NATURE AND SCOPE OF HRM

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 Background/Concept
An Org is made up of 4 resources –
1. Men/labour [living – human]
2. Material [non living – non human]
3. Money [Capital] -do-
4. Machinery [Equipments] -do-
The human/people make use of non human resources,
therefore are considered to be the most significant
resources in an org.
Business houses are made or broken not by
markets/capital/patents or equipments but by men [LF
Urwick]
Peter F. Drucker – “Man, of all the resources available to
man, can grow and develop”
CONTD……………
HRs [living beings] differ also from non HRs in respect of
heterogeneity in the sense that they differ in:
 Personality [kind, timid, brave & courageous, introvert, extrovert….]
 Perception [how you see things/visualize things]
 Emotions [greed, fear, anger, sad, happy…..]
 Values [beliefs, faith, priorities]
 Attitudes
 Motives [drivers – what drives you]
 Mode of thoughts [thought process]
Their behavior to stimuli is inconsistent and unpredictable. HRs
appreciate with time [with one condition – continuous learning, T&D]
Features of modern HRs – better educated, more skilled and better
aware of their interests and rights. However, all these make it difficult
for managers to use human resources always effectively and
efficiently.
 Real Challenge of Manager/HR manager

Due to the Highly competitive and complex

business environment, attracting and retaining
qualified and competent employees have become
a real challenge of the day for the managers.
Rule of thumb – obsolete and redundant
New perspective [new mantra] – to have right
people for rt jobs. This new mantra offers an org
an edge termed it by mgt expert as competitive
advantage or core competency to thrive in the
business. This in fact gives genesis to the
concept of HRM in business org.
 Meaning and Definition
Sumantra Ghosal – considers human resources as human
capital and classifies human capital into three
categories –
1. Intellectual capital – consists of specialized knowledge,
tacit knowledge and skills, cognitive complexity and
learning capacity.
2. Social capital – is made up of network of relationships,
sociability and trustworthiness
3. Emotional capital – consists of self confidence,
ambition and courage, risk bearing ability and
resilience.
HRs thus refer to the qualitative and quantitative aspects of
employees working in an org.
 Resource means an asset/wealth that can be drawn upon for aid, as and when required.

Human Resource management in simple words is a process

of making the efficient and effective use of human
resources so as to achieve the set goals.
Flippo – PM or HRM is the planning, organizing, directing
and controlling of the procurement, development,
compensation, integration, maintenance and separation of
human resources to the end that individual, organizational
and social objectives are accomplished.
NIPM – PM/HRM is that part of mgt concerned with
people at work and with their relationship within an
enterprise with the aim to bring together and develop an
effective org of the men and women who make up the
enterprise with regards to their well being for their best
contribution to its success.
Contd………
Decenzo and Robbins – HRM is concerned with people
dimension in mgt. Since every org is made up of people,
acquiring their services, developing their skills, motivating
them to higher levels of performance and ensuring that they
continue to maintain their commitment to the org are
essential to achieving orgl objectives. True to any type of
orgs such as – govt, business, education, health, recreation,
social action.

HRM can thus be defined as a process of procuring,

developing and maintaining competent human resources in
the org so that the goals of the org are achieved in an
effective and efficient manner. In short, HRM is an art of
managing people at work in such a manner that they give
their best to the org for achieving its set goals.
 Difference between PM and HRM
Debate goes on ----------
Goss – HRM has 3 principal distinguishing features as
compared to PM
1. Emphasis not just rule and contract but beyond them –
the assumptions underlying PM concepts clearly
defined rules, procedures and contracts and adherence
to it governs the actions of the mgt. Relationship
between WF and Mgt is governed by CB and
employment contracts. HRM emphasizes open ended
contracts, conflict viewed as something pathological
[caused by disease] resulting from negative
interpersonal relations rather than structural
contradictions. Mgt assumes responsibility to motivate
employees and constantly inspires performance based
on commonality of goals.
 Contd…….
2. PM does not focus on strategic mgt and its main
goal is peaceful or good labor-mgt relations. Its fn
is mainly reactive whereas HRM is a pro-active fn
and does not view labor-mgt relations as an end in
themselves. Not only concerned with present orgl
needs but anticipates future needs and then acts
appropriately. HRM also seeks to release the inner
potential and creativity of people.
3. The edifice [structure] of PM is built on collective
agreement between employees and mgt. employees
get standardised rewards based on job evaluation.
 Contd….
HRM leads to individualization of collective relations.
Thus, performance related pay is given key strategic
emphasis. Pay is linked with contribution made by an
employee to the realization of orgl goals.
HRM seeks to develop competencies of the employees
to derive benefits from it and to integrate individual
and orgl goals. Main hallmarks/distinguished
characteristics of HRD is the skill formation and
development with the ultimate aim to use the full
potential of HRs for serving customers’ needs and to
develop orgl competencies.
 Comparing HRM with PM
Dimensions PM HRM
Nature of relations Pluralist Unitarist
Perception of conflict Conflict is institutionalized Pathological
Contract Emphasis on compliance Beyond contract
commitment
Role of procedures Rules dominated [roles – Culture and values
Boss & sub-ordinate] dominated
Planning perspective Ad hoc, reactive Integrated, pro-active
Acceptability of Acceptable Not desirable
unions
Level of trust Low High
Key relation Labor mgt Customer
Mgt’s role Transactional Transformational
Basis of job design Division of labor Teams
Key people PM/IR specialists Line people and GMs
Skill acquisition Trg & Dev Learning org
Reward management Standardised job evaluation Performance related
Objectives of HRM

Ensuring availability of rt people for rt jobs so as to effectively

achieve orgl goals being the primary objective of HRM, the
followings are the sub-objectives:-
1. Provide competent and motivated employees to help org
attain its goals effectively and efficiently.
2. To utilise available HRs effectively
3. Increase employees’ job satisfaction and self actualization
4. To develop and maintain QWL
5. To help maintain ethical policies and behavior in/out side
org
6. To establish and maintain cordial relations between E and
Mgt
7. To reconcile individual/grp goals with orgl goals
 Contd…..
Werther & Davis–objectives of HRM into 4 categories

SL HRM objectives Supporting functions

1 Societal objectives
2 Organizational
objectives
3 Functional objectives Appraisal, Placement,
4 Personal objectives
1. Legal compliance
2. Benefits
3. Union mgt relations
1. HRP
2. Employee relations
3. Selection, T&D,
Appraisal, Placement,
assessment
Assessment
T&D, Appraisal, placement,
compensation, assessment
 Scope of HRM

Scope of HRM in fact is very vast and wide which

includes all activities starting from manpower planning
till employees leave the org.
Scope of HRM consists of
1. Acquisition – HRP, Rectt, Selection and Placement
2. Development – training, Career development, OD,
Internal mobility
3. Maintenance/Retention – remuneration, motivation,
health and safety, social security, IRs, Performance
appraisal
4. Control – HR Accounting, HRIS
 Scope of HRM specified by NIPM, Kolkata
1. The Labor or Personnel Aspect – concerned
with manpower planning, Rectt, Selection,
Placement, Transfer, Promotion, T&D, layoff
and retrenchment, remuneration, incentives,
productivity etc.
2. Welfare Aspect – it deals with working
conditions, amenities such as canteen, creches,
rest and lunch rooms, housing, transport,
medical assistance, education, health and safety,
recreation facilities etc.
3. Industrial Relations Aspects – covers union
mgt relations, joint consultation, CB, grievance
Functions/activities of HRM
Functions performed by HRM is categorized into two –
Managerial functions and operative functions
Managerial Functions –
1. Planning – [determination of future course of action
to achieve desired results – plan is not IPT, planning
is, prevents crisis tomorrow] is a predetermined
course of actions and is a process of determining the
organizational goals and formulation of policies and
programme for achieving them. Planning is future
oriented concerned with clearly charting out the
desired direction of business activities in future.
Forecasting is one IPT element in planning process.
Other fns depend on planning. HR Mgr is to
determine personnel prog regarding –R, S, Trg etc
 Contd….
2.Organizing - [proper grouping of personnel activities,
assigning of different groups of activities to different
individuals and delegation of authority] – [wool of entire
mgt fabric] is a process by which the structure and
allocation of jobs are determined and involves giving
each subordinate a specific task, establishing
departments, delegating authority to sub-ordinates,
establishing channels of authority and communication,
coordinating the work of sub-ordinates.
3.Staffing – the process by which managers select, train,
promote their subordinates and involves type of people to
be hired, recruiting prospective employees, selecting
employees, setting performance std, compensating
employees, evaluating performance, counseling and T
and developing employees.
 Contd…….
4.Directing/Leading – [supervising and guiding the
personnel] [no direction, no destination] – HR mgr must
be an effective leader who can create winning team - is
the process of activating group efforts to achieve the
desired goals and includes activities like getting
subordinates to get the job done, maintaining morals,
motivating subordinates for achieving goals of the org.
5.Controlling– [measuring employees’ performance,
correcting _ve deviations and assuring efficient
accomplishment of plans] is the process of setting
standards for performance, checking to see how actual
performance compares with set standards and taking
corrective actions as needed. Makes individuals aware of
their performance thru review reports, records and
 Contd……..
Operative functions – also called service
functions are those which are relevant to
specific deptt. ensuring right people for rt jobs
at rt time. They are
1.Procurement – involves procuring rt kind of
people in appropriate no. to be placed in the
org. such as manpower planning, Rectt,
Selection, Placement and Induction or
Orientation of new employees.[job analysis,
HRP, R, S, P, Induction & orientation, internal
mobility, transfer, promotion, separation]
JA – process of collecting information related to operation and
responsibilities pertaining to a specific job.
 Contd…..
2.Development – involves activities meant to improve
K, S, Aptitudes and values of employees to enable
them perform their jobs better. These functions may
comprise training to employees, executive trg to
develop mgrs, OD to strike a better fit between orgl
climate/culture and employees. [Trg, ED, Career
planning & dev and HRD]
3.Motivation & Compensation – This function
involves determination of wages and salaries matching
with contribution made by employees to orgl goals. It
ensures equitable and fair remuneration for employees
in the org. and consists of activities such as – job
design, work scheduling, motivation, PA, job
evaluation, wage and salary admn, bonus, incentives,
payroll etc.
 Contd….

4. Maintenance – concerned with protecting and

promoting employees while at work by extending
various benefits like housing, medical, educational,
transport facilities along with several social security
measures taken up such as health, safety, social
security such as - PF, Pension, gratuity, group
insurance etc.
5.Integration – Grievances, discipline, teams & team
work, CB, participation, empowerment, TU, IR etc.
6.Emerging Issues – personnel records, P audit, P
research, HR accounting, HRIS, job stress, counseling,
mentoring, international HRM
Note – managerial and operative functions of HRM are
performed in conjunction with each other in an org.