Introduction to HRM

KBL Srivastava

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 Why Study HRM?
• People (human resources) are the essential
resource of all organizations
• These human resources create organizational
innovations and accomplishments
• Organizational success depends upon careful
attention to human resources

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Evolution of the Personnel Function

Concept What is it all about?

The Commodity Labour was regarded as a commodity to be bought and sold.

concept Wages were based on demand and supply. Government did
very little to protect workers.

The Factor of Labour is like any other factor of production, viz, money,
Production concept materials, land, etc. Workers are like machine tools.

The Goodwill concept Welfare measures like safety, first aid, lunch room, rest room will
have a positive impact on workers’ productivity

The Paternalistic Management must assume a fatherly and protective attitude

concept/ Paternalism towards employees. Paternalism does not mean merely
providing benefits but it means satisfying various needs of the
employees as parents meet the requirements of the children.

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Human Resource Management

• Utilization of individuals to achieve

organizational objectives
• All managers at every level must concern
themselves with human resource
management.
• Five functions

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 Importance of HRM

 attract and retain talent

 train people for challenging roles
 develop skills and competencies
 promote team spirit
Good HR Practices help
 develop loyalty and commitment
 increase productivity and profits
 improve job satisfaction
 enhance standard of living
 generate employment opportunities

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 Management of HRM

HRM Leveraging people’s capabilities and

commitment is critical to achieving sustainable
competitive advantage or superior public
services.
 Management and HRM

‘Human capital’: traits that people bring to

the workplace

Management: process designed to coordinate

and control productive activity.

Human resource management: (unlike

other resources) requires the coexistence of
control and cooperation.
 The Nature of the Employment Relationship

Regulation of employment relationship:

• unilateral (employer),
• bilateral (employer and trade unions),
• trilateral (employer, trade unions, government
statutes)
 The Nature of the Employment Relationship

Types of Relationship:
1. Economic : ‘exchange of pay for work’

2. Legal : contractual and statutory rights and obligations

3. Social : social relations, social structure and balance of

power

4. Psychological : two-way exchange of perceived

promises and obligations
 Scope and Functions of HRM
Subdomains of knowledge Micro (MHRM): individual
employees and small work groups

• Strategic (SHRM): links HR strategies with business

strategies and measures effects on organizational
performance

• International (IHRM): management of people in

companies operating in more than one country
 Theoretical perspectives on HRM

The Fombrun, Tichy and Devanna

model
• Interrelatedness • Four key components:
1. selection
and coherence of
2. appraisal
activities
3. development
4. rewards
Figure: The Fombrun, Tichy and Devanna Model
 Theoretical perspectives on HRM
The Harvard Model
Six components:
1. situational factors
2. stakeholder interests
3. HRM policy choices
4. HR outcomes
5. long-term consequences
6. feedback loop
Figure - The Harvard Model of HRM
 Theoretical Perspectives on HRM

The Warwick Model

• Extends analytical • Five Elements:
aspects of Harvard – Outer context
Model. – Inner Context
– Business Strategy
• Maps connections context
between outer and inner
– HRM context
contexts.
– HRM content
Figure - The Warwick Model of HRM
 Theoretical Perspectives on HRM
The Guest model
• Personnel management • Six components:
seeks ‘compliance’, – HR strategy
whereas HRM seeks – set of HR policies
‘commitment’ from – set of HR outcomes
employees. – Behavioural outcomes
– Performance outcomes
– Financial outcomes
 Theoretical Perspectives on HRM
The Storey model
• Differences between • Four parts:
‘personnel and – Beliefs and
industrials’ and HRM assumptions
paradigm by creating an – Strategic aspects
– Role of line managers
‘ideal’ type. – Key levers
 Theoretical Perspectives on HRM
Ulrich’s strategic partner model

• Demonstrates the • Four Roles:

added value of HR – Strategic partner
activities in business – Change agent
terms. – Administrative expert
– Employee champion
 Functions of HRM
P/HRM

Managerial Operative Functions

functions:
Development: Motivation and Maintenance: Integration: Emerging
– Planning
Procurement Compensation: Issues:
Training Grievances
Job Analysis Health Personnel
Job design
Executive Discipline records
HR planning development Work scheduling Personnel
– Organising
Safety Teams and audit
Recruitment Career Motivation teamwork
planning Personnel
Selection Job evaluation research
Welfare Collective
– Directing Placement Succession Performance and bargaining HR
potential accounting
Induction Social security Participation
appraisal HRIS
planning
Internal Compensation Empowermen Job stress
– Controlling mobility Human administration t
resources Mentoring
development Incentives Trade unions Internatio
strategies benefits and nal HRM
Employers’
services associations

Industrial
relations
The Human Resource Management
Functions

Human
Resource
Managemen
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t

Safety and
Health

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Work Responsibilities of HR
managers
• HR managers can be
specialists or generalists and
their exact remit of duties will
vary depending on their role
and company
Staffing

• Job Analysis
• Human Resource Planning
(HRP)
• Recruitment
• Selection

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 Staffing (Continued)
• Staffing - Process through which an
organization ensures that it always has
proper number of employees with
appropriate skills in right jobs at right time
to achieve organization’s objectives
• Job analysis - Systematic process of
determining skills, duties, and knowledge
required for performing jobs in an
organization

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 Staffing (Continued)

• Human resource planning - Process of

systematically reviewing human resource
requirements to ensure that required
numbers of employees, with required skills,
are available when needed.
• Recruitment - Process of attracting qualified
individuals and encouraging them to apply
for work with organization

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 Staffing (Continued)

• Selection - Process through which

organization chooses, from a group of
applicants, those individuals best suited both
for open positions and for the company

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Human Resource Development

• Training
• Development
• Career Planning
• Career Development
• Organizational Development

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 Human Resource Development
(Continued)

• Training - Designed to provide

learners with the knowledge and
skills needed for their present jobs.
• Development - Involves learning
that goes beyond today's job; it has
a more long-term focus

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 Human Resource Development
(Continued)

• Career planning - An ongoing process whereby

individual sets career goals and identifies means
to achieve them
• Career development - Formal approach used by
organization to ensure that people with proper
qualifications and experiences are available
when needed

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 Human Resource Development
(Continued)

• Organization development – Organization wide

application of behavioral science to planned
development and support of strategies,
structures and processes for improving firm’s
effectiveness

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Compensation and Benefits

Compensation- All
rewards that
individuals receive a
a result of their
employment

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 Compensation & Benefits

Pay - Money that a person receives for

performing a job
Benefits - Additional financial rewards, other
than base pay such as sick leave, vacations,
holidays and medical insurance
Nonfinancial Rewards
– The Job
– Pleasant working environment

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Safety and Health
• Employees who work
in a safe environment
and enjoy good
health are more likely
to be productive and
yield long-term
benefits to the
organization.

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 Safety and Health
• Safety - Involves protecting employees from
injuries caused by work-related accidents
• Health - Refers to the employees' freedom
from illness and their general physical and
mental well being

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 Employee and Labor Relations

• Private-sector union membership has

fallen from 39 percent in 1958 to 9
percent today.

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 Employee and Labor Relations
Business required by
law to recognize union
and bargain with it in
good faith if firm’s
employees want union
representation.

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Human Resource Research

• Human resource
research is not a
separate function.

• It pervades all HR
functional areas.

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Interrelationships of HRM Functions

• All HRM functions

are interrelated.

• Each function affects

other areas.

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 The Dynamic Human
Resource Management
Environment

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Environment of Human Resource Management
Unions EXTERNAL ENVIRONMENT Society
INTERNAL ENVIRONMENT
Legal Considerations

Technology
Marketing Operations

Human
Resource

Shareholders
Managemen
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The Economy

Other
Finance Safety and Functiona
Health l Areas

Customers Competition Labor Force 41

 Labor Force

Pool of individuals
external to firm from
which organization
obtains its workers

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Legal Considerations

• Central, state and

local legislation
• Court decisions

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 Society
• Social responsibility – Implied, enforced or felt
obligation of managers to serve or protect
interests of groups other than themselves
• Ethics – Discipline dealing with what is good
and bad, or right and wrong, or with moral
duty and obligation

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Unions

Group of employees
who have joined
together for purpose of
dealing collectively
with their employer

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Shareholders
• Owners of a corporation
• Because they have invested
money in a firm, they may
at times challenge programs
considered by management
to be beneficial to the
organization

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Customers

Because sales critical to

firm’s survival,
management must
ensure employment
practices do not
antagonize the
customers they
serve

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Competition

In order to succeed,
grow and prosper, a
firm must be able to
maintain a supply of
competent
employees.

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 Technology
As technology changes:
• Certain skills no longer required
• New skills needed

Necessitates some retraining of current

workforce

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The Economy

In general, when
economy is booming, it
is often more difficult to
recruit qualified workers.

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 Reasons: Increased Importance of HRM
External
1) Increased international competition:
a) Steel and automotive industry crises.
b) Looking at Japan’s employment practices that appear
to foster employee commitment, etc.
2) Increased domestic competition
3) Government involvement (e.g., fair employment
practices)
4) Demographic changes:
a) Age structure; female participation in work force
5) Changing values of the work force (altered
expectations)
6) Customer focus

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Reasons: Increased Importance of HRM
Internal
1) Need to improve productivity and quality
2) New technologies and production
concepts
3) Increasing education of the work force
4) Responding to slower growth/changes in
markets
5) Restructuring and reorganization
6) Need for flexible, adaptable work force:
firm specific skills.
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 HR’s Changing Role:
Who Performs Human
Resource Management Tasks?
• Human Resource Managers
• Shared Service Centers
• Outsourcing Firms
• Line Managers

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 The HRM Function Today
1) HRM is characterized by the emphasis on the
integration of traditional PM activities

2) HRM is characterized by HRMs involvement in

overall organizational planning and change
3) HRM today is characterized as a partner in
organizational change, creator of organizational
culture, and facilitator of organizational
commitment and the exercise of initiative.
4) HRM is characterized by the decentralization of
many of the traditional HRM activities from
personnel specialists to senior line management.

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 Contd.
4) HRM is characterized by the
decentralization of many of the traditional
HRM activities from personnel specialists to
senior line management

5) HRM practice is characterized by a focus on

individual employees rather than on
collective management-trade union
relations

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 The HRM Function Today
.
6) HRM function has been described as:
broad and strategic; employees as the
single most important organizational
asset; and having the objective of
enhancing organizational performance
and meeting employee needs.

7) Facilitator of organizational effectiveness

in the emergent, leaner organization.

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 Recent Trends in HRM

1) General trend away from centralizing personnel

responsibilities and returning them to line
responsibilities.
2) Trend towards reintegrating personnel functions
that used to be separated (such as compensation,
performance appraisal, and evaluation procedures).
3) Formal recognition that personnel/HRM policy is
just as much a part of corporate policy as other
functions.

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Top Challenges Identified by CEOs
and Top HR Professionals

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 Challenges for HR Professionals
1. HR Professionals as Strategic Business Partner-
• Making HR a partner in assisting corporate
leaders in navigating the uncharted waters
of new business realities
• Integrating people strategies with business
strategies
• Creating new options and possibilities,
thinking out of the box

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 Challenges for HR Professionals
2. Leading Change in the Organization-
• Leading organization to a faster pace of change
• Continually changing relationship between
organization and employees
• Driving diversity into all aspects of the
organization
• Assisting organization in analyzing, planning and
implementing change

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 Challenges for HR Professionals
3. Teaching HR Competencies to line
managers-
- Downsizing HR
- Decentralizing HR
- Moving important “People” tasks to frontline
managers
• Having frontline managers with HR
Competencies

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 Challenges for HR Professionals
4. Coping with more complex Laws
and Labour Problems
- Understanding Labour Laws
- The impact of Government policies
on working people
- Working and liaison with Institutions
to fill positions
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 Alternative Views of Human Resource
Management

5) Strategic Perspective of HRM: Implications:

a) The internal and external strategies must be
linked.
b) The idea of an internal strategy implies there is
consistency among all of the specific tactics or
activities which affect human resources.
c) HRM is part of the general management
function.
6) International Perspective

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Human Resource Manager

• Acts in advisory or staff capacity

• Works with other managers to

help them deal with human
resource matters

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Shared Service Centers (SSCS)

Takes routine,
transaction-based
activities that are
dispersed and
consolidates them in
one location.

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Shared Service Centers (SSCS)
Performing HR Tasks

Fewer HR Personnel
Needed

HR Managers Assume
aImproves QualityRole
More Strategic

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Outsourcing Firms

Transfers
responsibility to
an external
provider

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 Outsourcing

Reduces:
• Cost
• Transaction Time

Improves Quality

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 HR as a Strategic Partner
–HR executives must
understand complex
organizational design.
–Must be able to
determine capabilities
of company's workforce,
today and in the future

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The evolving strategic role of
Human Resource Management

Strategic focus

Strategic partner Change agent

System People

Administrative expert Employee champion

Operational focus

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Figure: Strategic Decisions and Their Implications for Human
Resource Management

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Figure : Strategic Decisions and Their Implications for Human
Resource Management (cont’d)

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 Traditional HR vs. Strategic HR
Point of distinction Traditional HR Strategic HR
Focus Employee Relations Partnerships with internal and
external customers
Role of HR Transactional change Transformational change leader
follower and respondent and initiator
Initiatives Slow, reactive, fragmented Fast, proactive and integrated
Time horizon Short-term Short, medium and long (as
required)
Control Bureaucratic-roles, policies, Organic-flexible, whatever is
procedures necessary to succeed
Job design Tight division of labour; Broad, flexible, cross-training
independence, teams
specialisation
Key investments Capital, products People, knowledge
Accountability Cost centre Investment centre
Responsibility for HR Staff specialists Line managers

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Shifts in HR management in India

Traditional HR practice Emerging HR practice

 Administrative role  Strategic role

 Reactive  Proactive

 Separate, isolated from  Key part of organisational

company mission mission

 Production focus  Service focus

 Functional organisation  Process-based organisation

 Individuals encouraged,  Cross-functional eams,

singled out for praise, teamwork most important

rewards

 People as expenses  People as key

investments/assets

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