Human Resource Management (BEBA55A) UNIT-1

REF NO: BEBA55A-U1-01

HUMAN RESOURCE MANAGEMENT (BEBA55A)

UNIT – I
INTRODUCTION

Modern organizational setting is characterized by constant changing relation to environmental

factors and human resources. As regard to the environmental factors, we find changes in the
operating organizational structure, the network of the working procedures, customs on norms
and the economic, political and the social patterns in which organizations exist. Moreover,
there is a constant change in human resources, the individuals are employed daily with new
creativity, ideas and experiences, while the existing workforce is also continuously changing
their ideas, attitudes and even values. These two dimensions reveal the following trends.

o Increased complexity of the organizations, employment and a clear hierarchy of

owners, managers and workers.
o Increased the number of employers, self-employed and enlarged size of workforce.
o Enhance the need of training in view of increased requirements of specialized skills.
o Public interventions and legal complications in employee and employer relationships.
o Enhanced training and development of managers and professionalization of
management education.
o Possibility of employment explosion in view of ever increasing size of workforce.
o Rising the formal level of education of rank and file employees who becoming
increasingly critical of management malpractice and errors.
o Rank and file employees rapidly growing demands in different employment situations.
o Recognizing of close relationships between profits and earnings and ability to manage
human resources.
Indeed these trends manifest themselves in problem areas as identified by the managers in
organizational settings. Although the change may provide solutions to some problems, it may
create several new ones. There is an urgent need to understand these problems, anticipate them
and to find solution to them. The responsibility to find out the solutions to these problems lies
with every manager who has prepared to deal with different change effectively through
educational and developmental programs. Obviously, every manager is responsible for
management of human resources of course with the advice and help of personnel department.

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Management of human resources is the essence of being manager who has to get things done
through the people without whom he can be a technician but not a manager. Thus, every
manager has to develop and maintain his competency in managing human resources, which
have assumed utmost significance in modern organizations.

What is Human Resource Management?

HRM is the study of activities regarding people working in an organization. It is a managerial

function that tries to match an organization‘s needs to the skills and abilities of its employees.

Definitions of HRM

Human resources management (HRM) is a management function concerned with hiring,

motivating and maintaining people in an organization. It focuses on people in organizations.
Human resource management is designing management systems to ensure that human talent is
used effectively and efficiently to accomplish organizational goals.

HRM is the personnel function which is concerned with procurement, development,

compensation, integration and maintenance of the personnel of an organization for the purpose
of contributing towards the accomplishments of the organization‘s objectives. Therefore,
personnel management is the planning, organizing, directing, and controlling of the
performance of those operative functions(EdwardB. Philippo).

According to the Invancevich and Glueck, ―HRM is concerned with the most effective use of
people to achieve organizational and individual goals. It is the way of managing people at work,
so that they give their best to the organization‖.

According to Dessler (2008) the policies and practices involved in carrying out the ―people‖
or human resource aspects of a management position, including recruiting, screening, training,
rewarding, and appraising comprises of HRM.
Nature of HRM
HRM is a management function that helps manager‘s to recruit, select, train and develop
members for an organization. HRM is concerned with people‘s dimension in organizations.
The following constitute the core of HRM

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1. HRM Involves the Application of Management Functions and Principles. The

functions and principles are applied to acquiring, developing, maintaining and
providing remuneration to employees in organization
2. Decision Relating to Employees must be integrated. Decisions on different aspects
of employees must be consistent with other human resource (HR) decisions.
3. Decisions Made Influence the Effectiveness of an Organization. Effectiveness of an
organization will result in betterment of services to customers in the form of high
quality products supplied at reasonable costs
4. HRM Functions are not confined to Business Establishments Only but applicable
to non-business organizations such as education, health care, recreation and like. HRM
refers to a set of programmes, functions and activities designed and carried out in order
to maximize both employee as well as organizational effectiveness.

SIGNIFICANCE/IMPORTANCE/NEED OF HRM

HRM becomes significant for business organization due to the following reasons.

1. Objective: - HRM helps a company to achieve its objective from time to time by creating a
positive attitude among workers. Reducing wastage and making maximum use of resources
etc.

2. Facilitates professional growth: - Due to proper HR policies employees are trained well
and this takes them ready for future promotions. Their talent can be utilized not only in the
company in which they are currently working but also in other companies which the employees
may join in the future.

3. Better relations between union and management:-

Healthy HRM practices can help the organization to maintain co-ordinal relationship with the
unions. Union members start realizing that the company is also interested in the workers and
will not go against them therefore chances of going on strike are greatly reduced.

4. Helps an individual to work in a team/group:- Effective HR practices teach individuals

team work and adjustment. The individuals are now very comfortable while working in team
thus team work improves.

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5. Identifies person for the future:-

Since employees are constantly trained, they are ready to meet the job requirements. The
company is also able to identify potential employees who can be promoted in the future for the
top level jobs. Thus one of the advantages of HRM is preparing people for the future.

6. Allocating the jobs to the right person:-

If proper recruitment and selection methods are followed, the company will be able to select
the right people for the right job. When this happens the number of people leaving the job will
reduce as the will be satisfied with their job leading to decrease in labour turnover.

7. Improves the economy:-

Effective HR practices lead to higher profits and better performance by companies due to this
the company achieves a chance to enter into new business and start new ventured thus industrial
development increases and the economy improves.

SCOPE OF HRM

The major HRM activities include HR planning, job analysis, job design, employee hiring,
employee and executive remuneration, employee motivation, employee maintenance,
industrial relations and prospects of HRM.
The scope of Human Resources Management extends to:

o All the decisions, strategies, factors, principles, operations, practices, functions,

activities and methods related to the management of people as employees in any type
of organization.
o All the dimensions related to people in their employment relationships, and all the
dynamics that flow from it.

The scope of HRM is really vast. All major activities on the working life of a worker – from
the time of his or her entry into an organization until he or she leaves it comes under the purview
of HRM. American Society for Training and Development (ASTD) conducted fairly an
exhaustive study in this field and identified nine broad areas of activities of HRM.
o Human Resource Planning
o Design of the Organization and Job
o Selection and Staffing

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o Training and Development

o Organizational Development
o Compensation and Benefits
o Employee Assistance
o Union/Labour Relations
o Personnel Research and Information System
a) Human Resource Planning:

The objective of HR Planning is to ensure that the organization has the right types of persons
at the right time at the right place. It prepares human resources inventory with a view to assess
present and future needs, availability and possible shortages in human resource.
HR Planning forecast demand and supplies and identify sources of selection. HR Planning
develops strategies both long-term and short-term, to meet the man-power requirement.

b) Design of Organization and Job:

This is the task of laying down organization structure, authority, relationship and
responsibilities. This will also mean definition of work contents for each position in the
organization. This is done by ―job description‖. Another important step is ―Job specification.
Job specification identifies the attributes of persons who will be most suitable for each job
which is defined by job description.

c) Selection and Staffing:

This is the process of recruitment and selection of staff. This involves matching people and their
expectations with which the job specifications and career path available within the organization.

d) Training and Development:

This involves an organized attempt to find out training needs of the individuals to meet the
knowledge and skill which is needed not only to perform current job but also to fulfil the future
needs of the organization.

e) Organizational Development:
This is an important aspect whereby ―Synergetic effect‖ is generated in an organization i.e.
healthy interpersonal and inter-group relationship within the organization.

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f) Compensation and Benefits:

This is the area of wages and salaries administration where wages and compensations are fixed
scientifically to meet fairness and equity criteria. In addition labour welfare measures are
involved which include benefits and services.

g) Employee Assistance:
Each employee is unique in character, personality, expectation and temperament. By and large
each one of them faces problems every day. Some are personal some are official. In their case
he or she remains worried. Such worries must be removed to make him or her more productive
and happy.

h) Union-Labour Relations: Healthy Industrial and Labour relations are very important for
enhancing peace and productivity in an organization. This is one of the areas of HRM. i)
Personnel Research and Information System: Knowledge on behavioural science and industrial
psychology throws better insight into the workers expectations, aspirations and behaviour.
Advancement of technology of product and production methods have created working
environment which are much different from the past. Globalization of economy has increased
competition many fold. Science of ergonomics gives better ideas of doing a work more
conveniently by an employee. Thus, continuous research in HR areas is an unavoidable
requirement. It must also take special care for improving exchange of information through
effective communication systems on a continuous basis especially on moral and motivation.

Objectives of HRM

The primary objective of HRM is to ensure the availability of competent and willing workforce
to an organization.
The specific objectives include the following:
1. Human capital: assisting the organization in obtaining the right number and types of
employees to fulfil its strategic and operational goals.
2. Developing organizational climate: helping to create a climate in which employees are
encouraged to develop and utilize their skills to the fullest and to employ the skills and
abilities of the workforce efficiently.
3. Helping to maintain performance standards and increase productivity through effective
job design: providing adequate orientation, training and development; providing
performance related feedback; and ensuring effective two-way communication.

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4. Helping to establish and maintain a harmonious employer/employee relationship.

5. Helping to create and maintain a safe and healthy work environment.
6. Developing programs to meet the economic, psychological, and social needs of the
employees and helping the organization to retain the productive employees.
7. Ensuring that the organization is in compliance with provincial/territorial and federal
laws affecting the workplace (such as human rights, employment equity, occupational
health and safety, employment standards, and labour relations legislation).
8. To help the organization to reach its goals.
9. To provide organization with well-trained and well-motivated employees.
10. To increase the employees satisfaction and self-actualization.
11. To develop and maintain the quality of work life.
12. To communicate HR policies to all employees.
13. To help maintain ethical polices and behavior.

Management has to create conductive environment and provide necessary prerequisites for the
attainment of the personnel management objectives after formulating them. The primary
objectives of HRM are to ensure the availability of competent and willing workforce to an
organization. Apart from this, there are other objectives too. Specifically, HRM objectives are
of four fold: societal, organizational, functional and personal.

Societal Objectives

The Societal Objectives are socially and ethically responsible for the needs and challenges of
society. While doing so, they have to minimize the negative impact of such demands upon the
organization. The failure of the organizations to use their resources for society may limit human
resources decisions to laws that enforce reservation in hiring and laws that address
discrimination, safety or other such areas of societal concern.

Organizational Objectives

The Organizational Objectives recognizes the role of human resources management in bring
about organizational effectiveness. Human resource management is not an end itself; it is only
a mean to assist the organizations with primary objectives.

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Functional Objectives
Functional Objectives try to maintain the departments’ contribution at a level appropriate to
the organizational needs. Human resources is to be adjusted to suit the organizational demands.
The department’s level of service must be tailored to fit the organization it serves.

Personal Objectives
Personal objectives assist employees in achieving their personal goals, at least in so far as these
goals enhance the individuals’ contribution to the organization. Personal objectives of
employees must be met if they are to be maintained, retained and motivated. Otherwise,
employees’ performance and satisfaction may decline giving rise to employee turnover.

Difference between Human Resource Management and Personnel Management

INTRODUCTION

The main difference between Personnel Management and Human Resource Management lies
in their scope and orientation. While the scope of personnel management is limited and has an
inverted approach, wherein workers are viewed as tool. Here the behaviour of the worker can
be manipulated as per the core competencies of the organization and are replaced when they
are worn-out.

On the other hand, human resource management has a wider scope and considers employees
as the asset to the organization. It promotes mutuality in terms of goals, responsibility, reward
etc. that will help in enhancing the economic performance and high level of human resource
development.

In early centuries, when Human Resource Management (HRM) was not prevalent, then the
staffing and payroll of the employees were taken care of, by the Personnel Management (PM).
It is popularly known as Traditional Personnel Management. Human Resource Management
have emerged as an extension over the Traditional Personnel Management. So, in this article,
we are going to throw light on the meaning and differences between Personnel Management
and Human Resource Management.

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COMPARISON CHART

Dimensions Personnel Management HRM

Meaning The aspect of management
that is concerned with the
work force and their
relationship with the entity is
known as Personnel
Management
Approach Traditional
The branch of management
that focuses on the most
effective use of the
manpower of an entity, to
achieve the organizational
goals is known as Human
Resource Management.
Modern

Treatment of manpower Machines or Tools Asset

Type of function Routine function Strategic function

Beliefs and assumptions

1. Contract Careful delineation of written Aim to go beyond contract
contracts
2. Rules Importance of devising clear 'Can-do' outlook; Impatience
rules/mutually with 'rule'
3. Guide to management Procedures Business-need'
action
4. Behaviour referent Norms/custom and practice Values/mission
6. Nature of relations Pluralist Unitarist
Strategic
8. Key relations Labor management Customer
9. Initiatives Piecemeal Integrated
11. Speed of decision Slow Fast
Line management
12. Management role Transactional Transformational leadership
13. Key managers Personnel/ IR specialists General/business/line
managers
14. Communication Indirect Direct
16. Management skills Negotiation Facilitation
Key levers

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17. Selection Separate, marginal task Integrated, key task

18. Pay Job evaluation (fixed grades) Performance-related
19. Conditions Separately negotiated Harmonization
21. Thrust of relations with Regularized through facilities Marginalized (with
stewards and training exception of some
bargaining for change
models)
22. Job categories and grades Many Few
23. Communication Restricted flow Increased flow
24. Job design Division of labor Teamwork

Function of Human Resource Management

Human Resource Management is a management function concerned with hiring, motivating,

and maintaining workforce in an organization. Human resource management deals with issues
related to employees such as hiring, training, development, compensation, motivation,
communication, and administration. Human resource management ensures satisfaction of
employees and maximum contribution of employees to the achievement of organizational
objectives.

According to Armstrong (1997), Human Resource Management can be defined as “a strategic

approach to acquiring, developing, managing, motivating and gaining the commitment of the
organisation’s key resource – the people who work in and for it.”

Human Resource Management functions can be classified in following three categories.

 Managerial Functions,
 Operative Functions, and
 Advisory Functions

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1. Planning:
Defined in its simplest terms, planning is the determination of anything in advance of the
action. It involves scanning of the external and internal environment, setting up of goals and
objectives, preparing an action plan to achieve these objectives/goals, laying down policies and
procedures, formulating standards of evaluation and allocating resources.
It requires anticipation, forecasting, predictions and so on. Thus, planning is a deliberate and
conscious effort to utilise the resources to achieve the given ends. Planning is a link between
the present and the future and is a continuous and never-ending process.
The goals set up under planning may be – (a) short term and (b) long term. Besides, these
objectives may be – (a) financial, (b) non-financial and (c) mixed. Above all, planning should
be flexible so that necessary adjustments could be made as and when needed.

Thus, planning provides the basis for effective and most economical action in the future. It
leads to integrated action and reduces considerably the probability of unanticipated crisis. It
also leads to the use of effective and efficient methods and helps in accomplishing the desired
goals of the enterprise through better control and coordination.

So far as an HR manager is concerned, he/she is required to determine in advance an HR

programme that will contribute towards the achievement of goals specified for the
organisa-tion. Thus, it involves planning of manpower requirements and related issues.
Obviously, it is necessary that the HR manager should be an expert in the field of HRP.

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2. Organising:
After plans have been developed and the course of
action determined, organising is next in order. The
process of organising is essential for accomplishing
the objectives of the enterprise. Organising
involves the establishment of an organisation
structure through determination and grouping the
activities, the assignment of activities to the
specified individuals and departments, defining
their role, establishing relationships, the delegation
of authority to carry out the responsibilities and
provision of coordination of men and work.
So far as an HR manager is concerned, in order to execute the HR plans and programmes, he/
she also has to form an organisation. He/she is required to design the structure of the
relationships among – (a) various jobs, (b) various personnel, (c) jobs and men (d) men and
machinery, (e) a specialised unit and the rest of organisation (f) and other physical factors.

In case the relationships among these are well defined, it will leave practically no scope for any
sort of confusion and thus lead to smooth sailing of the organisation towards the specified
goals.

The HR manager is expected to procure the resources necessary to carry out the HR
programme, design an appropriate system to carry out such a programme and also establish
lines of authority and communication between the various people working with or receiving
benefits from the HR programmes. However, the development of sound organisation requires
certain principles.
3. Staffing:
Staffing is a process of manning the organisation and keeping it manned. Needless to mention
that the future of any enterprise is governed by the quality of the hired personnel. In case the
enterprise has failed to get right man for the right job, the accomplishment of the objectives of
the enterprise will be quite difficult.

So far as an HR manager is concerned, he/ she is required to recruit, select, train, place,
compensate, promote and retire the personnel of the organisation at the appropriate time in a
manner most conducive for accomplishing the objectives of the enterprise. The HR department
itself is all about staffing.

4. Directing:
Having a plan and an organisation to execute it, the next step is getting the job done. As the
process of management is concerned with getting work done through and with people, they
require proper motivation. The management is required to lead, guide, motivate, supervise,
communicate and inspire them towards improved performance.

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An HR manager is also expected to do all these things in getting people to go to work will-ingly
and effectively. Although all managers must unavoidably direct their subordinates, the HR
manager should possess exceptional expertise in this regard.

5. Controlling:

Controlling is a very important function of management. In an undertaking, control consists in

verifying whether everything occurs in conformity with the plan adopted, the instructions
issued and the principles laid down. In this way, controlling is a measuring and corrective
device.
Through control, we evaluate the performance against the goals and the plan. Two important
things in the process of control are – (a) a comparison of actual performance as against
standards and (b) taking corrective actions.
So far as the HR manager is concerned, he/she has to evaluate the results of the personnel
activities in comparison with the desired objectives. Through control, he/she measures the
progress of the HR programme along the lines laid out in the programme and determines how
effectively the desired HR objectives were attained.
Thus, we can say that through direct observation, supervision report, records, audits and so on,
the HR manager ensures that the enterprise is carrying out the HR programme on the desired
lines and, if necessary, takes cor-rective steps.

The Operative functions are as follows:

1. Procurement of Human Resource / Employment:
The first important function of HRM is securing and employing the right type of personnel
according to the needs or requirements of the organization. For effective performance of
procurement function, HRM has to perform a number of functions such as manpower planning
which gives the estimate of manpower requirements.
Job analysis includes job description and job specification which gives the idea of title and
nature of job, duties and authorities on that job, specification of personnel required to perform
on that job such as qualification, qualities, experience, skill, talent, training, abilities etc.
Then he has to perform the function of recruitment which involves the identification of sources
of recruitments, selecting the right type of source for recruiting the personnel. Then he has to
perform selection function. Selection procedure has to be chalk out and selecting the right man
for the right job.
Then placing the personnel which involve allocation of job to the most suitable candidates.
After placement arrange the induction programme for the new entrant and give the information
about the company in detail and create a good image and opinion about the organization.

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2. Employee Compensation:
After procurement of employees the next operative function of HRM is compensation function.
It means providing adequate, equitable, regular and fair remuneration to the employees.
According to the services rendered by the employees, remuneration should be given.
For equitable and fair compensation, it should be based on job evaluation, merit rating
Techniques. HRM has to look after the wage and salary administration. He has to formulate
the incentives, bonus, fringe benefits, and social security measures in the interest of the
employees.
3. Development of Human Resource:
Development of Human Resources is done through the training and development programme.
Development process includes improving the skills and knowledge, creativity, ability,
intellectual ability, capacities of employees.
Development process also moulds and changes the attitude and behaviour of the employees,
improves their aptitude, commitment etc. Performance appraisal helps in employee
development programme.
A systematic training programme has to be arranged by the HRM for employee and
management development. He has to prepare career planning and development programme.
HRM has to frame the policies and plans of promotion, demotion and transfer of employees.
4. Developing Healthy Human Relations:
One of the most important operative functions of HRM is developing, maintaining and
preserving the healthy, friendly, harmonious relationship between the management and
employees or employer and employee.
He is also responsible for developing healthy relations between the employee and employer,
between workers and trade unions and management. Due to healthy relations there are no
disputes, clashes and misunderstanding. But it improves morale, team spirit, team work,
cooperation, togetherness, and oneness among the employees.
5. Integration of Conflicting Interest:
HRM has to perform one more important function that is integration of individual employee
interest and business organization interest. Employees are interested in higher wages and
salaries, more facilities, bonus, social security, less working hours, overtime wages, best
working conditions and so on.
On the other hand company is interested in more profit, higher production and efficiency, long
working hours, minimum working condition, etc. HR managers have to integrate these
conflicting interests in a way that both the parties should be satisfied.
6. Safety and Health of Employees:
HR manager has to take the care of safety and health of the employees. In case of employees
whose work is risky, and hazardous, HR manager has to provide the safety measures to the
employees. Regular medical checkup of the employees has to be done. Free medicines,
treatment should be provided to the employees who fall sick.

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7. Stability and Optimum Utilization of Employees:

HR manager has to maintain the employees in the organization and has to utilize them at the
optimum level, He must ensure the best utilization of employees. For this he has to motivate
the employees and to give them job satisfaction, job security, participate them in management.
Their grievances should be promptly resolved. Opportunities for career development should be
given so that employees may prefer to stay in the same organization and company can enjoy
the benefits of stable workforce.
8. Personnel Research, Audit and Records:
HR manager has to conduct research in various areas of human resource for example, research
in motivational techniques, behavioural sciences, attitude, turnover, absenteeism, development,
performance, morale and so on. Audit involves the periodical assessment and appraisal of
employee performance.
Moreover he has to maintain the updated records of the employees since joining till their
retirement by maintaining service books or records. These records would help at the time of
promotion, demotion and transfer of employees.

HUMAN RESOURCE MANAGER DUTIES

In providing this specialized assistance, the human resource manager carries out three distinct
functions:

1. A line function. The human resource manager directs the activities of the people in his or
her own department, and perhaps in related areas (like the plant cafeteria).

2. A coordinative function. The human resource manager also coordinates personnel activities,
a duty often referred to as functional authority (or functional control). Here he or she ensures
that line managers are implementing the firms’ human resource policies and practices (for
example, adhering to its sexual harassment policies).

3. Staff (assist and advice) functions. Assisting and advising line managers is the heart of the
human resource manager s job. He or she advises the CEO so the CEO can better understand
the personnel aspects of the company s strategic options. HR assists in hiring, training,
evaluating, rewarding, counselling, promoting, and firing employees. It administers the various
benefit programs (health and accident insurance, retirement, vacation, and so on). It helps line
managers comply with equal employment and occupational safety laws, and plays an important
role in handling grievances and labour relations. It carries out an innovator role, by providing
up-to-date information on current trends and new methods for better utilizing the company s

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employees (or human resources). It plays an employee advocacy role, by representing the
interests of employees within the framework of its primary obligation to senior management.
Although human resource managers generally can’t wield line authority (outside their
departments), they are likely to exert implied authority. This is because line Managers know
the human resource manager has top management s ear in areas like testing and affirmative
action.
ENVIRONMENT OF HRM
Internal environment:

Trade union:

They are formed protect workless interest. There is trade union influenced compensation.
Social security, incentives, industrial relation, grievances and separation.

Organizational culture:

Culture represents the personality or identity of the organization. It comprises of its values.
Believe and ethics. HR practices should be in tune with the culture of the organization.

Organizational conflict:

Conflicts happen because of difference between individual and organizational goals. HR has
to ensure the right fit between individual and organizational goals.

Vision and mission:

The vision and mission of the organization has an important influences HR policies system and
practices. Organizations which focus an innovation would recruit people who are creative.

2. External environment:

Technology environment:

Technology development is happening in a capital manner. They influence the way HR

function are performed and HR policies are implemented. Development in information
technology, internet and social media have a great impact on HR.

Economic environment:

It is the economic environment is good companies would create demand for human resources.
The HR department has to take step for requirement, selection and training of employees.

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3. Legal environment:

Every organization has to be aware and comply with labour legislation such as the factory Act,
industrial dispute Act, minimum wages Act, payment of bonus Act, etc.,

4. Labour markets:

Labour markets comprise of the demand for labour and supply of labour. If the demand for
labour exceeds supply. Wages rates would increase. It the demand for labour wages is loss than
supply wages rate would decrease.

5. Human resource condition:

The education, skill level and availability of human resources influence HR policy. Today work
force more literate, skilled and knowledgeable they expect rewards based on performance, roll
in decision making and fair- treatment.

STRATEGIC HUMAN RESOURCE MANAGEMENT

If a firm’s competitiveness depends on its employees, then the business function responsible
for acquiring, training, appraising, and compensating those employees has to play a bigger
role in the firm’s success. The notion of employees as competitive advantage has therefore
led to a new field of study known as strategic human resource management, “the linking
of HRM with strategic goals and objectives in order to improve business performance
and develop organizational cultures that foster innovation and flexibility.”

Strategic HRM is concerned with the following:

1. Analyse the opportunities and threats existing in the external environment.

2. Formulate strategies that will match the organisation’s (internal) strengths and
weaknesses with environmental (external) threats and opportunities. In other words,
make a SWOT analysis of organisation.
3. Implement the strategies so formulated.
4. Evaluate and control activities to ensure that organisation’s objectives are duly
achieved.

Basically any strategic process can be broken down into two phases:
1. Strategy Formulation
2. Strategy Implementation
Let us examine the role of HR in these two phases separately.

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Role in Strategy Formulation:

The environmental scanning is followed by strategy formulation.

 Environmental scanning helps an organisation identify its opportunities and threats

prevalent in the external environment.
 Here, HRM proves of great help in scanning the existing (external) environment, and
thus, identifies the specific opportunities and threats of it for the organisation.
 Besides, HRM is also of great help to make the organisation competitive and make
the best use of intelligence available. This may include the incentive plans being used
by the competitors, customer- I complaints, labour laws, etc.
 HR also participates in strategy formulation process by supplying information
regarding the company’s internal strengths and weaknesses.
 IBM’s decision to buy Lotus was probably prompted in part by IBM’s conclusion that
its own resources were inadequate to enable the firm to reposition itself as an industry
leader in networking systems, or at least to do so quickly enough.

Role in strategy implementation:

 HRM plays a crucial role in the successful execution or implementation of company’s

strategic business plan.
 Example: Maruti Udyog and Hindustan Motors are manufacturing cars, essentially
using identical technology. The secret behind the meteoric rise of Maruti is its human
resource/workforce.
 HRM supports strategy implementation in some other ways as well. For example, HR
is today heavily involved in the execution of strategy in the form of downsizing and
restructuring strategies, through outplacing employees instituting performance linked
pay plans, reducing health-care costs and retraining employees.
 Instituting HR practices that build employee commitment can help improve an
organisation’s responsiveness.

Jawahar Science College, Block-14, Neyveli. Page 18 of 18