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Human Resource

Management Practices
PDM (2016 18)
Session 2
HRM A Big Hat with No Cattle?
Managing Human Resources - Environment and Challenges
HRM Defined!
HRM refers to the framework of philosophies, policies, procedures and
practices for the management of the relationship that exists between an
employer and employee.

Processes of acquiring, training, appraising and compensating employees,

and of attending to their labor relations, health, safety and fairness concerns.
Since the organisation is run by its people, they are considered to a
resource a human resource.
Like we have funds to manage a project, we have people to manage the
Nature of HRM
People-related function

More important deliverable for HRM is building Human Capital. Human Capital refers
to the stock of employee Knowledge, Skills and Abilities (KSA) that may not show up in
the balance sheet but have significant impact on firms performance.

HRM necessitates alignment of HR policies and practices with organisations strategies

HRM assumes that it is the people who make the difference. They alone are capable of
generating value and adding to the competitive advantage to organisations.

Activities not a prerogative of HR specialist only but has to be practiced by everyone in

the organisation
HRM Objectives
Societal Objectives Functional Objectives:
o To be ethically and socially responsible to o To maintain the departments contribution
the needs and challenges of the society at a level appropriate to the organisations
while minimising the negative impact of need. E.g. Selection, Assessment,
such demands upon the organization E.g. Performance Appraisal etc.
Union Management, Legal Compliance,
Benefits Personal Objectives:
o To assist employees in achieving their
Organisational Objectives: personal goals, atleast in so far as these
o To recognise the role of HRM in bringing goals enhance the individuals
about organisational effectiveness E.g. contribution to the organisation. E.g.
Employee Engagement, HR Planning Training and Development
HRM Functions


Relationships Developing

Maintaining Motivating
HRM Practices
Knowledge Skill Abilities Empowerment Enhancing
(KSA) Enhancing Practices Practices
o Training o Grievance Procedures
o Selection o Flextime
o Compensation Level o Participation Programs
Employment Security
Motivation Enhancing o

o Incentive
o Compensation
o Task Variety Skill Variety Job Enrichment
o Internal Promotion 6
HRM and its Environment
External Environment


Internal Environment

Social Cultural
Unions HRM Strategy

Org. Culture Processes

Economic Professional

Characteristics 20th Century 21st Century

Changed Approaches between Organisation Pyramid The web or network

Focus Internal External
Style Structured Flexible
Source of Strength Stability Change
Structure Self-sufficiency Interdependencies
two centuries

Resources Physical Assets Information

Operations Vertical Integration Virtual Integration
Products Mass Production Mass Customization
Reach Domestic Global
Financials Quarterly Real-time
Inventories Months Hours
Strategy Top-down Bottom-up
Leadership Dogmatic Inspirational
Workers Employees Employee + free agents
Job Expectations Security Personal growth
Motivation To compete To build
Improvements Incremental Revolutionary
Quality Affordable best No compromise
Trends shaping Human Resource
Employers will therefore
So companies must
Trends expect from HR
be management that they

Focus more on big

Globalisation More competitive picture issues such as
Increased Faster and more helping the company
Competition responsive achieve its strategic
Technological More cost-effective goals
innovation Human capital Find new ways to
oriented provide transactional
More high-tech jobs
Quality conscious services such as benefits
More service jobs administration
More knowledge Create high-
Organised flatter
work performance work
Organised around
Aging workforce empowered teams systems
Slower economic Leaner
Manage ethically
growth in many Take steps to help
More scientific in how employers manage
countries they make decisions challenging times
HRM as a system
An open systems view of HRM has been developed by Wright and Snell (1998).

An open system is dependent on the environment for inputs, which are

transformed during throughput to produce outputs that are exchanged in
the environment.

Wright and Snell defined an open HRM system as a competence model of

Skills and abilities are treated as inputs from the environment;
Employee behaviours are treated as throughput;
Employee satisfaction and performance are treated as outputs.
HRM as a system (contd.)
An HRM system brings together
o HR philosophies that describe the overarching values and guiding principles
adopted in managing people,
o HR strategies that define the direction in which HRM intends to go,
o HR policies that provide guidelines defining how these values, principles and
the strategies should be applied and implemented in specific areas of HRM,
o HR processes that comprise the formal procedures and methods used to put HR
strategic plans and policies into effect,
o HR practices that consist of the approaches used in managing people, and
o HR programmes that enable HR strategies, policies and practices to be
implemented according to plan.
Managing People: A Critical Role for Every Manager
Following 5 activities are critical for every manager:

o Staffing: Includes i) identifying work requirements within an organisation ii)

determining the numbers of people and the skills mix necessary to do the work iii)
recruiting, selecting and promoting qualified candidates

o Retention: Includes i) rewarding employees for performing their jobs effectively ii)
ensuring harmonious working relations between employees and managers iii)
maintaining a safe, healthy work environment

o Development: To preserve and enhance employees competence in their jobs through

improving their knowledge, skills and abilities, and other characteristics

o Managing Change: Is an ongoing process whose objective is to enhance the ability of

an organisation to anticipate and respond to developments in its external and internal
environments, and to enable employees at all levels to cope with the changes
HR Outcomes
Goals and

Organisational Human Resource

Design and
Governance Outcomes Effectiveness in
and Organisation of
Commitment satisfying the
Leadership Work Coordination stakeholders
Measurement and Competence
reward systems

al factors


HRM inputs HRM outcomes Performance

(Observable) (?) (Measurable)



HR practices does not make a direct impact. There is an
intermediate factor in the form of employee characteristics
affected by HR practices.
o Ability + Motivation + Outcome (AMO) (Boxall and Purcell, 2003)
o P = f( Ability Motivation)



In an industry, senior clerical staff refuses to accept promotion to the officers

cadre. Monetary incentives are considered inadequate for shouldering high
responsibilities. But in a comparable industry, the reaction of a similar staff is
reported to be just the opposite.