Human Resource Management CHAPTER | By: Mr. ShewitCHAPTER ONE INTRODUCTION TO HUMAN RESOURCE MANAGEMENT Objectives: After studying this chapter, you would be able to: 1) Know the basic concepts of human resouree management (HRM) 2) Be acquainted with the major human resource management functions. 3) Understand personnel issues under different schools of thoughts INTRODUCTION TO HUMAN RESOURCE MANAGEMENT 1.1. Definition & Back Ground Human Resource Management 1.4.1. | Whatis human resource management? Before giving an answer to this question, it would be better to define "management" itself. ‘The reason1to this is that human resource management belongs to the broader field of study and practice known as management What is management? > Management refers to the process of achieving organizational objectives with and through the effort of people and other resources. + Management involves sctting goals and alloceting scarce resources to achieve them, + Management is the process of efficiently and effectively achieving the objectives of the organization with and through people. Generally, Management can be defined as the process of reaching organizational goals by working with and though people and other sesomces. Management in all areas of life implies achieving goals with effective and efficient use of organizational resources. Organizational resources can be grouped into four major categories: > Human resources “> Financial resources © * Physical resources Information resources 1[PageHuman resources are among the fimdamental resources evailable to any organization Emphasizing the importance of human resources, some prominent writers define management as the process of getting things done with and through other people Therefore, 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 funtion which is concemed 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 (Edward B. Philippo). According to the Invancevich and Glueck, “HRM is concerned with the most effective use of people to achieve organizational and individuel 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. ‘Human resource management (HIM) is thus a part of the field of management. HRM, can be well- defined as the utilization of human resources to achieve organizational objectives. It can broadly be seen as that function of all organizations which provides for effeetive utilization of human resources to achieve both the objectives of the organization on one hand and the satisfaction and development of employees on the other hand (Glueck, 1992) In defining and studying human resourees management some points need to be emphasized * Human resources management is concerned with the people dimension of the organizational management. ¢ Human resource management is a pervasive activity, meaning a universal activity in any type of organization: government, business, education, health, defense, recreation, ete. © The human resource is said to be the most important ( or critical) element in an organization since people make the decisions concerning all other organizational resources. Therefore, getting and keeping good peoples critical to the success of every organization, whether profit or non-profit, public or private. iu an organization, mauagers at all levels must concer themselves with buman resource ‘management at least to some extent. Basically, it has been said, managers get shings done through 2|Pagethe efforts of others, which basically requites effective human resource management (Monday & Noe, 1990) ‘A lman resource manager is an individual who normally acts in an advisory, o: "staf", eapacity, ‘working with other managers to help them deal with human resource matters. The human resource ‘manager is primarily responsible for coordinating the management of human resources to help the organization achieve its goals. Some writers in the field and other management people may use such names as "personnel", “personne! management”, "manpower management", and "employee relations" to say the same thing: human resouree management. Generally, HRM refers to the management of people in organizations. It comprises of the activities, policies, and practices involved in obtaining, developing, utilizing, evaluating, meintaining, and retaining the appropriate number and skill mix of employees to accomplish the organization’s objectives. The goal of HRM is to maximize employees’ contributions in order to achieve optimal productivity and effectiveness, while simultencously attaining individual objectives (such as having a challenging job and obtaining recognition), and societal objectives (such as. legal compliance and demonstrating social responsibility) In short Human Resource Management (HRM) can be defined as the art of procuring, developing and maintaining competent workforce to achieve the goals of an organization in au effective and efficient manner. Major Human Resource Management Functions Human resource management functions are the set of activities performed in utilizing human resources for better achievement of organizational objectives. Following are the major elements (Mondy & Noe, 1990): ‘Major HRM Functions/ Activities 1) Human Resource Planning/HRP/ 2) Recruitment 3) Selection 4) Orientation 5) Training & Development 6) Compensation 7) Performance Evaluation 8) Safety and Health 9) Promotion, transfer, demotion, & separation 10) Human Resource Research 3|PageMajor HRM Functions/Activities in Depth 1, Human Resource Planning Human resource planning (HRP) is the process of systematically reviewing human resource requirements to ensure that the required numbers of employees, with the required skills, are available when they are needed. HRP is the process of matching the intemal and external supply of people with job openings anticipated in the organization over a specified period of time. 2. Recruitment Recruitment is the process of attracting individuals in sufficient numbers and encouraging them to apply for jobs with the organization, It is the process of identifying and attracting a pool of candidates, from which some will later be selected to receive employment offers, Selection Selection is the process of choosing from a group of applicants the individuals best suited for a particular position. Whereas recruitment encourages individuals to seek employment with a firm, the purpose of the selection process is to identify and employ the best qualified individuals for specific positions Orientation Orientation is the formal process of familiarizing new employees with the orgenization, their job, and their work unit. Through orientation (@lso called socialization or induction) new employees will acquire the knowledge, skills, and attitudes that make them successful members of the organization, 5. ‘Training and Development Training and development aim to increase employee's ability to contribute to organizational effectiveness. Training is a process designed to maintain or improve performance (and skills) in the present job, Development is a programme designed to develop skills necessary for fsture work activities. It is designed to prepare employees for promotion. 6. Compensation Administration Compensation administration refers to the administration of every type of reward that individuals receive in return for their services. In its boarder sense, compensation represents all sorts of rewards that individuals receive as a result of their employment. 4|Page7. Performance Evaluation Performance evaluation is a formal system of periodic review and evaluation of an individual's {job performance. 8. Safety and Health Safety involves protecting employees from injuries caused by work-related accidents. Health refers to the employee’s freedom from illness and their general physical and mental well- being. These aspects of the job are important because employees who work in a safe environment and enjoy good health are more likely to be productive and yield long-term benefits to the organization. 9. Promotions, transfers, demotions and separations Promotions, transfers, demotions, and separations reflect an employee's value to the organization. High performers may be promoted or tansferred to help them develop their skills, while low performers may be demoted, transferred to less important positions, or even separated. 10. Human Resource Research Human resource research is a systematic gathering, recording, analyzing, and interpretation of data for guiding imman resouree management decisions, Every Inman resource management function needs effective research. 11, Other areas such as employee and labor relations, collective bargaining, employee rights and discipline, and retirement are also concems of human resource management. 1.1.2. Historical Development of HRM: an overview Personnel, according to some writers, at east in a primitive form, have existed sinee the dawn of group effort, Certain personnel fimetions, even though informal in nature, were performed whenever people came together for a common purpose. During the course of this century, however, the processes of managing people have become more formalized and specialized, and a growing body of knowledge has been accumulated by practitioners and scholars. For many decades such responsibilities as selection, training aud compensation were considered basic functions constituting the area traditionally referred to as personnel. These functions were performed without much regard for how they related to each other. From this narrow view the world has seen the emergence of what is now known as human resources management. Human resources management (HRM), as it is curently perceived, therefore, represents the extension rather than the rejection of the taditional requirements for managing personnel effectively. 5|PageUnderstanding Personnel Issues Under Different Schools of Thoughts: Scientific Management and Human Relations School 1. Scientific Management Scientific management is one of the classical schools of thoughts in management. This approach was initially formulated with the aim of increasing productivity and makes the work easier by scientifically studying work methods and establishing standards. Frederick W. Taylor played the dominant role in formulating this theory and he is usually named as the father of scientific management. Scientific management, sometimes called Taylorism, has a stong industrial engineering flavor. Taylor himself was a mechanical engineer whose primary aim was maximizing profits and minimizing costs of production. The guiding principle of this school was "getting the most out of workers", Taylor disliked wastage and inefficiency. During his time, in some working areas, employees tended to work at a slower pace, And this tendency, cecording to him, was a cause for less productivity and efficiency. Managers were unaware of this practice because they had never analyzed the jobs closely enough to determine how mnch the employees should be producing, Frederick Taylor based his management system on production-line time studies. Instead of relying on traditional work methods, he analyzed and timed each element of workers’ movements on a series of jobs. Once Taylor has designed the job, he thereby established how many workers should be able to do with the equipment and materials at hand. Next, he implemented. piece-rate pay system. Instead of paying all employees the same wage, he began increasing the pay of each worker who met and ‘exceeded the target level of output set for his job. Taylor encouraged employers to pay more productive workers at a higher rate than others. To realize this, he developed a differential rate system, which involves the compensation of higher wages to more efficient workers (Stoner & Freeman, 1992). Frederick Taylor rested his philosophy on some basic principles (Stoner & Freeman, 1992): 1. The development of a true science of management, so that the best method for performing each task could be detemined. 2. The scientific selection of workers, so that each worker would be given responsibility for the task for which he best suited. 3. The scientific training (education) of the worker 4, Intimate, friendly cooperation between management and labor 5. A division of responsibility between management and labor 6|PageFrederick Taylor saw scientific management as benefiting both management and the worker equally: management could achieve more work in a given amount of time; the worker could produce more and hence eam more-with little or no additional effort. Taylor strongly believed that employees could be motivated by economic rewards, provided those rewards were related to individual performance. Scientific management, according to Rue and Byars (1992), was a complete mental revolution for oth management and employees toward their respective duties aud toward each other. Itwas, at that time, a new philosophy and attitude toward the use of human effort. It emphasized maxinmun output with minimum effort through the climination of waste and inefficiency at the operative level. Scientific management basically had a focus on such areas as: 4 Techniques of production + The most efficient method + Rigid rules of performance Using the shortest time possible Worker's productivity /efficieney Minimum cost of production hence maximum profit Highly refined tools and materials Training and closer supervision, ete Scientific management, because of its fundamental ideas, has been subject fo strong crities. This school of thought was and still is considered to be limited by its basic assumptions, particularly, about human beings During the time of Taylor, the popular model of human behavior held that people were rational and motivated primarily to satisfy their economic and physical needs. Employees were considered as an extension of machine, as a factor of production, and as an economic unit. Thus, employees, according to Taylor, could be motivated solely by economic rewards or material gain. Nevertheless, the Taylor's model of motivation overlooked the human desire for job satisfaction and the social needs of workers as a group, failing to consider the tensions created when these needs are frustrated, Furthermore, the emphasis on productivity and profitability led some managers to exploit both workers and customers of the organization. As a result, more workers started to join labor unions to challenge the behavior of management. 2 The Human Relations Movement ‘The human relations movement, as the name implies is said to stress the human element in the work place, This movement was started as a reaction against the doctrines and practices of scientific management. According to the beliefs of this theory, labor is not a commodity to be bought and sold. Workers must be considered in the context of the groups of which they are a part (Griffith, 1979) 7|Page‘The human relation was interdiseiplinary in nature. It was founded on new knowledge's developed in the areas of psychology, group dynamics, sociology, political science, and labor economies. The human relations movement basically grew from the How Throne Experiments conducted by a scholar known as Elton Mayo, After extensive studies, Elton Mayo argued that workers respond primarily to other social context of the work place, and his conclusions include: Work is a group activity ‘ The need for recogaition, security, and a sense of belonging is more important in determining workers’ morale and productivity than the physical conditions under which he works, ¢ The worker is a person whose attitudes and effectiveness are conditioned by social demands from both inside and outside the work place. + Informal groups within the work place exercise strong social controls over the work habits and attitudes of the individual worker. ‘The proponents of scientific management are criticized to look on the employee as an economic unit, a factor of production, and an extension of a machine who is motivated only by « desire for material gain. The human relations, on the other hand, considered the worker as a complete human being with attitudes and needs which profoundly affected his work. It follows then that organizations must provide for the satisfaction of all inuman needs to obtain the most from their ‘employees. Scientific management did not consider the existence of informal relationship as it exists side by side with the formal one. As recognized by the human relations, informal organizations exist and play important part in the life of the worker. Informal organizations consist of social relationships among employees. Informal organization is voluntary in origin, its purpose is not clear, it has no hierarchy of positions and it ceases to exist when its members left, Many workers get their satisfaction in the informal groups where they are treated as individuals, not as a part of a machine in the plant. The fiiendliness and recognition of their co-workers compensate for their impersonal treatment by the Jarge and complex formal organization. In these informal and shifting groupings, leaders arise. ‘They are not elected or appointed, they have no legal standing, but they assume leadership roles on the basis of their colleagues' esteem, and together they constitute the informal authority structure. The attitude of an employee's primary group, as voiced by the group leader, may determine whether an official directive will be supported or subverted, whether employees will cooperate with administrators, or whether work norms will be raised or lowered. The group can influence a member to interpret mles narrowly or broadly, to slow down to speed up, to comply or resist. 8|Page‘A skillful administrator knows the various informal organization in his work environment and he knows their leaders. In discussion with the leaders of informal groups, he hears opinions, which might not be openly expressed in formal meetings. This leader recognizes that the informal organization adds a flexible dimension, which enables the fonnal organization to adjust to special cases and situations. After several studies and investigations Elton Mayo and his associates tried to show that workers primarily respond to group, uot as individuals. It follows, then, that administators should not deal with workers as individual units, isolated from those they work with, but as members of work proups subject to group pressure ‘The human relations movement also emphasizes that: + Communication is the life blood of an organization. Therefore, unlike the thinking of the classical school, information must flow freely, up, down, aud horizontally through established networks of the formal organization and non-official networks of the informal organization, + Participative decision making has strong motivating force. Participation in decision making increases members’ level of satisfaction, their enthusiasm for their organization and their positive attitude towards their organization and their superiors. 1.2. Importance of Human Resource Management The importance of human resource management ean be discussed by Yodder, Heneman and others, from three standpoints, viz., social, professional and individual enterprise, 1. Social Significance: Proper management of personnel enhances their dignity by satisfying their social needs. This is done 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 resources in an effective manner and paying the employee a reasonable compensation in proportion to the contribution made by hin iv. eliminating waste or improper use of human resource, through conservation of their normal energy and health; and v. _ byhelping people make their own decisions, that are in their interests. 2. Professional Significance-. By providing healthy working environment it promotes tean ‘work in the employees. This is done by: i. maintaining the dignity of the employee as a *human-being’; 9|Pageii providing maximum opportunity 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 of work. 3. Significance for Individual Enterprise: It can help the organization in accomplishing its goals by: i. Creating right attitude among the employees through effective motivation; ii, Utilizing effectively the available goals of the enterprise and fulfilling their own social and other psychological needs of recognition, love, affection, belongingness, esteem and self-actualization. Dynamic and growth - oriented organization do require effective management of people in a fast ~ changing environment. Organizations flourish only through the efforts and competencies of their human resources. Employee capabilities must continuously be acquired, sharpened, and used. Any organization will have proper hmman resonrce 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 co-operation from the employees to promote organizational effectiveness. 1.3. Evolution & Development of Human Resource Management The history of development of HR management in India is comparatively of recent origin. But Kautilya had dealt with some of the important aspects of human resources management in his “Arthasastra,” written in 400 B.C. Government in those days adapted the techniques of HRM as suggested by Kautilya. In its modem sense, it has developed only since independence. Though the importance of labour officers was recognised as early as 1929, the appointment of officers to selve Jabour and welfare problems gained momentum only after the enactment of the Factories Act of 1948, Section 49 of the Act required the appointment of Welfare Officers in companies employing more than 500 workers. At the beginning, Government was concemed only with limited aspects of labour welfare. The earliest labour legislation in India dealt with certain aspects of Indian labourers (Regulation of Recruitment, Forwarding and Employment) seat to various British colonies in 1830. Important phases of evolution of HRM are presented in Exhibit: 10|PageTable 1: Evolution and Developments of HRM in India Period Development ‘Outlook Emphasis Status Status 1920s- 1930s Beginning | Pragmatism of | Statutory, Clerical capitalists welfare paternalism 19408-19608 | Struggling for | Technical, | Introduction of | Administrative recognition legalistic Techniques 19708 ‘Achieving Professional Regulatory, Managerial conforming, imposition 1980s Sophistication | Legalistic, Standards on impersonal _|_other fimetions 19908 Promisiag | Philosophical | Human values, | Executive productivity through people Source: C.S. Venkataratnam and B.K. Srivastava, Personnel Management and Human Resources, TATA Me-Graw Hill, New Dethi, 1991, p.5 RECENT DEVELOPMENTS: Recent developments in the area of human resources management include treating the employees as economic, social, psychological and spiritual men and women. The important aspects of evelopment of human resources management year wise is shown below: * In the year 1995, emphasis has been shifted to human sesources development (HRD). In the year 1998, emphasis on HRD, cultural diversity, teamwork and participative management has been coutinuing. Further, the emerging areas are total quality in ‘management in HRM, empowering the employees and developing empowered teams and integrating HRM with strategic management as the top management, realised that HRM is the core of competencies of the 21st century corporations In the year 1999, second National Commission on Labour was setup to study the labour conditions In the year 2001, emphasis has been on ‘smart sizing of the organizations. In the year 2002, emphasis has been shifted to positive attitude of the candidate/employee rather than skill and knowledge. In the year 2003, shift from intelligence quotient (IQ) to emotional quotient (EQ). 1l|PageIn the year 2004, shift from skilled workers to knowledge workers. In the year 2005, shift from hierarchical structure to flexible and virtual structures oe * In the year 2006, IRM has become the core of strategic management level. © In the year 2007, the concept of HRM has been relegated to human capital management. + In the year 2008, emphasis has been on retention management and development of own human resources by companies through alliances with universities/colleges. In the same year, there was decline in business operations due to global economic recession and crisis. + In the year 2009, continuation ofjeb cuts, pay costs and lay-offs due to prolonged glebal recession and crisis. + In the year 2014, emphasis is shifted to talent management and flexible human resource policies and practices 1.4. Human Resource Management Objectives The primary objective of HRM is to ensure the availability of competent and willing workforce for an organization. Beyond this, there are other objectives too. Specifically, HRM objectives are four fold: Societal, Organization, Functional and personal. Figure: Objectives of HRM Seca ypc? Sonrce: Human Resource and Personnel Management, Text & Cases, by Aswathappa K., Tata Me Graw-Hill Publishing Company Lid, P.8.) 12|Page1.4.1. Personal Objectives: To assist Employees in achieving their personal goals, at least in so far as these goals enhance the individual’s contribution to the organization. Personal objectives of employees must be maintained, retained and motivated. 1.4.2. Functional Objectives: ‘To maintain the contribution of department at an appropriate level organization should fulfill the needs. Resources are wasted when HRM is either more or less sophisticated to suit the organizations demands. 1.4.3. Organizational Objectives: To recognize the role of HIRM in bringing about organizational effectiveness, HRM is not an end in itself but it is only a mean to assist the organization with its primary objectives organization. 144. Societal Objectives: To be ethically & socially responsible for the needs and challenges of society while minimizing the negative impact of such demands upon the organization to use their resources for society's benefits in ethical ways may lead to restriction. 14.5. Other objectives: ¥ Accomplish the basic organizational goals by creating and utilizing an able and motivated workforce Y To establish and maintain organizational structure and desirable working relationships among all the members of the organization, Y Develop co-ordination among individual and group within organization to secure the integration of organization. Y To create facilities and opportunities for individual or group development so as to match it with the growth of the organization. ¥ To attain an effective utilization of human resources in the achievement of organizational goals. 13|PageTo identify and satisfy individual and group needs by providing adequate and equitable wages, incentives, employee benefits and social security and measures for challenging work, prestige, recognition, security, status. To maintain high employee’s morale and human relations by sustaining and improving the various conditions and facilities. To strengthen and appreciate the human assets continuously by providing training and development programs To consider and contibute to the minimization of socio-economic evils such as unemployment, under employment, inequalities in the distribution of income and wealth. and to improve the welfare of the society by providing employment opportunities to women and disadvantaged sections of the society. To provide an opportunity for expression and voice management. To provide fair, acceptable and efficient leadership. To provide facilities aud conditions of work and creation of favorable atmosphere for maintaining stability of employment. To create & utilize an able & motivated work force Establish & maintain sound organizational structure Create facilities attain an effective utilization Identify & satisty individual & group needs. Maintain high employee morale Training & development Opportunity for expression Provide fair, acceptable and efficient leadership Facilities and conditions. 14|Page