Module ‐ I

Course Facilitator: Dr. Bhabani P. Rath

Retd. Professor of I R & P M
Berhampur University
UNIT - I
Concept, Objectives, Scope and Functions of Human Resource Management

Concept of HRM:
Human Resource Management is the process of recruitment, selection of employees, providing
proper orientation and induction, providing proper training and the developing skills, assessment of
employee (performance of appraisal), providing proper compensation and benefits, motivating,
maintaining proper relations with labour and with trade unions, maintaining employees safety,
welfare and health by complying with labour laws of concern state or country.
Human: refers to the workforce employed in the organisation.
Resource: refers to limited availability or scarce.
Management: refers to maximise or proper utilisation and making best use of limited and scarce
resources.

HRM is the process of hiring and developing employees so that they become more valuable to the
organization.

Human Resource Management includes conducting job analyses, planning personnel needs,
recruiting the right people for the job, orienting and training, managing wages and salaries,
providing benefits and incentives, evaluating performance, resolving disputes, and communicating
with all employees at all levels. Examples of core qualities of HR management are extensive
knowledge of the industry, leadership, and effective negotiation skills.
HRM is considered both as “art and science”. HRM is an art of managing people by recourse to
creative and innovative approaches; it is a science as well because of the precision and rigorous
application of theory that is required.
Edwin Flippo defines- HRM as “planning, organizing, directing, controlling of procurement,
development, compensation, integration , maintenance and separation of human resources to the
end that individual, organizational and social objectives are achieved.”
The National Institute of Personnel Management (NIPM) of India has defined human resources –
personnel management as “that part of management which is concerned with people at work and
with their relationship within an enterprise. Its aim is to bring together and develop into an
effective organization of the men and women who make up enterprise and having regard for the
well – being of the individuals and of working groups, to enable them to make their best
contribution to its success”.
According to Decenzo and Robbins, “HRM is concerned with the people dimension” in
management. Since every organization is made up of people, acquiring their services, developing
their skills, motivating them to higher levels of performance and ensuring that they continue to
maintain their commitment to the organization is essential to achieve organsational objectives. This
is true, regardless of the type of organization – government, business, education, health or social
action”.
It is a set of programmes and activities designed and carried out to maximize individual and
organizational effectiveness
As outlined above, the process of defining HRM leads us to two different definitions. The first
definition of HRM is that it is the process of managing people in organizations in a structured and
thorough manner. This covers the fields of staffing (hiring people), retention of people, pay and
perks setting and management, performance management, change management and taking care of
exits from the company to round off the activities. To some extent, it covers the areas of the
erstwhile used term Personnel Management”.
The second definition of HRM encompasses the management of people in organizations from a
collective perspective i.e. managing people in the form of a collective relationship between
management and employees. This approach focuses on the objectives and outcomes of the HRM
function. HR function in contemporary organizations is concerned with the notions of people
enabling, people development and a focus on making the “employment relationship” fulfilling for
both the management and employees.
The definitions and discussions highlight the following five essential features of HRM:
1. Organisations are people
2. HRM involves application of management functions and principles. The functions and
principles are applied for acquiring, developing, maintaining and remunerating employees in
organisations
3. Decisions relating to employees must be integrated. Decisions on different aspects of
employees must be considered with other HR decisions
4. Decisions made must influence the effectiveness of an organisation. Effectiveness of an
organisation must result in betterment of services to customers in the form of high quality
products and services at reasonable cost
5. HRM functions are not confined to business establishments only. They are equally
applicable to non-business organisations like education, health care. Recreation etc.
Hard and Soft versions of HRM:
Hard Version: It emphasises the term ‘resource’ and adopts a rational approach to managing the
employees, i.e. aligning business strategy and HR strategy and viewing people as any other
economic factor, as a cost that must be controlled.
Soft Version: It emphasises the term ‘human’ and advocates investment in training and
development and adoption of commitment strategies to ensure that highly skilled and loyal
employees give the organisation the competitive advantage.
From Personnel Management to Human Resource Management:
Development in two areas, namely economic and technological influenced the changes from PM to
HRM.
I. Economic: Entry of new industrialised nations
Development of the service sector
Increased power of the consumers
II. Change in Technology: introduction of new technology- computerisation, robot technology

The rise of HRM as a more active and strategic approach to personnel and organisation should be
viewed from the above developments. The increased level of altered quality of competition, the
greater emphasis on the market and the changing nature of work itself made it necessary to adopt
a different management approach (HRM).
Differences between Personnel Management and Human Resource Management

Features/criteria Personnel Management Human Resource Management

Psychological content Fair days work for a fair days pay Reciprocal commitment
Locus of control External Internal
Employee relations Pluralist, collective, low trust Individual, unitary, high trust
Organising principles Mechanistic, formal/defined Organic, flexible roles,
roles, top-down, centralised bottom-up, decentralised
Policy goals Administrative efficiency, Adaptive workforce.
standard performance Improved performance
cost minimisation Maximum utilisation
Philosophy Reactive Proactive
Orientation Maintenance/compliance Development/commitment
Relationship Goal
Approach Piecemeal Systematic
Labour as variable cost Social capital

OBJECTIVES OF HRM
Societal objectives. To be socially responsible to the needs and challenges of society while
minimizing the negative impact of such demands upon the organization. The failure of
organizations to use their resources for society's benefit may result in restrictions. For example,
societies may pass laws that limit human resource decisions.

Organizational objective. To recognize that HRM exists to contribute to organizational

effectiveness. HRM is not an end in itself; it is only a means to assist the organization with its
primary objectives. Simply stated, the department exists to serve the rest of the organization.

Functional objective. To maintain the department's contribution at a level appropriate to the

organisation's needs. Resources are wasted when HRM is more or less sophisticated than the
organisation demands. A department's level of service must be appropriate for the organisation it
serves.
Personal objective. To assist employees in achieving their personal goals, at least insofar as these
goals enhance the individual's contribution to the organisation. Personal objectives of employees
must be met if workers are to be maintained, retained and motivated. Otherwise, employee
performance and satisfaction may decline, and employees may leave the organisation
Scope of HRM
The scope of HRM is extensive and far-reaching. Therefore, it is very difficult to define it concisely.
However, we may classify the same under the following heads:
HRM in Personnel Management: This is typically direct manpower management that involves
manpower planning, hiring (recruitment and selection), training and development, induction and
orientation, transfer, promotion, compensation, layoff and retrenchment, employee productivity.
The overall objective here is to ascertain individual growth, development and effectiveness, which
indirectly contribute to organizational development. It also includes performance appraisal,
developing new skills, disbursement of wages, incentives, allowances, travelling policies and
procedures and other related courses of action.
HRM in Employee Welfare: This particular aspect of HRM deals with working conditions and
amenities at workplace. This includes a wide array of responsibilities and services such as safety
services, health services, welfare funds, social security and medical services. It also covers
appointment of safety officers, making the environment worth working, eliminating workplace
hazards, support by top management, job safety, safeguarding machinery, cleanliness, proper
ventilation and lighting, sanitation, medical care, sickness benefits, employment injury benefits,
personal injury benefits, maternity benefits, unemployment benefits and family benefits.
It also relates to supervision, employee counseling, establishing harmonious relationships with
employees, education and training. Employee welfare is about determining employees’ real needs
and fulfilling them with active participation of both management and employees. In addition to this,
it also takes care of canteen facilities, crèches, rest and lunch rooms, housing, transport, medical
assistance, education, health and safety, recreation facilities, etc.

HRM in Industrial Relations: Since it is a highly sensitive area, it needs careful interactions with
labor or employee unions, addressing their grievances and settling the disputes effectively in order
to maintain peace and harmony in the organization. It is the art and science of understanding the
employment (union-management) relations, joint consultation, disciplinary procedures, solving
problems with mutual efforts, understanding human behavior and maintaining work relations,
collective bargaining and settlement of disputes.
The main aim is to safeguard the interest of employees by securing the highest level of
understanding to the extent that does not leave a negative impact on organization. It is about
establishing, growing and promoting industrial democracy to safeguard the interests of both
employees and management.

The scope of Human Resource Management refers to all the activities that come under the banner
of Human Resource Management. These activities are as follows.

 Human resources planning:- Human resource planning or Human Resource Planning refers
to a process by which the company to identify the number of jobs vacant, whether the
company has excess staff or shortage of staff and to deal with this excess or shortage.
 Job analysis design:- Another important area of Human Resource Management is job
analysis. Job analysis gives a detailed explanation about each and every job in the company.
 Recruitment and selection:- Based on information collected from job analysis, the company
prepares advertisements and publishes them in the newspapers. This is recruitment. A
number of applications are received after the advertisement is published, interviews are
conducted and the right employee is selected, thus recruitment and selection are yet
another important area of Human Resource Management.
 Orientation and induction:- Once the employees have been selected an induction or
orientation program is conducted. This is another important area of Human Resource
Management. The employees are informed about the background of the company, explain
about the organizational culture and values and work ethics and introduce to the other
employees.
 Training and development:- Every employee goes under training program which helps him
to put up a better performance on the job. Training program is also conducted for existing
staff that have a lot of experience. This is called refresher training. Training and
development is one area where the company spends a huge amount.
 Performance appraisal:- Once the employee has put in around 1 year of service,
performance appraisal is conducted by the Human Resource department, checks the
performance of the employee. Based on these appraisals, future promotions, incentives,
increments in salary are decided. This also helps in identifying training needs.
 Compensation planning and remuneration:- There are various rules regarding
compensation and other benefits. It is the job of the Human Resource department to look
into remuneration and compensation planning.
 Motivation, welfare, health and safety:- Motivation becomes important to sustain the
number of employees in the company. It is the job of the Human Resource department to
look into the different methods of motivation. Apart from this certain health and safety
regulations have to be followed for the benefits of the employees. This is also handled by
the HR department.
 Industrial relations:- Another important area of Human Resource Management is
maintaining co-ordinal relations with the union members. This will help the organization to
prevent strikes lockouts and ensure smooth working in the company.
 STRATEGIC HUMAN RESOURCE MANAGEMENT

The HR Manager’s job has grown broader and more strategic over time. Globalisation,
technological, and nature of work trends have made the HR managers shoulder several new
responsibilities. One of the foremost is to make their functions to be more strategic.
Strategy: It is a long term plan with a course of action
Strategic Plan: A strategic Plan is the company’s plan for how it will match its internal strengths and
weaknesses with the external opportunities and threats in order to maintain a competitive
advantage.
The essence of Strategic Planning is to analyse the present position of business, where one like to
be and how to reach the same. The Manager then formulates specific HR and other strategies to
take the company from its current position to the desired position.
Strategic Human Resource Management: SHRM means formulating and executing HR policies and
practices that produce the employee competencies and behaviours the company needs to achieve
its strategic aims.
In practice, HR Management’s strategic role means making the HR managers involved in partnering
with their top managers in both designing and executing their company’s strategies.
HR managers must also express their departmental plans and accomplishments in measurable
terms.
HR strategies is involved in making the company more valuable, for instance by boosting skill levels
and thereby improving performance
Human Resource Planning
HRP is a forward looking function making an organization to identify skill and competency gaps and
initiate plans for development of deficient skills and competencies. More precisely, it is a process of
ensuring the right number and types of employees, at the right places, at the right time who would
be capable of contributing to achieving the organizational goals successfully.
It is a systematic activity comprising of three key elements: 1) Workforce forecast, 2) Manpower
assessment and 3) Staffing programme.
According to Leon C. Megginson HRP is ‘an integrated approach to performing the planning aspects
of the personnel function in order to have a sufficient supply of adequately developed and
motivated people to perform the duties and tasks required to meet organizational objectives and
satisfy the individual needs and goals of organizational members”
Stainer defines HRP as a strategy for the acquisition, utilization, improvement, and preservation of
an enterprise’s human resources.
Steps in HRP:
HRP involves the following steps:
1) Scrutiny of the present personnel strength
2) Anticipation of manpower needs
3) Investigation of turnover of personnel
4) Planning job requirements and job description
Further HRP involves the following sequential activities:
1) Preparation of long-term plans of the organization (its growth, diversification, expansion,
new markets and so on)
2) Breaking the long-term plans into annual plans
3) Deciding on the manpower requirements every year, keeping in view the long term plans
4) Conducting manpower audit to find out the promotability of the existing employees to
higher levels whenever vacancies exist
5) Detailing out manpower requirements for the coming year on the basis of steps above
 6) Initiating recruitment and promotion
HRP Objectives:
1) To link HRP with organizational planning
2) To ensure the optimum use of human resources currently used
3) To assess or forecast future skills requirements
4) To provide control measures to ensure that necessary resources are made available as and
when required
HRP Benefits:
1) Reduce labour costs associated with attrition
2) Reduce recruitment and replacement costs
3) Focus on training resources appropriately
4) Increase the ability to take advantage of new business opportunities
5) Improve employee morale and satisfaction
6) Control rapid expansion or reduction in workforce
7) Monitor staffing and retention policies
Job Analysis:
Job analysis is the process of systematically analyzing the activities pertaining to each job. It is
designed to define the duties, responsibilities and accountability of the job.
This comprises of three aspects – Job description, Job specification and Job evaluation
Job description – A description of what the job holder does
Job specification – Those personal characteristics a job holder must possess to be successful on the
job
Job evaluation – Concerned with determining the relative worth of the job

UNIT ‐ III

RECRUITMENT

Once the requisite number of employees to be filled up in an organization is finalized the HR

Department can initiate the process of recruitment. A new employee goes through four stages
before he is finally placed on a job.
1) Recruitment: This is a process of identifying the prospective employees and encouraging
them to apply for a particular job
2) Selection: It is a process of examining the suitability of an applicant for the given job and
choosing the best from the eligible candidates.
3) Placement: It is a process of placement of an employee selected in a job best suited to
him/her. (Assigning the job to the new employee). It helps to reduce labour turn over,
absenteeism, accident rates and improves morale, job satisfaction, motive etc.
4) Induction: It is a process through which an employee is introduced to the job and the
organisation. This may be called as orientation or introduction. The person in this process is
acquainted with the company, people, rules and regulations. It is a process of infusing and
developing a sense of involvement in the new employee towards the organization.
Meaning: It is a process of attracting potential employees to the company. It is a process of
identifying the sources for prospective candidates and stimulates them to apply for the jobs.
Characteristics: The following are the features:
1) Organisations make a search for prospective job seekers
2) Prospective employees seek out prospective organization
 3) Based on the mating theory, where success is dependent upon the timing i.e. unless the
search from both the parties synchronises, conditions are not ripe for recruitment to
succeed. The process of synchronisation depends upon the following conditions:
i) There must be a communication medium
ii) Job seekers must perceive a match between one’s own personal characteristics and
prescribed job requirements
iii) Job seekers must be motivated to apply
Sources of recruitment: Broadly there are two sources of recruitment, namely, external and
internal
Internal Source: Comprises of the employees serving in the organisation and also includes those
who were employed earlier. This also includes the children/dependents of the existing employees
External Source: Comprises of the source which lies outside the organisation. It is a source of
getting new entrants into an organisation.
There are broadly three methods of tapping the external source for recruitment: Direct Method,
Indirect Method and Third Party Method.
Direct Method: Field trips, Educational Institutions, Professional Meetings etc.
Indirect Method: Advertisement, Notifications etc.
Third Party Method: Employment Exchanges, Employee Referrals, Consultants etc.

Relative merits and demerits of internal and external sources of recruitment:

Merits of internal source:
1) Develops a sense of security
2) Employees remain loyal
3) Need no induction training
4) Employees in the lower ranks feel encouraged to look forward to higher positions
5) Decrease in labour turn over
6) Better employer-employee relationship
Demerits of internal source:
1) Choice is limited to few only
2) May encourage favouritism and nepotism
3) It may lead to inbreeding of traditional ideas and will not generate new aideas
4) Existing employees may not be suitable for new jobs and may require training involving
extra expenditure
Merits of external source:
1) New employees bring a fresh outlook and new ideas. Old habits and methods are replaced
by new ones, making the organisation dynamic
2) The field of choices becomes wide. Hence, possibility of getting better people.
3) All are treated in a free and fair manner
Demerits of external source:
1) Develops frustration and low morale among the existing employees
2) Employees may feel insecure and lose their loyalty to organisation
3) May lead to a higher rate of labour turn over (Attrition rate)
4) May adversely affect the employer-employee relationship
Evaluation of Alternative Sources: This depends on the following;
1) Time lag between requisition and actual placement
2) Recruitment ratio i.e. The number of people actually hired for every 100 applicants
3) Employee attitude towards external and internal sources
 4) Correlation between sources and factors for success in jobs
5) Data on attrition rate, grievances, absenteeism, disciplinary action etc. according to different
sources of recruitment
6) Government Rules and guidelines (sons of the soil)
Time Lag: Actual time to be taken from the date of getting the requisition to finally fill up the
vacancy
Yield ratio: Number of leads/contacts needed to generate a given number of hires in a given period
of time.
Sons of the soil: National Commission on Labour (1969): Young persons from families whose land
are acquired for industrial use should be provided training opportunities for employment likely to
be created by the new units on these lands.
Unskilled workers: first preference to the displaced persons and next to those living in the area
Selection for the jobs with lower scales should be done through a selection committee having a
representative of the State Govt.
Middle level on all India basis with associating a member of the State Public Service commission

UNIT ‐ IV

SELECTION
‘Hire hard, manage easy’ and ‘Good training will not make up for a bad selection’

Selection is the process of choosing individuals with the correct qualifications needed to fill jobs in
an organisation. It typically focuses on the applicant’s knowledge, skill and abilities (KSA). It
attempts to find out which person/job fits in the organizational context.
Person/job fit: Matching the KSAs of individuals with the characteristics of jobs
Person/organisation fit: The congruence between individuals and organizational factors
Selection Criteria: Characteristics that a person must possess to successfully perform work
Predictor Criteria: Measurable or visible indicators of selection criteria
Selection Methods: There is no standard selection procedure. It varies from organisation to
organisation, job to job, and also on the policy and philosophy of the management. However, all
organisations generally adopt a combination of selection techniques like application forms, tests,
interviews etc.
The following are the different methods:
5) Profile matching: Known successful employees are made to pass through different selection
techniques. Their average score in each technique is recorded and then these are used as
standard to judge the score of the other applicants.
6) Multiple cut-off: A cut-off point is defined for each technique. An applicant has to score
above the cut-off points on all the techniques. The cut-off point is defined by the trial and
error method.
7) Multiple regressions: A simple addition of scores for each one who is above all the cut-off
scores does not help in ranking them in order of merit. Two applicants might have the same
total scores but differ in their scores in each of the techniques. Multiple regressions is used
where the relative contribution of each input factor to output is determined.
8) Multiple Hurdles: Different selection techniques are arranged in a sequence as the hurdles
and an applicant must clear these hurdles in order to reach the final stage. An applicant has
to secure above the given minimum score at each stage before one is considered for the
next stage.
Selection techniques: The following are the techniques;
1) Application form: There can be two varieties, namely structured and unstructured. The
application form serves the dual purpose of providing preliminary information about the
candidate and aids the interviewer by opening up areas of interest for discussion. It serves
the following purposes:
i) It provides the candidate’s first formal introduction to the company
ii) It generates data in uniform formats and hence, makes cross comparison of the
applicants
iii) The data so generated serves as a basis to initiate dialogue in interviews
iv) Data from the forms can be used for the purpose of analysis and personnel research
2) Tests: There are different types of tests like: Psychological/Mental tests, Performance tests,
Aptitude tests, Personality tests, Intelligence tests, Situational tests etc. It can further be
divided as Cognitive and Non-cognitive tests.
i) Cognitive tests are based on the principle that if ‘X’ abilities are found in a person, then
he can always do the ‘Y’ job successfully. This, however, may not be always true.
ii) Non-cognitive tests recognize the abilities which help one in changing circumstances. It
focuses on qualities like the need for achievement, problem-solving abilities, tolerance
for ambiguity, decision making etc.
The different tests to be administered must be based on the principles of validity and
reliability.
i) Validity: They should actually measure what is/are intended to be measured. The validity
can be measured by the relationship between the test results and efficiency on the job.
ii) Reliability: It is understood by the consistency with which it serves as a measuring
instrument
3) Interview: It is considered the heart of the selection process. There are three purposes of
interview, namely, obtaining information, giving information and motivation
Interview content covers: Personal Qualities, Academic Achievement, Occupational
Experience, Interpersonal Competence and career Orientation
Types of interview:
i) Preliminary Interview
ii) Patterned/Structured Interview
iii) Non-directive Interview
iv) Stress Interview
v) Depth Interview
vi) Group Interview
vii) Panel Interview
4) Physical/Medical Test
5) Reference Checks
Differences between Recruitment and Selection.
Features/criteria Recruitment Selection
Meaning Searching for the right people Selecting the right people
Nature Positive Negative
Aim Attract the suitable Reject the unsuitable
Procedure Notifies the vacancies Pass through different stages
Contract No contract of service Result leads to contract of
service
 CAREER PLANNING
Meaning
Career planning means helping employees to plan their career in terms of their capacities within
the context of organizational needs.
It is known as designing an organizational system of career movements and growth opportunities
from the point of entry to employment to retirement.
It is a management technique for mapping out the entire career of young employees by discovering
and developing talents and planning for deployment and redeployment of these talents.
It is not simply a series of work related experiences but consists of a series of properly sequenced
role experiences leading to an increased level of responsibilities, status, power and rewards.
Career: All the jobs that are held during one’s working life.
Edwin B. Flippo defines a career as “a sequence of separate but related work activities that provide
continuity, meaning and order to a person’s life.
Wrether and Davis define the terms of career planning as follows:
1) Career path: Sequential pattern of jobs that form a career
2) Career goals: Future positions one strive for as a part of one’s career
3) Career Planning: It is the process by which one selects career goals and the path to these goals.
4) Career development: Personal improvements one undertakes to achieve a career plan
5) Career management: The process of designing and implementing goals, plans, and strategies to
enable the organisation to satisfy employee needs while allowing individuals to achieve their
career goals.
Career Stages: There are five career stages, namely, Exploration, Establishment, Mid-career, Late
career and Decline.
1) Exploration: This spreads over from adolescence to mid twenties as one makes a transition
from college to work. From the organisation point of view, this stage is of least importance
as it takes place prior to employment.
2) Establishment: At this stage, one begins to search for work. It includes getting one’s first job.
It is a stage of getting a right job. At this stage, individuals commit mistakes, learn from the
mistakes and assume increased responsibilities.
3) Mid – career Stage: This stage is marked by continuous improvement in performance,
leveling off in performance or the start of deterioration in performance. Two categories:
Climbers and Plateaued .
4) Late career Stage: A stage in which one is no longer learning about his or her job. Mostly
occupy supervisory position and rest on his laurels and gain respect of young employees.
5) Decline Stage: This is the final stage usually marked by retirement. It is a hard stage, as after
decades of service one has to retire from service.
Need for Career Planning: It is necessary for the following reasons:
1) To attract competent people and to retain them in the organisation
2) To provide suitable promotional opportunities
3) To enable employees to develop and make them ready to meet future challenges
4) To increase utilization of managerial reserves within an organisation
5) To correct employee placement
6) To reduce employee dissatisfaction and turnover
7) To improve motivation and morale
Process of career Planning and Development:
1) Analysis of individual skills, knowledge, abilities, aptitude etc.
2) Analysis of career opportunities both within and outside the organisation
 3) Analysis of career demands of the incumbent in terms of skills, knowledge, abilities,
aptitude etc., and in terms of qualifications, experience and training received
4) Relating specific jobs to different career opportunities
5) Establishing realistic goals both short- term and long- term
6) Formulating a career strategy covering areas of change and adjustment
7) Preparing and implementing an action plan includes acquiring resources for achieving goals
Career Development: The following are the four steps
1) Needs: this step involves defining the present system and in conducting need assessment
for training programmes.
2) Vision: It is concerned with determining new directions and possibilities by linking needs of
the career systems with interventions
3) Action Plan: Deciding the course of action. An action plan has to be formulated in order to
achieve the vision. It needs support of the top management
4) Results: Concerned with maintaining the change. Career development programme should
be integrated with the organisation’s on-going employee training and management
development programmes.
Career Development Actions:
1) Job Performance: Performance on the job is to the level of standard established
2) Exposure: Expose their skills, knowledge, qualifications, achievements, performance etc. to
those who make decisions about career progress
3) Resignations: Employees may resign from their present job in the organisation if they find
career growth opportunities better elsewhere
4) Change the Job: Changing job in the same organisation if they find career opportunities are
better than the present job
5) Career Guidance: Counselling provides information, advice and encouragement to switch over
to another career or organisation where career opportunities are better.
Human Resource Planning and Career Planning: There cannot be effective human resource
planning if there is ineffective career planning. Both are mutually dependent.
Career Planning and Succession Planning:
Career Anchors
The concept of "career anchor" grew out of several decades of research to capture some of the
essential components of how career occupants define themselves in relation to their work. A
person's career anchor is the evolving self-concept of what one is good at, what one's needs and
motives are, and what values govern one's work related choices. One does not have a career
anchor until one has worked for a number of years and has had relevant feedback from those
experiences. But once a career anchor evolves, roughly five to ten years after one has gone to work,
it becomes a stabilizing force in the total personality that guides and constrains future career
choices.
1) Security/stability: Loyalty and promise of tenure
2) Autonomy/independence: Flexibility and freedom
3) Technical or functional competence: Focus on developing skills
4) General management competence: Opportunity to develop up the ladder
5) Entrepreneurial creativity: Create an organisation or enterprise
6) Service/dedication to a cause: Making the world a better place
7) Pure challenge: To solve impossible problems
8) Life style: Balance and integrate personal, family and career needs
 HUMAN RESOURCE ADJUSTMENT
(HR Internal Mobility)
Promotions and Transfers

External Mobility vs. Internal mobility:

External mobility refers to the movement of employees from one organisation to another
organisation seeking better placement. Internal mobility is the movement of employees within the
organisation.
Need for Internal Mobility:
1) Change in the job structure, job design, job grouping etc.
2) Change in technology, mechanization etc. resulting in an enhancement of job demands
3) Expansion and diversification of production/operation and geographic expansion
4) Demands of trade unions regarding protection of employees’ interests
5) Changes in employees’ skills, abilities aptitude etc.
Purpose of Internal Mobility:
1) To improve the effectiveness of organisation
2) To maximize employee efficiency
3) To ensure discipline
4) To adopt organizational changes
Human Resources Adjustment Plans: It may be informal or formal
Informal: Whims and prejudices and mostly by thumb rules
Formal: Through written down and codified documents taking into consideration the following;
1) Job description for each job
2) Drawing charts and diagrams depicting the interconnection between jobs, terminal points
and avenues of upward and lateral mobility
3) Framing elaborate rules to govern each type of change
4) Dissemination of knowledge to all employees
5) Fairness in the application of these rules

PROMOTIONS

External selection and internal promotion

Meaning:
Pigors and Myers: Promotion is advancement of an employee to a better job – better in terms of
responsibility, more prestige, or status, greater skill and especially increased rate of pay or salary.
Mirza S. Saiyadain: The upward assignment of an individual in an organisation’s hierarchy is
accompanied by increased responsibilities, enhanced status, and usually with increased income
Thus the characteristics of promotion are:
1) Reassignment of higher level job to an employee than what he is presently performing
2) The employee will be delegated with higher responsibility and authority than what he had
earlier
3) It normally accompanies higher pay
4) A promotions without any increase in pay is called as dry promotion
Objectives of Promotion:
1) Motivates employees to be more productive
2) Attract and retain people
3) Recognise and reward efficient employees
4) Fill up vacancies at higher levels by insiders
 5) Build loyalty, morale and a sense of belongingness

Promotion Policy:
1) It must provide for a uniform distribution of promotional opportunities through the
organisation with a balanced ratio of internal promotion and external recruitment
2) Ensure consideration of all eligible in service candidates and not only the few highly visible
ones
3) Some definite system for selection of the employees who are to be promoted from the
promotion zone
4) All promotions should be finally sanctioned by the concerned line head
5) There should be a suitable system of follow-up counselling and review

Bases or Criteria of Promotion:

Organisations adopt different bases of promotion depending upon their size, nature of
management etc. The well established bases of promotion are Seniority and Merit.
Merit as the basis of promotion: Merit is determined based upon an employee’s skill, knowledge,
aptitude, efficiency etc. from educational, training, and past employment records.
The following are the merits of merit-based promotions:
1) The resources of a higher order employee can be utilized at a higher level, resulting in
optimum utilisation of human resources in an organisation
2) Competent employees are motivated
3) It works against employee turnover
4) It encourages the employees to acquire new skills, knowledge etc for the all-round
development

Demerits:
1) Measurement of merit is highly difficult
2) Employees and particularly the trade unions distrust the management’s integrity injudging
merit
3) The technique of measuring merit is subjective
4) Merit denotes mostly past achievement, efficiency etc. on past performance which may not
always guarantee future success.

Seniority as the basis of promotion:

Merits:
1) It is a relatively easy objective in measuring seniority
2) It is done by a system and not by a management
3) There is no scope for any favouritism and discrimination in judgment
4) It gives a sense of certainty/security of getting a promotion at their turn
5) It is in consonance with our culture
6) Prevent people to leaving the organisation
7) It minimises the scope for grievances and conflicts relating to promotion
Demerits:
1) Sometimes it gives scope for promoting the incompetents
2) Lacks initiative or zeal for development
3) Adversely effects the morale of meritorious people
4) It results in employee turnover, particularly with the young and meritorious ones
 TRANSFERS
Meaning:
It is the movement of the employee from one job to another in the same level of organizational
hierarchy.
Dale Yoder and others define it as the lateral shift causing movements of individuals from one
position to another, usually without any marked changes in duties, responsibilities, skills needed or
compensation.
Objectives of Transfer:
1) To meet exigencies of company business
2) To meet the request of employees
3) To correct incompatibility in employee relations
4) To provide creative opportunities to deserving employees
5) To train employees for later advancement for promotion
6) To correct erroneous placements
7) To punish the employees who violate disciplinary rules
Transfer Policy:
1) When to be transferred i.e. the circumstances of transfer
2) Who is responsible for initiating transfer
3) To which jobs transfers can be made – transfer zone
4) What would be its effect on seniority
5) Benefits and pay to be received by the transferee
Types of Transfer:
1. Production transfer : transfer caused due to changes in production
2. Replacement transfer : transfer caused due to initiation or replacement of a long
serving employee in the same job
3. Rotation transfer : transfer initiated to increase the versatility of the employees
4. Shift transfer : transfer of an employee from one shift to another
5. Remedial transfer : transfer initiated to correct the wrong placements
6. Penal transfer : transfer initiated as a punishment for acts of indiscipline of
employees
Reasons for Transfer:
Transfers are basically of three categories, employee initiated, employer initiated and public
initiated.
1) Employee Initiated Transfer:
i) Temporary transfers: Due to ill health, family problems, or other temporary needs
ii) Permanent transfers: Due to chronic ill health, family problems, correcting wrong
placements, to relieve him from monotony or boredom, to avoid conflicts with other
employees (Supervisors), searching more challenging jobs, for opportunities for moving to
a higher level job.
2) Employer/Company Initiated transfers:
i) Temporary transfers: Temporary absenteeism of employees, fluctuation in production or in
work load, due to short vacancies
ii) Permanent transfers: Changes in the quality of production, technology, organizational
structure etc, to improve versatility, job satisfaction of the employees
3) Public Initiated Transfers: Due to unethical behaviour or when acting against public interest
Benefits of Transfers:
1) Reduces employees’ monotony, boredom and increase job satisfaction
2) Improve employees’ skill, knowledge etc.
 3) Correct erroneous placements and interpersonal conflicts
4) Prepare employees to meet organizational exigencies
Problems of Transfer:
1) Employees Suspect victimisation
2) Unwillingness of the employees to move to unknown places
3) Dislike to leave their social group
4) Problems of adjustment with new environment, job, superiors and colleagues
5) Cause inconvenience and cost for relocation of family, children’s’ education etc
6) Results in cost and loss of man days

HUMAN RESOURCE MANAGEMENT

Human resources mean people’s skills, abilities, competencies which are seen as something an
organisation can make use of
Manpower employed has never remained static. It has changed from place to place and time to
time.
Prior to the industrial revolution, the employment scenario was different. In the pre and post
medieval period, apart from agriculture, any work relating to production of any consumable items
was done by skilled artisans or craftsmen. Different practices in India vs. the west. (caste system vs.
Guild system)
Transition in the types of Human resources: Slaves - Serfs - Indentured labour
Mercantilism: Market economy
Changes in HR: Induction of new employees with new ideas and expectations, so also changes in
the existing employees ideas, values, skill etc.
A number of factors contributed for the development of HRM
HRM : Term started to be in use in the 1980s
HRM: As an activity and a s a discipline
Response of the organisations/Employers
Development of Trade Unions
Role of the ILO: Charter of Freedom of Labour (Philadelphia Declaration 1946)
i. Labour is not a commodity
ii. Poverty anywhere constitutes a danger to prosperity everywhere
iii. Freedom of expression and association are essential to sustained progress
iv. The war against want requires concerted efforts of the employers, employees and the
government.
UN Declaration of Human Rights:
Article 19: Right to freedom of opinion and expression
Article 20: Everyone has the right to freedom of peaceful assembly and association and no one may
be compelled to belong to an association.
Article 22: Right to social security
Article 23: Right to work, freedom of choice of employment, just and favourable conditions of work, and
protection against unemployment; equal pay for equal work; favourable remuneration; and to form and join
unions
Article 25: Everyone has the right to a standard of living adequate for the health and well-being of
himself and of his family, motherhood and childhood are entitled to special care and assistance.
National level efforts: Role of the Government/State
i. Shifting from Laissez faire to Welfare State
ii. Institutionalization of democracy
iii. Role of the government as the legislator, administrator and judiciary
Growth of the Management Theories/Thoughts
1. Frederick Winslow Taylor: Father of Scientific Management. Gave emphasis on promoting
productivity and increased remuneration for increased efficiency.. Also focused on group harmony.
2. Henry Lawrence Gnatt: Emphasis on scientific selection of workers and cooperation between
employer and employees and training of workers
3. Frank Bunker Gilberth: Time and motion studies. Emphasised that the gains of the companies
from the time saving methods should be shared with the workers
4. Lillion Gilberth: Explained the human aspects of the work and understanding the personality and
needs of the workers
5. Henri Fayol: Father of the modern management theory. Provided the five functions of
management: planning, organising, commanding, coordinating and controlling and the 14
principles of management
6. Hugo Munsterberg and Walter Dill Scott (Psychologists): Application of psychology in industry
7. Elton Mayo and F.J. Rothlisberger: Social attitude and relationship of work group on
performance. Hawthrone Works of the Western Electronic Company, Chicago, USA
8. Motivation theories: Maslow, Herzberg, Alderfer, Mc Clelland, Vroom, Adams emphasised the
individual behavioural aspects of the employees
9. Douglas McGregor: Theory ‘X’ and Theory ‘Y’: On the basis of the nature of people
‘X’: Traditional assumptions about the nature of people
‘Y’: Positive assumptions
 Strategic Human Resource Management
The word ‘Strategy’ comes from the Greek word ‘strategus’ meaning ‘commander of chief’
The development and usage of the term suggests that it is composed of two terms ‘stratos’ (army)
and ‘agein’ (to lead) and thus in the military context understood as to produce large scale
operations.
The Oxford dictionary defines it in terms of ‘generalship’ related to war.
In the management literature ‘strategy ’ has now replaced the more traditional term ‘long term
planning’ that the top managers perform in order to accomplish an organisation’s goals.
Some definitions of strategic management:
Wheelen and Hunger: that set of managerial decisions and actions that determine the long-run
performance of a corporation
Aktouf: maintenance of a ‘vision of the future’ that is constantly updated by data on both internal
and external environment.
Hill and Jones: the specific pattern of decisions and actions that managers take to achieve superior
organisational performance.
It is considered as a continuous process undertaken by the top management, that requires constant
adjustment of three interdependent poles: values of the senior management, the environment,
and the available resources.
Strategy: It is a long term plan with a course of action
Strategic Plan: A strategic plan is the company’s plan for how it will match its internal strengths and
weaknesses with the external opportunities and threats in order to maintain a competitive
advantage.
The essence of Strategic Planning is to analyse the present position of business, where one like to
be and how to reach the same. It seeks to match market with products and other corporate
resources in order to strengthen a corporation’s competitive position. The Manager then
formulates specific HR and other strategies to take the company from its current position to the
desired position
The strategic management process consists of five events or steps:
1. Organisation’s direction
2. Environmental analysis
3. Strategy formulation
4. Strategy implementation
5. Strategy evaluation
1. Organisation’s direction: This is the first step in which the senior managers evaluate their
position in relation to the organisation’s current mission and goals.
A mission statement is the organization’s statement of purpose and describes who the company is
and what it does. Customers, employees, and investors are the stakeholders most often
emphasized, but others, like governments or communities (i.e., in the form of social or
environmental impact) can also be impacted. Mission statements are often longer than vision
statements. Sometimes mission statements include a summation of the firm’s
values. Organizational values are those shared principles, standards, and goals.
A vision statement, in contrast, is a future-oriented declaration of the organization’s purpose. In
many ways, the mission statement lays out the organization’s “purpose for being,” and the vision
statement then says, “on the basis of that purpose, this is what we want to become.” The strategy
should flow directly from the vision, since the strategy is intended to achieve the vision and satisfy
the organization’s mission.
A goal is is a desired future state that the organisation attempts to realize.
2. Environmental analysis: Along with some form of internal and organizational analysis
using SWOT (strengths, weaknesses, opportunities, threats) (or the firm’s strengths, weaknesses,
opportunities, and threats), a strategy is formulated into a strategic plan. This plan should allow for
the achievement of the mission and vision. The factors that are most important to the
organisation’s future are referred as to strength factors.
3. Strategy formulation: At this stage, the senior managers evaluate the interaction of the strategic
factors and make strategic choices that guide the organisation to meet its goals. Strategies may be
formulated at the corporate, business and functional levels.
4. Strategy implementation: It is an area of activity that focuses on the techniques used by the
managers to implement the strategies. Factors that are included here are the type of leadership,
structure of the organisation, information and control system, and the management of human
resources. The key factor, however, is leadership
5. Strategy evaluation: In this step it is determined to what an extent actual change and
performance matches desired change and performance.

In diversified enterprises, strategies are initiated at four distinct organisation levels-

These are as follows:
1. Corporate Strategy – It is a strategy for the company and all of its businesses as a whole.
2. Business Strategy – It is a strategy for each separate business the company has diversified into.
3. Functional Strategy – Then there is a strategy for each specific functional unit within a business.
Each business usually has a production strategy, a marketing strategy, a finance strategy, and so on.
4. Operating Strategy – And finally, this is a still narrower strategy for basic operating units —
plants, sales districts and regions, and departments within functional areas.
Corporate and Business Strategy
Business strategy is concerned with strategic decisions concerning the choice of product,
competitive advantage, customer satisfaction, etc.
Corporate strategy is concerned with the overall objective and scope of business to fulfill
stakeholders’ expectations.

Comparison Chart
Basis for
Business Strategy Corporate Strategy
Comparison
Business Strategy is the strategy framed Corporate Strategy is stated in the
by the business managers to strengthen mission statement, which explains the
Meaning
the overall performance of the business type and ultimate goal of the
enterprise. firm.
Created by Middle level management Top level management
Nature Executive and Governing Decisive and Legislative
Selection of plan to fulfill the objectives Business selection in which the
Relates to
of organization. company should compete.
Deals with Particular business unit or division Entire business organization
Term Short term strategy Long term strategy
Competing successfully in the Maximizing profitability and business
Focus
marketplace. growth.
Approach Introverted Extroverted
Major Cost Leadership, Focus and
Expansion, Stability and Retrenchment.
strategies Differentiation

Features of Functional Strategy

Some important features of functional strategy are as follows:
1. The time span of a functional strategy, as compared to a business-level strategy, is short.
2. It focuses attention on what needs to be done now to make the grand strategy work.
3. It is more specific and action-oriented because it clearly outlines what should be done in each
functional area so as to achieve the corporate objectives.
4. Functional strategy pertains to the function, department, division of the enterprise.
5. It has to be in pursuance of the overall corporate strategy.
6. It acts to achieve corporate and business unit objectives by maximizing resource productivity.
7. It is the game plan to manage a principal subordinate activity within a business.
8. Functional strategy is concerned with developing and nurturing a distinctive competence to
provide a company or business unit with a competitive advantage.
9. The orientation of the functional strategy is dictated by its parent business unit’s strategy.
10. Functional strategy is narrower in scope than business strategy. It contains relevant details of
the overall business game plan by setting out the actions, approaches and practices which are to be
employed in managing a particular function.
11. It may differ from region to region.
12. Functional strategies should be in sync rather than serving their own narrower purposes. They
should be in coordination and consistency with long-term objectives and grand strategy.
13. These functional strategies have to be related to each other and to the overall corporate
strategy.
14. Implementation of these strategies involves a wide range of policy decisions to be made relating
to the functional areas.
15. The focus of these functional strategies is often towards external environment.
16. Functional strategies help in implementation of grand strategy. These translate grand strategy
into action.
17. There might be several sub-functional areas within functional strategies.
18. Functional strategies are made within the guidelines that have been set at higher levels.
19. These are detailed statements of the “means” or activities that will be used to achieve short-
term objectives and establish competitive advantage.
20. A functional strategy supports business-level strategy, which in turn supports corporate-level
strategy.
The importance of functional strategies is pointed out under the following headings:
1. Help in Operation of Business Functions:
Functional strategies provide operational help in the conduct of various functional activities. For
example, a finance manager has to necessarily take decisions on funding opportunities, deploying
projects, reducing capital costs, or acquiring another firm. In addition, he has to decide on strategic
options to manage working capital, which may be used to decide the various aspects of receivables
management, factoring, payable management, inventory strategy, and treasury management.
Similarly, to manage human resources function, a number of strategic initiatives can be deployed by
a firm. Managers need strategic focus on various functions. The production and operations
management function also involves a number of strategic issues.
2. Managerial Road Map:
Thompson and Strickland write, “A company needs a functional strategy for every major business
activity and organizational unit. Functional strategy, while narrower in scope than business
strategy, adds relevant detail to the overall business game plan. It aims at establishing or
strengthening specific competencies calculated to enhance the company’s market position. Like
business strategy, functional strategy must support the company’s overall business strategy and
competitive approach. A related role is to create a managerial road map for achieving the
functional area’s objectives and mission.”
3. Help in Implementation of Grand Strategy:
Pearce and Robinson state that “functional strategies must be developed in the key areas of
marketing, finance, production, R&D, and personnel. Functional strategies help in implementation
of grand strategy by organising and activating specific sub-units of the company to pursue the
business strategy in daily activities.
4. Decisional Guides to Action:
Functional strategies guide and translate thought into action designed to
accomplish specific annual objectives. Thus, functional strategies may be regarded as decisional
guides to action that make the strategies work. They clarify many conflicting issues and problems,
giving specific short-term guidance to operating managers and employees.
5. Improves Effectiveness and Efficiency and Creates Super Profitability:
It should be noted that functional strategies aim at improving the effectiveness of a company’s
operations and thus its ability to attain superior efficiency, quality, innovation, and customer
responsiveness. It is important to keep in mind the relationships of functional strategies, distinctive
competencies, differentiation, low cost, value creation, and profitability.
We can note that functional-level strategies can build resources and capabilities of a firm that
enhance superior efficiency, quality, innovation. These, in turn, create low cost, value and superior
profitability.
6. Builds Competitive Advantage:
Functional strategies can improve the efficiency, reliability (quality), and consumer responsiveness
of its service. Thus, they can be used to build a sustainable competitive advantage. Functional
strategies can increase efficiency of activities and thereby lower their cost structure. In fact,
functional strategy is concerned with developing and nurturing a distinctive competence to provide
a company or business unit with a competitive advantage.
Other Benefits of Functional Strategies:
i. They give operating personnel a better understanding of their role in the firm’s mission.
ii. The process of developing them becomes a forum for raising and resolving conflicts between
strategic intent and operational reality.
iii. They provide a basis for developing budgets, schedules, trigger points, and other sources of
strategic control.
iv. They can be powerful motivators, especially when connected to the reward system.
THE MEGA TRENDS IN HRM
1.INNOVATION:- It talks about how humans have increased their power of thinking &
communicating, as per recent studies done.The invention of telephone has gone through a sea
change to incentive research & innovation by transferring it from wired to mobile.The invention of
the super computer through innovation has also changed to desktops,PCs,laptops & tablets.The
companies like Apple,IBM,Google,Starbucks,Wall-marts, Boeing ford,Volvo have been transformed
through continuous research in terms of technology,quality,design,features etc. over the pace of
time.It has done through by acquiring the right talent, giving the right amount of reward &
supporting a life-long learning process.It is found that in last 4 years, has grown up to 80%.Humans
have also transformed themselves to build up modern leadership skills,company level,life maintain
a work-life balance, change their mindset & increase the productivity by 3 folds:-Humans also have
transformed themselves from manual work to knowledge work.The company mentioned above &
many such company in the que have stopped asking their employees to assignments,be productive
& performance oriented but have started saying be innovative create new, new ideas so, that we
can sustain for long time.
2.DEMOGRAPHIC CHANGE:- In this change we are very much concerned about the age factor which
prevails, leading either to talent shortage or talent excess.But to retain this talent, we need young
people who can take risks, challenge others to work & formulate a better strategy.There is no death
of talent shortage but nurturing,giving opportunities to think freely and retention is the greatest
challenge which the company are facing. On x axis you have years & y axis you have popular acs. to
figure we see that around 20% of the population i.e
*Age group of 50-64 will retire or become unproductive by 2030.
*Age group of 35-49 of the population there will be a gradual decrease of talent from the year 2010
onward,leading to serious crisis the middle level management.
*Age group of 25-34 of the population there will be a talent shortage from year 2015 onward.
The people who have already acquired talent but have not have access to the latest developments
in terms of technology,innovation,ideas etc. It will be comprise of more people within the age
bracket of 50 & above.
Baby boomers (1946 - 64) Generation X (1965 - 80), Y (1981 - 96) known as millennial, and Z (1997 -
2012)
3. GLOBALIZATION:-Due to changes in business because of stiff competition,more competitors,
requirement flow of cash,brand-name companies have started exporting products to different
notion.The system of getting in to a global market platform & to establishing your product or
service to the customers gives you a better form of investment & reward.It also encourage you to
out source some services which may be ancillary in nature because it uses away your resource for
mundane activity.
4. WEB 2.0:-The users generated continued talks about how the web has transformed itself into a
multi-user platform.There was one web produce I.e HTML.The users used to read the contents in
the website & get info from it, but there was no option to get back to the procedure of the website
for any clarification.It was one way communication process gradually we began to move from web
1.0 to web 2.0 to other interactive websites were made, such as Wikipedia, where the users
produce material & anybody can write for it or against it.Twitter,blogs,Facebook have produced a
platform for the users to interact with each other or discuss information. Generated in its
content.Companies today have changed their hiring process by first going through the profile of the
candidates posting on social media like Facebook,twitter,linked-in.This has helped to attract diverse
employees to know about their likes & dislikes shape attracting working conditions & maintain
strategic changes from time to time.
5. VALUE CHANGE:-From an old age it has been seen that women can be subjected to in-house
work, but the role of women has changed today.They are becoming more engaged in corporate life
& maintaining a balance between their family as well as their office. The role of women has also
changed time and again it has seen that women got into top positions in any professional field &
some here became very enterprising, successful entrepreneurs.People have also learn how to
manage themselves,their parents & their older ones.The relationship between parents & childrens,
employers & employees, students & professors has also gone for a massive change.It is better to
say that we have adopted from a close door to use & accept the latest technology, manage the
changes & attract & retain the best talent in an organization.
Strategic human resource management is the practice of attracting, developing,rewarding or
retaining employees for the benefit of both the employees as an individuals and organization as
whole.As a result a goal of HRD reflects & supports the goals of the rest of the organization. it links
human resources with strategic goals & objectives in order to improve business performance &
develop an organization culture that fosters innovation,flexibility & competitive advance.
SHRM means accepting & involving the HR function as a strategic partner in the formulation &
implementation of company strategies to give them a competitive edge over others.
The HR Manager’s job has grown broader and more strategic over time. Globalisation,
technological, and nature of work trends have made the HR managers shoulder several new
responsibilities. One of the foremost is to make their functions more strategic.
Strategic Human Resource Management: SHRM means formulating and executing HR policies and
practices that produce the employee competencies and behaviours the company needs to achieve
its strategic aims.
In practice, HR Management’s strategic role means making the HR managers involved in partnering
with their top managers in both designing and executing their company’s strategies.
HR managers must also express their departmental plans and accomplishments in measurable
terms.
HR strategies is involved in making the company more valuable, for instance by boosting skill levels
and thereby improving performance
Strategic HRM refers to adopting a specific plan in regard to human resources, and revamping
human resource policies and practices and developing employee competencies to cope with the
special challenging situations.
Gary Dessler and Biju Varkkey: SHRM means formulating and executing HR policies and practices
that produce employee competencies and the behaviours that the company needs to achive its
strategic aim.
David, Cenzo and Stephen: SHRM creates a clear connection between the goals of the organisation
and the activities of the people who work there. All employees should see the link between their
daily tasks and achievement of a purpose or goal.
Strategic HRM Tools: 1. Strategy Map, 2. HR Score Card, and 3. Digital Dashboard
1. Strategy Map: It gives the broad picture of the
 HUMAN RESOURCE PLANNING
Human Resource planning may be defined as a strategy for the acquisition, utilisation,
improvement and preservation of the human resources of an enterprise. It is the activity of the
management which is aimed at co-ordinating the requirements for and the availability of different
types of employees.
HRP is a forward looking function making an organization to identify skill and competency gaps and
initiate plans for development of deficient skills and competencies.

Coleman defines it as a process of determining manpower requirements and the means for meeting
these requirements in order to carry out the integrated plan of the organisation
Vetter: A process by which an organisation should move from its current manpower position to its
desired manpower position.
Wickstorm explains it from the context of a process comprising of four steps - Forecasting,
Inventory, Anticipating and Planning.
Thus the HR planning an organisation strives to have the the right number of people and right kind
of people at the right places, at the right time doing right things which would be capable in
achieving successfully both the organisational and the individual needs.

Importance of HRP
1. Assessing the right number and type of future personnel needs/requirements (shortage of
certain categories of employees and/or variety of skills despite the problem of unemployment)
2. Coping to the changes (Technology, marketing, management, products, government policies etc.)
3. Creating a highly talented pool of personnel by making right investment in HR
4. Protection of weaker section
5. International strategies (MNCs)
6. Foundation for HR functions

HRP Objectives:
To link HRP with organizational planning
To ensure the optimum use of human resources currently used
To assess or forecast future skills requirements
To provide control measures to ensure that necessary resources are made available as and when
required

HRP Benefits:
Reduce labour costs associated with attrition
Reduce recruitment and replacement costs
Focus on training resources appropriately
Increase the ability to take advantage of new business opportunities
Improve employee morale and satisfaction
Control rapid expansion or reduction in workforce
Monitor staffing and retention policies

Factors affecting HRP

It comprises of two factors - External factors and Internal factors
I. External Factors:
a) Government policies: Government labour policy, Industrial relations policy, Policy on reservation
of jobs, sons-of-the soil affect HRP
b) Level of economic development: Level of economic development determines the level of HRD in
the economy and thereby the supply of the human resource in future in the country
c) Business environment: External business environment factors influences the volume and mix of
products and thereby the future demand for human resources
d) Level of technology: Level of technology determines the type of human resources needed
e) International factors: Migration, MNCs etc affect the demand and supply of human resources
II. Internal Factors
a) Company policies and strategies: Policies relating to expansion, diversification, alliance,mergers
etc determines the demand for the quantity and quality of HR
b) HR policies: Compensation, promotion and transfer, quality of work life influences the HR plan
c) Job analysis: Primarily the HR plan is based on job analysis. Components of job analysis I.e job
description and job specification determines the kind of employees needed for an organisation.
d) Time horizon: In a stable competitive environment a company can plan for a long run but in a
unstable competitive environment it can go for a short-term plan
e) Type and quality of information: Any planning process depends on qualitative and accurate
information so also for HR planning. The information needed for HR plan are as follows
i) Strategic information - Product, customer, level of competition, geographic limit of the market
ii) General organisational information - organisation structure, technology, production process,
distribution channels, etc
iii) Specific information needed for HRP - job analysis, labour market scenario, compensation,
training and development, recruitment, retirement, labour turnover data, labour laws
f) Trade unions: influence of trade unions regarding hours of work, recruitment sources .
g) Environmental uncertainties

Process of Human Resource Planning

1. Analysing organisational plans
2. Demand forecasting: Forecasting the overall human resources requirements in accordance with
the organisational plan
3. Supply forecasting: Obtaining the data and information about the present invemtory of human
resources and forecast the future changes in the HR inventory
4. Estimating the human resource requirements
5. In case of future surplus, plan for redeployment, retrenchment and lay-off
6. In case of future deficit, forecast the future supply of HR from all sources with reference to plans
of other companies
7. Plan for recruitment, development and internal mobility if future supply is more than or equal to
the net HR requirements
8. Plan to modify or adjust the organisational plan if future supply will be inadequate with reference
to future net requirements.

1. Analysing the organisational plan: It is to be derived from the organisational plan. It should start
with with analysing the organisational plan into production, technology, expansion and
diversification, marketing, sales, finance etc. The HR planning has to be integrated with the other
plans of the organisation. HRP thus incorporates both HR and other functional plans and derives
specific requirements in terms of number and types.
2. Demand forecasting; It involves the estimation of manpower needs for specified/current or
anticipated workload structure. Based on job analysis not only for the existing jobs but for future
jobs. The estimation takes into account the quantity and quality (knowledge, skill, values,
capabilities) aspects. Important forecasting methods are: a) Management judgement, b) Statistical
techniques and c) Work study techniques
a) Management judgement: Bottom-up and top-bottom approach
b) Statistical techniques: There are two models- i) Ratio-trend analysis and ii) Econometric models
c) Flow Model (Markov Model)
d) Mathematical Model
i) Ratio-trend analysis: It takes into consideration the ratio of the employees and production on
the basis of past data.
Present production as on 1st January 2023 1500 units
st
Number of operatives employed on 1 January 2023 300
Ratio between foreman and units produced(300: 1500) 1: 5
st
Estimated production on 1 January 2024 2500
Number of foremen required on 1st January 2024 500
without giving any provision for changes
Changes may be positive or negative. It may be increase in
Social activity and decline in work or change in values and
Commitment.
Ratio may be 1 : 4 units to be produced per operative 625
Ratio may be 1 : 6 units to be produced per operative 416
ii) Econometrics models: This is being done on the basis of past statistical data and
bringing the relationship among the different variables like production, sales, workload etc. And
their movements or changes from time to time.
e) Work Study Techniques: Can be adopted in organisations in which volume of work is easily
measurable
i) Planned operations during the year 2022 1,92,000 units
ii) Standard man hour needed per unit 0.25 hours
iii) Planned man hour needed 48,000 hours
iv) Work ability per employee (300 X 8) 2,400 hours
v) No. of employees needed (48,000/2,400) 20
3.