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Introduction of HRM

Organisation comprise of people & they function through people.

The resources of men, money, materials and machinery cannot accomplish the organizational
objectives in isolation. They need to be united into a team. It is only through the combined &
coordinated efforts of people that the material & monetary resources can be effectively utilized
for the attainment of objectives.

Hence, people are the most significant resource of any organization & are called as “Human

“Human Resources” are defined as the knowledge, skills, creative abilities, talents and aptitudes
obtained in the population

Human Resources are the sum-total of the internet abilities, acquired knowledge and skill as
exemplified in the talents & aptitudes of its employees.

Features of Human Resources

1. Human Resources of an organization are the product of their biological inheritance &
interactions with the environment. The attitude & behaviour of human beings is always
shaped by the family relationship, religious influences, educational background &
organization climate.
2. Human resources are heterogeneous i.e. everyone has a different personality, different
needs, attitudes & values. Inorder to make effective use of its human resources, an
organization must recognize and acknowledge the differences between individuals so that
each person can maximize his/her potential.
3. The effective utilization of all the other resources of an organization depends upon the
quality of human resources.
4. Human resources are dynamic & behave differently. They react different to different
situations. Hence, it is difficult to predict human behaviour.
5. If provided with the right climate human resources have a good potential to develop &
grow. An organization can survive & grow if it has the right people at the right time
working at right jobs.

Features of HRM / Nature of HRM

1. Integral part of management –HRM is integral in the process of management. This

function is performed by all the managers throughout the organization rather than the
personnel department only. The manager must undertake the basic responsibility of lining
the right people, thereafter providing them with the right training & motivation and
appraising their performance for improving their quality.
2. Comprehensive function - HRM is concerned with managing people at work. It covers
all types of people at all levels the organization. It applies to workers, supervisors,
officers, managers and other types of personnel.

3. People oriented - HRM is concerned with employees as individuals as well as groups. It

is the task of dealing with human relationship within an organization.
It is concerned with all categories of personnel from top to the bottom of the
organization. It is the process of bringing together people and organizations so that the
goals of each are met.

4. Action-oriented –HRM focuses on action rather than on recordkeeping or procedures. It

stresses the solution of personnel problems to achieve both organizational objective and
employees personal goals.

5. Personnel activities or function- Personnel management involves various functions of

managing people at work like manpower planning, employment, placement, training
appraisal and compensation of employees. “Personnel Department” is created in the
organizations which is responsible for all these activities.

6. Individual-oriented - Every employee is considered as an individual so as to provide

services & programmes to facilitate employee satisfaction and growth.

7. Development–oriented – HRM is concerned with developing potential of employees so

that they get maximum satisfaction from their work and give their best to the
organization. For this, it takes into account the personality, interests and capacities of

8. Continuous Process - Personnel Management is not a “one-shot” function, but a

continuous one which requires constant alertness and awareness of human relations and
their importance in day-to-day operations.

9. Pervasive function – HRM is a pervasive function of management which is performed

by all managers at various level in the organization, across the different industries. When
a personnel department is created other managers are not relieved of this responsibility.
However, they can always seek advice and help in managing people from experts who
specialize in personnel management.

10. Future-oriented - HRM is concerned with helping an organization achieve its objectives
in the future by providing for competent and well motivated employees.

11. Based on Human Relations - Personnel management is concerned with the motivation
of human resources in the organization. Every person has different needs, perceptions and
expectation. Managers must have the human relations skills to deal with the people at
work. Human relations skills are also required in training, performance appraisal, transfer
& promation of subordinates.

12. Challenging Fucnction - Managing of human resources is a challenging job due to the
dynamic nature of people. People have to be dealt with tactfully as they have sentiments
& emotions.

13. Interdisciplinary - HRM involves application of knowledge drawn from disciplines like
sociology, anthropology, psychology etc. HRM is a highly specialized job.

14. Science as well as Art - HRM is a sciences as it contains an orgnised body of knowledge
consisting of principles & techniques. It is also an art because it involves application of
theoretical knowledge to the problems of human resources.

15. Staff Function - The function of HRM is advisory in nature. HR managers contribute to
the growth & success of the organization by advising the operating department on
personnel matters.

Objectives of HRM

The basic objective of personnel / human resource management is to contribute to the realsation
of the organizational goals. Inorder to achieve organizational objective, integration of employer’s
and employees interest is important.

The objectives of HRM are-

1. To ensure effective utilization of human resources. All other organizational resources will be
efficiently utilized by the human resources.

2. To help the organization attain its goals by providing well-trained and well-notivated

3. To establish and maintain an adequate organizational structure of relationships among all the
members of an organization by dividing of organization tasks into functions, positions and jobs
and by defining clearly the responsibility, accountability, authority for each job and its relation
with other jobs in the organization.

4. To bring about maximum individual development of members of the organization by

providing opportunities for training and advancement.

6. To ensure reconciliation of individual/group goals with those of the organization in such

a manner that the personnel feels a sense of commitment and loyalty towards it.

7. To achieve and maintain high morale among employees in the organization by securing
better human relations.
8. To identify and satisfy the needs of individuals by offering various monetory and non-
monetory rewards.

9. To develop and maintain a quality of work life (QWL) which makes employment in the
organization a desirable personnel & social situation.

10. To help maintain ethical policies and behaviour inside and outside the organization.

11. To manage change to the mutual advantage of individuals, groups, organization and the

12. To ensure respect for human beings by providing various services and welfare facilities
to the personnel.

To sum up, HRM seeks to accomplish individual, organizational and societal goals.

According to the Indian Institute of Personnel Management, “Personnel Management aims to

achieve both efficiency and justice, neither of which can be pursued successfully without the
other. It seeks to bring together into an effective organization the men and women who make up
an enterprise, enabling each to make his/her own best contribution to its success both as an
individual and as a member of a working group. It seeks to provide fair terms and conditions of
employment and satisfying work for those employed.”


The requirements for attaining the above objectives of HRM are –

1) Human Resource or Manpower Planning i.e. determining the number and kinds of
personnel required to fill various positions in the organization.
2) Recruitment, Selection and Placement of personnel i.e. employment function.
3) Training and Development of employees for their efficient performance and
4) Appraisal of performance of employees and taking corrective steps like transfer
from one job to another.
5) Motivation of workforce by providing financial incentives and avenues of
6) The employees should be given good remuneration (wages & fringe benefits) to
achieve higher standard of living and so that they are motivated to give higher
7) Social security and welfare of employees.
8) Review and audit of personnel policies, procedures and practices of the
According to the Indian Institute of Personnel Management, the scope of personnel management
is –

A) The welfare aspect – concerned with working conditions and amenities like canteens,
crèches, housing, personal problems of workers, schools and recreation.
B) The Labour or personnel aspect – includes recruitment, placement of employees,
remuneration, promotions, incentives, productivity etc.
C) The Industrial relations aspect – includes trade union negotiations, settlement of
industrial disputes, joint consultation and collective bargaining.


There are 3 broad functions of HRM –

 Managerial Functions
 Operative Functions
 Advisory Functions

 Managerial Functions – Like any other manager, a Human Resource Manager

performs the functions of –
• Planning
• Organising
• Directing
• Controlling

1) Planning – A Plan is a predetermined course of action. Planning is the process of

deciding the goals and formulating policies and programmes to achieve the goals. HRM
involves forecasting vacancies for human resources, predicting trends in labour market,
wages, union demands etc and their impact on the organization. In the area of HRM,
“Planning” involves deciding personnel goals, formulating personnel policies &
programmes, preparing the human resource budget etc.

2) Organising – In order to implement the plans, a sound organization structure is required..

The organization structure includes the following –

• Grouping of personnel activity logically into functions or positions.

• Assignment of different groups of activities to different individuals.
• Delegation of authority according to the tasks assigned and responsibilities involved.
• Co-ordination of activities of different individuals.

3) Direction – Direction is the process of motivating, activating, leading and supervising

people. The direction function of the personnel manager involves encouraging people to work
willingly and effectively for the goals of the enterprise.
The personnel manager can motivate the employees in an organization through career planning,
salary administration, ensuring employee morale, developing cordial relationships and provision
of safety requirements and welfare of employees.

4) Controlling – It implies checking, verifying and regulating to ensure that everything is in

accordance with the plans. It is the observation and comparison of results with the standards and
corrections of deviations that may occur. Controlling the management of human resources
involves auditing training programmes, analyzing labour turnover records, directing morale
surveys, conducting separation interviews etc.

 Operative Functions / Service Functions – These functions are undertaken by

the personnel manager of the personnel department. These are –
A) Procurement Function – It is concerned with securing and employing the right
kind and number of people so as to accomplish the organizational objectives. It consists
of the following activities –
a) Job Analysis – It is the process of studying in detail the operations and responsibilities
involved in a job so as to identify the nature and level of human resources required to
perform the job effectively.
b) Human Resource Planning – Is the process of estimating the present and future
manpower requirements of the organization.
c) Recruitment – It is the process of searching for required personnel and stimulating them
to apply for jobs in the organization.
d) Selection – Involves judging the suitability of different candidates for jobs in the
organization & choosing the most appropriate people.
e) Placement – It means assigning suitable jobs to the selected candidates so as to match
employee’s qualifications with job requirements.
f) Induction or Orientation – It involves familiarizing the new employees with the
company, the work environment and the existing employees so as the new employees feel
comfortable and get introduction to the work culture.

B) Development Function – HRD is the process of improving the knowledge, skills aptitudes
and values of employees so that they can perform the present and future jobs more effectively. It
consists of the following activities.

a) Performance & Potential Appraisal – It consists of a systematic evaluation of

employees with respect to their performance once on the job and their potential for
b) Training – Is the process wherein employees learn knowledge, skills and attitudes which
help in the present job for which he has been engaged in the organization and also helps
to develop him for higher jobs in the organization.
c) Executive Development – Is the process of developing managerial talent through
appropriate programmes.
d) Career Planning & Development – Involves planning the career of employees so as to
fulfill the career aspirations of people. It involves promotions & transfers.
C) Compensation Function – It is providing of equitable and fair remuneration to employees
for their contributions to achieve the organizational objectives. They can be compensated both by
monetary and non-monetary rewards. It consists of the following activities:-

a) Job Evaluation – It is the process of determining the relative worth of a job.

b) Wage & Salary Administration – Consists of developing and operating a suitable wage
and salary programme.
c) Bonus – Involves payment of bonus under the payment of Bonus Act, 1965 as well as
non-statutory bonus and other incentives.

D) Maintenance Function – (Working conditions & welfare) It is concerned with providing the
employees with good working conditions so that they like their work and workplace & maintain
their efficiency. This is important to increase the motivation & morale of employees several
fringe benefits like housing, medical aid, educational facilities etc are also given to the
employees, social security measures like provident fund, gratuity, maternity benefits, injury /
disablement allowance, group insurance etc are also given.

Health, safety and welfare services are designed to preserve the human resources of the

E) Motivation – The personnel manager helps the various departmental managers to design a
system of financial and non-financial rewards which is a source of motivation to the employees.

F) Personnel Records – Personnel department keeps an updated record of the employees with
respect to the training, achievements, transfer, promotions etc. Records of absenteeism, labour
turnover and the personnel programmes & policies of the organization are also kept.

G) Industrial Relations – The personnel managers can help in collective bargaining, joint
consultation and settlement of disputes, if they arise, since he is associated with the committees
on discipline, labour welfare, safety, grievance etc, he helps in maintaining industrial peace in
the organization.

H) Separation – At the time of separation of the employees from the organization, the personnel
manager must ensure the release of retirement benefits to the retiring personnel in time.

 Advisory Functions – The HR Manager offer advice to –

i) Top Management – In formulation & evaluation of personnel programmes &

policies; and gives advice on maintaining good human relations & a high employee
ii) Departmental Heads – The HR manager offers advice to the heads of different
departments on manpower planning, job analysis & design, recruitment & selection,
placement, training, performance appraisal etc.
To, sum up:

HR Functions

Managerial Operative Advisory

a) Planning a) Procurement a) Advice to top Mgmt.
b) Organising b) Development b) Advice to departmental heads
c) Directing c) Compensation
d) Controlling d) Maintenance
e) Motivation
f) Personnel Records
g) Industrial Relations
h) Separation
Importance of HRM

1) Significance for an Enterprise – HRM helps an enterprise to accomplish its goals efficiently
by means of -

a) Attracting, & retaining the required talent through proper HR Planning, recruitment,
selection, placement, orientation, and compensation & promotion policies.
b) Developing the skills and right attitudes among the employees through training,
development, performance appraisal etc,.
c) Securing willing co-operation of employees through motivation, participation, grievance
handling etc.
d) Utilising the human resources effectively
e) Ensuring a team of competent people in the organization in the future also. –

2) Professional Significance – Effective management of human resources improves the

quality of work life. It encourages team work among employees by providing a healthy,
working environment. It leads to professional growth by means of –

a) Providing Maximum Opportunities for personal development of each employee.

b) Maintaining healthy interpersonal & intergroup relationships.
c) Allocating work properly.

3) Social Significance – A sound HRM contributes to the society since it enhances the
dignity of labour in the following ways –

a) Providing suitable employment that provides social & psychological satisfaction to

b) Maintaining a balance between the jobs available and he jobseekers w.r.t. the numbers,
qualifications, needs & aptitudes.
c) Eliminating waste of human resource through conservation of physical and mental health.
4) National Significance – Countries are under developed because their people are
backward. There is a big difference in development between countries with similar resources
due to the differences in the quality of people The level of development in a country depends
on the skills, attitudes & values of its human resources. Thus, effective management of
human resources aids in the economic growth of the country, thereby leading to a higher
standard of living & better employment.

Challenges of HRM

1) Increasing size of workforce - The size of organizations is increasing and with the rise
of MNCs, the workforce of an organization has also increased. The management of such
a large workforce is difficult as the workers are more conscious of their rights.

2) Increase in Education Level – The rise in the literacy level will definitely create tough
task for the future managers.

3) Increasing aspirations of employees – The workers are becoming more aware of their
higher level needs & this awareness will intensify more in the future workers. The
managers would have to evolve appropriate techniques to satisfy the higher level needs of
workers & thus motivate them.

4) Technological Advances – In the competitive world of today, organizations cannot

survive for long with old technology. The problem of unemployment resulting from
modernization will be solved by properly assessing manpower needs and training of
redundant employees in alternate skills.

5) Changes in Political Environment – There may be more of government interference in

business to safeguard the interests of workers, consumers & the public at large. Govt’s
participation in trade & commerce will also pose challenges for the managers.

6) Changing Psycho-social system – The future management would be required to ensure

effective participation of lower levels in the management of the organization system. An
organizational model will have to be designed whose roots are deeply entrenched in
“democratic humanistic system”.

7) Mobility of Professional Personnel – There is an increased mobility of various

managerial & professional personnel between organizations. As individuals develop
greater technical & professional expertise, their services are in greater demand by the
other organizations.

8) Motivation – Work-force in the future & in fact, now also is more educated & are self-
conscious, will demand more of participation & avenues for self-fulfillment. With the rise
in the proportion of professional & technical employees & the women getting into
managerial ranks, non-financial incentives are more important for the employees rather
than only the financial incentives.
9) Changes in Legal Environment – Many changes are taking place in the legal
framework within which the industrial relations system in the country is now functioning.
It is the duty of the HR executive to anticipate the changes & prepare the organization to
face them & bring about necessary adjustment for the effective utilization of human

10) Empowerment – Dynamic managers understand the role of empowerment of lower

levels. Empowerment means giving everyone more information & control over how they
perform their jobs. Empowerment techniques can be from participation in decision-
making to the use of self-managed teams.

11) Building Responsive Organizations – Rather than being a traditional boss, the managers
today have to be more so a “team leader”, “internal consultant” & “change facilitator”.
They have to aim at building up of responsive organizations, customer-oriented
organizations which require more of employees’ commitment.

12) Leadership – The HR Managers have to not only look after the personnel functions, but
also be involved in the actuating process (leadership & motivation) of the entire
organization (from bottom to the top level). The HR Manager is required to play the key
role in formulation of personnel policies, programmes, plans etc in consultation with the
other functional managers.

13) Change Agent – The HR Managers will be required to act as change agents through
greater involvement in environmental scanning & strategic planning; they not only have
the responsibility of maintaining the organization but also furthering it. They need to
prepare the personnel to help them deal with the environmental uncertainties.

14) Greater Professionalism – The HR Manager is required to be an expert in behavioral

sciences who can play a creative & developmental role. HRM as a profession will survive
with the judicious application of knowledge & skills available.

15) New Work Ethics – HR Managers will have initiate & foster a new work ethic so as to
assist the top management in setting up & enforcing good quality standards. As changing
work ethic requires increasing emphasis on individual, jobs will have to be redesigned to
make them more challenging. Flexitime would be necessary. Focus will (infact has
already started) shifting from extrinsic to intrinsic motivation of employees.

16) Keeping IR from conflict to co-operation – The challenge for Managers is to move IR
from conflict to co-operation. The present industrial relations situation in India is marked
by multiplicity of unions. The union tend to make irrational & false promises & adopt
erratic and violent measures to compete with their rivals. There is more of inter-unions
rivalry too. This problem can be resolved by a system of recognition of trade unions.
Industrial harmony can be accomplished through worker’s participation in the
management. There should be improved interpersonal interaction based on trust &
confidence between workers & the management.
Evolution of the Concept of HRM

1) The Commodity concept – Prior to the Industrial Revolution, the guild system was the
onset of personnel management. “Guild” refers to a closely knit group concerned with
selecting, training rewarding, and maintaining workers. The industrial revolution gave
rise to the Factory System wherein factory owners employed workers on fixed wages.
The workers were treated as a commodity which could be bought & sold. The close
relationships between owners and workers were broken.

2) The Factor of Production Concept – In this, employees were considered a factor of

production just like capital, materials & machinery. Taylor’s scientific management laid
stress on the proper selection and training of employee’s inorder to maximize
productivity. The employees were treated as mere operators of machines.

However, unlike in the commodity concept, employees gained through higher earnings &
better working conditions in this concept. Personnel Management was believed to be
concerned with keeping records of production, employment, wage payments, training etc.

3) The Paternalistic Concept – Employees organized together on the basis of their

common interest & formed trade unions. The growing democracy and the growth of trade
unions stimulated the employees to have a paternalistic (fatherly & protective) attitude
towards the workers.

Employees launched health and welfare schemes like housing facilities, recreation
facilities, medical facilities, worker’s education, pension plans, etc. In several factories,
welfare officers were appointed to provide welfare services to the workers.

Employers & Employees both realized that they cannot survive without each other. All
the benefits were treated as a favour to the employees by their workers.

4) The Humanitarian Concept – In the 1920s and 30s, industrial psychologists and human
relations activists advocated the adoption of humanitarian concept. They opined that
workers should be treated as human beings and the employer’s responsibility is to
provide facilities for the social and psychological satisfaction of the workers.

Hawthorne Experiments generated considerable interest in human problems of the

workplace. This approach is also known as human relations concept.

5) The Behavioral Human Resource Concept – The emergence of behavioral science

approach in 1950s led to the application of behavioral sciences to the problems of
individual and group behavior at work. There was a rise in the concepts of motivation,
leadership, group dynamics, organizational climate, organizational conflict etc.
Employees were considered as a valuable asset of the organization. Focus was on the
integration of employee with the organization so that organizational & individual’s goals
could be achieved simultaneously. Focus was on management practices like two-way
communication, management by objectives, quality circles etc.

6) The Partnership Concept – The modern trend is to view employees as partners in

industry. Worker’s participation is of utmost importance, several companies have
launched stock option plans to retain their employee and achieve their commitment to the
organization. The employees are treated as a valuable resource and “Human Resource
Development (HRD)” is the buzz word in the industry today.
The HRD Concept

Human Resource Development (HRD) is the core of a larger system known as Human Resource
System, wherein HRD is mainly concerned with providing learning experiences for the people
associated with an organization through behavioral processes. It means those learning
experiences which are organized for a specific time & is aimed to bring about a behavioral
change. In this, the individual is provided with learning experiences not only in isolation but he
shares other’s learning experiences also.

HRD is a process whereby the employees are continuously helped in a planned way to –

a) Acquire or sharpen capabilities required to perform various tasks & functions associated
with their present and future expected roles.
b) Develop their general enabling capabilities as individuals so that they can be developed
for their own/organizational development purposes.
c) Develop an organizational culture where superior-subordinate relationships, team work &
collaboration among different sub-units are strong & contribute to the professional well-
being, motivation & pride of employees.