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FUNDAMENTALS OF HUMAN RESOURCE MANAGEMNT
C H A P T E R
What are the primary objectives of an organization ?
• Profit • Survival • Growth
How organizations achieve these objectives ?
By converting the inputs ( Resources) into out put ( Goods & Services )
What do we mean by a resource ? Resource means an asset or wealth which can be drawn upon for aid, as and when required. Frequently used resources by the organizations Or Human Resources. – Men & Women Financial Resources.- Money Physical Resources. – Material, Machine Land, Labour and Capital
The people (All men & women ) employed by an organization to carry out various jobs, tasks and functions in exchange for wages, salaries and other benefits
The CEO, the Finance mgr, the Mktg. mgr, the HR mgr, the clerk, cleaning & maintenance staff etc.
It is the sum total of knowledge, skills, abilities & attitudes of all the employees of an organization.
( Leon C. Megginson ,1982)
A whole consisting of interrelated, interdependent and interacting physiological, psychological, sociological and ethical components.
( Michael Jucius, 1980 )
which unlike finance has three components – Intellectual capital. 1999 ) 6 .Human Resources It is viewed as capital i. Social capital and Emotional capital (Sumantra Ghoshal.e. The human capital.
Thus it can be concluded that human resources refers to the quantitative and qualitative aspects of employees in the organization. Social capital is made up of network of relationship. skills. learning capacity etc. sociability etc. 7 . trustworthiness.Human Resources The intellectual capital consists of knowledge. Emotional capital refers to self confidence. risk taking abilities etc. courage. ambition.
Source of Creative Energy 8 .Significance of Human Resources Activation of Non human Resources Means for developing Competitive Advantages.
9 . HRM is the design of formal system in an organization to ensure effective and efficient use of human talent to accomplish the organizational goals.Human Resource Management Is the efficient and effective utilization of human resources.
who individually and collectively contribute to the organizational objectives Is the comprehensive set of managerial activities and tasks concerned with developing and maintaining a qualified workforce.Human Resource Management A strategic and coherent approach to management of the most valued assets of an organization.e. i.human resources in ways that contribute to organizational effectiveness. people. 10 .
and decisions that concern making effective and efficient use of the employees of an organization in order to achieve the organization’s objectives. practices.Human Resource Management Consists of the policies. Involves all management decisions and practices that directly affect the people of an organization 11 .
evaluates. integration. directing and controlling of the procurement. develops. selects. 12 . trains. compensation. development. and rewards people fairly. organising. organizational and societal objectives are achieved.Human Resource Management HRM refers to activities by which an organization recruits. compensates. motivates. maintenance and separation of human resources to the end that individual. Is the planning.
13 . It is the management of employees’ aspirations. skills. knowledge. expectations . organizational and societal objectives are achieved.Human Resource Management Thus it can be concluded that human resource management means people management. & attitude etc to the end that individual.
MAX INDIA LTD.Why is HRM Important to an Organization? HRM is of vital importance to the organizations as a means for achieving their objectives. People bring competence and commitment and the company provides trust and an environment. 14 . There is no such things as a technology problem. a financial problem or a sales problem – it all begins with people.
Why is HRM Important to an Organization? Dag Hammarskjold Nations stated. New York 22 to 23 June 1994) 15 . man is the key to all problems. Such people. Former Secretary-General united “Fundamentally.” (Report of the United Nations Expert Group Meeting on Human Resources Development in the Public Sector held at United Nations Headquarters. on the other hand. can work miracles even with small resources and draw wealth out of a barren land. Funds are valuable only when used by trained. experienced and devoted men and women. not money.
6. 5.Evolution of the Human Resource Function 1. 2. 4. 7.1900 – 1920s Human Relations Era – 1930s – 1950s Behavioural Science Era – 1950s – 1960s Systems & Contingency Approach Era – 1960s onwards Human Resource Management Era – 1980s onwards 16 . Industrial Revolution Era – 19th Century Trade Union Movement Era – Close to 2oth century Social Responsibility Era – Beginning to 2oth century Scientific Management Era . 8. 3.
As these businesses grew and became increasingly complex. In order to manage people in the factory system of industrial revolution. This transition in turn. owners began to step aside and turn the operations of their firms to full time professional managers.Industrial Revolution Era The industrial revolution sparked a great interest in business growth and expansion. resulted in greater awareness of the various functions of management that were necessary for long term organizational success. and large scale business operations began to emerge throughout Europe and the USA. training of workers & control of workers 17 The basic philosophy of managing workers revolved around master servant relationship . three systems of HRM were developed: recruitment of workers.
regulated working hours . holiday and vacation time etc. the expansion of employee benefit programmes. disciplinary practices. the basic objectives of such associations were to safeguard their interests and to sort out their problems. workers started to organize themselves based on their common interests to form workers’ associations which were subsequently known as trade unions. 18 . These developments forced managers to the adoption of employee grievance handling system.Trade Union Movement Era Soon after emergence of factory system.
it is necessary to improve the conditions of employees by removing them from an adverse environment. Marry Parker Follette and Munsterberg recognized the importance of people in organizations.Social Responsibility Movement Era Few early management pioneers and management writers like Robert Owen. All these practices led to the development of social welfare aspect of labour management. In order to increase productivity. It was argued that a more humanistic and paternalistic approach be adopted towards workers. 19 .
scientific selection and training of workers. SM principles relevant to management of workers are – Job analysis. Scientific management was concerned with how to structure individual jobs to maximize efficiency and productivity. financial incentives and standardization.Scientific Management Era The first serious study of management practice set during the early years of twentieth century was based on scientific management. 20 .
The pattern of results seemed to contradict some of the ideas of scientific management. a series of studies conducted to test some principles of scientific management. and the human relations era emerged as a result of efforts to explain the results of these studies.Human Relations Era The human relations era was instigated by the Hawthorne studies. The research revealed that individual and group behviour played an important role in organizations and that human behaviour at work was something managers needed to under stand. 21 .
22 . managers began to focus more and more attention on better understanding the human character of their employees. communication. Among the many social & individual psychologists who have contributed to management are Maslow (popularized hierarchy of human needs)& McGregor (proposed theory X. organizational change & development.Behavioural Science Era Stimulated by the findings of the Hawthorne studies. During this era. group dynamics etc. theory Y.) Major contributions of behavioural scientists are in the areas of motivation leadership.
Contingency approach of management emphasizes on two points.Systems & Contingency Approach Era HRM is a subsystem of organization as a system. In fact. 1. 23 . It focuses on situational factors that influence managerial decisions. It implies that HRM can not be stand alone process but it must be derived from the corporate strategy of the organization. 2. It highlights the need for developing skills for managers in situational analysis. the effectiveness of HRM depends on how well it is linked to the corporate strategy an how its internal processes are carried on. Therefore it must be linked to other subsystems of the organization.
which gave birth to Industrial relations department to look after the workers. Later on with the increasing complexity of managing large business organizations. the scope of IR department was extended to cover supervisory staff & managerial personnel and the department was renamed as personnel department. 24 .Human Resource Management Era The industrial revolution paved way for factory system. With the increasing competition for market share and increased role of people in the competition the personnel department was renamed as human resource department.
During 1930 and 1940s these units gradually began to be called personnel departments ( set up as self contained departments charged with responsibility of hiring new workers ) The recognition that human resources needed to be managed gave rise to a new type of management function – Personnel management. 25 . The manager who ran the personnel department was called as personnel manager.Personnel Management As organizations grew. they began to create specialized units to cope with their increasing hiring needs & to deal with government regulations.
Executive Productivity through people 26 . legalistic Professional. capitalists welfare.Evolution & development of HRM in India Period 1920s – 1930s 1940s – 1960s 1970s – 1980s 1990s Development Status Beginning Outlook Emphasis Status Clerical Pragmatism of Statutory. legalistic Philosophical Introduction of techniques Struggling for recognition Impressing with sophistication Promising Administrativ e regulatory Managerial Conformance. standardization Human values. paternalism Technical.
and the present emphasis on business issues merely represents another change in the environment to which the personnel manager adapts by strengthening the competencies needed for the new situation. HRM is just the continuing process of PM – it is not different’ 27 .Personnel Management & HRM : A Comparison Some treat both as the same with difference only in nomenclature Pat Lowry ( 1990 ) observes – “ Personnel work has always included strategic matters.
Personnel Management & HRM : A Comparison Some scholars are of the view that on certain issues both are same but on others. the management of which is the direct concern of top management as part of the strategic process of the enterprise” 28 . it could indeed be no more and no less than another name for personnel management. at least it has the virtue of emphasizing the virtue of treating people as a key resource. but as usually perceived. they are different Armstrong ( 1887 ) views that “ HRM is regarded by some personnel managers as just a set of initials or old wine in new bottles.
29 . PM is mostly concerned with non managers. 2. they stress that such a difference exist in terms of both contents as well as emphasis. HRM is aimed at managerial personnel. PM keeps itself detached from OD.Personnel Management & HRM : A Comparison There is another set of scholars who strongly feel that there is a difference between HRM and PM. PM attempts to influence line mgt. Legge ( 1999) has found the difference between PM & HRM as 1. HRM involves an integrated line mgt activity 3. HRM has utmost focus on development issues.
Difference between PM & HRM Dimension PM HRM Unitarist/ customer Pathological Beyond contract commitment Culture & values Proactive Not desirable High Teams Line people / HRM 30 Nature of relations Pluralist / labour Mgt Perception of conflict Contract Institutionalized Emphasis on compliance Role of procedures Rules dominated Planning perspective Unions Levels of trust Basis of design Key people Reactive Acceptable Low Division of labour PM / IR specialist .
Objectives of HRM Facilitating organizational competitiveness Human Resource Management Complying with legal & social Enhancing productivity and quality Promoting individual growth and development 31 .
Individual objectives. Organizational Objectives. 32 .Objectives of HRM Social Objectives.
Objectives of HRM . Meeting legal obligations 33 . Social objectives of HRM are concerned with balancing work and family. maintaining the harmonious and productive relations with the society.Social Every organization is dependent on the society for the inputs as well as for the out puts. it is the responsibility of every organization to be socially responsible.
To help the organization to meet the challenges of the environmental factors by developing people on continuous basis.organizational To help the organization to attain its goals effectively and efficiently by providing competent and motivated employees. To help organizations to enhance productivity and quality To utilize the available human resources effectively. 34 .Objectives of HRM .
35 . To help them to separate from the organization happily and satisfactorily.Objectives of HRM . To provide the environment and incentives and right compensation. To help the employees to grow. To help the employees to develop their skills and knowledge to meet the challenges of their jobs. To provide the QWL.Individual To provide the career avenues to the employees.
Objectives • To facilitate the retention of skilled and competent employees. 36 . • To build the competencies by facilitating continuous learning and development • To develop practices that foster team work and flexibility • To make the employees feel that they are valued and rewarded for their contribution • Developing management practices that engender high commitment • To facilitate management of work force diversity and availability of equal opportunities to all.
Basic functions: Procurement Development Compensation Integration & Maintenance and Separation 37 .
to achieve the organization’s objectives.Procurement Procurement is the function through which an organization ensures that it always has the proper no of employees with the appropriate skills in the right jobs at the right time. Procurement function involves Job Analysis Human Resource Planning Recruitment & Selection 39 .
Development Human resource development is a major HRM function through which an organization build the competencies by facilitating continuous learning and development. Development function involves – Training & Development Career Planning Organization Development Performance Appraisal 40 .
A well thought out compensation system provides employees with adequate and equitable rewards for their contributions to meeting of organizational goals. The reward may be one or a combination of Pay Benefits & Non financial rewards. Compensation includes the total of all rewards provided to employees for their contribution. 41 .Compensation Rewarding people for their contribution is major function of HRM.
Integration & Maintenance Maintenance function is the function through which an organization ensures employees’ commitment and loyalty to the organization. Maintenance activities include Health Safety Communications Employee assistance programs Employee and Labour relations 42 .
The marketing function The finance function The human Resource function The operations function The other functions 43 .The Human Resource Management System A system is an interrelated set of elements functioning as a whole Human resource management system is an integrated and interrelated approach to managing human resources that fully recognizes the interdependence among the various tasks and functions that must be performed.
44 .Who performs the HRM tasks Human Resource Manager An individual who normally acts in an advisory or staff capacity. relocation a& recruitment support. Benefits & pension administration. transaction based activities dispersed throughout the organization and consolidates them in one place. Global T & D etc. achieve its goals. HR mgrs were primarily responsible for coordinating the mgt of human resources to help the org. – Shared Service Centers – A center that takes routine. payroll. working with other managers regarding human resource matters.
line managers are stepping up and performing duties often done by the HR managers.individuals directly involved in accomplishing the primary purpose of the organization. T & D. compensation etc. Line managers often perform many of the staffing functions such as interviewing. As the traditional work of HR managers diminishes. 45 .Who performs the HRM tasks Line Managers.
The HR functions in Organizations of various sizes In Small Businesses The Human Resource Function Manager/ Owner Sales Operations Finance 46 .
47 .In Medium Sized Firms President Sales Manager Operations Manager Finance Manager Human Resource Mgr.
Staffing Mgr.Operations VP .MKTG VP . Comp. Mgr.Finance Human Resource Mgr. T & D Mgr. Safety & Health 48 .In a Large Firms President/ CEO VP . Mgr.
outsourced Exec. Mgr.MKTG VP .An Evolving HR Organization President/ CEO VP . Trg. other HRM Functions Employee Benefits 49 SSC . Dev Mgr.Operations Director Health & Safety Human Resource Mgr.
Human Resource Management Environment Labour Force External Environment Legal Considerations Internal Environment ff in g Society Economy Marketing Operations H D R St a M ai Technology nt e Human Resource Management ce na n Finance Customers om C en p n io at s Unions Others Competition Shareholders 50 .
Factors out side its boundaries that affect a firm’s human resources make up the external environment.Human Resource Management Environment The set of interrelated. Society. Each factor. interdependent and interacting factors that affect human resource management. Competition. Unions. Shareholders. can place constraints on how HRM tasks are completed. either separately or in combination with others. Legal Considerations. 51 . External factors include – Labour Force. technology and the economy. customers.
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