Chapter 1

Understanding the
Nature and Scope
of
Human Resource Management
Learning Objectives

• Understand the Nature, Scope and Objectives of

Human Resource Management.
• Design an Organisation Chart for Human Resource
Management Function in a Typical Industrial
Establishment.
• Understand the Personnel Principles and Policies.
• Trace the Evolution of Human Resource
Management.
• Understand Human Capital Management
• Identify Jobs and Careers in HRM.

2
• Introduction
• Organisations have to provide a healthy work climate in order to get the
best out of people. To utilise the capabilities of people fully, you need
competent leadership willing to recognise, reward and nurture talent at all
levels. This is where human resource managers play a critical role by
bridging gaps between employee expectations and organisational
requirements by adopting appropriate human resource strategies and
practices. HRM, in short, is the art of procuring, developing and
maintaining competent workforce to achieve the goals of an organisation
in an effective and efficient manner.

3
1-3
Human Resource Management: Features

Pervasive force
(Universal)
Action oriented
Individually oriented
People oriented
Future oriented
Development oriented
Integrating mechanism
Comprehensive function
Auxiliary service
(support)
Inter-disciplinary
Line and Staff Aspects of HRM

• Line manager
– A manager who is authorized to direct the work of
subordinates and is responsible for accomplishing the
organization’s tasks.
• Staff manager
– A manager who assists and advises line managers.
Line Managers’ HRM Responsibilities

1. Placing the right person on the right job

2. Starting new employees in the organization (orientation)
3. Training employees for jobs that are 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
Human Resource Managers’ Duties

Line Function Coordinative

Line Authority Function
Implied Authority Functional Authority

Functions of
HR Managers

Staff Functions
Staff Authority
Innovator
Employee Advocacy
1-4
Important terms
Clearing the Fog
Human resource: Knowledge, skill sets, expertise of
employees, the adaptability, commitment and loyalty
of employees.
Skills: The individual abilities of human beings to
perform a piece of work.
Resource: The stock of assets and skills that belong
to a firm at a point of time.
Capability: The ability of a bundle of resources to
perform an activity; a way of combining assets,
people and processes to transform inputs into outputs.
 Core competencies: Activities that the firm performs especially
well when compared to its competitors and through which
the firm adds value to its goods and services over a long
period of time.
 Competitive advantage: It comes from a firm's ability to
perform activities more distinctively and more effectively
than rivals. To attain competitive advantage, firms
need to add value to customers and offer a product or service
that cannot be easily imitated or copied by rivals (Uniqueness).
 Value: Sum total of benefits received and costs paid by the
customer in a given situation.

Human Resource Management, 5E 9

HRM

Meaning and Definition

The policies and practices involved in carrying out the “people” or
human resource aspects of a management position, including
recruiting, screening, training, rewarding, and appraising.
• According to Decenzo and Robbins, “HRM is
concerned with the people dimension” in management.
• The basic function of management is to bring
employees and organization on the same platform in
order to meet the individual goals as well as
organizational goals at the same time.
Chapter 1
Understanding the Nature and Scope of
Human Resource Management
Nature of Scope of The
HRM HRM Semantics

Organisation of HRM
Paradoxes in
HR Department Functions and
HRM
Objectives

Personnel
HRM Evaluation
Policies and
Models of HRM
Principles
Harvard Model

Human Capital
Guest Models
Management

Warwick Model Jobs and

Careers in
HRM
Why Study
HRM?
 Harvard model of HRM

The Harvard model of HRM is an HR

strategy model comprised of six
components. The model starts, on the left,
with stakeholder interest. These stakeholders
include shareholders, management, employee
groups, government, and more. These interests
define the model of HRM policies.

Human Resource Management, 5E 12

Harvard model of HRM

Human Resource Management, 5E 13

 Guest model of HRM

This model was developed by David Guest in 1997. This

model emphasizes on the assumption that HR
manager has specific strategies to begin with, which
demand certain practices and when executed will
result in outcomes. These out comes include
behavioural performance related and financial rewards.

Human Resource Management, 5E 14

Guest model of HRM

Human Resource Management, 5E 15

1-5

Scope of HRM

HRM mainly covers three broad areas

Personnel aspect
Welfare aspect
Industrial relations aspect

Scope of HRM
Enters
Works
Exits
Scope of HRM

Nature of
HRM

Prospects Employee
of HRM Hiring

HRM
Employee &
Industrial
Executive
Relations Remuneration

Employee Employee
Maintenance Motivation
Difference between PM and HRM
Personnel Management HRM
• Careful delineation of written • Aim to go beyond contract
contracts • Can do outlook, impatience with
• Importance of devising clear rules rule
• Procedures • Business need
• Norms/customs and practices • Values/mission
• Monitoring
• Labour management • Nurturing
• Piecemeal • Customer
• Slow • Integrated
• Transactional • Fast
• Indirect • Transformational leadership
• Negotiation • direct
• Separate, marginal task • facilitation
• Job evaluation • Integrated key tasks
• Performance related
Difference between PM and HRM
Personnel Management
• Separately negotiated
• Collective bargaining contracts
• Many
• Division of labour
• Reach temporary truce
• Controlled access to courses
personnel procedures
• Labour is treated as a tool which
is expendable and replaceable
• Interests of the organisation are
uppermost
• Precedes HRM
• external
HRM
• harmonisation
• Individual contract
• Few
• Team work
• Manage climate and culture
• Learning companies
wide ranging culture, structural
and personnel strategies.
• People are treated as assets to
be used for the benefit of an
organisation, its employees and
the society as a whole.
• Mutuality of interests
• Latest in the evaluation of the
subject
• internal
1-9

Functions of HRM
P/HRM

Managerial Operative Functions

functions:
Procurement Development: Motivation and Maintenance: Emerging
– Planning Integration:
Compensation: Issues:
Job Analysis Training Grievances
Job design Health Personnel
HR planning Executive records
Work scheduling Discipline
– Organising Recruitment development
Safety Personnel
Motivation Teams and
Selection Career teamwork audit
planning Job evaluation Personnel
Placement Welfare Collective
Succession Performance and research
– Directing bargaining
Induction potential HR
appraisal Social security Participation accounting
Internal planning
mobility Compensation Empowerment HRIS
– Controlling Human administration
resources Trade unions Job stress
development Incentives
benefits and Employers’ Mentoring
strategies
services associations International
HRM
Industrial
relations
1-6

Objectives of HRM
HRM aims at achieving organisational goals, meet the expectations
of employees; develop the knowledge, skills and abilities of
employees; improve the quality of working life and manage human
resources in an ethical and socially responsible manner.
Objectives of HRM

Personal
Objectives

Functional
Objectives

Organisational
Objectives

Societal
Objectives
Importance of HRM
From an organizational standpoint, good HR practices help in
attracting and retaining talent, train people for challenging roles,
develop their skills and competencies, increase productivity and
profits and enhance standard of living
1-7

Importance of HRM

attract and retain talent

train people for challenging roles
develop skills and competencies
promote team spirit
Good HR Practices help
develop loyalty and commitment
increase productivity and profits
improve job satisfaction
enhance standard of living
generate employment opportunities
1-8

HRM as a central subsystem in an

organisation(HRM as a Mother Function)
Product
Subsystem

HR Subsystem
Procurement
Finance Training Marketing
Subsystem Compensation Subsystem
Appraisal
Rewards

Technical
Subsystem
Personnel Policies at ABB India

• Role clarity
• Empowerment
• Take responsibility
• Competence development
• Clearly defined objectives for individual and the work team
Personnel Policies at ABB India

• The local unions as natural co-operation partners

• Planning discussions held at least once a year

• Internal mobility and employee development

• Ethics, equal opportunities and an open and honest

exchange of thoughts and ideas

• A strategic issue
Evolution of HRM in India

1920s – 30s
Pragmatism of capitalists

1940s – 50s
Technical, legalistic

1970s – 80s
Professional, legalistic, impersonal

1990s
Philosophical
Jobs & Careers in HRM

• HR Specialist
• HR Manager
• HR Executive

• Why Study HRM?

Reality Check

• It is good to read that people management has matured from

IR to PM to HRM to HCM. But has the change been only
cosmic or real? Have a debate.
 Reality Check

• Should this happen? Would this happen? Could this happen?

How could all HR activities be outsourced? Can a firm
function with a HR department organised on perfunctionary
basis? Answer these questions.
Reality Check

• Looking at the four models described in this section, what

similarities and dissimilarities do you notice among them?
What assumptions to they make? What lessons do they carry
to practising HR managers and students of HRM?
1-14

EVOLUTION OF HRM

The field of HRM evolved both in India and elsewhere over a number of
years to present level of sophistication and use of proactive methods

 The industrial revolution

 Scientific management
 Trade unionism
 Human relations movement
 Human resources approach
1-15

Evolution of the Personnel Function

Concept What is it all about?

The Commodity Labour was regarded as a commodity to be bought and sold.

concept Wages were based on demand and supply. Government did
very little to protect workers.

The Factor of Labour is like any other factor of production, viz, money,
Production concept materials, land, etc. Workers are like machine tools.

The Goodwill concept Welfare measures like safety, first aid, lunch room, rest room
will have a positive impact on workers’ productivity

The Paternalistic Management must assume a fatherly and protective attitude

concept/ Paternalism towards employees. Paternalism does not mean merely
providing benefits but it means satisfying various needs of the
employees as parents meet the requirements of the children.

Cont…
1-16

Evolution of the Personnel Function

The Humanitarian To improve productivity, physical, social and psychological
concept needs of workers must be met. As Mayo and others stated,
money is less a factor in determining output, than group
standards, group incentives and security. The organisation is a
social system that has both economic and social dimensions.

The Human Resource Employees are the most valuable assets of an organisation.
concept There should be a conscious effort to realise organisational goals
by satisfying needs and aspirations of employees.

The Emerging concept Employees should be accepted as partners in the progress of a

company. They should have a feeling that the organisation is
their own. To this end, managers must offer better quality of
working life and offer opportunities to people to exploit their
potential fully. The focus should be on Human Resource
Development.
1-17

Growth in India

 Legal phase
 Welfare phase
 Development phase
1-18

Personnel Function in India; Changing

Scenario
Period Emphasis Status Roles
1920 – 30 Welfare management Clerical Welfare
Paternalistic practices administrator

1940 – 60 Expanding the role to cover Administrative Appraiser

Labour, Welfare, Industrial Advisor
Relations and Personnel Mediator
Administration Legal advisor
Fire fighting

1970 – 80 Efficiency, effectiveness Developmental Change agent

dimensions added Integrator
Emphasis on human Trainer
values, aspirations, Educator

1990s – Incremental productivity Proactive, Developer

onwards gains through human growth-oriented Counsellor
assets Coach
Mentor
Problem solver
1-19

Shifts in HR management in India

Traditional HR practice Emerging HR practice

 Administrative role  Strategic role

 Reactive  Proactive

 Separate, isolated from  Key part of organisational

company mission mission

 Production focus  Service focus

 Functional organisation  Process-based organisation

 Individuals encouraged,  Cross-functional eams,

singled out for praise, teamwork most important

rewards
 People as expenses  People as key
investments/assets