Unit-1

Fundamentals Of HRM: Evolution Of HR Function, The Nature And Scope Of HRM, Challenges Of HRM,
Competencies Of HR Manager

Introduction
Human Resource refer to the individuals or personnel or workforce within an organisation responsible
for performing the tasks given to them for the purpose of achievement of goals and objectives of the
organisation which is possible only through proper recruitment and selection, providing proper
orientation an induction, training, skill developments, proper assessment of employees (performance
appraisal), providing appropriate compensation and benefits, maintaining proper labour relations and
ultimately maintaining safety, welfare and health concern of employees, which is process of the human
resource management.

Human resource management (HRM) is the practice of recruiting, hiring, deploying and managing an
organization's employees. HRM is often referred to simply as human resources (HR). A company or
organization's HR department is usually responsible for creating, putting into effect and overseeing
policies governing workers and the relationship of the organization with its employees. The term human
resources was first used in the early 1900s, and then more widely in the 1960s, to describe the people
who work for the organization, in aggregate

HRM is really employee management with an emphasis on those employees as assets of the business. In
this context, employees are sometimes referred to as human capital. As with other business assets, the
goal is to make effective use of employees, reducing risk and maximizing return on investment (ROI).

Human Resource Management is a function within an organization which focuses mainly on the
recruitment of, management of, and providing guidelines to the manpower in a company. It is a function
of the company or organization which deals with concerns that are related to the staff of the company in
terms of hiring, compensation, performance, safety, wellness, benefits, motivation and training

Human Resource Management is also a premeditated approach to manage people and the work culture.
An efficient human resource management enables the workforce of an organization to contribute
efficiently and effectively towards the overall achievement of a company’s goals and objectives.

The traditional method of human resource management involved planned exploitation of staffs. This
new function of human resource management involves HRM Metrics and measurements and strategic
direction to display value. Under the influence of giving away the traditional method, HRM has got a
new terminology called Talent Management.

The modern HR technology term, human capital management (HCM), has come into more frequent use
than the term, HRM, with the widespread adoption by large and midsize companies and other
organizations of software to manage many HR functions.
Dale Yoder: “HRM is the provision of leadership and direction of people in their working or employment
relationship.”

Gray Dessler: “The policies and practices one needs to carry out the people or human resource aspects
of a management position, including recruiting, screening, training, rewarding, and appraising.”

Why do we call it as Human Resource Management?

Human: refers to the skilled workforce in an organization.

Resource: refers to limited availability or scarce.

Management: refers how to optimize and make best use of such limited or scarce resource so as to
meet the organization goals and objectives.

Therefore, human resource management is meant for proper utilisation of available skilled workforce
and also to make efficient use of existing human resource in the organisation. Today many experts claim
that machines and technology are replacing human resource and minimizing their role or effort.
However, machines and technology are built by the humans only and they need to be operated or at
least monitored by humans and this is the reason why companies are always in hunt for talented, skilled
and qualified professionals for continuous development of the organization.

Therefore humans are crucial assets for any organisation, although today many tasks have been handing
over to the artificial intelligence but they lack judgement skills which cannot be matched with human
mind.

Nature of Human Resource Management (HRM)

Human resource management (HRM) is an inevitable part of every organisation. It is crucial to have an
in-depth knowledge of HRM to realise organisational goals and simultaneously creating a happy and
contented workforce.
  Pervasive Function: HRM is practiced at all levels of management and applies to all kinds of
organizations, even to non-profit organizations.
 Result Oriented: It aims at achieving organisational objectives through the optimum utilisation
of human resources.
 Tactful Approach: HRM deals with the people who are distinct from one another; thus the
manager needs to apply diverse strategies and tactics at different point of time and in different
situations.
 People-Centric: Human resource management is concerned majorly with the employees
working in an organisation.
 Integrative Action: It focusses on maintaining cordial relations among the employees at
different levels and also addresses employee grievances.
 Continuous Process: HRM is an ongoing process of procurement, development and redirection
of personnel towards the organisational goals. It cannot be completed in a day, a week or a
month.

Objectives of human resource management

The objectives of HRM can be broken down into four categories:

Societal objectives: Measures put into place that respond to the ethical and social needs or challenges
of the company and its employees. This includes legal issues such as equal opportunity and equal pay for
equal work.

Organizational objectives: Actions taken that help to ensure the efficiency of the organization. This
includes providing training, hiring the right amount of employees for a given task or maintaining high
employee retention rates.

Functional objectives: Guidelines used to keep the HR functioning properly within the organization as a
whole. This includes making sure that all of HR’s resources are being allocated to its full potential.

Personal objectives: Resources used to support the personal goals of each employee. This includes
offering the opportunity for education or career development as well as maintaining employee
satisfaction.

Scope of Human Resource Management

1. Personnel Aspect

Human Resource Planning – It is the process by which the organization identifies the number of jobs
vacant.

Job Analysis and Job Design – Job analysis is the systematic process for gathering, documenting, and
analyzing data about the work required for a job. Job analysis is the procedure for identifying those
duties or behaviour that define a job.

Recruitment and Selection – Recruitment is the process of preparing advertisements on the basis of
information collected from job analysis and publishing it in newspaper. Selection is the process of
choosing the best candidate among the candidates applied for the job.

Orientation and Induction – Making the selected candidate informed about the organization’s
background, culture, values, and work ethics.

Training and Development – Training is provided to both new and existing employees to improve their
performance.

Performance Appraisal – Performance check is done of every employee by Human Resource

Management. Promotions, transfers, incentives, and salary increments are decided on the basis of
employee performance appraisal.

Compensation Planning and Remuneration – It is the job of Human Resource Management to plan
compensation and remunerate.

Motivation – Human Resource Management tries to keep employees motivated so that employees put
their maximum efforts in work.
2. Welfare Aspect – Human Resource Management have to follow certain health and safety regulations
for the benefit of employees. It deals with working conditions, and amenities like - canteens, creches,
rest and lunch rooms, housing, transport, medical assistance, education, health and safety, recreation
facilities, etc.

3. Industrial Relation Aspect – HRM works to maintain co-ordinal relation with the union members to
avoid strikes or lockouts to ensure smooth functioning of the organization. It also covers - joint
consultation, collective bargaining, grievance and disciplinary procedures, and dispute settlement.
1800 BC minimum wage rate and incentive plans were included in Babylonian code of Hammurabi

Kautilya’s Arthasastra specifies that there existed systematic management of people as early in 320 BC

In India the origin of HRM in India traced to the beginning of 20th century with labour welfare in
factories since 1920

1931 “The royal commission on labor – removal of jobber system and appointment of labour officer to
settle disputes and grievences

After Independence The Factories Act 1948 ,laid down the qualifications and duties of welfare officers
where the firm employs 500 or more workers.

IIPM(Indian Institute of Personal Management) and National Institute of Labour Management merged as
NIPM( National Institute of Personal Management)

After the second world war and Independence , during 1960’s the personeel function got expanded with
addition of three areas

Labour welfare

Industrial relations

Personeel administration

All these three integrated into a profession called Personnel Management

Later professionalism in managing became quite visible in 1970’s and there was a shift from welfare
approach to efficiency approach .

Then the approach shifted to Human Resource Management in 1990’s mainly focused in human
resource development,

Since 2000’S it was transformed as Strategic HR , by being a strategic partner in decision making
Functions of Human Resource Management

Operative Functions

Recruitment: This is the most challenging task for any HR manager. A lot of attention and resources are
required to draw, employ and hold the prospective employees. A lot of elements go into this function of
recruitment, like developing a job description, publishing the job posting, sourcing the prospective
candidates, interviewing, salary negotiations and making the job offer.

Training and Development: On the job training is the responsibility of the HR department. Fresher
training may also be provided by some companies for both new hires and existing employees. This
Fresher training is mainly done to make the employees up to date in their respective areas as required
by the company. This function makes the employees understand the process and makes it easy for them
to get on their jobs with much ease. During the process of the training and development, the results are
monitored and measured to find out if the employees require any new skills in addition to what he/she
has.

Professional Development: This is a very important function of Human Resource Management. This
function helps the employees with opportunity for growth, education, and management training. The
organization undertakes to sponsor their employees for various seminars, trade shows, and corporal
responsibilities. This, in turn, makes the employees feel that they have been taken care by their
superiors and also the organization.
Compensation and Benefits: A company can attain its goals and objectives if it can acclimatize to new
ways of providing benefits to the employees. Some of the benefits given by companies are listed below
for our understanding:

Working hour flexibility

Extended vacation

Dental/Medical Insurance

Maternal/Paternal Leave

Education Reimbursement for children

Performance Appraisal: The employees of any organization will be evaluated by the HR department as
per the performance. This function of Human Resource Management is to help the organization in
finding out if the employee they have hired is moving towards the goals and objectives of the
organization. On the other hand, it also helps the company to evaluate whether the employees needs
improvement in other areas. It also helps the HR team in drawing certain development plans for those
employees who have not met the minimal requirements of the job.

Ensuring Legal Compliance: To protect the organization this function plays a crucial role. The HR
department of every organization should be aware of all the laws and policies that relate to
employment, working conditions, working hours, overtime, minimum wage, tax allowances etc.
Compliance with such laws is very much required for the existence of an organization.

Managerial Functions

Planning: This function is very vital to set goals and objectives of an organization. The policies and
procedures are laid down to achieve these goals. When it comes to planning the first thing is to foresee
vacancies, set the job requirements and decide the recruitment sources. For every job group, a demand
and supply forecast is to be made, this requires an HR manager to be aware of both job market and
strategic goals of the company. Shortage versus the excess of employees for that given job category is
determined for a given period. In the end, a plan is ascertained to eliminate this shortage of employees.

Organizing: The next major managerial function is to develop and design the structure of the
organization. It fundamentally includes the following:

Employees are grouped into positions or activities they will be performing.

Allocate different functions to different persons.

Delegate authority as per the tasks and responsibilities that are assigned.

Directing: This function is preordained to inspire and direct the employees to achieve the goals. This can
be attained by having in place a proper planning of career of employees, various motivational methods
and having friendly relations with the manpower. This is a great challenge to any HR manager of an
organization; he/she should have the capability of finding employee needs and ways to satisfy them.
Motivation will be a continuous process here as new needs may come forward as the old ones get
fulfilled.

Controlling: This is concerned with the apprehension of activities as per plans, which was formulated on
the basis of goals of the company. The controlling function ends the cycle and again prompts for
planning. Here the HR Manager makes an examination of outcome achieved with the standards that
were set in the planning stage to see if there are any deviations from the set standards. Hence any
deviation can be corrected on the next cycle.

Advisory Functions

Top Management Advice: HR Manager is a specialist in Human Resource Management functions.

She/he can advise the top management in formulating policies and procedures. He/she can also
recommend the top management for the appraisal of manpower which they feel apt. This function also
involves advice regarding maintaining high-quality human relations and far above the ground employee
morale.

Departmental Head advice: Under this function, he/she advises the heads of various departments on
policies related to job design, job description, recruitment, selection, appraisals

Difference between personnel management and HRM

Basics of PPPERSONNEL MANAGEMENT HRM
comparison
Meaning The aspect of management that The branch of management that
is concerned with the work force focuses on the most effective use
and their relationship with the of the manpower of an entity, to
entity is known as Personnel achieve the organizational goals is
Management. known as Human Resource
Management.
Approach Traditional Modern
Treatment Machines or Tools Asset
of
manpower
Decision Slow Fast
Making
Job Design Division of Labor Groups/Teams
Focus Primarily on mundane activities Treat manpower of the
like employee hiring, organization as valued assets, to
remunerating, training, and be valued, used and preserved.
harmony.
Importance of Human Resource Management (HRM)

Over the years, human resource management (HRM) has gained importance in the business sector, as
well as non-profit organisations. Human capital is equally important as the financial capital is to an
organisation, since ‘people perform a task

Challenges of HRM

Everything you need to know about the challenges of HRM. The organisations today realise that human
resource is the most valuable asset and are adopting policies like competence building, job rotation,
performance linked pay, empowerment, etc., which promote the overall development of the human
resources. Greater stress is also being given in the field of employee welfare and social security with
increased post-retirement benefits like health insurance, provident fund, pension, etc.HR professionals
have to play a vital and pivotal role by acquiring, preparing and maintaining human resources for the
meeting various challenges. social, economical, technological conditions are changing. These changes
are already affecting business and will have an even greater impact in future. Human behaviour is also
complex.
The individuals rarely react exactly in an identical manner even in identical situations. These changes
pose major challenge to the human resource management. The human resource function has to make a
pro-active and creative response to these challenges and the consequence they hold for the human
resource function.

The challenges of HRM can be studied under the following heads:

Challenges of HRM Faced by HR Professional:-

1. Managing Workforce Diversity

2. Meeting Aspirations of Employees

3. Empowerment of Employees

4. Management of Human Relations

5. Dynamic Personnel Policies and Programs

6. Building Responsive Organisation

7. Creating Dynamic Work-Culture

8. Building Core Competence and Creating Competitive Advantage and

9. Outsourcing HRM Functions.

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

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.

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 skepticism
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
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’.

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 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 unimitable 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.

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.

Core Competencies of a Human Resource Manager

The role of the human resources manager has evolved over the years. Whether you are hiring for your
own internal HR department or outsourcing the work to a firm, make sure that the individual handling
your human resources needs has core competencies that make him more effective in his role. Core
competencies are behavioral traits that suggest how a person will succeed in specific types of business
scenarios. For HR managers, they can help you become strategic partners for business leaders

Influence on Others

Influence as a competency looks at how a person is able to gain favor for new ideas and to build
momentum for existing ones. This behavior skill helps HR managers convince strong candidates that the
company is the perfect place for their next job. It is also used when working with existing talent to deal
with new processes and protocols that are required but not necessarily embraced by the workforce.

For example, rolling out a new customer-retention management platform might create a lot of push-
back by employees, but it's necessary for the long-term success of the company. Influence spans various
demographic, cultural and socio-economic groups.

Relationship Building

The human resources manager is responsible for keeping that talent pool alive and ready for
opportunities. As a business owner, you don't always have the capacity to bring people in, but when an
opening arises, you want the position filled as soon as possible. The human resources manager who is
adept at relationship-building, will reach out to potentially great candidates and keep the relationship
going, until either they are ready to move or you have the capacity to hire them.
Communication Skills

Communication skills are a core competency, business owners want communication skills in all
employees, but particularly in human resources managers. Human resources departments do more than
simply hire and fire people or keeping track of employee files. They are the foundation of company
training programs, complaint recipients, and overall, are an extended arm of the company in the
community. They must exhibit tactful but clear communication skills. Great human resources managers
are great communicators. Not only do they possess this competency, but they are able to help others
communicate thoughts and ideas more effectively.

Cultural Steward

Diversification in the workplace has many legal regulations and ramifications for failing to be inclusive.
Great human resources managers understand that they are more than simply protecting the company
from negativity; they are cultural stewards of diversity and inclusion. As such, they look at pools of
talent from a variety of sources; not always taking a resume at face value. They train employees on
diversity rules and host team-building workshops to help co-workers embrace differences. They also see
how a diverse workforce helps bring a broader customer base to the organization. All these are positives
that build company morale and productivity.

Critical Thinking

Flipping through resumes, understanding the realities of co-worker complaints or picking out talent from
among existing workers to promote and develop, are all part of the human resource manager's role.
Critical-thinking skills help them better execute these tasks, as they are better able to read between the
lines and cut through the politics or the fluff of a situation. The human resources manager must consider
all angles, and how any one situation affects all parties, including the employees, the consumers and the
company as a whole.