Nature and Scope of

Human
Resource Management
 Meaning and Definition
• HRM is a management function that helps
managers recruit, select, train and develop
members of an organisation.

• HRM…… People’s dimension

 HRM Definition……
• Is concerned with people dimension in
management.Since every organisation is made
up of people, acquiring their services,
developing their skills, motivating them to
higher levels of performance and ensuring
that they continue to maintain their
commitment to the organisation are essential
to achieving organisational objectives.
 Scope of HRM
• HR Planning
• Job analysis and Design
• Recruitment and Selection
• Orientation and Placement,
• Training and Development
• Performance appraisal and Job Evaluation
• Employee and Executive Remuneration
• Motivation and communication
• Welfare, Safety and Health
• Industrial Relations (IR)
 Importance of HRM
• Social Significance

• Balance the jobs available and job seekers

• Provide suitable and productive employment
• Maximize utilization of the resources
effectively
• Eliminate waste or improper use human
resources
• Help people make their own decisions
• Professional Significance

• Maintain dignity of the employee as human

• Provide maximum opportunities for personal
development
• Provide healthy relationship to different work
groups
• Improve skills and capacities
• Minimise wrong postings, allocate work properly
 Features of HRM
• Comprehensive • Interdisciplinary
Function • Nervous system.
• People-Oriented • Young discipline
• Action Oriented • Future-oriented
• Individual Oriented • Challenging Function
• Development Oriented • Science as well an Art
• Pervasive Function • Staff function
• Continuous Function
 What Is Strategic Management?
• Strategic Management
– The ongoing process companies use to form a vision,
analyze their external environment and their internal
environment, and select one or more strategies to use to
create value for customers and other stakeholders,
especially shareholders
• Vision
– Contains at least two components—a mission that
describes the firm’s DNA and the “picture” of the firm as
it hopes to exist in a future time period.
 Parts of Strategic Management

• Strategy
– An action plan designed to move an
organization toward achievement of its
vision
• Mission
– Defines the firm’s core intent and the
business or businesses in which it intends to
operate
 The Strategic Environment

• Internal Environment
– The set of conditions (such as
strengths, resources and capabilities,
and so forth) inside the firm affecting
the choice and use of strategies
• External Environment
– A set of conditions outside the firm that
affect the firm’s performance
 Key Characteristics of Strategic Management

• Strategic management is:

• Performance oriented
• Ongoing in nature
• Dynamic rather than static
• Oriented to the present and the future
• Concerned with conditions both outside and inside
the firm
• Concerned with performing well and satisfying
stakeholders
 The Three Parts of the Strategic
Management Process
1. Strategic leaders form a firm’s vision and mission.
2. Firms analyze their external environment and their internal
environment.
3. Firms choose and implement a strategy that to creates
unique mix of value for customers and satisfies other
stakeholders.
– Strategy implementation—the set of actions firms take
to use a strategy after it has been selected.
 Difference between HRM & PM
HRM
• HRM views people as an important source or
asset to be used for the benefit of
organisation, employees and the society.
• Philosophy of mutuality : mutual goals, mutual
respect,mutual rewards and mutual
responsibilities.
• ASPA changed its name to SHRM
 Difference between HRM & PM

Dimension Personnel Human

Resource
Employment Written, Aim to go
Contract delineated beyond contract
Rules Clear Outlook,
Impatience
Guide to Mgnt. Procedures Business Needs
Action
Behaviour Norms/Custom Values/Missions
referent s and Practices
 Difference between HRM & PM

Dimension Personnel Human

Resource
Managerial Monitoring Nurturing
/labour task
Key Relations Labour Customer
Management
Initiatives Piecemeal Integrated

Management Transactional Transformational

Role Leadership
Speed of Slow Fast
decision
 Difference between HRM & PM
Dimension Personnel Human
Resource
Communication Indirect Direct
Prized Negotiation Facilitation
Management
skill
Selection Separate, Integrated, key
Marginal task task
Pay Job Evaluation Performance
(Fixed grades) based
Conditions Separately Harmonisation
negotiated
 Difference between HRM & PM
Dimension Personnel Human
Resource
Labour Collective barg- Individual
Management aining contracts contracts
Job categories Many Few
and grades
Job design Division of labour Team work

Conflict handling Reach temporary Manage climate

truce and culture
Training & Controlled access Learning
Development to courses companies
 Difference between HRM & PM
Dimension Personnel Human
Resource
Intervention Personnel Wide ranging-
focus procedures cultural,structural
and personnel
strategies
Respect for Labour treated People are treated
employees as tool : as assets to
expendable and benefit
replaceable organisation/
employees/society
 Difference between HRM & PM

Dimension Personnel Human

Resource
Shared Organisational Mutuality of
interests interests are interests
uppermost
Evolution Precedes HRM Latest in the
evolution of the
subject
 OBJECTIVES OF HRM

• SOCIETAL OBJECTIVES
• ORGANISATIONAL OBJECTIVES
• FUNCTIONAL OBJECTIVES
• PERSONAL OBJECTIVES
 Objectives of HRM
Functional
To maintain the department’s contribution at
a level appropriate to the organization's needs.

Personal
To assist employees in achieving their
personal goals, at least insofar as these goals
enhance the individual’s contribution to the
organization.
 HRM Objectives and Functions
• HRM Objectives • Supporting Functions

• Societal 1.Legal Compliance

2.Benefits
3.Union management
relationship
 HRM Objectives and Functions
• HRM Objectives • Supporting Functions

1.Human Resource
• Organisationala Planning
2.Employee Relations
3.Selection
4.Training &
Development
5.Appraisal
6.Placement
7.Assessment
 HRM Objectives and Functions
• HRM Objectives • Supporting
Functions

• Functional 1.Appraisal
2.Placement
3.Assessment
 HRM Objectives and Functions
• HRM Objectives • Supporting
Functions

• Personal 1.Training &

Development
2.Placement
3.Assessment
4.Compensation
Human Resources Management
 JOB ANALYSIS
FRINGE
BENEFITS JOB DESIGN

WAGES &
NCENTIVES
JOB EVALUATION

CAREER
PLANNING
MANPOWER
PLANNING
PROMOTIONS HUMAN RESOURCE
MANAGEMENT RECRUITMENT

JOB
TRANSFER
SELECTION
JOB
ROTATION
PLACEMENTS
EMPLOYEE
TRAINING
INDUCTION
 Image & Qualities of HR
Manager
• Fairness & Firmness
• Tact and resourcefulness
• Sympathy and consideration
• Knowledge of labour other terms
• Broad Social outlook
• Competence
 HR Policies
• A policy is plan of action. Is a statement of intention
committing the management to general course of
action. Policy contains HR programmes, expression
of philosophy and principles.

• Policy are required for……

basic needs, consistency in treatment & continuity
 EVOLUTION OF HRM IN INDIA
• 1920s - 1930s
• 1940s – 1960s
• 1970s – 1980s
• 1990s
 Evolution of HRM
• HRM emerged in 1970s
• Kautilya’s Arthashastra in 4th BC
• Babylonian Code of Hammurabi 1800 BC
‘minimum wage rate’ & ‘incentive wage plan’
• In India since 1920 : First world war, emergence of
trade union
• The Royal Commission (1931) : Labour Welfare
Officers : Selection of workers and settle grievances.
 Evolution of HRM
• Factories Act (1948) Welfare officers compulsory
in industries employing 500 employees
• IIPM – Kolkata, NILM in Mumbai : (Jute and
textiles)
• Second World War : increased expectations of the
workers : IR and Personnel admn integrated as
PM
• 1970 : Shift from welfare to efficiency.
• 1980 : HRM and HRD Challenges
• 1990 : Human value and productivity through
people.
ORGANIZATION OF HR DEPARTMENT
 Two Issues become relevant in a discussion on
organization of an HR department.
 Place of the HR dept. in the overall set-up
 Composition of the HR department itself
 Status of the HR dept. depends on whether the
unit is small or large.
 In small organizations there is no separate dept.
to coordinate the HR activities
 A large scale unit will have a Manager/Director
heading the HR dept.
Prof.Sujeesha Rao
ORGANIZATION OF HR DEPARTMENT

Owner/Propreitor

Production Sales Office

Accountant
Manager Manager Manager

Personnel
Assistant

Prof.Sujeesha Rao
ORGANIZATION OF HR DEPARTMENT
HRM in a large scale unit:
Chairman / MD

Director Director Director Director Director

Production Finance HRM Marketing R&D

Prof.Sujeesha Rao
 CHALLENGES FOR HRM MANAGER
• Challenges relating to recruitment, selection and
development of manpower.
• Challenges relating to industrial relations.
• Challenges relating to provision of welfare
facilities.
• Challenges relating to manpower management.
 Business Facts
• Today, India is the fourth largest economy in the world.
• Until 1991, there was an import substitution policy that
favored domestic industries.
• After 1991, there was active foreign investment with a very
strong trade liberalization policy.
– Foreign direct investment in India increased dramatically ($15.8
million in 1997 compared with 0.3 million in 1991).
• In 2000, the Y2K computer crisis required worldwide
computer remediation provided by software engineers.
• Indian software engineers were found to be very dedicated
and hard-working (Friedman, T. 2005; “The World is Flat”).

©SHRM 2008 37
 Mercer’s 2006 Best Companies to
Work For in India
• Infosys Technologies Limited (IT industry).
• MindTree Consulting (IT industry).
• Satyam Computer Services Limited (IT industry).
• Dr. Reddy’s Laboratories Limited (pharmaceutical company).
• Sapient Corporation (business and technology consulting).
• Agilent Technologies (IT industry).
• Johnson & Johnson (consumer health care company).
• Covansys India (IT industry).
• HCL Comnet (IT industry).
• HSBC; Hongkong and Banking Corporation (banking services).

©SHRM 2008 38
 Federal Employment Laws
• HR began to play a significant role with the early enactment
of these employment-related laws:
• The Workers’ Compensation Act of 1923 ensured that
employers compensate employees for work-related injuries.
• The Trade Union Act of 1926 gave formal recognition to trade
unions.
• The Industrial Disputes Act of 1947 led to the increased role of
industrial relations (employees were distinguished by the work
they did such as permanent, temporary, trainee etc.).
• The Factories Act of 1948 regulated the work environment in
factories to ensure the safety of employees.
• The Employees Provident Funds and Miscellaneous Provisions
Act of1952 required employers to provide contributions for
retirement.

©SHRM 2008 39
 Federal Employment Laws
• The Minimum Wage Act of 1948 established
minimum wages that vary from state to state.

• The Payment of Bonus Act 1965 provides for a

minimum bonus of 8.33 percent of salary, even if the
organization is not making any profit.

• The Persons with Disabilities Act (PWD) of 1995 was

landmark legislation for disabled people in India.

©SHRM 2008 40
 Indian HR Associations
• In the 1940s and early 1950s, two professional HR associations were
established to acknowledge the importance of HR:
• Indian Institute of Personnel Management (IIPM).
• National Institute of Labor Management (NILM).
• In1980, the two associations merged to form the National Institute of
Personnel Management (NIPM).
• NIPM is the only group engaged in the advancement of HR, industrial relations
and labor welfare.
• NIPM has a working relationship with HR groups in the United States, Australia
and the United Kingdom.

©SHRM 2008 41
 Class 3

Indian HR Practices

©SHRM 2008 42
 Staffing Practices
• Resumes seek strong educational background.

• Employee referrals (predominantly used for middle and

senior management).

• Succession planning (predominantly used for middle and

senior management).

• Elaborate employment tests related to the job, especially at

entry level.

• E-recruitment: Naukri.com was the first e-portal established

in 1998 (naukri means job in Hindi ).

©SHRM 2008 43
 Staffing Practices
• Newspaper advertisements are used to brand the company
to potential applicants.

• Newspaper advertisements will specify age and gender

requirements.

• Personal questions will be asked in interviews/resumes

about:

 Age
 Marital status
 Family plans (women planning to start a family)
 Family background
 Caste background
 Photos to be included
 Verification of educational certificates
©SHRM 2008 44
 Training Practices
Training (future orientation):
• Education is extremely valued, and training is an
extension of it.
• Entry point training programs (3 to12 months of
orientation).
• Ongoing training programs.
• Development programs (promotions involve training).
• In-house training centers are a common feature in Indian
organizations.
• Deductive learning style in training: Known as “top-down
approach” where learning principles start with general
concepts and move toward specific application.
©SHRM 2008 45
 Performance Appraisal
• Cultural dimensions of collectivism and power distance make objective
appraisals a challenge.

 Supervisors and subordinates develop close relationships.

 Organizational loyalty is as important as work performance.
 Employee promotions are frequently based on seniority.

• Annual performance appraisals.

• Supervisors provide performance ratings that are frequently inflated due
to personal relationships.
• Employment at will does not exist in India. Employment termination
carries a social stigma.

©SHRM 2008 46
 Compensation and Benefits
• In addition to a base salary, compensation includes:
– House rent allowance (HRA*).
– Medical allowance.
– Dearness allowance (DA*).
– Leave travel allowance (LTA*).
– Commuter allowance.
– * These allowances are frequently referred by their acronyms

• Several categories of leave (vacation) exist:

– Sick leave: 7 days (medical certificate required).
– Casual leave: 7 days (for personal and family emergencies,
requires prior permission of boss). Employees can take
maximum 2 days at a time
– Annual leave: 3 weeks (after one year of employment).
– Federal holidays: About 20 days.

©SHRM 2008 47
 Compensation and Benefits
• Retirement age:
– 55-60 years (private sector);.
– 60 years (public sector).
• Retirement Benefits: Employees receive two lump-sum payments when they
retire:
– Provident Fund (similar to 401(k))
• Typical contributions: 10-12 percent of base salary (employer and
employee).
• Payable on retirement, voluntary separation, death.

– Gratuity
• Only employer contributes (15 days salary per year of service).
• Tax-exempt for employees.
• Payable on retirement, voluntary separation, death.

©SHRM 2008 48
 Compensation and Benefits
• Organizations are seen as an extension of the family.

 Provide both short-term and long-term personal loans.

 Personal loans for housing, car, home maintenance and family emergencies.

 Loan amounts vary by position and level in organization.

 All employees after their probation (confirmation) period are eligible.

• Many medium and large organizations have cafeterias with subsidized

lunch facilities.

©SHRM 2008 49
 Compensation and Benefits
• Executives receive special benefits to reflect status such as:

• Club memberships.
• Overseas training.
• Company housing.
• Company cars.
• Provided with drivers.
• International cars.
• Operational and maintenance costs.
• Phone bill reimbursements.
• Organizations provide business and cell phones.

©SHRM 2008 50
 Definition of Cultural Dimensions
(GLOBE Study)
• Power distance: The degree to which organizations and societies accept
power.
• Institutional collectivism: The degree to which organizational and
institutional practices encourage collective action.
• In-group collectivism: The degree to which individuals in societies reflect
collectivist behavior.
• Uncertainty avoidance: The degree to which organizations and societies
avoid uncertainty by relying on practices and procedures.
• Performance orientation: The degree to which upper management in
organizations and leaders in societies reward group members for
performance excellence.

©SHRM 2008 51
 Definition of Cultural Dimensions
(GLOBE Study)
• Assertiveness: The degree to which individuals in organizations or
societies are assertive in social relationships.
• Future orientation: The degree to which individuals in organizations or
societies plan for the future.
• Gender egalitarianism: The degree to which organizations or society
promote gender equality.
• Humane orientation: The degree to which individuals in organizations or
societies reward individuals for positive behavior.

©SHRM 2008 52
 National Culture and HR
Practices
• Scholars have found a strong connection between cultural
dimensions and HR practices.

• High power-distance cultures create:

 Hierarchical organizational structures.
 Loyal and committed subordinate
workers.
 Autocratic relationships between
managers and subordinates.

• What kind of HR practices would low power-distance cultures

adopt?
• What staffing practices would high power-distance cultures
©SHRM 2008 53
encourage?
 National Culture and HR Practices
• High institutional-collectivism cultures prefer:
 Group harmony and cooperation.
 Conformity to societal norms valued.

• High in-group collectivism cultures feel:

 A very close bond with their organization family, friends and relatives.

• What kind of HR practices would low institutional collectivism cultures

adopt?
• What staffing practices would high in-group collectivism cultures
encourage?

©SHRM 2008 54
 National Culture and HR Practices
• High uncertainty-avoidance cultures create:

o Formalized procedures to minimize unpredictability.

o Clearly defined roles for employees.
o Focus on security and trust.

• What kind of HR practices would low uncertainty-avoidance cultures

create?
• What staffing practices would high uncertainty-avoidance cultures
encourage?

©SHRM 2008 55