KV INSTITUTE OF MANAGEMENT AND INFORMATION STUDIES

BA7204 HUMAN RESOURCE MANAGEMENT UNIT I

UNIT I - PERSPECTIVES IN HUMAN RESOURCE MANAGEMENT

Evolution of human resource management – The importance of the human factor –

Objectives of human resource management – Inclusive growth and affirmative action -Role
of human resource manager – Human resource policies – Computer applications in human
resource management – Human resource accounting and audit.

Contents
1.1 Evolution of Human Resource Management ................................................................................ 2
1.2 Importance of Human Factor ....................................................................................................... 5
1.3 Objective of Human Resources Management. .............................................................................. 6
1.4 Affirmative Action Plan ............................................................................................................... 6
1.5 Role of Human Resources Manager: ............................................................................................ 7
1.6 Formulation of HR Policies ......................................................................................................... 8
1.7 Computer Application in Human Resource Management ............................................................. 9
1.7.1 Benefits of HRIS: ................................................................................................................... 11
1.7.2 Limitations of HRIS: .............................................................................................................. 11
1.8 Human Resource Accounting ..................................................................................................... 11
1.8.1 SIGNIFICANCE OF HRA .................................................................................................. 12
1.8.2 Objectives of HRA.............................................................................................................. 12
1.8.3 ADVANTAGES OF HRA .................................................................................................. 12
1.8.4 Approaches of Human Resource Cost Accounting .................................................................. 12
1.8.4.1 HISTORICAL COST APPROACH.................................................................................. 13
1.8.4.2 REPLACEMENT COST APPROACH ............................................................................ 13
1.8.7 Human Resource Audit: Meaning/Definition: ......................................................................... 13
1.8..7.1 Significance HR Audit .................................................................................................... 13
1.8.7.2 Need for HR Audit: .......................................................................................................... 13
1.8.7.2 Special areas of HR Audit ................................................................................................ 14
1.8.7.8 Scope of Audit ................................................................................................................. 14
1.8.7.9 Use of HR Audit: ............................................................................................................. 14
1.8.7.8 Objectives: ....................................................................................................................... 15
1.8.7.9 Benefits of HR Audit: ...................................................................................................... 15
1.8.7.10 Pitfalls of HR Audit ....................................................................................................... 15
1.8.7.11 Audit of HR Function: .................................................................................................... 15
1.8.7.12 Auditor‟s Role................................................................................................................ 16
1.8.7.13 FIVE Approaches to HR Audit: ...................................................................................... 16

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BA7204 HUMAN RESOURCE MANAGEMENT UNIT I

1.1 Evolution of Human Resource Management

 The seed of HRM were sown during the industrial revolution 1850s in Western
Europe and USA
th
 Then it slowly reached to India in 20 century.
The Development of HRM classified as
 
Trade Union Movement Era
 
Social Responsibility Era
 
Scientific Management Era
 
Human Relations Era
 
Behavioral Science Era
 
Systems Approach Era
 
Contingency Approach Era


Trade Union Movement Era
 In the aftermath of factory system the conditions of workers were pathetic
because of Industrial revolution.
 At the time of First World War still the conditions of workers became sad.
 At this time protection of workers interest felt necessary.
 The Koyal Commission of Labor in India 1911 under the chairmanship of
J.H.Whitley recommended the abolition of the Jobber system & the
appointment of labour officers in Industrial enterprises in order to perform the
recruitment and settlement of worker's grievances.
 At this period workers started forming their associations named as „Trade
Unions‟
 Trade Union Act 1926 was passed in India
 Trade Unionism was to safeguard
 Worker‟s Interest
 Sort out their problems

Child labour

Long hours of work

Poor working conditions
 These unions used to

Strikes

Slowdowns

Walkouts

Picketing

Boycotts & sabotage as weapons for the acceptance of their
problem. 
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
Activities of Trade Union gave rises to personnel practices such as
1. Collective Bargaining
2. Grievance Handling system
3. Arbitration
4. Disciplinary Practices
5. Employee Benefits Programmes
6. Defensible Wage Structures etc…

Social Responsibility Era
th

Starting decades of 20 century some factory

Owners/employers started showing humanistic approach towards the workers.

Robert Owen a British Industrialist first to adopt humanistic and paternalistic
approach towards workers.
 He viewed that the principal, social & economic environment influence the
physical mental & psychological development of workers.
 Therefore in order to improve the productivity it is necessary to improve the
conditions of employee.
 By removing or changing the satisfactory living & working conditions.
 Father and child, owner and worker.
 He implied in his own cotton Mill at Scotland by introducing

All facilities

Shower bath

Toilets

Villages for Workers

Raising minimum wages

Reducing working hours 12 to 10 hours.
 Owner adopted these facilities to control over the labour problems.

Scientific Management Era
th
It was introduced by Fredrick Winslow Taylor in USA 20 century. Taylor Developed 4
principles of scientific management
1. Use of scientific methods to setting work standard, determining a fair day‟s
work & best way of doing work.
2. Selecting and placement of workers & Training & development
3. Clear division of work & responsibility between management & workers.
4. Harmonious relations & close cooperation with workers to secure
performance.
Techniques Developed by him
1. Time study
2. Motion study
3. Standardization of tools, equipments & machinery & working conditions.
4. Piece rate of wages. (Incentive wage plan)

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
Human Relation Era
 In between 1925 & 1935 many experts expressed their HRM aspects as
Organizational activities.
 A psychologist namely Hugo Munsterberg in his book suggested the use of
psychology in selection, placement, testing and training of employees in an
organization.
 Elton Mayo & his associates conducted a series of experiments from 1924 to 1932 at
the Hawthorne plant of the western Electric Company in USA.
Main findings of Hawthorne Experiments
 Physical environment at work place.
 Favourable attitudes of workers & work-team towards their work.
 Fulfillment of the workers social & psychological needs it has direct impact on
morale and efficiency of workmen.
 Employee groups based on social interactions & common interests exercised a strong
influence on workers performance.
 Workers cannot be motivated solely by rewards. More important motivations are job
security, recognition, right to express their opinion on matters related to them.
 This approach was to make employees productive by employee satisfaction

Behavioural Science Era
 Human Behaviour as a means to achieve efficiency in performance.
 This approach belongs to the disciplines of sociology, social psychology,
anthropology & management experts.
 Major contributions of this approach are motivation, leadership, communication,
organizational change and development, organizational culture and individual &
group dynamics.
Elements of Behavioural Science Era.
 Individual Behaviour is linked with the group behaviour.
 Informal leadership rather than the formal
 Job itself is a source of motivation & satisfaction to employee.
 Self-control & self-direction can improve operating efficiency.

System Approach Era.
Working organization usually consists of 3 board sub-system
1. Technical sub-system - i.e. formal relationships among the members of an
organization.
2. Social sub-system – i.e. social satisfaction to the members through informal group
relations.
3. Power sub-system – i.e. exercise of power or influence by individual or group.
Feature:

A system is a group of inter related elements. 

All the elements are inter-related in an orderly manner.

There is the need for proper & timely communication

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
There is the need for proper & timely communication

Interaction between the elements should lead to achieve some common goal. 

Contingency Approach Era.

According to the approach the best way to manage varies with the situation This

approach is also called as Situational.

1.2 Importance of Human Factor

Environmental factors vs. Human factor
The more a man has, the more he wants. This adage carries a grain of truth, but it does not
come true for everybody. Keops was a powerful pharaoh, good and correct who cherished the
human being. Putting the people above everything, even above his greatest dream - the dream
to build an enormous pyramid, to last for centuries, Keops commanded to stop working until
the Nile's waters will rise again. Thus, what mattered to him, first of all, were the people, so
that it won't shy of a thing and that it would rise in the world.

Unlike other leaders, who fallowed their interests, Keops got involved in the internal
problems of his country, paying a special attention to develop the human and economic
factor. In order to win his people by his side, he was concerned about the way people are
living. And in case of a crisis, he had the power to sell even from his part of treasure in the
use of his people. With certainty, Keops represents a worthy example to follow for all the
managers, politicians and presidents from the whole world.

Stand on the human factor

If you don't consider the human factor, it's unlikely that you obtain fast and efficient results.
One of the reasons because a lot of companies don't manage to climb the top is because
managers don't communicate efficiently with the employees and they don't manage to build a
performing way of working. Instead of determining the employees to have a cooperative
attitude, stimulating them in building a career, some managers trace some targets and give
orders without thinking at the needs, the pretences and the aspirations of their employees.
The fact that certain work skills can tire the people doesn't affect at all some managers, who
many times ask for the impossible and they are also displeased that the employees are not
productive, are not interested and they are very little involved in the company activities.

People are active part of any company, and the managers have to count on their strong points
to obtain good results. Also, people represents the most important source of increasing the
profitability of a company and without it, the company could not function. It's clear why the
most dynamic companies in the world give so much importance to the human factor and
make all that is possible to form a professional team, who will be able to accomplish with
devotion and responsibility the tasks they were given.

In conclusion: Leading a company has to stand on the human factor, to assure favourable
working conditions, offering employees the possibility to remark themselves and to progress
in their career based on their achievements.
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Taking care about the people needs and maximizing their value are the most important
aspects that a manager should have in mind, otherwise he will fail.

1.3 Objective of Human Resources Management.

1. To help the organization to reach its goals
2. To employ the skills & abilities of the workforce efficiently.
3. To provide the organization with well-trained & well-motivated employees.
4. To increase to the fullest the employees job satisfaction & self-actualization.
5. To develop & maintain a quality of work life.
6. To communicate HR policies to all employees.
7. To be ethically & socially responsive to the needs of society.

1.4 Affirmative Action Plan

As defined, Affirmative Action Plan is a program or policy of a company that aims to
eliminate discrimination by providing equal opportunities and giving additional education or
work experience. In connection to HR systems, this concept grants employees the privilege of
improving his profession. An employer may have a number of fine options such as seminars,
forums or grants for additional employee special courses. Affirmative action initially
developed to fix established discriminations in some minority groups or underrepresented
groups in the society.

HR systems have developed solutions for managing affirmative action plan or AAP. Modern
AAP‟s one major function is to define categories for minority groups and preparing
acceptable plans. Affirmative Plans lay down goals to be achieved, timeframes and specify
tasks to given in such groups.

There is no need to worry about the technical part because online and built-in program
wizards are available to guide you through software applications that are available in the
market. Analysis programs are also provided to help you monitor on the progress of your
plan and generate regular performance reports.

Although there might have been a number of objections concerning the program, advocates
still consider AAPs as a good means of giving minority groups a chance to contribute in
society. Affirmative action plans in general, enables you to monitor the availability of the
underrepresented groups, especially women. This helps you develop this group and provide
them with equal opportunity as qualified employees. Planning carefully on this program is
suggested to do away with potentially negative effects. Click on the relevant sites to know
more on this HR solution and other related topics. Legal sites are also available for online
support.

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1.5 Role of Human Resources Manager:

Human Resources Managers are involved in the process of organizing, developing,
motivating and maintaining the human resources in the organization. Acquisition implies a
need to put the right people on the right job. It therefore emphasizes the need to select the
right person as well as to define jobs completely. Developing indicates the need to hone the
skills of employees in order to enable them to perform well on their job. Motivation is
concerned with sustaining the level of performance of each and every employee in the
organization. In today‟s context of high attrition, there is a need to design attractive
measures to retain high performers. Organizations are realizing that this task is perhaps of
prime concern. The maintenance function is concerned with such issues that have a direct
impact on building employee relationships. The sub functions of these activities are shown
in figure below.

Maintenance Acquisition
Improving Work Conditions Human Resource Planning
Benefits and Services Recruiting
Safety and Health Selection
Employee Relationships Induction and Socialization
Motivation HRM GOALS Development
Performance Appraisal Employee Training
Linking Reward to Management Development
Performance Organizational Development
Ensuring Satisfaction Career Development
Compensation
Administration

You can observe from the figure that the essentially, there are four distinct
activities that a human resource manager is involved with. They are:

 Acquisition
 Development
 Motivation and
 Maintenance

Acquisition

It begins with manpower planning. It tries to understand the current human resources
available with the organization. A forecast of future manpower requirement and supply are
made. Any shortages are made up, through recruitment and selection at appropriate time.
Acquisition also includes other activities such as induction and socialization of employees.
For example at Sum Total, regular team outings, new inductee lunches and evenings are
celebrated to develop cooperation and camaraderie between organizational members.

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Development

The development function has four distinct activities. They are employee development,
management development, organizational development and career development. Employee
development is concerned with developing skills of the employee. It also includes changing
the attitudes of employees if need be. Management development is concerned with
enhancement of conceptual abilities and improving knowledge acquisition of employees.
Organizational development is concerned with planning and managing change. Career
development is concerned with matching the long-term goals of the individual employee
and the organization. For example, at Ramco System all employees are put through a
comprehensive thirty- day program to enrich their skills to enable them to perform well on
the job. While at HCL, both technical and soft skill training is provided to employees. This
is done to ensure that employees are current in terms of knowledge and skills. It helps them
to improve their career prospects.

Motivation

Individual employees are different from each other. Motivation techniques must consider
these differences. Therefore, this function is concerned with performance appraisal, methods
to stimulate performance, linking rewards to performance, compensation administration, and
linking rewards to satisfaction. It also takes into consideration issues such as monotony and
boredom causing alienation. It is concerned with disciplining of employees too. The need is
to provide challenging, satisfying and personally rewarding jobs. At Sum Total, „Power of
One‟ (global award given quarterly) and „ Big One” (employee of the year award) are given.
Surprisingly, these awards are given to the parents/spouse of the employee in recognition of
the latter‟s excellent performance. The family‟s role in employee excellence is recognized.
Mind tree consulting has a „heroes gallery‟ to recognize excellence.

Maintenance

This function is concerned with ensuring the continuance of employees in the organization.
Therefore, it focuses attention on issues such as working conditions, benefits and services to
be provided to keep employees happy, so as to ensure their commitment to the organization.
The employees stock (ESOP) is a non-cash compensation issued by Infosys. A rising stock
price gives the employees the drive to work harder and stay longer with Infosys.

1.6 Formulation of HR Policies

a) Identifying the need: Initially importance areas of personnel management must have a
policy formulation which is clearly spelt out.
b) Collecting Data: Once priority areas are listed, steps should be taken to collect facts
before formulating a policy. Various sources such as
 Company records

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 Past practices
 Survey of industry practices
 Top management philosophy
 Organizational culture etc.
c).Specifying alternatives: Policy alternatives should emerge clearly after collecting relevant
data from various sources. These have to be evaluated carefully in terms of their contribution
to organizational objectives.
d).Communicating the Policy: To gain approval at various levels, the formulated policy
should be communicated throughout the organization. Policy manual, in- house journal and
discussions with people at various levels may be used to reach out to employees quickly.
e).Evaluating the Policies: personnel policies, to be effective, must be reviewed, evaluated
and controlled regularly against established standards. Evaluation helps determine changes in
existing policies.

1.7 Computer Application in Human Resource Management

1. Payroll
2. Time and attendance
3. Performance appraisal
4. Benefits administration
5. HR management information system
6. Recruiting/Learning management
7. Performance record
8. Employee self-service
9. Scheduling
10. Absence management
11. Analytics

The payroll module automates the pay process by gathering data on employee time and
attendance, calculating various deductions and taxes, and generating periodic pay cheques
and employee tax reports. Data is generally fed from the human resources and time keeping
modules to calculate automatic deposit and manual cheque writing capabilities. This module
can encompass all employee-related transactions as well as integrate with existing financial
management systems.

The time and attendance module gathers standardized time and work related efforts. The
most advanced modules provide broad flexibility in data collection methods, labor
distribution capabilities and data analysis features. Cost analysis and efficiency metrics are
the primary functions.

The benefits administration module provides a system for organizations to administer and
track employee participation in benefits programs. These typically encompass insurance,
compensation, profit sharing and retirement.

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The HR management module is a component covering many other HR aspects from

application to retirement. The system records basic demographic and address data, selection,
training and development, capabilities and skills management, compensation planning
records and other related activities. Leading edge systems provide the ability to "read"
applications and enter relevant data to applicable database fields, notify employers and
provide position management and position control. Human resource management function
involves the recruitment, placement, evaluation, compensation and development of the
employees of an organization. Initially, businesses used computer based information systems
to:
 Produce pay checks and payroll reports;
 Maintain personnel records;
 Pursue talent management.

Online recruiting has become one of the primary methods employed by HR departments to
garner potential candidates for available positions within an organization. Talent
management systems typically encompass:
 Analyzing personnel usage within an organization;
 Identifying potential applicants;
 Recruiting through company-facing listings;
 Recruiting through online recruiting sites or publications that market to both
recruiters and applicants.
The significant cost incurred in maintaining an organized recruitment effort, cross-posting
within and across general or industry-specific job boards and maintaining a competitive
exposure of availabilities has given rise to the development of a dedicated applicant tracking
system, or 'ATS', module.

The training module provides a system for organizations to administer and track employee
training and development efforts. The system, normally called a "learning management
system" (LMS) if a stand alone product, allows HR to track education, qualifications and
skills of the employees, as well as outlining what training courses, books, CDs, web based
learning or materials are available to develop which skills. Courses can then be offered in
date specific sessions, with delegates and training resources being mapped and managed
within the same system. Sophisticated LMS allow managers to approve training, budgets and
calendars alongside performance management and appraisal metrics.

The employee self-service module allows employees to query HR related data and perform
some HR transactions over the system. Employees may query their attendance record from
the system without asking the information from HR personnel. The module also lets
supervisors approve O.T. requests from their subordinates through the system without
overloading the task on HR department.

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Many organizations have gone beyond the traditional functions and developed human
resource management information systems, which support recruitment, selection, hiring, job
placement, performance appraisals, employee benefit analysis, health, safety and security,
while others integrate an outsourced applicant tracking system that encompasses a subset of
the above.

The Analytics module enables organizations to extend the value of an HRMS implementation
by extracting HR related data for use with other business intelligence platforms. For example,
organizations combine HR metrics with other business data to identify trends and anomalies
in headcount in order to better predict the impact of employee turnover on future output.

1.7.1 Benefits of HRIS:

 Higher Speed of retrieval and processing of data.

 Reduction in duplication of efforts leading to reduced cost.
 Ease in classifying and reclassifying data.
 Better analysis leading to more effective decision making.
 Higher accuracy of information/report generated.
 Fast response to answer queries.
 Improved quality of reports.
 Better work culture.
 Establishing of streamlined and systematic procedure.
 More transparency in the system.
 Employee – Self Management.

1.7.2 Limitations of HRIS:

 It can be expensive in terms of finance and manpower.

 It can be threatening and inconvenient.
 Thorough understanding of what constitutes quality information for the user.
 Computer cannot substitute human beings.
 Lack of communication
 Time of year and duration
 No or poorly done needs analysis.

1.8 Human Resource Accounting

Definition
“It is the dynamics of the organization. It is the assessment of condition of human resources
within an organization and the measurement of the changes in the condition through time.”
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Basic Premises
 Value
 Usefulness
 Information
 People are Valuable Resources
 Usefulness of Manpower in the way it is managed
 Information is useful for Decision Making.

1.8.1 SIGNIFICANCE OF HRA

Accounting now a day‟s regarded as a services activity, a descriptive analytical discipline.

Primary role of accounting is to provide an effective measurement and reporting system for
decision making.

Formulations of policies

Decision regarding cost reduction
 Training and development

Recruitment and selection

Manpower planning and control

Conservation and reward of human resources. 

1.8.2 Objectives of HRA 


Determine the return on investment


Determine the human resource management


Determine the worth of human resource


Provide a sound and effective basis for asset control


Allows management personnel to monitor effectively the use resource of human.

1.8.3 ADVANTAGES OF HRA

Human resource accounting helps in knowing whether human asset is being built up in the
business or not.

Ascertain the cost of labour turnover.

Development of human resources.

Planning and execution of personnel policies. 

Return on investment on human resources. 

1.8.4 Approaches of Human

 Resource Cost Accounting

Historical Cost Approach


Replacement Cost Approach


Opportunity Cost Approach

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1.8.4.1 HISTORICAL COST APPROACH

 The actual cost incurred on recruiting, selecting, training, placing and developing the
human resources of an enterprise are capitalized and written off over the expected
useful life of human resources.
 Any amount spent on training and developing human resource increases its efficiency,
hence capitalized.
 The amortization of human resource assets is done in the same way as that of other
physical assets.
 If the asset is liquidated prematurely then it‟s underwritten off amount is charged to
revenue account.
 On the other hand, if it has a longer life than expected, its amortization is rescheduled.

1.8.4.2 REPLACEMENT COST APPROACH


The cost of replacing employees is used as the measure of company‟s human

resources.

The human resources of a company are to be valued on the assumption as to what it
will cost the concern if existing human resources are required to be replaced with

other persons of equivalent experience and talent.

In this the cost of recruiting, selecting, training, etc. of new employees to reach the

level of competence of existing employees are measured.

1.8.7 Human Resource Audit: Meaning/Definition:

A Human Resources Audit is a comprehensive method (or means) to review current human
resources policies, procedures, documentation and systems to identify needs for improvement
and enhancement of the HR function as well as to ensure compliance with ever-changing
rules and regulations. An Audit involves systematically reviewing all aspects of human
resources, usually in a checklist fashion.

1.8..7.1 Significance HR Audit

1. Essential for Organization success.
2. It Provides Required Feedback.
3. Managing Rising Labor Costs.
4. Increasing Opportunities for Competitive Advantage of HRM.
5. HR Audit can avoid Government intervention
6. HRP protect Employees interests

1.8.7.2 Need for HR Audit:

Though, to audit HR- Policies & Practices no legal obligation exists, some Modern
Organizations chase to:
1. Increase size of Organization & Personnel
2. Change Philosophy of Management towards HR
3. Increase Strength & Influence of Unions

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 KV INSTITUTE OF MANAGEMENT AND INFORMATION STUDIES
BA7204 HUMAN RESOURCE MANAGEMENT UNIT I

1.8.7.2 Special areas of HR Audit

1.8.7.8 Scope of Audit

1.8.7.9 Use of HR Audit:

Basic purpose of HR-Audit is to find:
1. How various units are functioning?
2. How they met policies & guidelines Pre-agreed upon?
3. To assist Rest of Organization locating gaps between Objectives & Results.
4. Formulate Plan for corrections

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 KV INSTITUTE OF MANAGEMENT AND INFORMATION STUDIES
BA7204 HUMAN RESOURCE MANAGEMENT UNIT I

1.8.7.8 Objectives:

Effectiveness: To review performance of Human resource Department and its

activities to determine effectiveness.


Implementation: To locate gaps, lapses, failings in applying Policies, Procedures,
 Practices & HR-directives. Also to see areas of wrong/ non-implementation that
hindered the planned programs & activities.
 Rectification: To take corrective steps to rectify mistakes, shortcomings contesting
effective work performance of HR Department.

Evaluation: To evaluate HR Staff & employees. 


To evaluate the extent to which Line Managers Applied Policies Programmes &
 
Directives initiated by Top Management & HR Department.

Modify: To review HR System and Modify to meet challenges in comparison with

other organizations.
 Questioning: To seek answers to„ What, Why, When‟ Happened while implementing
Policies, Practices & Directives in managing HRs

1.8.7.9 Benefits of HR Audit:

1. Identifies contribution of HR Department.
2. Improves HR Department‟s Professional Image.
3. Fosters greater Responsibility & Professionalism amongst HR Staff.
4. Classifies HR Department‟s Responsibilities & Duties.
5. Stimulates Uniformity of Personnel Policies & Practices.
6. Identifies Critical personnel problems.
7. Ensures Timely Legal Compliance Requirements.
8. Reduces HR Costs

1.8.7.10 Pitfalls of HR Audit

1. Full audit may be time consuming

2. May not be as objective and impartial as desired
3. Impact of certain actions may not be clear

1.8.7.11 Audit of HR Function:

Involves all activities of HR Functions, From HRP to IR

Major Areas:
 Planning - Forecasting,
 Scheduling;
 Staffing & Development,
 Organizing;
 Motivation & commitment ;
 Administration ;
 Research & Innovation.
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duplicated for use outside of KV. Violators will face infringement proceedings of copyright laws..
 KV INSTITUTE OF MANAGEMENT AND INFORMATION STUDIES
BA7204 HUMAN RESOURCE MANAGEMENT UNIT I

1.8.7.12 Auditor’s Role

For each activity in the HR Audit functions Auditors must:


Determine objective of activity. 

Identify who is responsible for its performance. 

Review the performance. 

Develop action plan to correct deviation, between Results & Goal. 

Follow up action plan. HR Evaluation must justify existence of

Department & its expenses. Department has no reason to function if fails to 

Contribute to Company‟s bottom-line, Prune expenses to make department viable. 

1.8.7.13 FIVE Approaches to HR Audit:

Auditors may choose any of the five approaches for the purpose of Evaluation.

Comparative Approach.

Outside Authority Approach. 

Statistical Approach.

Compliance Approach. 

MBO Approach
Comparative Approach –

Auditors Identify another Company as a MODEL. Result of their 

Organization compared with those of Model Company. 

Outside Authority Approach –


Often, Auditors use standard set by Outside Consultant as BENCHMARK for
comparison of own Results

Auditors review Past Actions to determine if those activities comply with legal

Requirements and Company Policies & Procedures. A Final approach is for 

Specialists & Operating Managers to set objectives in their areas of responsibility. 

Management By Objectives Approach –


Creates Specific Goals against which performance can be measured. Then the Audit
Team Researches ACTUAL PERFORMANCE and compares with the OBJECTIVES.
Period of Audit:
Naturally any audit will be done annually. Though it is preferred to conduct Human Resource
Audit annually, but it is advisable to conduct audit once in three years or five years, keeping
in view the fact that the realization of the Organizational goals may not be identified within a
year.

Audit Report:
The Programmes comes to end with preparation of Report. Report may be Clean or
Qualified. It is Qualified if HR Performance contains Gaps for which remedies suggested.
Report is clean where Performance is fairly Satisfactory.

16
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duplicated for use outside of KV. Violators will face infringement proceedings of copyright laws..