Human resource management is a function in organizations designed to maximize

employee performance in service of their employer’s strategic objectives. HR is

primarily concerned with how people are managed within organizations, focusing

on policies and systems. HR departments and units in organizations are typically

responsible for a number of activities, including employee recruitment, training

and development, performance appraisal, and rewarding. HR is also concerned

with industrial relations, that is, the balancing of organizational practices with

regulations arising from collective bargaining and governmental laws.

HR is a product of the human relations movement of the early 20th century, when

researchers began documenting ways of creating business value through the

strategic management of the workforce. The function was initially dominated by

transactional work, such as payroll and benefits administration, but due to

globalization, company consolidation, technological advancement, and further

research, HR now focuses on strategic initiatives like mergers and acquisitions,

talent management, succession planning, industrial and labor relations, and

diversity and inclusion

In startup companies, HR's duties may be performed by trained professionals. In

larger companies, an entire functional group is typically dedicated to the discipline,

with staff specializing in various HR tasks and functional leadership engaging in

strategic decision making across the business. To train practitioners for the

profession, institutions of higher education, professional associations, and

companies themselves have created programs of study dedicated explicitly to the

duties of the function. Academic and practitioner organizations likewise seek to

engage and further the field of HR, as evidenced by several field-specific

publications. HR is also a field of research study that is popular within the fields of

management and industrial/organizational psychology, with research articles

appearing in a number of academic journals, including those mentioned later in this

article.

In the current global work environment, most companies focus on lowering

employee turnover and retaining the talent and knowledge held by their workforce.

New hiring not only entails a high cost but also increases the risk of the newcomer

not being able to replace the person who was working in that position before. HR

departments also strive to offer benefits that will appeal to workers, thus reducing

the risk of losing knowledge.

CONCEPT OF HUMAN RESOURCE MANAGEMENT

Human resource management is a process of bringing people and organizations

together so that the goals of each other are met. The role of HR manager is shifting

from that of a protector and screener to the role of a planner and change agent.

Personnel directors are the new corporate heroes. The name of the game today in

business is personnel. Nowadays it is not possible to show a good financial or

operating report unless your personnel relations are in order. Over the years, highly

skilled and knowledge based jobs are increasing while low skilled jobs are

decreasing. This calls for future skill mapping through proper HRM initiatives.

Indian organizations are also witnessing a change in systems, management cultures

and philosophy due to the global alignment of Indian organizations. There is a need

for multi skill development. Role of HRM is becoming all the more important.

Some of the recent trends that are being observed are as follows:

The recent quality management standards ISO 9001 and ISO 9004 of 2000 focus

more on people centric organizations. Organizations now need to prepare

themselves in order to address people centered issues with commitment from the

top management, with renewed thrust on HR issues, more particularly on training.

Charles Handy also advocated future organizational models like Shamrock, Federal

and Triple I. Such organizational models also refocus on people centric issues and

call for redefining the future role of HR professionals.

To leapfrog ahead of competition in this world of uncertainty, organizations have

introduced sixsigma practices. Six- sigma uses rigorous analytical tools with

leadership from the top and develops a method for sustainable improvement. These

practices improve organizational values and helps in creating defect free product or

services at minimum cost.

Human resource outsourcing is a new accession that makes a traditional HR

department redundant in an organization. Exult, the international pioneer in HR

BPO already roped in Bank of America, international players BP Amoco & over

the years plan to spread their business to most of the Fortune 500 companies. With

the increase of global job mobility, recruiting competent people is also increasingly

becoming difficult, especially in India. Therefore by creating an enabling culture,

organizations are also required to work out a retention strategy for the existing

skilled manpower
HRM is the process of managing people in organizations in a structured and

thorough manner. This covers the fields of staffing (hiring people), retention of

people, pay and perks setting and management, performance management, change

management and taking care of exits from the company to round off the activities.

This is the traditional definition of HRM which leads some experts to define it as a

modern version of the Personnel Management function that was used earlier.

We have chosen the term “art and science” as HRM is both the art of managing

people by recourse to creative and innovative approaches; it is a science as well

because of the precision and rigorous application of theory that is required.

Human Resource Development (HRD) means to develop available manpower

through suitable methods such as training, promotions, transfers and opportunities

for career development.

HRD programs create a team of well-trained, efficient and capable managers and

subordinates. Such team constitutes an important asset of an enterprise. One

organisation is different from another mainly because of the people (employees)

working there in. According to Peter F. Drucker, "The prosperity, if not the survival

of any business depends on the performance of its managers of tomorrow." The

human resource should be nurtured and used for the benefit of the organization
Uses of Human Resource Management in an organization:

 Human Resource Management (HRM) is the function within an organization

that focuses on recruitment of, management of, and providing direction for the

people who work in the organization. It can also be performed by line managers.

 Human Resource Management is the organizational function that deals with

issues related to people such as compensation, hiring, performance management,

organization development, safety, wellness, benefits, employee motivation,

communication, administration, and training

 HRM is also a strategic and comprehensive approach to managing people and

the workplace culture and environment. Effective HRM enables employees to

contribute effectively and productively to the overall company direction and the

accomplishment of the organization's goals and objectives.

 Human Resource Management is moving away from traditional personnel,

administration, and transactional roles, which are increasingly outsourced. HRM is

now expected to add value to the strategic utilization of employees and that

employee programs impact the business in measurable ways. The new role of

HRM involves strategic direction and HRM metrics and measurements to

demonstrate value.
 The Human Resource Management (HRM) function includes a variety of

activities, and key among them is responsibility for human resources -- for

deciding what staffing needs you have and whether to use independent contractors

or hire employees to fill these needs, recruiting and training the best employees,

ensuring they are high performers, dealing with performance issues, and ensuring

your personnel and management practices conform to various regulations.

Activities also include managing your approach to employee benefits and

compensation, employee records and personnel policies. Usually small businesses

(for-profit or nonprofit) have to carry out these activities themselves because they

can't yet afford part- or full-time help. However, they should always ensure that

employees have - - and are aware of -- personnel policies which conform to current

regulations. These policies are often in the form of employee manuals, which all

employees have.

 HRM is widening with every passing day. It covers but is not limited to HR

planning, hiring (recruitment and selection), training and development, payroll

management, rewards and recognitions, Industrial relations, grievance handling,

legal procedures etc. In other words, we can say that it’s about developing and

managing harmonious relationships at workplace and striking a balance between

organizational goals and individual goals.

Advantages / Importance of HR:

 Meeting manpower needs: Every Organisation needs adequate and properly

qualified staff for the conduct of regular business activities. Imaginative HRP is

needed in order to meet the growing and changing human resource needs of an

organisation.

 Replacement of manpower: The existing manpower in an Organisation is

affected due to various reasons such as retirement and removal of employees and

labour turnover. HRP is needed to estimate the shortfall in the manpower

requirement and also for making suitable arrangements for the recruitment and

appointment of new staff.

 Meeting growing manpower needs: The expansion or modernisation programme

may be undertaken by the enterprise. Manpower planning is needed in order to

forecast and meet additional manpower requirement due to expansion and growth

needs through recruitment and suitable training programs.

 Meeting challenges of technological environment: HRP is helpful in effective

use of technological progress. To meet the challenge of new technology existing

employees need to be retrained and new employees may be recruited.

 Coping with change: HRP enables an enterprise to cope with changes in

competitive forces, markets, products, and technology and government regulations.

Such changes generate changes in job content, skill, number and type of personals.

 Increasing investment in HR: An employee who picks up skills and abilities

becomes a valuable resource because an organisation makes investments in its

manpower either through direct training or job assignments.

 Adjusting manpower requirements: A situation may develop in; an organisation

when there will be surplus staff in one department and shortage of staff in some

other department. Transfers and promotions are made for meeting such situations.

 Recruitment and selection of employees: HRP suggests the type of manpower

required in an organisation with necessary details. This facilitates recruitment and

selection of suitable personnel for jobs in the Organisation. Introduction of

appropriate selection tests and procedures is also possible as per the manpower

requirements.

 Placement of manpower: HRP is needed as it facilitates placement of newly

selected persons in different departments as per the qualifications and also as per

the need of different departments. Surplus or shortage of manpower is avoided and

this ensures optimum utilization of available manpower.

 Training of manpower: HRP is helpful in selection and training activities. It

ensures that adequate numbers of persons are trained to fill up the future vacancies

in the Organisation

HR Managers today are focusing attention on the following-

 Policies- HR policies based on trust, openness, equity and consensus.

 Motivation- Create conditions in which people are willing to work with zeal,

initiative and enthusiasm; make people feel like winners.

 Relations- Fair treatment of people and prompt redress of grievances would

pave the way for healthy work-place relations.

 Change agent- Prepare workers to accept technological changes by

clarifying doubts.

 Quality Consciousness- Commitment to quality in all aspects of personnel

administration will ensure success.

 Due to the new trends in HR, in a nutshell the HR manager should treat

people as resources, reward them equitably, and integrate their aspirations

with corporate goals through suitable HR policies

The performance appraisal is the process of obtaining, analyzing and recording

information about the relative worth of an employee. The focus of the performance

appraisal is measuring and improving the actual performance of the employee and

also the future potential of the employee. Its aim is to measure what an employee

does. Performance appraisals are regular reviews of employee performance within

organizations. Generally, the aims of a performance appraisal are too:

 Give feedback on performance to employees.

 Identify employee training needs.

 Document criteria used to allocate organizational rewards.

 Form a basis for personnel decisions: salary increases, promotions,

disciplinary actions, etc.

 Provide the opportunity for organizational diagnosis and development.

 Facilitate communication between employee and administration

It is a powerful tool to calibrate, refine and reward the performance of the

employee. It helps to analyze his achievements and evaluate his contribution

towards the achievements of the overall organizational goals. By focusing the

attention on performance, performance appraisal goes to the heart of personnel

Management and reflects the management's interest in the progress of the

employees.

People differ in their abilities and their aptitudes. There is always some difference

between the quality and quantity of the same work on the same job being done by

two different people. Therefore, performance management and performance

appraisal is necessary to understand each employee's abilities, competencies and

relative merit and worth to the organization.

Performance appraisal rates the employees in terms of their performance.

Performance appraisal takes into account the past performance of the employees

and focuses on the improvement of the future performance of the employees.

A 360 degree appraisal is the report generated by compiling the perspectives of a

number of selected respondents (or raters).

Sometimes also called 180 or 540 degree - with the difference being the number of

respondent 'groups'.

Typically 360 degree would involve the person themselves, their manager, selected

peers and selected people that the person manages - 4 dimensions.

A 180 degree could be just the person and their manager - or the person and their

peers - or the person and the people they manage - 2 dimensions.

540 degree is where additional groups are asked to contribute - for example

'customers' and other 'stakeholders' - 5 or more dimensions.

Each of the respondents is asked to complete a questionnaire that allows them to

score and comment on the person.

The questionnaire is normally based on behaviours that are expected to create high

performance in the role.

Therefore the principle steps in the sequence are:

 Create a questionnaire.

 Select the respondents.

 Distribute the questionnaires.

 Allow time for people to respond and complete their questionnaires.

 Generate the report from the responses gathered.

 Hand (or preferably discuss) the compiled report to the 'appraisee' (the

person being appraised).

 The key difference to a more traditional appraisal is that more people are

involved.

The benefits of the greater involvement are:

  The report provides a more powerful insight into the performance of the

person.

 The 'Manager' has more 'evidence' to bring to the appraisal discussion.

 The different 'Perceptions' from the other people asked often create a

broader debate.

Advantages of Performance Appraisal:

It is said that performance appraisal is an investment for the company which can be

justified by following advantages:

1. Promotion: Performance Appraisal helps the supervisors to chalk out the

promotion programmes for efficient employees. In this regards, inefficient workers

can be dismissed or demoted in case.

2. Compensation: Performance Appraisal helps in chalking out compensation

packages for employees. Merit rating is possible through performance appraisal.

Performance Appraisal tries to give worth to a performance. Compensation

packages which include bonus, high salary rates, extra benefits, allowances and

pre-requisites are dependent on performance appraisal. The criteria should be merit

rather than seniority.

3. Employees Development: The systematic procedure of performance appraisal

helps the supervisors to frame training policies and programmes. It helps to

analyze strengths and weaknesses of employees so that new jobs can be designed

for efficient employees. It also helps in framing future development programmes.

4. Selection Validation: Performance Appraisal helps the supervisors to understand

the validity and importance of the selection procedure. The supervisors come to

know the validity and thereby the strengths and weaknesses of selection procedure.

Future changes in selection methods can be made in this regard.

5. Communication: For an organization, effective communication between

employees and employers is very important. Through performance appraisal,

communication can be sought for in the following ways:

a. Through performance appraisal, the employers can understand and accept skills

of subordinates.

b. The subordinates can also understand and create a trust and confidence in

superiors.

c. It also helps in maintaining cordial and congenial labour management

relationship.

d. It develops the spirit of work and boosts the morale of employees.

6. Motivation: Performance appraisal serves as a motivation tool. Through

evaluating performance of employees, a person’s efficiency can be determined if

the targets are achieved. This very well motivates a person for better job and helps

him to improve his performance in the future.

The performance appraisal is the evaluation process in which the information are

gathered, recorded, measured and analyses relating to the performance of the

employees. A set of activities are arranged in a logical sequence to perform the task

of evaluation It includes the steps as establishment of performance standards,

communication of performance standards and expectations, measurement of

performance, comparison, appraisal feedback, corrective, motivation and

development action. These steps are explained below:

Step-1: Establishment of performance standards: These should have evolved out of

job analysis and the job description. The performance standards should be clear to

achieve the objectives. Further it is required that these should be understood and

measured. Management identify and prioritize the goals of the organization. For

accomplishment of the goals the jobs are to be performed. Now, what level of

performance is expected from the employees is to be discussed. For fixing the

performance standard the comprehensive discussion should be there among

managers, supervisors, employees, experts in house and consultants. The

performance standard should be feasible to achieve. These should not be very low
or high. The performance of slow, fast performer may not be suitable for everyone.

That is why the average performance should be taken into account. Performance

Standards are the statements that specify what constitutes good work. The all

concerned persons involved in fixing performance standards develop the list of

specific job tasks then they write statements that specify how the quality of the

work will be determined. The performance standards should be specific,

measurable, attainable, relevant and time-based. The performance standards should

be decided regarding the quality of work, quantity of output, with reference to the

time taken, manners of work performed, method of doing the tasks, behaviour and

costs involved in performing the jobs. These will give a clear idea to the

supervisors and performers regarding what are expected from them on job.

Step-2: Communication of performance standards and expectations: Once

performance standards are established, it is necessary to communicate these

expectations. It should not be a part of the employee's job to guess what is

expected of them. Unfortunately, too many jobs have vague performance

standards. The problem is compounded when these standards are not

communicated to the employee. It is important to note that communication is a

two-way street.
More transference of information from the manager to the subordinate regarding

expectation is not communication. Timely and proper communication should be

there between managers,

supervisors and employees on jobs regarding the goals, expectation from

employees, performance standards to be achieved, the jobs to be performed and

methods of performing the jobs. It should clearly explain these things so the clarity

should be maintained. Communication takes place, effectively only when the

transference of information takes place, is received, clearly understood by the

subordinate and he provides the `feedback' to his superior.

Step-3: Measurement of performance: The third step in the appraisal process is the

measurement of performance. To ascertain what actual performance is, necessary

information about it should be obtained. One is concerned with how he measures

and what he measures. There are four common sources of information frequently

used by managers to measure actual performance; personal observation, statistical

reports, oral reports and written reports. Each has its strengths and weaknesses;

however a combination of them increases both the number of input sources and the

probability of receiving reliable information. It is the responsibility of the

immediate manager or supervisor under whom the person is working. The

performance can be measured in quality, quantity, time, cost, difficulties faced,

competencies expressed during work and initiatives taken for problem solution.
Only the trained person can perform this task effectively. Otherwise the objective

of the performance appraisal may be defeated.

Step-4: Comparison: The fourth step in the appraisal process relates to the

comparison of actual performance with standards. In first step the performance

standards have been decided and in second stage the actual performance is

measured. Now in this step the actual performance is compared with the prefixed

standards. The attempt in this step is to locate variations between standard

performance and actual performance so that one can proceed to the next step in the

process. The deviations in quality, quantity, time, cost, competencies, behaviour,

leadership, initiative etc can be identified. The slow and fast working persons can

be identified through thiscomparison. If the comparison is not carried out then the

goals and performance cannot be aligned to meet the planning requirements.

Step-5: Appraisal feedback: In this step the information gathered relating to

appraisal are analysed and discussed with the employee. The appraiser discuss with

concerned employee regarding the strengths he has shown during the work. The

place where he finds himself in a good position, the good performance he has

given and the required competencies he has at present. Focus is also given on the

weak points of the workers and through discussion these areas are identified.

Further, discuss the difficulties faced with the work due to him, machines, working

procedure of any other reason. The ultimate goal of this is to improve the working
of the employees as well as organization. Employees get feedback from the

appraiser regarding the performance they have given their positive and negative

points. Simultaneously they get the counseling, coaching and suggestions for better

working.

Step-6: Corrective, motivation and development action: The last step in the

appraisal process is the initiation of corrective, motivation and development action

when necessary. Corrective action can be taken at the earliest to remove the cause

of the problem. The performance may be poor due to workers, machines, working

method, environmental etc. The immediate action will be initiated so that the

problem can be corrected and it should not affect the performance adversely. Next,

the actions will be taken to motivate the persons by identifying rewards,

recognition, incentives, compensation and promotion. This will motivate as well as

correct the behavior of employees, Finally, the management take action for further

education, training, improvement in working procedure and replacement of old

technology. The ultimate goal of this stage is to remove the problems so that in

present as well as in future the performance should not be affected.

Methods of Performance Appraisal

There are a number of methods that are used to evaluate employee's performance.

It may be evaluated on the basis of his traits and attributes as well as on the basis

of his work or results and objectives achieved by him. Thus his performance may

be measured in terms of standards of histraits and general behaviour on the job or

in terms of results and goals. Some of the common techniques are given below.

Each method has its merits and demerits but one thing is clear that the technique

employed has to evaluate mainly his job related performance. The appraisal

methods can be classified as follows:

(a) Individual appraisal, group appraisal and other methods

(b) Traditional and modern methods

(a) Individual Appraisal Methods

Some of the methods which are widely used to evaluate an individual employee

against the standard are as under:

(i) Rating scale: This is the oldest and most popular method of evaluating

individual's performance. In this technique the appraiser judges the employee's

performance along a scale from low to high. The appraiser rates employee's work

and traits such as output, dependability, loyalty, initiative, cooperation, attendance

and the like as poor, average, good, very good, excellent etc. Rating is the

subjective opinion of the appraiser about the individual work or particular trait.
This is noted on the appraisal form against each criterion or trait. The ratings may

be assigned numerical values or scores, so that an average can be calculated and a

comparison be made. For example, poor standard may indicate no or zero score,

fair, acceptable, good and excellent rates may have 1, 2, 3 and 4 scores

respectively. Score for overall performance can be determined and compared in

case of each employee. Sometimes grades A, B, C, D, E may be assigned as a

rating measure. A- for excellent performance, B-for very good, C-for good, D- for

average and E-for poor performance.

(ii) Checklist method: The appraisal form in this technique is a checklist of

statements or words which describes employee's performance or behaviour. The

rater reads the same and rates the employee against that statement. It is in the form

of yes-no response. The rater marks yes if he is in agreement with the statement or

description. Marks no if employee does not agree with the statement. Finally the

total of yes and no are taken into account. Sometimes, personnel department may

assign weights to each item or statement of the checklist according to its

importance for evaluating performance. This is known as weighted checklist rating

method. Weighting helps in quantifying rating.

(iii) Forced choice method: In this case the appraisal form contains different

sentences, each of them contains a pair of positive or negative statement relating to

various classes of characteristics, such as learning ability, co-operation, leadership,

dependability, loyalty, attendance, work performance etc. In each item, the

appraiser or rater has to choose that statement out of the two, which fits the

employee most. For example, if both the statements in an item benefit the

employee performance, the rater has to discard any one. Hence this technique is

known as forced choice method. For instance, take the item - `has sound job

knowledge works hard.' If both statements benefit an employee, in this method, the

later has to choose only one of the two. The other is overlooked. The appraisal may

be faulty on this account.

(iv) Critical incident method: In this technique, the rater records an extreme or

extraordinarybehaviour displayed by the employee when he works on the job. This

will assist him to appraise his performance. The incidents that take place may

indicate positive or good behaviour of the employee or his negative or bad

behaviour e.g. in case of a fire, the employee might have shown an exemplary

courage. Without worrying about life risk he controls the fire. Another example,

when there is an income tax department raid in the company office and the finance

manager is not available in office. The dealing persons shows the initiative to

handle the situation very effectively by explaining every points asked by the

income tax inspector. The incidents are noted in a critical incident sheet. These are

taken into account while evaluating employees’ performance in critical situations.

(v) Field review method: In this method a specialist of the personnel department

goes into the field and helps the supervisor in rating the employee. The work of the

employees is observed actually in the field. The observer sees the nature of job,

environment in which the job is performed, the climatic conditions, difficulties

faced, working conditions, methods used for working, facilities available to the

workers, risks involved in the jobs. The specialist prepares an evaluation based on

the observation and information provided by the immediate supervisor about the

performance of the employee. It is forwarded to the supervisor for review,

modification or for discussion with the employee. The only difference is that a

skilled specialist fills up the appraisal form.

(vi) Performance test and observation method: The purpose is to test the

knowledge and skills of an employee. He is evaluated either by giving him a paper-

pencil test or he is required to demonstrate his skill in a practical situation. For

example, a baker may be asked to prepare a cake or a mechanical engineer may be

required to locate a fault in a defective machine. It depends upon the type of the

job. For a typist a letter can be given for typing. On the basis of work the

assessment can be done. A programmer can be give a task to design a program for

that task. Receptionist can be given a task to contact vendors or customers and

simultaneously the conversation can be monitored.

(vii) Annual confidential reports (ACR): These reports relate to the performance of

employees and they are kept quite confidential. They are prepared by superiors on

the basis of their judgements, observations and intuitions. The subordinate is not

permitted to see his report on performance. The whole process is conducted

without disclosing any information out of it to any concerned person. The

employee does not get any feedback about his performance, shortfalls and

strengths. They are kept in dark. The scope for self development is very less in this.

Generally it is being used in government organization.

(b) Group Appraisal Methods

There are a number of methods that are used to appraise the performance of

groups of employees. Generally, these methods are used to rank various employees

in a group or groups in accordance of their merits and hence they are, useful for

deciding merit, promotion, pay increments, rewards etc.

(i) Factors and points method:

In this method the factors affecting the performance of

employees are identified. The factors may be performance standard achieved,

behaviour, competencies, leadership quality, initiatives to solve the problems.

There may me other less important factors may or may not be considered. Every
factor is given points or marks as per their relating importance. Finally the total of

all factors is taken.