging through human and purposeful activities in an integral part of

human relations ensuring their willing co-operations and loyalty

Further, personnel rules and programs help in translating procedures into concrete action.

Personal rule spells out specific required action or non-action allowing no discretion. For

example:
Paying bonus of 8.33% of the salary (consisting of pay plus dearness allowance)on March 31,

1998 to all the confirmed employees who had completed minimum one year of continuous

service as on March 31, 1998.

Personnel programs are complex sets of goals, policies, procedures, rules steps to be taken,

resources to be employed, and other elements necessary to carry out a given course of action. It

can be said that rules and programs are aids to policy.

The aforesaid write up on HRM policy helps the managers to take administrative and

disciplinary actions and also make the employees feel that the management’s treatment is

rational and they are getting adequate compensation for their work along with proper growth. No

doubt the policy may be modified as and when required to suit the changes in business

environment which the organization has to follow to survive competition. Consequently the

procedures and rules follow the changes in the HRM policy.

Functions of a Human Resource Manager

A human resource manager, charged with fulfilling the objectives of an organisation,

should be a leader with high intellectual powers, a visionary and a philosopher who provides the

initiative to shape the future in terms of leading the human beings in an organisation towards

more prosperous and progressive policies.

1. Human Resource Man as an Intellectual : The basic skill in the human resource field as

compared to technologists or financial experts is the skill to communicate, articulate, understand

and above all, to be an expert when it comes to putting policies and agreements in black and
white. The personnel man‘s skill lies in his command over the language. A personnel man has to

deal with employees and he must possess the skills of conducting fruitful and systematic

discussions and of communicating effectively.

2. Human Resource Man as an Educator : He should be deeply interested in learning and also

in achieving growth. Basically, human beings like to grow and realise their full potential. In

order to harmonise the growth of individuals with that of the organisation, a personnel

administrator must not only provide opportunities for his employees to learn, get the required

training and assimilate new ideas but also he himself should be a teacher.

3. Human Resource Man as a Discriminator : A human resource administrator must have the

capacity to discriminate between right and wrong, between that which is just and unjust and

merit and non-merit. In other words, he should be a good judge when he sits on a selection

board, a fair person when he advises on disciplinary matters and a good observer of right conduct

in an organisation.

4. Human Resource Man as an Executive : The human resource man must execute the

decisions of the management and its policies with speed, accuracy and objectivity. He has to

streamline the office, tone up the administration and set standards of performance. He has to

coordinate the control functions in relation to the various other divisions and, in doing so he

should be in a position to bring unity of purpose and direction in the activities of the personnel

department.

5. Human Resource Man as a Leader : Human resource man must not avoid the role of

leadership in an organisation. He, by setting his own example and by working towards the

objectives of sound personnel management practices, must inspire his people and motivate them
towards better performance. He should resolve the conflicts of different groups and build up

teamwork in the organisation.

6. Human Resource Man as a Humanist : Deep faith in human values and empathy with

human problems, especially in less developed countries, are the sine qua non for a Human

resource man. He has to deal with people who toil at various levels and partake of their joys and

sorrows. He must perform his functions with sensitivity and feeling.

7. Human Resource Man as a Visionary : While every leading function of an organisation

must evolve its vision of the future, the primary responsibility for developing the social

organisation towards purposive and progressive action fall on the personnel man. He should be a

thinker who sets the pace for policy-making in an organisation in the area of human relations and

should gradually work out new patterns of human relations management consistent with the

needs of the organisation and the society.

Challenges of a HR Manager

Personnel management which is know as human resource management has adapted itself to the

changing work environment, however these changes are still taking place and will continue in

the future therefore the challenges before the HR manager are

1. Retention of the employees :-

One of the most important challenge the HR manager faces is retention of labour

force. Many companies have a very high rate of labour turnover therefore HR manager

are required to take some action to reduce the turnover

2. Multicultural work force :-

 With the number of multi cultural companies are increasing operations in

different nations. The work force consists of people from different cultures. Dealing with

each of the needs which are different the challenge before the HR manager is integration

of multicultural labour work force.

3. Women in the work force :-

The number of women who have joined the work force has drastically increased

over a few years. Women employees face totally different problems. They also have

responsibility towards the family. The organization needs to consider this aspect also.

The challenge before the HR manager lies in creating gender sensitivity and in providing

a good working environment to the women employees.

4. Handicapped employees :-

This section of the population normally faces a lot of problems on the job, very

few organization have jobs and facilities specially designed for handicapped workers.

Therefore the challenge before the HR manager lies in creating atmosphere suitable for

such employees and encouraging them to work better.

5. Retrenchment for employees :-

In many places companies have reduced the work force due to changing economic

situations, labourers or workers who are displaced face severe problems. It also leads to a

negative atmosphere and attitude among the employees. There is fear and increasing

resentment against the management. The challenge before the HR manager lies in

implementing the retrenchment policy without hurting the sentiments of the workers,
 without antagonizing the labour union and by creating positive attitude in the existing

employees.

6. Change in demand of government :-

Most of the time government rules keep changing. While a lot of freedom is given

to companies some strict rules and regulations have also been passed. The government

has also undertaken the disinvestment in certain companies due to which there is fear

among the employees regarding their job. The challenge before the HR manager lies in

convincing employees that their interest will not be sacrificed.

7. Initiating the process of change :-

Changing the method of working, changing the attitude of people and changing

the perception and values of organization have become necessary today. Although the

company may want to change it is actually very difficult to make the workers accept the

change. The challenge before the HR manager is to make people accept change.