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European Powers- British and French

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Human Resource Management:

Human: refers to the skilled workforce in an organization.
Resource: refers to limited availability or scarce.
Management: refers how to optimize and make best use of such limited
or scarce resource so as to meet the organization goals and objectives.
Therefore, human resource management is meant for proper utilisation
of available skilled workforce and also to make efficient use of existing
human resource in the organisation.

Human Resource Management is the process of

recruiting, selecting, inducting employees, providing
orientation, imparting training and development, appraising the
performance of employees, deciding compensation and providing
benefits, motivating employees, maintaining proper relations with
employees and their trade unions, ensuring employees safety, welfare
and healthy measures in compliance with labour laws.

Concept of HRM
Human resource management (HRM or HR) is the strategic approach to
the effective and efficient management of people in a company or

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organization such that they help their business gain a competitive

advantage.

It is designed to maximize employee performance in service of an

employer's strategic objectives.

Objectives of Human Resource Management

1. Societal objective.
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.

2. Organizational objective.
To recognize that Human resource management 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.
3. Functional objective.
To maintain the department's contribution at a level appropriate to the
organisation's needs. Resources are wasted when Human Resource
Management is more or less sophisticated than the organisation
demands. A department's level of service must be appropriate for the
organisation it serves.

4. 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

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maintained, retained and motivated. Otherwise, employee

performance and satisfaction may decline, and employees may leave
the organisation.

ROLE OF HRM
1. Advisory Role: HRM advises management on the solutions to any
problems affecting people, personnel policies and procedures.

(a) Personnel Policies: Organization Structure, Social Responsibility,

Employment Terms & Conditions, Compensation, Career & Promotion,
Training & Development and Industrial Relations.

(b) Personnel Procedures: Relating to manpower planning procedures,

recruitment and selection procedures, and employment procedures,
training procedures, management development procedures,
performance appraisal procedures, compensation procedures,
industrial relations procedures and health and safety procedures.

2. Functional Role: The personnel function formulates personnel

policies in accordance with the company’s doctrine and management
guidelines. It provides guidance to managers to help them ensure that
agreed policies are implemented.

3. Service Role: Personnel function provides personnel services. These

services constitute the main activities carried out by the personnel
department, like payroll, disciplinary actions, etc, and involve the
implementation of the policies and procedures described above.

ROLE OF HR MANAGERS
1. Humanitarian Role: Reminding moral and ethical obligations to
employees.

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2. Counsellor: Consultations to employees about marital, health,

mental, physical and career problems.
3. Mediator: Playing the role of a peacemaker during disputes, conflicts
between individuals and groups or management.
4. Spokesman: To represent the company in Media and other forums
because he has a better overall picture of his company’s operations.
5. Problem Solver: Solving problems of overall human resource
management and long-term organizational planning.
6. Change Agent: Introducing and implementing institutional changes
and installing organizational development programs
7. Management of Manpower Resources: Broadly concerned with
leadership both in the group and individual relationships and labour-
management relations.

MANAGERIAL FUNCTIONS OF HRM

1. Planning: Research and plan about wage trends, labour market
conditions, union demands and other personnel benefits. Forecasting
manpower needs etc.
2. Organizing: Organizing manpower for the achievement of
organizational goals and objectives.
3. Staffing: Recruitment & Selection
4. Directing: Issuance of orders and instructions, providing guidance
and motivation to managers and employees.
5. Controlling: Regulating personnel activities and policies according to
plans. Observations and comparisons of deviations

OPERATIONAL FUNCTIONS OF HRM

1. Procurement: Planning, Recruitment and Selection, Induction and
Placement
2. Development: Training, Development, Career planning and
counselling.

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3. Compensation: Wage and Salary determination and administration

4. Integration: Integration of human resources with organization.
5. Maintenance: Sustaining and improving working conditions,
retentions, employee communication
6. Separations: Managing separations caused by resignations,
terminations, lay offs, death, medical sickness etc.

Functions of HRM:

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12 human resources functions are:

1. Human resource planning
2. Recruitment and selection
3. Performance management
4. Learning and development
5. Career planning
6. Function evaluation
7. Rewards
8. Industrial relations
9. Employee participation and communication
10. Health and safety
11. Personal wellbeing
12. Administrative responsibilities

Perspective of HRM
1. The Normative Perspective
The normative perspective of human resource management bases itself
on the concepts of “hard HRM” and “soft HRM,” on which the
foundations of human resource management rest.
The concept of “Hard HRM” is the basis for the traditional approach
toward human resource management. This concept traces its origins to
the Harvard model that links workforce management to organizational
strategy. Hard HRM stresses the linkage of functional areas such as
manpower planning, job analysis, recruitment, compensation and
benefits, performance evaluations, contract negotiations, and labor
legislations to corporate strategy. This enforces organization interests
over the employees' conflicting ambitions and interests. It views the
workforce as passive resources that the organization can use and
dispose at will.

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Soft HRM is synonymous with the Michigan model of human resources

and is the bedrock of the modern approach to strategic human
resource management. This model considers human capital as “assets”
rather than “resources” and lays stress on organizational development,
conflict management, leadership development, organizational culture,
and relationship building as a means of increasing trust and ensuring
performance through collaboration. This approach works under the
assumption that what is good for the organization is also good for the
employee.
2. The Critical Perspective of Human Resource Management
The critical perspective of human resource management is a reaction
against the normative perception. This highlights some inherent
contradictions within the normative perspective.
This perspective espouses a gap between rhetoric, as organizations
claim to follow soft HRM policies when they actually enforce hard HRM.
A study by Hope-Hailey et al. (1997) finds that while most organizations
claim employees to be their most important assets and make many
commitments for their welfare and development, in reality employers
enforce a hard HRM-based strategic control, and the interests of the
organization always take priority over the individual employee.
3. The Behavioral Perspective of Human Resource Management
The behavioral perspective of human resource management has its
roots in the contingency theory that considers employee behavior as
the mediator between strategy and organizational performance. This
theory holds that the purpose of human resource intervention is to
control employee attitudes and behaviors to suit the various strategies
adopted to attain the desired performance. This perspective thus bases
itself on the role behavior of employees instead of their skills,
knowledge, and abilities.
For instance, an organization aiming to innovate will require a
workforce that demonstrates a high degree of innovative behavior such

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as long-term focus, cooperation, concern for quality, creativity,

propensity for risk taking, and similar qualities. The role of human
resource management in such a context is to inculcate and reinforce
such behavioral patterns in the workforce.
4. The Systems Perspective of Human Resource Management
The systems perspective describes an organization in terms of input,
throughput, and output, with all these systems involved in transactions
with a surrounding environment. The organized activities of employees
constitute the input, the transformation of energies within the system
at throughput, and the resulting product or service the output. A
negative feedback loop provides communications on discrepancies.
The role of human resource management in the systems perspective is
1. Competence management to ensure that the workforce has the
required competencies such as skills and ability to provide the input
needed by the organization.
2. Behavior management through performance evaluation, pay
systems, and other methods to ensure job satisfaction, so that
employees work according to the organizational strategy, ultimately
boosting productivity.
3. Setting up mechanisms to buffer the technological core from the
environment in closed systems.
4. Facilitating interactions with the environment in open systems.
HRM Influences & Recent Trends

HRM Influences:
The objectives that management set for their human resources strategy
are influenced by a variety of internal and external factors.
Internal influences on HRM objectives
1. Corporate objectives
E.g. an objective of cost minimisation results in the need for
redundancies, delayering or other restructuring

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2. Operational strategies
E.g. introduction of new IT or other systems and processes may require
new staff training, fewer staff
3. Marketing strategies
E.g. new product development and entry into a new market may
require changes to organisational structure and recruitment of a new
sales team
4. Financial strategies
E.g. a decision to reduce costs by outsourcing training would result in
changes to training programmes
External influences on HRM objectives
1. Market changes
E.g. a loss of market share to a competitor may require a change in
divisional management or job losses to improve competitiveness
2. Economic changes
E.g. changes in the level of unemployment and the labour market will
affect the supply of available people and their pay rates
3. Technological changes
E.g. the rapid growth of social networking may require changes to the
way the business communicates with employees and customers
4. Social changes
E.g. the growing number of single-person households is increasing
demand from employees for flexible working options
5. Political & legal changes
E.g. legislation on areas such as maximum working time and other
employment rights impacts directly on workforce planning and
remuneration

RECENT TRENDS IN HUMAN RESOURCE MANAGEMENT

1. Globalization and its implications

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Business today doesn’t have national boundaries – it reaches around

the world. The rise of multinational corporations places new
requirements on human resource managers. The growth of liberal
cross-border trade, the use of communications technology and the
expansion of transnational companies are not likely to let up. Attracting
global talent requires staying abreast of new strategies for finding and
attracting talent. The HR department needs to ensure that the
appropriate mix of employees in terms of knowledge, skills and cultural
adaptability is available to handle global assignments. In order to meet
this goal, the organizations must train individuals to meet the
challenges of globalization. HRM would be required to train
management to be more flexible in its practices. Business technology
consultancy Infosys decided to hire Chinese graduates and started by
inviting and teaching a select group of Chinese students English at its
office in Mysore, India, allowing the company to source workers from a
neighbouring country cost-effectively.
2 Work-force Diversity
Workforce diversity means similarities and differences among
employees in terms of age, cultural background, physical abilities and
disabilities, race, religion, gender, and sexual orientation. No two
humans are alike. Diversity is critically linked to the organization’s
strategic direction. The workforce composition is also changing over the
years. Demands for equal pay for equal work, putting an end to gender
inequality and bias in certain occupations, the breaking down of glass
ceiling have already been met. A family friendly organization is one that
has flexible work schedules and provides such employee benefits such
as child care. In addition to the diversity brought by gender and
nationality, HRM must be aware of the age differences that exist in
today’s work force. HRM must train people of different age groups to
effectively manage and to deal with each other and to respect the
diversity of views that each offers. In situations like these a

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participative approach seems to work better. In current scenario,

employing diversified workforce is a necessity for every organization
but to manage such diversified workforce is also a big challenge for
management.
3 Employee expectations
Nowadays workers are better educated, more demanding and are
ready to voice strong, violent and joint protests in case their
expectations are not met. The list of financial and non-financial
demands is ever-growing and expanding. In fast-changing industries
such as software, telecom, entertainment and pharmaceuticals the
turnover rations are rising fast and if HR managers do not respond
positively to employee expectations, the acquisition and development
costs of recruits is going to mount up steadily. An efficient organisation
is, therefore required to anticipate and manage turnover through
human resource planning, training schemes followed by appropriate
compensation packages.
4 Changing skill requirements
Recruiting and developing skilled labour is important for any company
concerned about competitiveness, productivity, quality and managing a
diverse work force effectively. Skill deficiencies translate into significant
losses for the organization in terms of poor-quality work and lower
productivity, increase in employee accidents and customer complaints.
Since a growing number of jobs will require more education and higher
levels of language than current ones, HRM practitioners and specialists
will have to communicate this to educators and community leaders etc.
Strategic human resource planning will have to carefully weigh the skill
deficiencies and shortages. HRM department will have to devise
suitable training and short term programs to bridge the skill gaps &
deficiencies.
5 Corporate downsizing

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Whenever an organization attempts to delayer, it is attempting to

create greater efficiency. The pressure to remain cost effective has also
compelled many a firm to go lean, cutting down extra fat at each
managerial level. The premise of downsizing is to reduce the number of
workers employed by the organization. HRM people must ensure that
proper communication must take place during this time. They must
minimize the negative effects of rumours and ensure that individuals
are kept informed with factual data.
6 Continuous improvement programs
It is a process whereby an organization focuses on quality and builds a
better foundation to serve its customers. This often involves a
companywide initiative to improve quality and productivity. The
company changes its operations to focus on the customer and to
involve workers in matters affecting them. Companies strive to improve
everything that they do, from hiring quality people, to administrative
paper processing, to meeting customer needs. HRM plays an important
role in the implementation of continuous improvement programs. HRM
must prepare individuals for the change. This requires clear and
extensive communications of why the change will occur, what is to be
expected and what effect it will have on employees.
7 Re-engineering work processes for improved productivity
Although continuous improvement initiatives are positive starts in
many of our organizations, they typically focus on ongoing incremental
change. Such action is intuitively appealing – the constant and
permanent search to make things better. Yet many companies function
in an environment that is dynamic- facing rapid and constant change.
Re-engineering occurs when more than 70% of the work processes in
an organization are evaluated and altered. It requires organizational
members to rethink what work should be done, how it is to be done
and how to best implement these decisions. Re-engineering changes
how organizations do their business and directly affects the employees.

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Re-engineering may leave certain employees frustrated and angry and

unsure of what to expect. Accordingly HRM must have mechanisms in
place for employees to get appropriate direction of what to do and
what to expect as well as assistance in dealing with the conflict that
may permeate the organization. For re-engineering to generate its
benefits HRM needs to offer skill training to its employees.
8 Contingent workforce
A very substantial part of the modern day workforce are the
contingent workers. Contingent workers are individuals who are
typically hired for shorter periods of time. No organization can make
the transition to a contingent workforce without sufficient planning. As
such, when these strategic decisions are being made, HRM must be an
active partner in these discussions. After its entire HRM department’s
responsibility to locate and bring into the organization these temporary
workers. As temporary workers are brought in, HRM will also have the
responsibility of quickly adapting them to the organization. HRM will
also have to give some thought to how it will attract quality
temporaries.
9 Mass Customization
There is a lot going on already within HR concerning mass
customization, the optimal combination of mass production with
customization. HR will need to take the tools of marketing around
customization for consumers and clients and applying them to the task
of talent segmentation. HR should develop principles for understanding
the optimal level of customization in the employment relationship.
Moreover, because customization will often mean that different groups
of employees receive different employment arrangements based on
their needs or the way they contribute, HR must develop principles that
equip leaders to explain these differences to employees.
10 Decentralized work sites

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Work sites are getting more and more decentralized. Telecommuting

capabilities that exist today have made it possible for the employees to
be located anywhere on the globe. For HRM, decentralized work sites
present a challenge. Much of that challenge revolves around training
managers in how to establish and ensure appropriate.

Some of the important HRM Models:

1. The Standard Causal Model of HRM
The best-known HR model is the Standard Causal Model of HRM. The
model is derived from many similar models published throughout the
90’s and early 2000’s. The model shows a causal chain that starts with
the business strategy and ends, through the HR processes, with
(improved) financial performance.

The model thus shows how HR activities that are aligned with
organizational strategy lead to business performance. According to this
model, HR will only be effective if its strategy is aligned with business
strategy (in line with the best-fit theory). HR strategy is thus derived
from the overall strategy.
2. The 8-box model by Paul Boselie
A different HR model that’s often used to model what we do in HR, is
the 8-box model by Paul Boselie. The 8-box model shows different
external and internal factors that influence the effectiveness of what
we do in HR.

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First of all, you see the external general market context, the external
population market context, the external general institutional context,
and the external population institutional context. These are external
forces that influence how we do HR.
For example, if there is a shortage of certain skills in the market, this
influences how we do our sourcing, recruiting, and hiring, compared to
when there’s an abundance of qualified workers. The institutional
context also changes: legislation impacts the way we work in HR (e.g.
the day-to-day impact of HR) while trade unions and work councils limit
what we can do.

The HR strategy consists of six parts:

● Intended HR practices:
The intention we have with our recruitment, training, and other
practices matters but this model shows it’s only a starting point.
● Actual HR practices:
We can have great intentions but the execution of HR practices is a
cooperation between HR and the manager. When the manager
decides to do things differently, the intention can be nice but the
actual practices can be very different.
● Perceived HR practices:
This is how the employee perceives what’s going on in the
organization. HR and the manager can do their absolute best but if

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their activities are perceived in a different way than they were

intended and actually done, the perception will not mirror the actual
HR practices.
● HR outcomes:
The perceived HR practices (hopefully) lead to certain HR outcomes.
These are similar to the ones in the Standard Causal Model of HR,
described above.
● HR outcomes lead to critical HR goals (i.e. cost-effectiveness,
flexibility, legitimacy, and so on), which in turn leads to ultimate
business goals (i.e. profit, market share, market capitalization – all
related to the viability of the organization, and other factors that help
to build a competitive advantage).
3. The HR value chain
The HR value chain is one of the best-known models in HR. It is based
on the work of Paauwe and Richardson (1997) and creates a nuance on
the models above in regards to how HR operates.
According to the HR value chain, everything we do (and measure) in HR
can be divided into two categories: HRM activities and HRM outcomes.
● HRM activities are day-to-day activities, including recruitment,
compensation, training, and succession planning. These activities are
often measured using HR metrics. These are so-called efficiency
metrics. The cheaper we hire and the faster we train, the better.
● HRM outcomes are the goals we try to achieve with the HRM
activities. We recruit, we train, and we compensate to achieve certain
goals/ outcomes. These outcomes include employee satisfaction,
motivation, retention, and presence.
If we just focus on measuring HRM activities, we will automatically
focus on reducing costs (i.e. maximizing efficiency). However, we
should instead focus on HRM outcomes as this helps to align our
processes with our goals.

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4. The HR Value Chain Advanced

We’ve researched a lot of the literature but we can’t find an original
source for this model. This model is very similar to the HR value chain
but with two key differences.
First, the organizational performance is defined in the balanced
scorecard. The balanced scorecard contains the key performance
indicators from a financial perspective, a customer perspective, and a
process perspective. These are integrated into the HR value chain. This
document helps to align and show the added value of HR to the
business.
Second, the model starts with a number of HR enablers. These enablers
are key for what HR is doing in the business. This includes HR systems,
budget, capable professionals, and other key elements. The thinking is
that these enablers need to be present in order for the value chain to
operate effectively.
If HR lacks well-trained professionals, if the budget is low, or if the
systems are outdated and hamper innovation, HR will be less efficient
in reaching its HR outcomes and business outcomes.

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5. The Harvard Framework for HRM

The Harvard framework for HRM is an HR model comprised of five
components.
● The model starts, on the left, with stakeholder interest. These
stakeholders include shareholders, management, employee groups,
government, and more. These interests define the HRM policies.
● At the same time, situational factors influence these interests.
Situational factors include workforce characteristics, unions, and all
the other factors that were also listed in the 8-box model.
● Situational factors and stakeholder interest influence HRM policies.
These include the core HR activities, like recruitment, training, and
reward systems.
● When done well, HRM policies lead to positive HRM outcomes. These
include the previously mentioned retention, cost-effectiveness,
commitment, and competence.
● These positive HRM outcomes lead to long-term consequences.
These can be individual, organizational, and societal.
The Harvard framework is an HR model that takes a more holistic
approach to HR, including different levels of outcome.

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