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HRM

UNIT –1
FUNDAMENTALS-PURPOSE-ROLE OF HRM-
EVOLUTION OF HRM, CHALLENGES OF
HRM
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Where Managers Work?
In an Organization
•Organizations are made up of people & function through people.
Without people, organizations cannot exist.
•An organization is nothing without human resources. What is IBM
without its employees? It’s just a lot of factories, expensive
equipment , & just impressive bank balances.
•Millions of organizations which provide us with so many goods &
services actually depend on people to make them operate.
• It is only under unusual circumstances such as in case of Maruti
Suzuki Manesar plant lockout b’cauz of worker-management riots,
that we recognise the important role that employees play in
making organizations work.
• Technology, financial & material resources can be purchased & copied but it
is impossible to buy & copy human processes such as faster decision
making, leadership development, effective negotiation,etc.
• Of all the resources, human resource is the only resource which does
not depreciate, with the passage of time.
• The effective utilization of all other resources depends upon the quality
of human resources.
• Thus, people are the most important resource of any organization.It is the
people/human resources who make an organisation a success or allow it to
be handed over to the BIFR.

 Thus, human resources represent the people at work. They are the sum-
total of the inherent abilities, acquired knowledge & skills of the employees.

 So, HRM deals with issues on how to attract employees, retain them,
motivate them etc. so that they love coming to work everyday.

Concept of HRM/Definitions:

 HRM: a process of bringing people and organisation together so that goals
of each one is met effectively and efficiently.

 Human resource management (HRM) involves the application of mgt
functions & principles. Mgt functions & principles r applied to acqusitioning,
developing, maintaining & remunerating employees in organisations.

 HRM is defined as“the policies and practices involved in carrying out the
“people” or human resource aspects of a management position, including
recruiting, screening/selecting, training & development, rewarding, and
appraising members for an organisation in order to maximise both
employee as well as organisational effectiveness.

 Acc. to Flippo, HRM is “the planning, organising, directing &
controlling of the procurement, development, compensation,
integration, maintenance & utilisation of human resources to the end
that individual, organisational & societal objectives are
accomplished.”


Concept of HRM/Definitions:

 Acc. to NIPM of India, “HRM is that part of management concerned with
“people” at work & with their relationships within the organisation. The
objective is to attain maximum individual development , desirable working
relationsship b/w employers & employees.



CHARACTERISTICS OF HRM (In Handouts)

1. People oriented & individual oriented
2. Comprehensive function
3. Action oriented
4. Development oriented
5. Pervasive function
6. Continuous function
7. Future oriented
8. Science as well as an art



HR Manager’s Job
 Conducting job analyses (determining the nature of each employee‟s job)
 Planning labor needs and recruiting job candidates
 Selecting job candidates
 Orienting and training new employees
 Managing wages and salaries (compensating employees)
 Providing incentives and benefits like insurance, medical benefits, etc
 Appraising performance
 Communicating (counseling, personal problem solving,disciplining)
 Training and developing managers
 Employees career planning
 Building employee commitment & conducting attitude surveys
 Keeping employee records
 Union/ labour relations
 Maintaining nice working conditions


Personnel Mistakes
 Hire the wrong person for the job
 Experience high turnover
 Have your people not doing their best
 Waste time with useless interviews
 Have your company in court because of discriminatory actions
 Have your company receive penalties for unsafe practices
 Have some employees think their salaries are unfair and
inequitable relative to others in the organization
 Allow a lack of training to undermine your department‟s
effectiveness
 Commit any unfair labor practices
Basic HR Concepts
Getting results
– The bottom line of managing
HR creates value by engaging
in activities that produce
the employee behaviors
the company needs to
achieve its strategic
goals.
HR Managers Responsibilities
1. Placing the right person on the right job through promotions &
transfers.
2. Starting new employees in the organization
(Orientation/Induction/Socialization)
3. Training employees for jobs new to them
4. Improving the job performance of each person
5. Gaining creative cooperation and developing smooth working
relationships
6. Interpreting the firm‟s policies and procedures
7. Controlling labor costs
8. Developing the abilities of each person
9. Creating and maintaining department morale
10. Protecting employees‟ health and physical condition

Role of HR Manager
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Purpose/Objectives/Goals of HRM
 HRM seeks to improve the productive contributions of people
to the organisation in ways that are ethically and socially
responsible.
 To help organisation reach its goals by providing well-trained
& well-motivated employees.
 To employ the skills and abilities of the workforce efficiently
so as to reconcile individual goals with the organisational
goals.
 To increase to the fullest the employee‟s job satisfaction and
self actualisation by encouraging every employee to realise
his full potential.
 To establish & maintain productive & satisfying working
relationships among organisational members.
 To bring max. individual development of employees by
providing training opportunities.



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To develop and maintain QWL (i.e. a work
environment where work does not become
routine/monotonous& becomes more rewarding for the
employees).
To communicate HR policies to all employees
To be ethically and socially responsible to the needs
of the society

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HRM Components
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HR Planning,Recruitment sources,Selection,Socialization=
Competent employees who have adapted to the
organization’s culture.
+
Employee training & career development=
Competent employees with up-to-date skills & knowledge
+
Motivation, Performance appraisal,Rewarding productive
employees=
Competent employees who desire to exert high effort
+
Compensation & benefits,safe & healthy working
conditions=
Competent employees who are satisfied with their jobs

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Scope or the dimensions of HRM
The scope of HRM is very vast. All d major activities in d working life
of a worker-from d time of his entry into an organization until he
leaves –come under the purview of HRM.
1. Personnel/Human resource Aspect
HR planning, Job analysis & design, Recruitment, Selection,
Training, Development, Performance Appraisal, Compensation

2. Welfare Aspect
Working conditions, Amenities, Facilities, Benefits, Motivation,
safety & health i.e. employee maintenance

3.Industrial Relations Aspect
Employee-employer relations, Grievance handling, dispute
settlement, discipline, collective bargaining
Importance of HRM

The significance of HRM can be discussed at 4 levels:

1.At the Enterprise Level
 Good HR practices, policies & HR planning will attract and retain talent.

 HR helps in training people for challenging roles, developing right attitudes
towards job and company, promoting team spirits, developing commitment .

 HR helps in securing willing co-operation of employees through motivation,
participation & grievance handling.

 Utilising effectively the available human resources.

 Ensuring that the enterprise will have in future a pool of competent &
dedicated employees.





2. At the Individual Level
 It promotes team work and team spirit among employees by providing a
healthy working environment.
 It offers excellent growth opportunities for personal development of each
employee who have potential to rise
 It allows people to work with diligence and commitment

3. At the society level
 Employment opportunities multiply that provide social & psychological
satisfaction to people.
 Scarce talents are put in to use
 Maintaining a balance between the available jobs and job seekers.

4. At the national level
 Effective use of HR help in exploitation of natural, physical and financial
resources of the nation in a better way


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SYSTEMS APPROACH OF HRM
 System is a set of interrelated but separate elements or parts working
together towards a common goal.
 HRM IS A CENTRAL SUB SYSTEM IN ANY ENTERPRISE that interacts
closely & continuously with all other subsystems of an organisation.



Functions of HRM(Explanation in handouts)
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Evolution of HRM
 Period of industrial revolution (1750 to 1850) – Industrial
revolution marked the conversion of economy from agriculture
based to industry based. Modernization and increased means
of communication gave way to industrial setup. A
department was set up to look into workers wages, welfare and
other related issues. This led to emergence of personnel
management with the major task as Worker’s wages and
salaries, Worker’s record maintenance, Worker’s housing
facilities and health care. An important event in industrial
revolution was growth of Labour Union/Trade Union (1790) –
The works working in the industries or factories were subjected
to long working hours and very less wages. With growing unrest
, workers across the world started protest and this led to the
establishment of Labour unions. To deal with labour issues at
one end and management at the other, Personnel Management
department had to be capable of politics and diplomacy , thus
the industrial relation department emerged.


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Evolution of HRM
 Post Industrial revolution – The term HRM saw a major evolution after
1850. Various studies were released and many experiments were conducted
during this period which gave HRM altogether a new meaning and
importance.
A brief overview of major theories released during this period is
presented below:
1. F. W. Taylor gave principles of scientific management (1857 to 1911) led
to the evolution of scientific HR management approach which was involved
in scientific selection & training of workers, Maintaining wage
uniformity, Focus on attaining better productivity but less focus on
human factor.

2. Hawthorne studies, conducted by Elton Mayo & his associates(1927 to
1940). – Observations and findings of Hawthrone experiment shifted the
focus of Human resource from increasing worker’s productivity to
increasing worker’s efficiency through greater work satisfaction. This is also
called HUMAN RELATIONS MOVEMENT as it focused attention on the
feelings of workers, informal groups & their influence on productivity.

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Evolution of HRM
3. Douglas McGregor Theory X and Theory Y (1960)
and Maslow’s Hierarchy of needs ( 1954) – These
studies and observations led to the transition from the
administrative and passive Personnel Management
approach to a more dynamic Human Resource
Management approach which considered workers as a
valuable resource. This was also called the Behavioural
science era & led to development of new techniques of
motivation and leadership.

– HRM function like job enrichment, employee participation,
communication and MBO came into existence.
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PERSONNEL MANAGEMENT VERSUS
HUMAN RESOURCE MANAGEMENT
 The term “Personnel Management” has a limited scope. In PM, the focus is
more on individualistic i.e. individual interest is more than group interest.
 Viewed labour as a tool beneficial to organisation.
 Can be replaced when the tool is worn out i.e. the relationship between
management and employees is merely on contractual basis where one hires
and the others perform.
 The nature of leadership was very task-oriented and task accomplishments
were put ahead of human factors such as personal bonding, interpersonal
relationship, trust, understanding, tolerance and care.
 Pay policies in PM were merely based on skills and knowledge required for
the specific jobs only as per the employment contract. It does not encourage
value-added incentives to be paid out.
 Also the functions were more departmentalized in which each job falls into
one functional department i.e. division of labour based on job needs and
skill possessions and requirement.

PERSONNEL MANAGEMENT VERSUS
HUMAN RESOURCE MANAGEMENT
Personnel Deptt was as such considered as
non productive
PM was considered as a routine activity of
hiring and maintaining personnel records
Never considered as part of strategic
management of business
Historically, PM preceded HRM.

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PERSONNEL MANAGEMENT VERSUS
HUMAN RESOURCE MANAGEMENT
 HRM Scope is vast compared to PM i.e. HRM focuses on overall
organisation‟s performance & not just one individual.
 PM is a part of HRM.
 Not viewed labour as a tool beneficial to organisation, but as a
resource/asset to be nurtured and developed and to be considered as a
Human capital.
 The HRM‟s "flexible approach" encourages employees to choose various
ways to keep contributing their skills and knowledge to the organization.
HRM, has created flexi-working hours, work from home policies,etc.

 HRM creates leaders who are transformational. This leadership style
encourages business objectives to be shared by both employees and
management. Here, leaders only focus more on shared vision; Corporate
culture and missions; Trust and flexibility; and how to integrate individual
needs with business needs.

PERSONNEL MANAGEMENT VERSUS
HUMAN RESOURCE MANAGEMENT
 In HRM, the pay is designed to encourage continuous job
performance and improvement which is linked to value-added
incentives such as group profit sharing, ESOP‟s, individual
incentive plans,etc.
 The job design is based on teamwork. HRM encourages job
rotation which is inter and intra-departmental based and job
enlargement which encourages one potential and capable
individual to take on more tasks to add value to his/her job and
in return enjoy added incentives and benefits.
 HRM Deptt is as productive like any other because
development of human assets is very important for competitive
advantage

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PERSONNEL MANAGEMENT VERSUS
HUMAN RESOURCE MANAGEMENT
 The activities of HR Deptt vary from planning, job analysis, job
design, job evaluation, recruitment and selection, training and
development, compensation management, motivation, welfare,
safety, health etc

 HR policies promote mutuality-mutual/common goals, mutual
respect, mutual rewards & mutual responsibilities as mutuality
elicit commitment which in turn yields better economic
performance.

 HRM is now part of strategic management of business & thus
the term HRM has replaced PM. Thus the subject has matured
from IR to PM to HRM to HCM.

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Personnel Management vs HRM
DIMENSIONS PERSONNEL
MANNAGEMENT
HUMAN RESOURCE
MANAGEMENT
EMPLOYEE CONTRACT Careful delineation of
written contracts
Aim to go beyond contracts
RULES Importance of devising clear
rules
Impatience with rules
GUIDE TO MANAGEMENT
ACTION
Procedures Business need
BEHAVIOUR REFERENT Norms/ customs and
practices
Values / Mission
MANAGERIAL TASK Monitoring employees Nurturing employees
KEY RELATIONS Labour Management Customer
Personnel Management vs HRM
DIMENSIONS PERSONNEL
MANNAGEMENT
HUMAN RESOURCE
MANAGEMENT
INITIATIVES Unsystematic, partial
initiatives
Integrated initiatives
SPEED OF DECISION Slow Fast
LEADERSHIP ROLE Transactional Transformational leadership
COMMUNICATION Indirect Direct
PRIZED MANAGEMENT
SKILLS
Negotiation Facilitation
SELECTION Separate, marginal task Integrated, key task
LOCUS OF CONTROL External Internal(the employee
believes they can control
their life)
Personnel Management vs HRM
DIMENSIONS PERSONNEL
MANNAGEMENT
HUMAN RESOURCE
MANAGEMENT
PAY Job evaluation Performance related
CONDITIONS Separately negotiated Harmonization
LABOUR MANAGEMENT Collective bargaining
contracts
Individual Contracts
JOB CATEGORIES AND
GRADES
Many Few
JOB DESIGN Division of Labour Team work
CONFLICT HANDLING Reach temporary
agreement
Manage climate and culture
ORGANISING
PRINCIPLES
Heirarchial, bureacratic, Top
down, Centralised
Flat organization,
communications are
horizontal, Bottomup,
Decentralised
Personnel Management vs HRM
DIMENSIONS PERSONNEL
MANNAGEMENT
HUMAN RESOURCE
MANAGEMENT
TRAINING AND
DEVELOPMENT
Controlled access to
courses
Learning Organization
SCOPE NARROW WIDER
RESPECT FOR
EMPLOYEES
Labour is treated as a tool
which is replaceable
People are treated as
assets to be used for the
benefit of an organisation,
its employees and the
society as a whole
SHARED INTERESTS Interest of the organisation
are uppermost
Mutuality of interests
EVOLUTION Precedes HRM Latest in the evolution of the
subject
Examples of HR Job Duties
 Recruiters
– Search for qualified job applicants.
 Equal employment opportunity (EEO) coordinators
– Investigate and resolve EEO grievances, examine organizational
practices for potential violations, and compile and submit EEO
reports.(EEO-Equal opportunity employment refers to the approach of
the employers to ensure the practice of being fair and impartial in the
employment process & prohibits employers from discriminating against
employees on the basis of race, sex, creed, religion, color, marital status,
minority status, disability or national origin. With the increasing diversity
in workforce, it is the responsibility of the employer to create an
equality-based and discrimination-free working environment and
practices. EEO principles help to realize and respect the actual worth of
the individual on the basis of his knowledge, skills, abilities and merit.)
Equal employment opportunity is necessary to ensure:
-To give fair access to the people of all development opportunities
– To create a fair organisation, industry and society.
– To encourage and give disadvantaged or disabled people a fair chance to
grow with the society

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Examples of HR Job Duties (cont’d)
 Job analysts
– Collect and examine information about jobs to prepare job descriptions.
 Compensation managers
– Develop compensation plans and handle the employee benefits program.
 Training specialists
– Plan, organize, and direct training activities.
 Labor relations specialists
– Advise management on all aspects of union–management relations.

 Employee welfare officers(to handle welfare activities in factories as
required by law)

 Perf Appraisal: It’s a time bound exercise done by the companies to
assess the performance and the potential of the employees towards
achieving the set goal/targets as well the mission and vision of the
company. It complements the employee in achieving their respective
targets.



Cooperative Line and Staff HR Management
1. The line manager‟s responsibility is to specify the qualifications
employees need to fill specific positions during recruiting & hiring.
2. Then the HR staff takes over.HR staff then develops sources of
qualified applicants and conduct initial screening interviews
3. HR administers the appropriate tests and refers the best applicants to
the supervisor (line manager), who interviews and selects the ones he
or she wants.
4. In training also, the line mgr describes what KSA he expects the
employees to possess, then the HR team devises a training program,
which the line mgr then administers so that learning is brought back to d
workplace.

Thus, HR function is a STAFF FUNCTION wherein HR managers assist &
advise line managers in functions such as hiring, training, evaluating,
rewarding, counseling employees.
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The Changing Environment Of
HRM/HR’s changing role/Challenges of HRM

The HR deptt’s responsibilities have become larger, broader &
more strategic since the olden days of personnel
management.

Earlier it was thought that shortage of capital is the bottleneck
for a developing Company. But dis no longer holds true.
Rather, it’s the workforce & d Co’s inability to recruit &
maintain a good workforce dat does constitute d bottleneck
for production. The growth of many Co’s gets hampered or
partly stopped if they can’t maintain an efficient & enthusiastic
labour force.



The following are the various challenges in
modern HRM:

 Globalization: Globalized production & sales(Eg: Dell produces & sells
PC’s in China, Toyota produces its cars in US & Mexico) are possible
because of growing integration of the World economy &
agreements/FTA’s between countries. So, the HR deptt of these huge
Companies help to integrate its global operations. Eg: HR operations deptt.
maintains a database of production managers who can move among its
factories in different countries. Also, HR needs to formulate selection,
training & compensation policies for the expatriate employees.
 Globalization means more competition from foreign players & more
competition means more pressure to be “World class”-to lower costs, to
make workers more productive, & to do things less expensively. Thus, HR
function is a key player in helping Company achieve these strategic/long
term aims.
Eg. MNC’s have intranet enabled processes that let employees serve their own
HR needs like changing the insurance policy beneficiaries name, or applying
for leave in the calendar,etc. This also cuts global HR communication costs.
 Thus, managing GLOBALIZATION in World-class firms is a major HR
challenge.

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Challenges of HRM

 Changed employee expectations: Employees today demand
empowerment/involvement from the management along with
upward communication. Eg: the worker’s union at Companies
like OTIS,HUL have an equal say in the management policies.
 Technological Advances: The improvements in technology
that make firms WORLD-CLASS involve technology.
Eg: Carrier Corporation saves a huge amount of money by using
internet to handle all its business transactions with the retailers
& distributors as they r able to enter & confirm an order in
minutes. So, the HR faces the challenge of quickly applying
technology to the task of improving its own operations.
 Also, technology is changing the nature of work. Even factory
jobs r more demanding. They need to manufacture more items
per day according to customer demand, say in manufacturing
apparels. Also, JIT reduces inventory costs & customer
ordering happens simultaneously with manufacturing.

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Eg: When a customer orders a Dell computer, the same internet message that
informs Dell‟s assembly line to produce the order also signals the keyboard
& UPS manufacturers to pick up their parts at a particular time. Thus, the
waste time/slack time is reduced & Co‟s r able to manage with less
workforce
 Workforce Demographics-the workforce is becoming more & more diverse
as women, minority group members & older workers, contract workers enter
the workforce.
 Exporting jobs: This means more & more jobs are being outsourced to low
cost countries where cheap labour is available. Eg: US MNC’s like IBM, Dell
have their call centres in India & China.

With these trends the HR mgr’s job has grown broader & more strategic
over time. With the development of knowledge industry & the resulting
high demand for people, the HR function started to take a strategic
focus.

HRM/HR’s changing role/Challenges of
HRM

 Strategic partner role(partnering with top mgt in designing and
executing the Co’s strategies:
Eg: If a Co. decides to transform its existing plant to a new, computerized,
automated technology plant, then this new automated technology requires a
new kind of working environment with employees who possess the KSA‟s &
motivation to run the new automated plant, who can work in teams, manage
their own work & trng to run d plant‟s computerized equipments.
So, the HR mgr is entrusted to select, train & organise the tech-friendly
workforce the new plant required through its personnel policies. Thus, the
HR must significantly support the Co„s changing strategies(the Co‟s strategy
is to close d old plant & replace it with a new,highly automated one) & this
role of HR is known as STRATEGIC HRM.
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Managing diversity and Change agent role


Carrying out Value Chain Analysis –Balancing
internal and outsourcing-working for lean
organisation with focus on productivity &
performance(most orgns ourtsource activities like
payroll, benefits, applicant testing & screening,
reference checks, exit interviews, employee
trng,etc. to firms like Manpower Inc, Kelly
Services, Team Lease, Ma Foi Mgt consultants,
Hewitt Associates, etc who provide temporary
staffing services in India
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HRM/HR’s changing role/Challenges
of HRM

 Managing and adopting changes in technology(Eg: the intranet enable
employees to sign up for, manage their own benefits packages or change
their benefits allocations as they like & update their personal information;
technology is used to facilitate distance learning & provide training to
employees quickly & inexpensively; new technologies like network
monitoring software used to track employee‟s internet/e-mail activities,etc)

 J ob re-designing

 Talent hunting, developing and retaining-global context

 Taking care of health care benefits


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