UNIT 1

UNIT I –Perspectives in Human Resource Management

Evolution of human resource management – The importance of the
human factor – Challenges – Inclusive growth and affirmative action
–Role of human resource manager – Human resource policies –
Computer applications in human resource management – Human
resource accounting and audit.

PERSPECTIVE IN HUMAN RESOURCE MANAGEMENT

*EVOLUTION OF HUMAN RESOURCE MANAGEMENT

Evolution of HRM over the period of time is important for
understanding the philosophy, functions, and practices of HRM that are
followed in different situations so that relevant HRM practices are
evolved in the present situation.
HRM, being a part of management discipline, has followed the pattern of
development of management because of the interrelationship of the
problems of both the fields.

Human Resource Management (HRM) is relatively a very recent term

considered for managing human resources in an organisation. HRM is
still evolving to become an amalgam of organisational behaviour,
personnel management, industrial relations and labour legislation.
The evolution of the concept of Human Resource Management is
presented below

Period before industrial revolution – The society was primarily an

agriculture economy with limited production. Number of specialized
crafts was limited and was usually carried out within a village or

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community with apprentices assisting the master craftsmen.
Communication channel were limited.

Period of industrial revolution (1750 to 1850) – Industrial revolution

marked the conversion of economy from agriculture based to industry
based. Modernization and increased means if communication gave way
to industrial setup. A department was set up to look into workers’ wages,
welfare and other related issues. This led to emergence of personnel
management with the major task as:
– Worker’s wages and salaries
– Worker’s record maintenance
– Worker’s housing facilities and health care

An important event in industrial revolution was growth of Labour Union

(1790) – The works working in the industries or factories were subjected
to long working hours and very less wages. With growing unrest, workers
across the world started protest and this led to the establishment of
Labour unions. To deal with labour issues at one end and management
at the other Personnel Management department had to be capable of
politics and diplomacy, thus the industrial relation department emerged.

Post Industrial revolution – The term Human resource Management saw

a major evolution after 1850. Various studies were released and many
experiments were conducted during this period which gave HRM
altogether a new meaning and importance.

A brief overview of major theories release during this period is presented

below

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Frederick W. Taylor gave principles of scientific management (1857 o
1911) led to the evolution of scientific human resource management
approach which was involved in
– Worker’s training
– Maintaining wage uniformity
– Focus on attaining better productivity.

Hawthorne studies, conducted by Elton Mayo & Fritz Roethlisberger

(1927 to 1940). – Observations and findings of Hawthrone experiment
shifted the focus of Human resource from increasing worker’s
productivity to increasing worker’s efficiency through greater work
satisfaction.

Douglas McGregor Theory X and Theory Y (1960) and Abraham

Maslow’s Hierarchy of needs ( 1954) – These studies and observations
led to the transition from the administrative and passive Personnel
Management approach to a more dynamic Human Resource
Management approach which considered workers as a valuable resource.
As a result of these principles and studies, Human resource management
became increasingly line management function, linked to core business
operations. Some of the major activities of HR department are listed as-

Recruitment and selection of skilled workforce.

Motivation and employee benefits
Training and development of workforce
Performance related salaries and appraisals.
Strategic Human Resource Management Approach

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With increase in technology and knowledge base industries and as a
result of global competition, Human Resource Management is assuming
more critical role today. Its major accomplishment is aligning individual
goals and objectives with corporate goals and objectives. Strategic HRM
focuses on actions that differentiate the organization from its
competitors and aims to make long term impact on the success of
organization.

IMPORTANCE OF THE HUMAN FACTOR

• Proper utilization of other resources
– Help transform lifeless factors of production into useful products
• Capable of enlargement
– produce extraordinary things when inspired
– Can help organisation achieve results quickly, efficiently & effectively.
• The secret of their success is ―The way they treat their employeesǁ-
Sony
• Nestle CEO ―Every single person in the organization should ask
himself or herself –is there anything I can do to add a little more value to
our organization
• ―How important are people treated in the Organization.
• Organization –acquires the services from the Employees, develop
their Skills and motivate them to achieve the organization objectives.
• HR - Productivity, Quality Work Life & Profit.
• ―The Enterprise is Peopleǁ, ―Organization need people and
People need Organization.

IMPORTANCE OF HUMAN RESOURCE MANAGEMENT

The importance of human factor can be discussed as follows:

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a) Social Significance:
Proper management of personnel, enhances their dignify by satisfying
their social needs. This it does by i) maintaining a balance between the
jobs available and the jobseekers, according to the qualifications and
needs; ii) providing suitable and most productive employment, which
might bring them psychological satisfaction; iii) making maximum
utilization of the resource in an effective manner and paying the
employee a reasonable compensation in proportion to the contribution
made by him; iv) eliminating waste or improper use of human resource,
through conservation of their normal energy and health; and v) by
helping people make their own decisions, that are in their interests.

b) Professional Significance:
By providing a healthy working environment it promotes teamwork in
the employees. This it does by i) maintaining the dignity of the employee
as a human-being’; ii) providing maximum opportunities for personal
development; iii) providing healthy relationship between different work
groups so that work is effectively performed; iv) improving the
employees‘ working skill and capacity; v) correcting the errors of wrong
postings and proper reallocation work.
c) Significance for Individual Enterprise:
It can help the organisation in accomplishing its goals by: i) creating
right attitude among the employees through effective motivation; ii)
utilizing effectively the available human resources; and iii) securing
willing co-operation of the employees for achieving goals of the
enterprise and fulfilling their own social and other psychological needs
of recognition, love, affection, belongingness, esteem and self-
actualisation.

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Dynamic and growth-oriented organisations do require effective
management of people in a fast-changing environment. Organisations
flourish only through the efforts and competencies of their human
resources. Employee capabilities must continuously be acquired,
sharpened and used. Any organisation will have proper human resource
management i) to improve the capabilities of an individual; ii) to develop
team spirit of an individual and the department; and iii) to obtain
necessary cooperation from the employees to promote organisational
effectiveness.
It is the human resource, which is of paramount importance in the
success of any organisation, because most of the problems in
organisational settings are human and social rather than physical,
technical or economic. Failure to reorganize this fact causes immense
loss to the nation, enterprise and the individual. In the words of Oliver
Sheldon, ―No industry can be rendered efficient so long as the basic fact
remain unrecognized that it is principally human. It is not a mass of
machines and technical processes, but a body of men. It is not a complex
matter, but a complex of humanity. It fulfils its function not by virtue of
some impersonal force, but a human energy. Its body is not an intricate
maze of mechanical devices but a magnified nervous systemǁ.
People at work ‘comprise a large number of individuals of different sex,
age, socio-religious group and different educational or literacy
standards. These individuals in the work place exhibit not only similar
behaviour patterns and characteristics to a certain degree, but they also
show dissimilarity. Each individual who works has his own set of needs,
drives, goals and experiences. Each has his own physical and
psychological traits. Each human being is not only a product of his
biological inheritance but also a result of interactions with his
environment. Family relationships, religious influences, racial or caste

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backgrounds, educational accomplishment, the application of
technological innovations, and many other environmental-experimental
influences affect the individual as he works.
People come to work with certain specific motives to earn money, to get
employment, to have better prospect in future, to be treated as a human
being while at the place of work. They sell their labour for reasonable
wage / salary and other benefits. It is these people who provide the
knowledge and much of the energy through which organisational
objectives are accomplished.
The management must, therefore, be aware not only of the
organisational but also employee needs. None of these can be ignored.
Human resource management performs a number of management and
operative functions. A lot of time and effort is involved in conducting the
various human resource activities, so it becomes important to ensure
that these activities should return value for the investment which is
made in them.

Human resource activities if conducted properly can result in

tremendous benefits to the organisation; some of the
important ones are listed as under:

Importance # 1. Explicit Communication:

HR planning can help a firm develop a focused set of strategic objectives
and communicate them effectively to people at various levels in the
organisation. It ensures effective communication to employees regarding
the organisation’s policies, procedures and guidelines.

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Importance # 2. Successful Procurement:
An effective human resource management program ensures successful
procurement which results not only in the organisation’s acceptance of
the person, but also in the person’s acceptance and satisfaction with the
job and the company.

Importance # 3. Reduced Layoffs:

It results in reduced number of voluntary as well as involuntary layoffs in
the organisation by listening to the employee’s grievances and handling
them at priority basis.

Importance # 4. Reduced Turnover:

An effective HRM system can ensure reduced absenteeism, and turnover
of employees.

Importance # 5. Coordination and Integration:

Human resource managers ensure proper coordination and integration
between the authority and responsibility relationships existing between
various levels in the organisation.

Importance # 6. Increased Productivity:

It can result in increased productivity for the organisation and
realisation of the individual as well as organisational goals effectively by
ensuring fully trained and developed workforce.

Importance # 7. High Motivational Levels:

The motivational levels of employees in the organisation can also be
maintained by ensuring fairness and equitableness in their
compensation with the help of effective human resource management.

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Importance # 8. Parity in Compensation:
The salary structure designed for organisation ensures not only the
internal parity but at the same time maintains external parity with other
competitive organisations as well.

Importance # 9. Competitiveness:
In addition to ensuring that the firm is generally competitive in terms of
salary, the human resource manager also ensures that expenditures are
within allocated budgets.

Importance # 10. Reduced Discontent:

An effective HRM program tries to reduce employee’s discontent with
organisation by handling their formal as well as informal complaints
effectively.

Importance # 11. Retaining Effective Employees:

Various types of incentive pay plans are also introduced by human
resource managers to attract and retain effective employees in their
organisation.

Importance # 12. Ensuring Integration:

Ensuring integration of individual, societal and organisational interests
is one of the most difficult tasks being performed by the human resource
managers. They deal with the feelings and attitudes of employees in
conjunction with the principles and policies of organisations ensuring an
overall increase in the goodwill or the image of the organisation.

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Importance # 13. Effective Separation:
The HRM program ensures effective separation of employees through
carefully designed programs for retirement, layoffs, and discharge. Even
the separation needs to be handled carefully so that the employees who
are leaving the organisation should leave it on a good note.

Importance # 14. Cordial Human Relations:

Finally human resource management ensures cordial human relations
existing within the organisation and reduced cases of industrial disputes,
strikes and lockouts.

Importance # 15. Enforced Values:

The strategic HRM plan reinforces certain values, such as, customer
focus, innovation, fast growth, and cooperation which go a long way in
adding to the success of the organisation.

The importance of HRM is discussed below:

Importance # 1. Social Level:

Proper management of personnel enhances their dignity by satisfying
their social needs.

This is done by taking following steps:

(i) Forming a balance between the jobs available and the job seekers,
according to the qualifications and needs of the organisational criteria.
(ii) Giving the organisation suitable and the most productive
employment, which might bring to them psychological satisfaction.

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(iii) Utilising maximum resources in an effective manner and paying the
employee a reasonable compensation in proportion to the contribution
that has been made by him.
(iv) Reducing waste or improper use of human resources, through
conservation of their normal energy and health.
(v) Assisting people to take their own decisions that are in their interests.

Importance # 2. Professional Level:

By crediting healthy working environment, teamwork in the employees
is promoted.
This is done by taking the following steps:
(i) Forming the dignity of the employees as a ‘human-being’.
(ii) Giving maximum opportunities to the development of individual.
(iii) Giving healthy relationship between different workgroups so that
the work may be effectively performed.
(iv) Enhancing the employee’s working skill and capacity.
(v) Rectifying the errors of wrong postings and proper re-allocation
work.

Importance # 3. Individual Level:

It can help the organisation in accomplishing its goals by
adopting the following measures:
(i) Making right attitude among the employees through effective
motivation.
(ii) Making effective use of effectively the available human resources that
are available.
(iii) Tying willing cooperation of the employees for achieving goals of the
enterprise and fulfilling their own social and other psychological needs

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of recognition, love, affection, belongingness, esteem and self-
actualisation.

Importance # 4. Corporate Level:

HRM is of great use in helping business organisations to attain
its goals and objectives more efficiently and effectively in the
following ways:
(i) By ensuring that business organisation has a team of dedicated,
competent employees.
(ii) By utilizing all available human resources.
(iii) By attracting as well as retaining requisite talent through the
following effective HR planning, recruitment, selection, placement,
orientation, compensation, and promotion policies.
(iv) By developing a requisite skills and correct attitude amongst the
employees through the proper training of employee, development,
performance appraisal and other schemes.
(v) By effectively securing the willing cooperation of employees through
motivation, grievance handling and so on.

Importance # 5. National Level:

HRM plays a very vital role in the development of nation in
following ways:
(i) Judious utilisation of natural, physical and financial resources of
nation requires an efficient and committed workforce.
(ii) Economic development of nation is dependent upon the skills,
attitudes, and values of its human resource.
(iii) It aids to accelerate the process of economic growth.

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(iv) It assists to help in improving the standard of living and better
employment.

CHALLENGES IN HUMAN RESOURCE MANAGEMENT

Challenge # 1. Managing Workforce Diversity:

An important challenge that human resource managers face involves
workforce diversity, i.e., the increasing heterogeneity of organisations
with the inclusion of employees from different groups such as women,
physically disabled persons, retired defence personnel, backward classes,
ethnic groups, etc.

Whereas globalisation focuses on differences between personnel from

different countries, workforce diversity addresses differences among
people within the same country.
For instance, more and more women have been joining the organisations
in India and women executives have also been occupying important
positions at the middle and top levels in the organisations. This in itself
is a challenge for organisations as, traditionally, the Indian society has
been male dominated.

Workforce diversity has significant implications for the management.

The managers will be required to shift their approach from treating each
group of workers alike to recognizing differences among them and
following such policies so as to encourage creativity, improve
productivity, reduce labour turnover and avoid any sort of
discrimination.

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When workforce diversity is managed properly, there would be better
communication, better human relations and congenial work culture in
the organisation.

Challenge # 2. Meeting Aspirations of Employees:

There has been a rise in the proportion of employees in today’s
industries who belong to the younger generations whose aspirations are
different from those of the earlier generations. Today’s workers are more
careers oriented and are clear about the lifestyle they want to lead.
Considerable changes have been noted in the career orientation of the
employees.
They are becoming more aware of their higher-level needs and this
awareness would intensify further among the future employees. The
managers would be required to evolve appropriate techniques to satisfy
the higher-level needs of the employees and develop suitable plans for
their career advancement.

Challenge # 3. Empowerment of Employees:

There has been a general change in the profile of workforce in industrial
and other organisations. The organisations in future will get better
qualified and career oriented young employees. The proportion of
professional and technical employees will also increase as compared to
the blue collared employees.

They will seek greater degree of participation in goal setting and

decision-making and also demands greater avenues of self-fulfilment. To
respond to these demands, organisations will have to be redesigned or
restructured to empower the employees so that they have sufficient
autonomy or freedom to take decisions while performing their jobs.

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Empowerment involves giving the employees more information and
control over how they perform their jobs. Various techniques of
empowerment range from participation in decision-making to the use of
self-managed teams. In future, organisations will follow team structures
which will pave the way for empowerment of lower levels.
Empowerment would be all the more necessary to speed up the process
of decision-making, make use of environmental opportunities and to
serve the customers and society better.

Challenge # 4. Management of Human Relations:

Management of human relations in the future will be more complicated
than it is today. “Many of the new generation of employees will be more
difficult to motivate than their predecessors. This will in part be the
result of a change in value system coupled with rising educational levels.
Greater scepticism concerning large organisations and less reverence for
authority figures will be more common. Unquestioning acceptance of
rules and regulations will be less likely.”

Since workforce in future will comprise better educated and self-

conscious workers, they will ask for the higher degree of participation
and avenues for self- fulfilment. Moreover, the proportion of
professional and technical employees will increase in relation to blue-
collar workers. The ratios of female employees in the total workforce wall
also rise. Integration of women within managerial ranks might itself be a
problem.

Money will no longer be the sole motivating force for majority of the
workers. Non-financial incentives will also play an important role in
motivating the workforce. In short, human resources will be treated as

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assets which will appear in the Balance Sheets of business organisations
in future.

Challenge # 5. Dynamic Personnel Policies and Programs:

The Human Resource Manager of tomorrow will not only look after
personnel functions, but will also be involved in human resource policies
and programs for the entire organisation. Similarly, human resource
management is not merely going to be an exclusive job of the HR
Manager, but every executive in the organisation would be made
responsible for the effective management of people in his unit.

Thus, management of human resource will receive greater attention of

all managers from top to bottom. The human resource manager would
play a key role in the formulation of personnel policies, programs, plans
and strategies of the organisation. Every HR program will have to be
properly planned and directed by the human resource manager in
consultation with the line and functional managers.

Challenge # 6. Building Responsive Organisation:

The Human Resource Manager will have to contribute tremendously to
the building up of responsive organisation. Creating adaptive customer-
oriented organisation would require soliciting employees’ commitment
and self-control and encouraging empowerment of employees. Instead of
imposing himself as the traditional boss, the future manager will have to
think of himself as a ‘team-leader’, ‘internal consultant’ and ‘change
facilitator’.

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Challenge # 7. Creating Dynamic Work-Culture:
The human resource manager will have to mobilise a new work ethic so
as to assist the top management in setting up and enforcing quality
standards. Greater efforts will be needed to achieve group cohesiveness
because workers will have transient commitment to groups.
As changing work ethic requires increasing emphasis on individuals, jobs
will have to be redesigned to provide challenge to the employees. Flexible
starting and quitting times for employees [flexitime] may become
necessary. Further, focus will shift from extrinsic to intrinsic motivation
of employees.

In future, changes will have to be initiated and managed to improve

organisational effectiveness. A work culture conducive to absorption of
changes in the technological, economic, political, socio-cultural and
international environment will have to be nourished by the
HR/Personnel executives if they want to acquire higher status in
industry and society.

They will also have to make top management more actively involved in
the development of human resources for meeting the challenges of
environment and enhancing organisational effectiveness.
Over the years, human resource management has emerged as a
discipline in its own right and the HR manager as a professional.
Professional dynamics will enhance its prestige and quality of service.
However, its survival and success in future will depend upon the
judicious application of knowledge and skills available. Human resource
management will emerge as a well-established, well-respected and well-
rewarded profession, comparable to other established professions

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provided the challenges and opportunities are successfully exploited for
its advancement.

Challenge # 8. Building Core Competence and Creating

Competitive Advantage:
The human resource manager has a great role to play in developing core
competence by the firms. A core competence is a unique and unlimitable
strength of an organisation which may be in the form of human
resources, marketing capability, or technological capability. If the
business is organised on the basis of core competence, it is likely to
generate competitive advantage.

Because of this reason, many organisations have restructured their

business by divesting those business activities which do not match core
competence or acquiring those business activities which fit their core
competence such as Gujarat Ambuja acquiring cement companies and
Reliance Industries acquiring yam companies. In fact, organisation of
business around core competence implies leveraging the limited
resources of the firm. It needs creative, courageous and dynamic
leadership having faith in the organisation’s human resources.
In today’s globalized market piece, maintaining a competitive advantage
is the foremost goal of any business organisation. There are two
important ways a business can achieve a competitive advantage. The first
is cost leadership which means the firm aims to become the low-cost
leader in the industry.

The second competitive strategy is differentiation under which the firm

seeks to be unique in the industry in terms of dimensions that are widely
valued by the customers.

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Putting these strategies into effect carries a heavy premium on having a
highly committed and competent workforce. Such a workforce would
enable the organisation to compete on the basis of market
responsiveness, product and service quality, differentiated products and
technological innovation. Creation of competent and committed
workforce is a great challenge for the human resource manager.

Challenge # 9. Outsourcing HRM Functions:

These days, many organisations are outsourcing routine HRM functions
so as to focus on strategic HR issues that affect corporate performance
and shareholder value. The HRM functions which are of routine type and
can be safely outsourced include recruitment, selection, compensation,
job evaluation, training, etc. Outsourcing of such functions would enable
the management pay greater attention to core business activities.

The term ‘outsourcing’ means getting some service from external service
providers or agencies rather than performing it within the organisation.
This practice is called Business Process Outsourcing (BPO). The basic
feature of BPO is that companies hire out on contract those services or
tasks which fall outside the area of their ‘core competence’.
For example, a business enterprise may outsource employment of
personnel, training of personnel and payroll accounting to a specialised
service provider, often called a BPO film.

Outsourcing of routine HRM functions is cost effective. The

management need not invest in the staff and necessary infrastructure for
the performance of routine functions. Further, BPO firms use their
expertise in the performance of such functions.

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INCLUSIVE GROWTH AND AFFIRMATIVE ACTION
• Affirmative action should provide consistent, fair and ethical
leadership to meet present and future HR challenges.
NEW TRENDS IN HUMAN RESOURCE MANAGEMENT
Attitude Surveys
Better Communication Channels
Change in the Work-Life
Job Redesign
Job Enlargement
New approaches to compensation and rewards Career Planning
Performance Appraisal Decentralisation
Breaking down the hierarchical structure Facilitating Empowerment
Initiating and facilitating process of change Enlarging the knowledge
base
Developing team spirit
Facilitating the employee’s desires of self-actualisation.

Role of HRM
The role of HRM is to plan, develop and administer policies and
programs designed to make optimum use of an organizations human
resources. It is that part of management which is concerned with the
people at work and with their relationship within enterprises. Its
objectives are:
(a) Effective utilization of human resources,
(b) Desirable working relationships among all members of the
organizations, and
(c) Maximum individual development.
Human resources function as primarily administrative and professional.
HR staff focused on administering benefits and other payroll and

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operational functions and didn’t think of themselves as playing a part in
the firm’s overall strategy.
HR professionals have an all-encompassing role. They are required to
have a thorough knowledge of the organization and its intricacies and
complexities.
The ultimate goal of every HR person should be to develop a linkage
between the employee and organization because employee’s
commitment to the organization is crucial.

ROLE OF HUMAN RESOURCE MANAGER

1. Recruitment
2. Training
3. Maintaining work culture
4. Employee relations
5. Rewards and incentives
6. Organization
7. Management
8. Payroll management
9. Legal Knowledge
10. Resolving conflicts

Responsibilities
• Set objectives for the HR team and track progress
• Design and implement company policies that promote a healthy work
environment
• Develop compensation and benefits plans
• Support and suggest improvements to the entire recruitment process
• Host in-house recruitment events

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• Discuss employees’ career development paths with managers
• Monitor HR metrics (e.g. turnover rates and cost-per-hire)
• Review departmental budgets
• Organize learning and development programs
• Ensure HR staff addresses employees’ requests and grievances in a
timely manner
• Maintain HR procedures that comply with labour regulations

HUMAN RESOURCE POLICIES

Human resource management consists of deliberate organizational
activities designed to improve employee productivity and administration
through such means as recruitment, compensation, performance,
evaluation, training, record keeping and compliance. HR policies should
be developed for key HR management functions covering eight
commonly accepted responsibilities:

1. Compensation and benefits

2. Labour management relations
3. Employment practices and placement
4. Workplace diversity
5. Health, safety and security
6. Human resources information systems
7. Human resource research
8. Training and development

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The following steps should be taken when formulating or
revising policies:

1. Gain understanding of the corporate culture and its shared values

2. Analyse existing policies: both written and unwritten existing
policies.
3. Analyse external influences: HR policies are subject to the
influence of many legislation, regulations and authorities, thus the
codes of practice issued by the professional institutions should also
be consulted.
4. Assess any areas where new policies are needed or existing policies
are inadequate.
5. Check with managers, preferably starting with the organization's
leadership team, on their views about HR policies and where they
think could be improved.
6. Seek the view of employees about the HR policies, especially to the
extent for which they are inherently fair and equitable and are
implemented fairly and consistently.
7. Seek the view of the union's representatives.
8. Analyse the information retained in the previous steps and prepare
the draft policies.
9. Consult, discuss and agree on policies with management and union
representatives.

COMPUTER APPLICATIONS IN HRM

The computer application in human resource management is the
managerial applications of computer use which is usually known as
management information system. In case of Human Resource
Management, it is known as Human Resource Information System

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(HRIS). Computer converts the data into meaningful information
needed by the manager to make decisions, planning and control.

Today HRIS is computer-based information system. Manager as a

decision maker is a processor of information. He must possess the ability
to obtain the information, store the information, process and retrieve the
information and use it for the right decision.
Today knowledge is increasing with the tremendous speed. There is an
explosion of knowledge. Current information is very essential for right
decision.

Speed and accuracy is the special feature of computer. The machine does
not get bored or fatigued. It can handle any quantity of data. The speed
and accuracy of computer has led to speedy transactions and other
business operations. The information is made available to management
more quickly Computer provides large and sophisticated database to the
manager that can be used at appropriate time for making decisions.

Today’s computer languages are user friendly that allow manager to

learn enough skills in a short time ranging from a day or two to have an
access to the most of their demand for immediate and ad hoc
information provided data are properly collected, organized and stored
in a computer. Management must insist on economic quality the quality
which is cost effective. It should establish quality standards that reflect
needs of the organisation. It can be easily done through “Quality Circles’.
They should focus their attention on programming techniques,
documentations, new technology use etc. Computer is a time saver
device.

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Data and Information:
There is a distinction between data and information. Data are facts and
figures in the form of historical records that are not used in making
decisions. Information on the other hand consists of data which are
retrieved and processed and used for making decisions, forecasting and
argument. Processed data is information.

Decisions Support System:

Decision support system aids the manager in decision making. According
to R. H. Sprague and E. D. Karlson, decision support system is, “an
interactive computer-based system that helps decision makers utilizes
data and models to solve unstructured problems.”
A decision support system can be created in which senior and
experienced manager’s procedures and methods of decision making can
be replicated. It will help the managers immensely to arrive quickly at a
decision on any problem related to human resources of the organisation.
DSS facilitates the present executive to have experts’ advice at his
fingertips. The system is user friendly. It provides a readymade advice to
the executive. DSS for several human resources problems can be
developed and kept ready. DSS helps an executive to plan for future.

Data base Management System:

It is a collection of software for processing interrelated data. In large
organisations there is an expansion in succession at the bottom
structure. They face with a problem of integrating the organisations
human resources information.
Their activities should be integrated. The information about their
activities should be integrated. There are several software packages that

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are developed to integrate the data contained in a data base. Such
software packages are known as database management systems.
The data base management systems are special computer programmes
enabling user to create, manipulate, retrieve and maintain file data. The
database management system facilitates creation, addition, deletion and
modification and sorting of records.
It also helps in preparing printed reports as per required specifications.
It helps in arranging the data in desired sequence. It acts as an interface
between applications programme and the office files.

Data base Management System

Data base management system provides access to file inquiries and
information, other details regarding employees, updates records, creates
reports etc. It makes efficient use of computerized storage space.

Management Information System:

Management information system or MIS is the old concept. The
computerized MIS is new. Executives used MIS for planning and control.
Computerized MIS added new dimensions by way of increased speed
and accuracy. The use of computer has made the management
information system feasible. It is not necessary that management
information system should be computerized. There are host of tasks that
are performed perfectly by employees and executives but there are
certain tasks that can be speedily and accurately performed by this
electronic machine” computer.

According to Gordon B. Davis and Margrethe H. Olson management

information system is, “an integrated, user machine system for providing
information to support operations, management and decision-making

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functions in an organisation. The system utilizes computer hardware and
software; manual procedures; models for analysis, planning, control and
decision making; and a data base.”

MIS helps in integrating organisational information. In respect of

human resources management, it helps in having the integrated
information in respect of human resources of the organisation. The
information can be utilized by anyone needing it for which the
knowledge of computer is not essential. Simply knowledge of using it will
do. MIS is a support system for various functions of management.

Organisation is a techno-economic and social system. MIS draws upon

the organisation, organisation theory and management. If helps in
understanding organisational structure and design, organisational
change processes, motivation, decision making, organisational behaviour
pattern etc.

Organisation is a system consisting several subsystems based on

functional activities such as Production, Marketing, Personnel, Finance,
Sales, Accounting, and Materials etc. MIS tries to bring about their
integration for smooth working. Human resources are used in each
system manning respective positions.

MIS helps in providing integrated information in respect of all human

resources of the organisation. The information system should match
managerial needs of the organisation. Computer Applications in Human
Resource Management programme and the office files. The figure given
below is an illustration.

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Management’s Needs and Information Systems:
The information systems come to the rescue of employees and executives
while performing their jobs at their workplace. The system helps them to
improve their performance leading to complete job satisfaction. The
information needed by the executives differ in quantity and quality
according to their position and level in the organisational hierarchy.
Traditionally the management of organisation has a pyramidal shape, i.e.
narrower at the top having flattened base. This organisational pyramid
can be divided into three levels; top, middle and lower. Top management
consists of top-level managers such as managing directors, chief
executive officer etc., the middle level management consists of middle
level management i.e., the departmental heads and lower level of
management consists of the front-line supervisors, superintendents and
other operational staff. For performing the works, they require different
types of information. The information for performance can also be
divided, according to these levels because the decisions to be made differ
according to the managerial hierarchy.

Levels of Management in an Organisation

The top-level management requires Decision Support System or DSS to

frame organisational strategy in respect of various aspects of
organisation. They may frame the strategy in respect of human resources
of the organisation. They have to take strategic decisions requiring an
interactive computer-based system which is known as decision support
system.

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The middle level management has to make tactical decisions for which
they need the data base system known as management information
system or MIS. Lower level management has to make operational
decisions for actual work performance, the system they require for the
purpose is known as the electronic data processing system or EDP
system.

The information needed by the executive depends on the technical

background, decision making ability and managerial leadership style
adopted nature of the corporate body structure of organisation and
executive’s perception of requirements of information.

Human Resource System:

Human resource is actually a subsystem of a system, the organisation.
Human resource system includes acquisition of human resources, their
training and development, compensation, other benefits, health and
safety, job analysis, job description, job specification, performance
evaluation, job evaluation, other information relating to human
resources such as skill, competence, experience, their yearly increments,
bonus, cost of acquiring human resources, cost of training, composing
skill inventory, strategy in respect of acquisition, retention of human
resources etc.
The complete information in all these respects is to be kept ready at
hand. Computers aid in keeping all this information and make it
available at the fingertips of human resource manager. Human resources
are the part of the whole system. They are working in all functional areas
of the organisation manufacturing, marketing, sales, finance, logistics,
research and development, advertising, etc.

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Complete information is to be stored, compiled, processed, retrieved
along with the external agencies like government, dealers, wholesalers,
financers, suppliers etc. A system oriented human resource function
integrates and interrelates with other functions of the organisation. The
computerized human resource system is known as human resource
information system or HRIS. It is dealt with in the chapter Human
Resource Planning earlier.

HRIS maintains the up to date information relating to all aspects of

human resources of the organisation and works as decision support
system. Its input is raw data and output is information. It is a system
that acquires, manipulates, analyses, stores, retrieves and makes
available the instant information in respect of human resources of the
organisation. The information is finished and structured one. Some
personnel are required to work with the system. They include Systems
Manager who is responsible for planning, monitoring and controlling the
activities relating to computerization.

System Analyst is another personnel required in the system to study and

analyse the problems and prepare solutions and programme
specifications. The third personnel in the system and in the hierarchy are
the Programmer. More programmers are required to prepare computer
programmes based on specifications prepared by system analyst. The
fourth personnel in the system who works at the lowest level in the
hierarchy is the Data Entry Operator.

More such operators are required who are responsible for entering the
data into computer system. This man machine interface is known as
human ware or livewire. These people prepare several software’s and

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databases and pass on the information on line by making these systems
accessible. In this way eliminating waste and achieve significant
improvements in data quality, thus helping the line managers to solve
their human resource problems.
The computerized systems have added value to the human resource
development and management giving an opportunity to emerge as power
base in the organisation. Now the electronic mail, computer to computer
links and videoconferencing have brought about transformation of
human resource function. It has also brought down the overhead costs
incurred.

The human resource management system consists of several inputs and

outputs and other activities and processes working through information
media. The system possesses a computerized data base management
system, programme for cross checks for accuracy, modules for
performing specific functions and a facility for special information to be
provided on query.

Computer use in HRM:

The modern technology has brought in sea changes and transformed the
organisational structure, working and culture. Computers and computer
programmes have flooded into the organisations of all kinds and types
giving no chance to escape from their influence. They are widely used in
human resource management.

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Human Resource Planning:
The vast data is required for human resource planning. Top management
wants to prepare a long-term strategic planning for human resources.
Human resource information system provides necessary information
required for making essential projections regarding human resources
requirements. The information can also be utilized for acquiring human
resources, their promotion, transfer and career planning. Job analysis
information helps in human resource planning.

Acquisition of Human Resources:

Acquisition of human resources is done through recruitment and
selection. Human resource information system is a tool that provides a
lot of help in internal posting of jobs which is done through recruitment.
It is an internal source of recruitment. The complete information
regarding skill, competence, knowledge, experience, training,
educational qualification, age, sex etc. available to the human resource
executive through HRIS enabling him to fill up the vacant position by
way of promotion or transfer.
External recruitment also made easy with the help of computerized
information’s maintained by the organisations by way of keeping a track
record of unsolicited applicants and at times taking the help from private
employment agencies who maintain databases regarding various types of
human resources available in different organisations and or other
persons in search of jobs.
The acquisitions of human resources by way of selection are quite
lengthy and complicated procedure is adopted. All these complications
are made easy by way of using computerized information. Test and
scanning of applications are accurately performed through computers
hence saving a lot of time and cost.

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Training and Development:
In the area of training and development the computer has been used to a
greater extent. There is computer assisted instructions that are widely
used training techniques. Computer assisted instructions (C.A.I.) are the
programmed learning methods.

Earliest in 1924 the use of rudimentary teaching machines was made but
with the advent and availability of computers the programmed training
is in vogue now. The computerized training system is utilized for hosts of
job holders that include mechanics, clerks, pilots etc. Computer
simulation of real job situation is of particular importance. It is on the
job training method. It helps trainee to gain practical experience.
Under computer managed instructions the trainees’ competence is
assessed by the computer before start of the training. The assessment
continues till the end of the training. The assessment makes the trainer
to modify training contents to suit the trainee’s needs.
Under computer-based training, the facilities of computer aided
instructions and computer managed instructions are combined together.
Being comprehensive it provides many advantages to the trainee through
effective learning. Computer -based training (CBT) provides immediate
feedback. A commoner gets more knowledge through CBT than in
classroom training. The training through CBT can be provided at the
place of working or where the trainees assemble. It is cost effective.

No costs are incurred on trainer as it is the programmed-based training.

There is an improvement in CBT with the addition of video which is high
tech training technique and is known as interactive video training. CD-
ROM is also used for executive development. It is up to the organisation

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to make a choice of appropriate computerized training technique
depending upon the availability of funds and the type of employees and
executives undergoing training.
The high-tech training methods have high initial investment but once
purchased it is very cost effective. The evaluation of trainees and training
programme can be immediately available which is not possible under
other traditional training techniques.
Computer can store the information relating to trainees, their
performance and their needs for further training. Up to date information
in this respect can be made available as and when required by the human
resource manager or any executive for that matter.
HRIS modules can be used to record the training received and cost of
training can be monitored. There is a constant need to update the skills
and knowledge of the employees and executives to meet the growing
needs of the organisation. The computerised training programmes fulfil
these needs of the organisation.

Career and Succession Planning:

Career planning requires thorough check up of one’s own preferences,
abilities, skills, competence, knowledge and expertise and values and
their matching with the job requirements at the higher level available in
the organisation or in another organisation. This is easily and accurately
done by the computer for the individual employee and executive and
organisation.
The organisation can keep track of such ambitious employees and
executives. Such personnel are very conscious of their career and career
path. They do not hesitate in leaving the organisation if an opportunity
in their career path is denied to them.

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One can say that career planning and computer applications are made
for each other. The detailed inventory in respect of human resources of
the organisation and the job details can be stored in a computer.
Succession system is another area where computer play an important
role in suggesting a suitable person to succeed a retired one at a position.
This can be easily maintained for employees and executives both.

Compensation:
Compensation is yet another area where computer applications can be
made. The compensation includes salary, wages and other benefits. The
information required in this system is payroll and financial records.
Human resource information system aids in wage and salary
administration.
Several software packages are available in this respect to maintain and
monitor the compensation administration. The employee gets the
information relating to the salary drawn by him and compulsory
deductions from the salary along with his leave records till date every
month.
It saves manual labour of maintaining the large and heavy ledgers. The
details regarding employees’ contribution to provided fund, the interest
thereon is also maintained and at regular interval the employees are
handed over the details.

Performance Appraisal:
If merit or performance is rated by an individual may be superior in rank
and hierarchy, there is a scope for biased attitude. Computer can provide
unbiased solution to the problem. Modules are available to help in
evaluating performance. There are several software’s available in
evaluating the performance of the employees and executives having

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several rating scales in critical areas of performance. The organisation
can make use of the relevant scales of evaluating the performance of its
employees of various grades and ranks by varying the rating scale
provided by the software.

Safety and Health:

Safety and health at workplace are very essential. Healthy employees free
from any disease having all the parts of body intact and safe are the
assets of the organisation. The organization having such human
resources should boast upon itself. It deserves credit for excellent
provisions in respect of safety and health of its employees.
It is a dream away from facts. But organisation can take utmost care of
its employees keeping the records of occupational diseases, injuries and
make the employees aware of them from time to time and also draw
attention of the employees towards hazardous chemicals and other such
materials and their use.
Human resource information system can develop a software and
maintain the records of various categories of occupational diseases, their
dangers, how people suffer from them, medical treatment available,
methods of prevention, safety measures at the workplace, the cares to be
taken etc.
The employees can be, through computer network at regular intervals or
daily, made aware of all these and warn of the hazardous after effects.
Computer in this respect can provide a healthiest system for safety and
health of the human resources of the organisation. The computers aid in
respect of maintaining health, cope up with stress, change in lifestyle and
adopting the one that suits to his or her health, dieting etc.

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Human Relations:
Maintaining better human relations is a problem faced by many
organisations. Every organisation expects better human relations and
smooth functioning. The relations between union and management
should be smooth and of cooperation. The computers can help in
keeping the records of negotiations between unions and management,
the agreements reached between the two. Computer network helps in
reminding the executives of the agreements and agreed terms between
the management and unions. Executive’s personal computer can be
connected to an on line information search and retrieval system human
relations information network. Employees can also have the access to the
system knowing fully well what their leaders agree or disagree to. This
promotes complete transparency in human relations or industrial
relations in the organisation.
In modern times giant corporate bodies are coming up with global
network employing lacs of employees and other officials across the
world. They have different points of views and demand. To maintain
them efficiently and satisfy their needs, it is therefore necessary for the
organisation to develop an expert system that enable to have opinion
survey of the employees, their perception, and advice. Computers help in
streamlining the process.
Through this network executives have at hand information and close
contacts with the employees. Any problem crops up at any plant
anywhere can be immediately attended and nipped it in the bud. Expert
system can be developed to keep qualitative information along with
quantitative one. In this way computers play a vital role in human
resource management. Computers aid in facilitating smooth working
and worry free environment at the plants, offices and at homes. They aid
in restoring industrial peace and harmony.

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HUMAN RESOURCE ACCOUNTING AND AUDIT
HR audit is an important management control device. It is a tool to judge
organisations performance and effectiveness of HR management.
According to Dale Yoder, “Personnel audit refers to an examination and
evaluation of policies, procedures and practices to determine the
effectiveness of personnel management.”
It is an analytical, investigative and comparative process. It gives
feedback about HR functions to operating managers and HR specialists.
It enables to know about the effectiveness of personnel programmes. It
further provides feedback about how well managers are meeting their
HR duties. It provides quality control check on HR activities. It refers to
determine the effectiveness and efficiency of HRM.
Sections of review include:
1. Hiring and Onboarding
2. Benefits
3. Compensation
4. Performance evaluation process
5. Termination process and exit interviews
6. Job descriptions
7. Form review
8. Personnel file review
The purpose of an HR Audit is to recognize strengths and identify any
needs for improvement in the human resources function. A properly
executed Audit will reveal problem areas and provide recommendations
and suggestions for the remedy of these problems. Some of the reasons
to conduct such a review include:
1. Ensuring the effective utilization of the organization’s human
resources

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2. Reviewing compliance in relation to administration of the
organization
3. Instilling a sense of confidence in management and the human
resources function
4. Maintaining or enhancing the organization and the department’s
reputation in the community
5. Performing “due diligence” review for shareholders or potential
investors/owners
6. Establishing a baseline for future improvement for the function

HR ACCOUNTING:
Human resource accounting is the process of identifying and reporting
investments made in the human resources of an organization that are
presently unaccounted for in the conventional accounting practice. It is
an extension of standard accounting principles.
1. The human resource process was established to fulfil a number of
objectives within the organization. These include:
2. To furnish cost value information for making proper and effective
management decisions about acquiring, allocating, developing, and
maintaining human resources in order to achieve cost effective
organizational objectives.
3. To monitor effectively the use of human resources by the
management.
4. To have an analysis of the Human Asset, i.e. whether such assets
are conserved, depleted, or appreciated.
5. To aid in the development of management principles and proper
decision making for the future, by classifying financial
consequences of various practices.

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Importance of Human Resource Management - Article shared
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