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Human Resource Management


Why Study HRM ?

Most of us can expect to spend many years of our lives working in organisations of various kinds, being managed or managing others. Employers have different approaches to managing their employees, but all organisations require people to make the goods or provide the services they are set up to make or provide, and therefore an understanding of how to effectively manage people in the workplace is of great importance and value. To work with people effectively, we have to understand human behavior.

At the same time, we have to be aware of economic, technological, social, and legal issues that either facilitate or constrain our efforts to achieve organizational goals.

There is no magic in the success or companies in general. The secret or their success is 'simply the way they treat their employees. As Thomas J. Watson, the founder of IBM, said, "You can get capital and erect buildings, but it takes people to build a business."

What is Human Resource?

According to leon C. Megginson, the term human resources can be thought of as, the knowledge, skills, creative abilities, talents and aptitudes of an organizations workforce, as well as value, attitudes and beliefs of the individuals involved.

What is Management? Management has been defined by Mary Parker Follett as, "the art of getting things done through people."

Meaning of Human Resource Management HRM

HRM means to Select, Develop, Motivate and Maintain human resources, in the organization. It first selects the right human resources or staff (i.e. managers and employees). It trains and develops them. It motivates them by giving them recognition and rewards. It also provides them with the best working conditions. HRM is directly concerned with the "people" of the organization. French Wendell, defines Human resource management as the recruitment, selection, development, utilization, compensation and motivation of human resources by the organization.

Nature of HRM
Inherent Part of Management: Human resource management is inherent in the process of management. This function is performed by all the managers throughout the organization rather that by the personnel department only. If a manager is to get the best of his people, he must undertake the basic responsibility of selecting people who will work under him. Basic to all Functional Areas : Human Resource Management permeates all the functional area of management such as production management, financial management, and marketing management. That is every manager from top to bottom, working in any department has to perform the personnel functions.

People Centered : Human Resource Management is people centered and is relevant in all types of organizations. It is concerned with all categories of personnel from top to the bottom of the organization. The broad classification of personnel in an industrial enterprise may be as follows : (i) Blue-collar workers (i.e. those working on machines and engaged in loading, unloading etc.) and white-collar workers (i.e. clerical employees), Managerial and non-managerial personnel.


(iii) Professionals (such as Chartered Accountant, Company Secretary, Lawyer, etc.) and non-professional personnel.

Personnel Activities or Functions : Human Resource Management involves several functions concerned with the management of people at work. It includes manpower planning, employment, placement, training, appraisal and compensation of employees. For the performance of these activities efficiently, a separate department known as Personnel Department is created in most of the organizations. Continuous Process : Human Resource Management is not a one shot function. It must be performed continuously if the organizational objectives are to be achieved smoothly.

. Based on Human Relations : Human Resource Management is concerned with the motivation of human resources in the organization. The human beings cant be dealt with like physical factors of production. Every person has different needs, perceptions and expectations. The managers should give due attention to these factors. They require human relations skills to deal with the people at work. Human relations skills are also required in training performance appraisal, transfer and promotion of subordinates.

Scope of Human Resource Management HRM

Human Resource Planning (HRP):HRP estimates the manpower demand and manpower supply of the organization. It compares the manpower demand and manpower supply. Acquisition Function: Acquisition function includes Human Resource Planning, Recruitment, Selection, Placement and Induction of employees. HRM uses the scientific selection procedure for selecting the right man for the right post. The "right man" is given proper placement and induction.

Placement Function: HRM also performs the placement function. Placement is done after selection of employees. It means to put the right man in the right place of work. Proper placement gives job satisfaction to the employees, and it increases their efficiency.
Performance Appraisal: HRM also conducts a performance appraisal. Performance appraisal is a systematic evaluation of the employees' performance at work. It informs the employees about their strengths and weakness. It also advises them about how to increase their strengths and remove their weaknesses.

Career Development: HRM also helps the employees in planning and developing their careers. It informs them about future promotions and how to get these promotions. It helps them to grow and develop in the organization.

Training and Development: HRM also provides training and development to the employees. Training means to increase the knowledge and skills of the employee for doing a particular job. Training given to managers is called development. So, training is given to employees while development is given to managers.

Employees' Welfare: HRM provides employee's welfare. Welfare measures include paid holidays, medical insurance, canteen facilities, recreation facilities, rest room, transport facilities, etc. Proper and timely welfare facilities motivate the employees to work hard in the organization.
Compensation Function: Employees must be rewarded and recognized for their performance. HRM makes proper compensation packages for the employees. These packages motivate the employees and increase their morale. Rewards are given to individuals, and teams. The rewards may be in the form of higher pay, bonus, other monetary incentives, and non-monetary incentives such as a certificate of appreciation, etc.

Labour Relations: HRM is also includes industrial relations. It includes union management relations, joint consultations, negotiating, collective bargaining, grievance handling, disciplinary actions, settlement of industrial disputes, etc.

Objectives of HRM
To achieve an effective utilization of human resources. To establish and maintain an 'adequate organizational structure and a desirable working, relationship among all the members of an organization, To secure the integration of the individuals and groups within the organization.

To satisfy and recognize individual needs and group goals by offering an adequate and equitable remuneration, economic and social security. To maintain a high morale and better human relations inside the organization

Pre-Requisites for the Achievements of the Objectives

Capable people should be picked up on the basis of the qualification. Individual and group efforts must be utilized by providing suitable work opportunities, tools and raw materials , by showing an appreciation of work well done, and by offering better chance for future advancement and training.

Willing Co-operation of the people to achieve the objective must be available by creating such feelings as people work with us rather than saving that people work for us.

The task of an organization should be properly divided in accordance with a sound plan into functions, each indicating clear cut authority responsibility and duties, as also the relationship of one position with other. A wide- scale enquires and consultation should be undertaken before the formulation of objectives and effort should subsequently be made to develop a common understanding of the objectives among managers at various levels. The objectives should be clear defined, failing which a great deal of confusion may raise. Without clear-cut objectives, the management of organizational records cannot be kept in balance, and the management of one section may interfere with that of another. A properly prepared grievance handling procedure and disciplinary plan should be available.

Difference Between PM&HRM

The term human resources at the macro level spells the total sum of all the components (like skills, and creative ability) possessed by all the people (employed, self employed employer, owners etc.) HRM differs from PM.

HRM views people as an important source or asset to be used for the benefits of organizations, employees and society .Further, human resources includes human values, etc,

Whereas the term personnel even at macro level is limited to only the employees of the organizations. PM has a limited scope and a inverted organization. It viewed workers as a workers, the behavior of which could be manipulate for the benefit of the organization.

Personnel Management

Human Resources Management

PM is the management of people employed

HRM is the management of employees skills, knowledge, abilities, talents, aptitudes creative abilities etc.

Employees of PM are mostly treated as an Employees in HRM are treated not only as economic man as his services are exchanged economic man but also as social and for wage/ salary. psychological man. Thus, the complete man is viewed under this approach Employees is viewed as a commodity or tool, Employees is treated as a resources which can be purchase and used Employees are treated as cost center and Employees are treated as a profit center and therefore management controls the cost of therefore, management invest capital for labour. human resources development and future utility. Employees are used mostly for organizational Employees are used for the multiple mutual benefits. benefits of the organization employees and their family members.

Personnel system and procedures should Human resources systems and procedures be designed to achieve maximum should be designed on the basis of process efficiency. to reduce wastage. In personnel management communication In HRM direct communication is maintained system is a indirect to nature and speed of timely decision making-making is possible. decision is slow. Job design is on the basis of division of Teamwork is the main criteria for the job labour, and managerial task is monitoring in design, and managerial task nurturing in nature, and management role is transactional. nature, and management play a role of transformational leadership.

Evolution & Development of HRM

HRM has evolved due to enlightened employers trying hard, over the years, to improve the lot of their workers. Kautilya has observed that there existed a sound base for systematic management of human resources in the fourth century B.C. Moses originated the principle of division of labour in 400 B. C. The Babylonians had a code for incentive wage plans in 1800 B.C.

Thus human resource management in some form or the other has been practiced in various parts of the world since the dawn of civilization.
With the onset of the Industrial Revolution, the position underwent a radical change.

Industrial Revolution is a word used to describe a number of changes which took place in England between 1760 and 1850. It brought about far reaching changes in the economic life of people.
It is against this background that we trace the origin of modem. human resource management.

The Report of tile Royal Commission on Labour in India: Human resource management in India dates back to the Report of the Royal Commission on labour in India (1929-31) which recommended the appointment of labour officers to deal with recruitment in order to check corrupt practices in industries in India, particularly in areas of selection of workers.

Appointment of Labour Officers: Labour officers were entrusted with the responsibility of promoting welfare activities. They functioned as industrial relations officers to handle grievances. The Bombay Mill Owners Association in Bengal appointed labour officers to settle grievances and disputes.

Tile Second World War: During the second world war, the need for enlisting labour support for the war effort was considered imperative. These officers were generally entrusted with the handling of welfare and labour administration. They were to deal with working conditions, canteens, ration shops, recreation facilities, medical facilities, workers' housing etc. The second world war resulted in welfare officers being appointed by government as well as industry. The function of the welfare officers included welfare activities, personnel activities and industrial relations.

Enactment of Industrial Disputes Act: The enactment of the Industrial Disputes Act 1947 made adjudication compulsory. This made the welfare officer handle disputes and adjudicate relating to conditions of service, wages, benefits etc. The welfare officer thus became industrial relations officers. As a result employers employed welfare officers with a legal background.

Enactment of Factories Act: Section 49 of the Factories Act 1948 made it obligatory for factories employing 500 or more workers to appoint welfare officers. A welfare officer had a list of duties laid down for him. Thus, they had to perform activities concerned with welfare, personnel administration and industrial relations.

Reasons for Slow Growth of HRM in India

1. Late arrival of the Factory System 2. Low Status of the Industrial Worker 3. Highly Authoritarian Culture 4. Social Responsibilities of Business (a) Fair Wages (b) Adequate Benefits (c) Good Working Conditions (d) Opportunity for Growth (e) Recognition of Worker's Rights (f) Co-operation 4. Technological Backwardness

5.Instability in Employment: 6. Unhealthy Growth o/Trade Unions: 7. Migratory characteristic of Indian Labour: As a result of migration, the industrial worker finds himself in an unfamiliar environment. Due to lack of houses, workers are forced to leave their families in villages. Separation from families leads to promiscuity, prostitution, venereal diseases and even AIDS. To compound the problem, the healtlt of the worker is subjected to severe strain due to many reasons like change in climate, working and living conditions etc.

The functions of HRM can be broadly classified into two categories, viz., (I) Managerial functions and (II)Operative functions.

I. Managerial Functions :Managerial

functions of personnel management involve planning, organizing, directing, and controlling. All these functions influence the operative functions.

(i) Planning: It is a .pre-determined course of action. Planning is determination of personnel programmes and changes in advance that will contribute to the organizational goals. (ii) Organizing: An organization is a means to an end. It is essential to carry out the determined course of action. In the words of J.c. Massie, an organization is a "structure and a process by which cooperative group of human beings allocates its task among its members, identifies relationships and integrates its activities towards common objective.

(iii) Directing: The basic function of personnel management at any level is motivating, commanding, leading and activating people. Tapping the maximum potentialities of the people is possible through motivation and command. Thus, direction is an important managerial function in building sound industrial and human relations besides securing employee contributions.
(iv) Controlling: After planning, organizing and directing the various activities of the personnel management, the performance is to be verified in order to know that the personnel functions are performed in conformity with the plans and directions. Controlling also involves checking, verifying and comparing of the actual with the plans, identification of deviations, if any, and correcting of identified deviations. Thus, action and operation are adjusted to pre-determined plans and standard through control.

II. Operative Functions :The operative functions of human

resource management are related to specific activities of personnel management viz., employment, development, compensation and relations. 1. Employment: It covers the functions such as job analysis, human resource planning, recruitment, selection, placement, induction and internal mobility. (i) Job Analysis: It is the process of study and collection of information relating to the operations and responsibilities of a specific job. It includes:

(a) Collection of data, information, facts and ideas relating to various aspects of jobs including men, machines and materials. (b) Preparation of job description, job specification, job requirements and employee specification which will help in identifying the nature, levels and quantum of human resources. (c) Providing the guides, plans and basis for job design and for all operative functions of HRM.

(ii)Human Resources Planning:a process by which an organization should move from its current manpower position to its desired manpower. Through planning, management strives to have the right kind of people at the right place at the right time, doing things which result in both the organization and the individual receiving's maximum long-run benefits. It involves

(0) Estimation of present and future requirements and supply of human resources based on objectives and long range plans of the organization. (b) Calculation of net human resources requirements based on present inventory of human resources.

(c) Taking steps to mould, change, and develop the strength of existing employees in the organization so as to meet the future human resource requirements. (d) Preparation of action programmes to get the rest of human resources from outside the organization and to develop the human resources of existing employees.

(iii) Recruitment: It is the process of searching for prospective employees and stimulating them to apply for jobs in an organization. It deals with: (a)Identification of existing sources of applicants and developing them.

(b) Creation/identification of new sources of applicants.

(c) Stimulating the candidates to apply for jobs in the organization. (d) Striking a balance between internal and external sources.

(iv) Selection: Choosing the most appropriate candidates and offering then jobs. This function includes:
(a) Framing and developing application blanks (Application Form). (b) Creating and developing valid and reliable testing techniques. (c) Formulating interviewing techniques.

(d) Checking of references.

(e) Setting up medical examination policy and procedure. (f) Line (Process) manager's decision. (g) Sending letters of appointment and rejection. (h) Employing the selected candidates who report for duty

(v) Placement: It is the process of assigning the selected candidate with the most suitable job in terms of job requirements. It is matching of employee specifications with job requirements. This function includes:
(a) Counseling the functional managers regarding placement. (b) Conducting follow-up study, appraising employee performance in order to determine employee adjustment with the job. (c) Correcting misplacements, if any.

(vi) Indication and Orientation: Induction and orientation are the techniques by which a new employee is rehabilitated in the changed surrounding and introduced to the practices, policies, purposes and people, etc., of the organization. (a) Acquaint the employee with the company philosophy, objectives, policies, career planning and development, opportunities, product, market shore, social and community standing, company history, culture, ete. (b) Introduce the employee to the people with whom he or she has to work such as peers, supervisors and subordinates. (c) Mould the employee attitude by orienting him to the new working and social environment.

2. Human Resources Development: It is the process of improving, molding and changing the skills, knowledge, creative ability, aptitude, attitude, values, commitment, etc., based on present and future job and organizational requirements. This function includes:
(i) Performance Appraisal: It is the systematic evaluation of individuals with respect to their performance on the job and their potential for development. It includes: (a) Developing policies, procedures and techniques.

(b) Reviewing of reports and consolidation of reports.

(c) Evaluating the effectiveness of various programmes.

(ii) Training: It is the process of imparting the employees the technical and operating skills and knowledge. It includes: (a)Identification of training needs of the individuals and the company. (b) Developing suitable training programmes. (c)Helping and advising line management in the conduct of training programmes.

(d)Imparting of requisite job skills and knowledge to employees.

(e) Evaluating the effectiveness of training programmes.

(iii) Management Development: It is the process of designing and conducting suitable executive development programmes so as to develop the managerial and human relations skill of employees. It includes: (a) Identification of the areas in which management development is needed. (b) Conducting development programmes. (c) Motivating the executives. (d) Designing special development programme for promotions. (e)Using the services of specialists, and/or utilizing of the institutional executive development programmes. (f)Evaluating the effectiveness of executive development programmes.

(iv) Career Planning and Development: It is the planning of one's career and implementation of career plans by means of education, training, job search and acquisition of work experiences. It includes internal and external mobility. Internal Mobility: It includes vertical and horizontal movement of an employee within an organization. It consists of transfer, promotion and demotion.

(v) Organization Development: It is a planned process designed to improve organizational effectiveness and health through modifications in individual and group behavior, culture and systems of the organization using knowledge and technology of applied behavioral science.

3. Compensation: It is the process of providing adequate, equitable and fair remuneration to the employees. It includes job evaluation, wage and salary administration, incentives, bonus, fringe benefits, social security measures,etc.
(i) Job Evaluation: It is the process of determining relative worth of jobs:

(a) Select suitable job evaluation techniques.

(b) Classify jobs into various categories.

(ii) Wage and Salary Administration: This is the process of developing and operating a suitable wage and salary programme. It covers: (a) Conducting wage and salary survey.

(b) Determining wage and salary rates based on various factors.

(c) Administering wage and salary programmes. (d) Evaluating its effectiveness.

(iii) Incentives: It is the process of formulating, administering and reviewing the schemes of financial incentives in addition to regular payment of wages and salary.

(iv) Bonus: It includes payment of statutory bonus according to the Payment of Bonus Act, 1965, and its latest amendments:

(v) Fringe Benefits: These are the various benefits at the fringe of the wage. Management provides these benefits to motivate the employees and to meet their life's contingencies. These benefits include:
Disablement benefit. Housing facilities. Educational facilities to employees and children. Canteen facilities. Recreational facilities.

Conveyance facilities. Credit facilities. Legal clinic. Medical, maternity and welfare facilities. Company stores.

(vi) Social Security Measures: Managements provide social security to their employees in addition to the fringe benefits. These measures include: Workmen's compensation to those workers (or their dependents) who involve in accidents. Maternity benefits to women employees. Sickness benefits and medical benefits. Disablement benefits/allowance. Dependant benefits. Retirement benefits like provident fund, pension, gratuity, ete.

4. Human Relations: Human Relations is the process of interaction among human beings. Human relations is an area of management in integrating people into work situation in a way that motivates them to work together productively, co-operatively and with economic, psychological and social satisfaction. It includes:

Understanding and applying the models of perception, personality,

learning, intra and inter personal relations, intra and inter group
relations. Motivating the employees. Boosting employee morale. Developing communication skills.

Developing leadership skills.

Redressing employee grievances properly and in time by means of a well formulated grievance procedure. :

Handling disciplinary cases by means of an established disciplinary procedure.

Counseling the employees in solving their personal, family and

work problems and releasing their stress, strain and tensions. Improving quality of work life of employees through participation and other means.

5. Effectiveness of Human Resources Management: Effectiveness of various personnel programmes and practices can be measured or evaluated by means of organisational health and human resources

accounting, etc.
(a) Organizational Health: Organizational health may be studied through the result of employees' contribution to the organization and the employee job satisfaction. The result of the employee satisfaction can be understood by labour turnover, absenteeism, commitment and the like. Low rate of absenteeism and specific and high rate of employee commitment most probably indicate employee-satisfaction about the job and the organisation.

(b) Human Resource Accounting, Audit and Research: Effectiveness of human resources management can also be found out through human resource accounting, audit and research.

Personnel Policy
Personnel Policy can be defined as a set of rules that define the manner in which an organization deals with a human resources or personnel-related matter.A personnel policy should reflect good practice, be written down, be communicated across the organization, and should adapt to changing circumstances. The major steps involved in Personnel Policy framing is as follows Identify the need for a policy Information collection Policy Drafting and Review Management Support Implement the Policy Communicate the policy

Record-keeping The oldest and most basic personnel function is employee recordkeeping. This function involves recording, maintaining, and retrieve employee related information for a variety of purposes. Records which must be maintained include application forms, health and medical records, employment history (jobs held, promotions, transfers, and lay-offs), seniority lists, earnings and hours of work, absences, turnover, and other employee data. Complete and up-to-date employee records are essential for most personnel functions. More than ever employees today have a great interest in their personnel records. They want to know what is in them, why certain statements have been made, and why records may or may not have been updated.

Personnel records provide the following: 1. A store of up-to-date and accurate information about the companys employees.

2. A guide to the action to be taken regarding an employee,

particularly by comparing him with other employees. 3. A guide when recruiting a new employee, e.g. by showing the rates of pay received by comparable employees. 4. A historical record of previous action taken regarding employees.