CHAPTER 1
Table of Content:
Introduction to HRM
Evolution of HRM
Features of HRM
Objectives of HRM
Importance of HRM
Principles of HRM
Functions Of HRM
Challenges of HRM
Role of HR Manager
Difference between HRM & Personnel Management
Introduction to HRM
In the dynamically changing landscape of a Vulnerable, Uncertain, Complex, and Ambiguous (VUCA) world, the advent of AI is reshaping the traditional workforce. However, it is imperative to acknowledge that the most invaluable asset for any organization remains its human resources. Humans are the true innovators, and it is the primary responsibility of organizations to genuinely empower their employees. While financial compensation is a crucial aspect, true empowerment involves understanding employees' needs, providing training, facilitating continuous improvement, elevating their skill sets, and fostering loyalty.
Aligned with this philosophy, the field of Human Resource Management (HRM) has evolved, introducing various functions, principles, and strategies that serve as global tools for organizations to meet their human resource needs effectively. This chapter aims to provide essential insights for individuals or organizations seeking to implement human resource practices that go beyond mere remuneration, encompassing holistic approaches to employee development, satisfaction, and organizational loyalty.
Meaning and Definition:
According to Decenzo and Robbins: "Human resource management is a process consisting of four functions viz. acquisition, development, motivation and maintenance of human resources."
According to Gary Dessler: "Human resource management refers to the policies and practices one needs to carry out the people or human resource aspects of management positions, including recruiting, screening, training, rewarding and appraising."
According to G.R. Agarwal: "Human resource management is a process concerned with the management of human energies and competencies, for achieving organizational goals through acquisition, development, utilization and maintenance of a competent and committed workforce, in a changing environment."
According to Edwin Fippo: “Personnel Management is the planning, organizing and controlling of the procurement, development, compensation, integration and maintenance of people for the purpose of contributing to the organizational, individuals and social goals".
According to Wendell French: “Personnel Management is the recruitment, selection, development, utilization of and accommodation to human resources by organizations. The human resources of an organization consist of all the individuals regardless of their role, who are engaged in any way of the organization’s activities.”
Reference: 1. Edwin B. Fippo, Principles of personnel Management, McGraw-Hill, New York (4th Edition), 1976, P5
Evolution of HRM
In India during the early 19th century industrialisation was at its boom, which influenced the need of personal management. But there was no separate department to look after the problems of laborers except welfare officers who care about women and children only.
During the 1st World War there was usual growth for Personnel Management. The number of welfare officers was increased. During this period the women were recruited in large numbers as most of the men had joined the military.
The first phase of labor management came in 1920 in factories to handle absenteeism etc.
Between 1920’s and 1930’s there were employers who cared for their employees wellbeing by themselves e.g. Tata Steel in Jamshedpur.
During the 2nd world war, the personnel management faced an improving stage because the government had to produce large war materiel then the personnel department worked on a full time basis.
After independence the role of personnel management became inevitable in industries. It played functions like formulation of HR Policies, Collective Bargaining, Industrial Relations, etc.
In 1930’s the concept of personnel management has been converted to HRM, due to various reason like:
View point about doing works,
Legislative framework,
Government policies,
Trade unions,
Concepts in management,
Change in economy.
In 1990, governments of various countries liberalized their policies due to which humans started moving from one nation to another. So the need for a cross-cultural perspective of HRM evolved. Due to this the recruitment became more specific and selection is based on talent regardless of nationality.
In table 1.1, the evolution of human resource management in India can be summarized as follows:
Table 1.1
Features of HRM : Human resource is a vast term which comprises many features.
Depending on the size and nature of an organization, the features along the functions are carried out with separate departments or combined. However all the given features are the base of HR department,
1.1
Fig 1.1 : Features of HRM
Recruitment and Staffing:
Job analysis and design
Sourcing and attracting candidates
Conducting interviews and assessments
Making hiring decisions
Employee Onboarding:
Orientation programs
Providing new employees with necessary information and resources
Ensuring a smooth transition into the organization
Training and Development:
Identifying training needs
Planning and organizing training programs
Career development initiatives
Skill enhancement programs
Performance Management:
Goal setting and performance expectations
Regular performance reviews
Providing feedback
Performance improvement plans
Compensation and Benefits:
Salary and wage administration
Benefits administration (healthcare, retirement plans, etc.)
Incentive programs
Compensation benchmarking
Employee Relations:
Handling employee grievances
Conflict resolution
Mediation
Promoting a positive work environment
HR Policies and Compliance:
Developing and updating HR policies
Ensuring compliance with labor laws and regulations
Handling legal issues related to employment
Workforce Planning:
Forecasting future workforce needs
Succession planning
Talent pipeline development
Employee Engagement:
Employee satisfaction surveys
Employee recognition programs
Building a positive organizational culture
Health and Safety:
Ensuring a safe and healthy work environment
Compliance with occupational health and safety regulations
Emergency preparedness
Diversity and Inclusion:
Promoting diversity in hiring
Inclusive workplace initiatives
Training on diversity awareness
HR Technology:
Implementing and managing HR information systems (HRIS)
Automation of HR processes
Data analytics for workforce insights
Succession Planning:
Identifying and developing potential future leaders
Ensuring a smooth transition in key roles
Talent development for leadership positions
Employee Wellness:
Wellness programs
Mental health support
Work-life balance initiatives
Objectives of HRM
The basic objective of HRM is to ensure the availability of a competent and willing workforce to an organization, the attainment or accomplishment of its goals. HRM also aims to meet the needs, values, dignity, etc., of employees and has due concern for the socio-economic problems of the community and the country.
The important objectives of HRM are listed below:
To create an able and motivated workforce and ensure its effective utilization to accomplish various organizational goals.
To establish and maintain suitable and sound organizational structure in order to secure integration of employees and groups and to create desirable working relationships amongst them for increasing the organizational effectiveness. For this purpose, efforts are required to be done to create a sense and feeling of belongingness and team spirit by encouraging the employees to make positive and valuable suggestions.
To create a proper atmosphere to maintain high morale and to encourage a value system and environment of trust, mutuality of interests.
To provide training and education for developing the human resources.
To provide opportunities for participation, recognition, etc., and for a fair, acceptable and efficient leadership.
To provide attractive incentives, monetary benefits, social security measures and welfare facilities, various non-monetary rewards, benefits, etc., in order to ensure the retention of competent employees.
To adopt such policies which recognise merits and contributions by the employees.
To ensure that there is no threat of unemployment by instilling confidence among the employees regarding stability of their employment.
An organization has to bear in mind its responsibility towards the society as a whole. The society may not desire to enforce reservation in hiring and the laws leading to discrimination affecting the society badly or if certain organizational decisions have some negative impact on the society, such decisions should be avoided. It should be the objective of an organization to use the resources for the betterment of the society and the nation as a whole.
If we want to categorize the above mentioned objectives of HRM that can be done in the following manner:
(a) Personal objectives,
(b) Functional objectives,
(c) Organizational objectives and
(d) Social objectives.
In order to attain the various objectives stated above, HRM has to perform certain functions and undertake important activities. Not only all major and important activities in the working life of a worker from the time of his or her entry into an organization until he or she leaves the organization come under the purview of Human Resource Management; but many other activities, Human resource planning, job design and analysis, recruitment and selection, training and development, performance appraisal, placement, assessment, proper motivation to the employees, maintenance of union-management relations, human resource accounting and audit, etc., are some of the important activities. This makes clear the scope of Human Resource Management, which is really very vast. The major topics, aspects which are generally included in the scope of HRM are shown in the figure given below.
Fig 1.2 : Some common objectives of HRM
Here are some common objectives of HRM are as follows
Attracting and Retaining Talent:
Make sure that people who are competent and skilled are hired.
Create plans to keep on top-performing staff members.
Employee Development:
Identification of training needs and plan accordingly
Encourage lifelong learning and skill development.
Performance Management:
Set expectations and benchmarks for performance.
Establish procedures for routine performance assessment and feedback
Planning for the Workforce:
Recognize and prepare for future labor requirements.
Make sure the appropriate amount of skilled workers are on hand.
Employee Engagement:
Encourage a happy work atmosphere to increase employee engagement.
Encourage the well-being and contentment of your staff.
Strategic Alignment:
Align HR strategies strategically with the overarching aims and objectives of the company.
Make certain that HR procedures aid in achieving company goals.
Management of Pay and Benefits:
Create and oversee pay plans that are competitive.
Implement benefit plans to draw in and keep workers.
Adherence to the Law:
Make sure that labor rules and regulations are followed.
Reduce the legal risks connected to hiring practices.
Inclusion and Diversity:
Encourage inclusiveness and diversity in the workplace.
Establish a culture that respects diversity and provides equal opportunity.
Safety and Health:
Establish a healthy and safe working environment.
Follow the rules on workplace safety and health.
Relations with Employees:
Encourage good communication between management and staff.
Deal with and settle disputes and problems at work.
Importance of HRM
HRM plays a vital role in the organization, at every level. It increases core competencies that distinguish an organization from its competitors. The organization can achieve its goals with the help of human resources, by utilizing the available human resources with systematic planning and control.
At the Personal Level: It helps in getting people with the best talent in the organization. It also trains employees to explore more and facilitates the growth of their skills. It encourages people to work with commitment.
At the Social Level: It gives status to the people due to their designation, facilities provided by the enterprise etc. It also provides enhancement in their career. The impact of fair wages and salary also brings satisfaction which results in their social aspects.
At the National Level: It reduces unemployment which supports stable social development. Due to employability, people’s enhanced skills, specialized education and change in attitude gives great benefit to the nation, by increasing the national income and GDP and leading to higher standard of living.
At the Organizational Level: It follows the practices of pulling the talent and nourishing people for their and organization’s growth and development. It Increases the dignity of employees and also achieves success for the organization by bringing in the talent. It also promotes work culture and increases productivity of an organization. It formulates policies and strategies for the organization.
Fig 1.3 - Importance of HRM
Principles of HRM
Fig 1.4 Principles of HRM
Strategic Alignment :
This means that HR should be focused on helping the organization achieve its goals. For example, if the organization is focused on growth, HR might focus on recruiting and developing employees with the skills and experience needed to support that growth.
There are two types of alignments
Vertical
Horizontal
Each human resource practice is in alignment when it is in its proper place relative to other practices and strategic objectives.
( Fig no 1.5 Strategic Alignment of HRM)
Horizontal alignment is keeping human resource practices such as work design, recruiting, selection and retention , performance management, training and development , compensation , labor relation etc aligning to each other. All functions have to be interlinked to each other.
Whereas vertical alignment is keeping human resource practice aligned to business competitive strategy.At last, all the functions of the department should aim to achieve organizational goals and strategy.
2) Employee Focus : HRM should be focused on the needs and well-being of employees. This means that HR should create a work environment that is fair, respectful, and rewarding. It should also provide employees with opportunities for growth and development.
3) Continuous Improvement
HRM should be a continuous process of improvement. This means that HR should be constantly looking for ways to improve its policies and practices. This can be done through data analysis, employee feedback, and benchmarking against other organizations.Continuous improvement is a fundamental principle in Human Resource Management (HRM) that emphasizes the ongoing enhancement of HR processes, policies, and practices. It involves a systematic and proactive approach to identifying areas for improvement, making necessary adjustments, and striving for excellence.
Regular Evaluation and Feedback
Data-Driven Decision-Making
Benchmarking
Employee Surveys and Engagement
Training and Development
Adaptability to Change
Lean Thinking
Continuous Learning Culture
Feedback Loops
Kaizen Philosophy
Technology Integration
Root Cause Analysis
Above given points are some ways to have continuous improvement in the organization .
When issues or challenges arise, conduct root cause analysis to understand the underlying factors. Addressing root causes helps prevent the recurrence of problems and promotes sustainable improvements.
4)Evidence-Based Decision Making
HRM decisions should be based on evidence, not intuition. This means that HR should use data and analytics to inform its decisions. This can help to ensure that HR decisions are fair, effective, and aligned with the organization's goals.This approach ensures that HR practices are grounded in objective information and align with the overall goals and objectives of the organization.
5)Data Collection and Analysis
HR professionals should systematically collect and analyze relevant data pertaining to the workforce. This includes information on employee performance, engagement, turnover rates, training effectiveness, and other key HR metrics.
6)Metrics and Key Performance Indicators (KPIs)
Establishing metrics and KPIs allows HR to measure and track various aspects of the workforce. For example, performance metrics can include sales targets, project completion rates, or customer satisfaction scores. These indicators serve as quantifiable measures for assessing HR-related initiatives.
7)Recruitment and Selection:
Utilize data-driven insights to optimize the recruitment process. This involves analyzing the success rates of different recruitment channels, evaluating the effectiveness of pre-employment assessments, and identifying the sources that yield the highest-performing employees.
8)Performance Management:
Conduct performance evaluations by emphasizing tangible data and concrete accomplishments, steering away from subjective assessments. Integrate objective employee performance metrics, input from supervisors, and pertinent data to offer a precise and comprehensive portrayal of an individual's contributions
9)Training and Development:
Assess the impact of training programs through data analysis. This includes measuring the improvement in skills, knowledge transfer, and the application of learning to job performance. Analyzing training effectiveness helps in refining and customizing future development initiatives.
10)Employee Engagement Surveys:
Conduct regular employee engagement surveys to gather quantitative data on job satisfaction, organizational commitment, and overall morale. Analyzing survey results provides insights into areas that may require intervention and improvement.
11)Succession Planning:
Use data to identify high-potential employees and create succession plans based on objective criteria. This ensures that leadership positions are filled by individuals with the necessary skills and potential to contribute to the organization's success.
12)Compensation and Benefits:
Analyze market data to ensure that the organization's compensation and benefits packages are competitive. Benchmarking against industry standards helps in attracting and retaining top talent.
13)Diversity and Inclusion:
Utilize demographic data to assess diversity and inclusion efforts. This involves tracking the representation of various demographics within the workforce and identifying areas for improvement to create a more inclusive work environment.
14)Legal Compliance:
Ensure HR decisions align with legal requirements by staying informed about employment laws and regulations. This involves using legal data to shape HR policies and practices to mitigate legal risks.
Functions Of HRM
Functions of Human Resource Management
Fig. 1.5 Functions of HRM
1. Human Resource Planning: This function creates a base for all the other functions carried out in an organization. The number and type of employees needed to accomplish organizational goals are determined by this function. Research is an important part of this function because planning requires collection and analysis of information, to forecast human resources supplies and to predict future human resources needs.
The basic human resource planning strategy is staffing and employee development. It also requires job analysis which provides information about the nature of job, the number of employees required with specific skill, their responsibility, the salary amount for each position and the expected experience etc. It also involves preparing the job description. A job description spells out work duties and activities of employees and it makes employees work as per the procedure. Job descriptions are a vital source of information to employees and managers, as job content has a great influence on personnel programmes and practices.
2. Training and Development: This function involves imparting the specific skills, education, abilities and knowledge to the employees.
Training is presumed to consist of some formal education. Any training and development programme aims to enable the participants to acquire skills and to make them understand how theoretical concepts should apply in practice. Training initially starts with an induction or orientation programme. Orientation helps new employees to adjust to the new job and the employer. It is a method to acquaint new employees with particular aspects of their job including pay and benefit programmes, working hours, company rules and expectations.
Training and development programmes provide useful means to assure that the
employees are capable of performing their jobs at acceptable levels.
3. Organizational Development: According to Warren Bennis: “Organizational Development is a response to change a complex educational strategy.” It is an intervention into the management structure so as to make use of group dynamics and social psychology techniques. It has following interventions which help organizations to understand their employees better and intend to change towards effective behavior:
Role Analysis Technique
Life and Career Planning
Role Negotiation Technique
Sensitivity Training or T group
Transactional Analysis
Survey Feedback
4. Employee Retirement and Separation: Most of the employees get separated from the organization due to retirement. Organization has to always make the retirement policies clear so that the employee can plan his life after retirement. The event of retirement is very important for the retiring employee. Hence an HR manager has to arrange a farewell or a small programme to acknowledge his / her services to the organization.
Retirement is of three types:
Compulsory Retirement
Forced Retirement
Premature / Voluntary Retirement
Separation: It is caused due to end of the employment contract or agreement or because of some special reason such as:
Resignation
Discharge
Suspension
Lay-Off
5. Performance Appraisal: According to Edwin B. Flippo: “Performance Appraisal is a systematic, periodic and so far as humanly possible, an impartial rating of an employee’s excellence in matters pertaining to his present job and to his potential for a better job.”
According to Afford Beatty: “Performance Appraisal is the evaluation or appraisal of
the relative worth to the company of a man’s services on his job.”
6. Personnel Research: In a good research approach, the objective is to get facts and specific information about personnel in order to develop and maintain a programme that works. It is impossible to run a personnel programme without pre-planning and post-reviewing. There is a wide scope for research in the areas of recruitment, employee turnover, terminations, training and so on. Through a well-designed survey, employees’ opinions can be gathered on wages, promotions, welfare services, working conditions, job security, leadership, industrial relations etc. However despite its importance, in most companies, research is the most neglected area because human resources is too busy solving HR related issues. Research helps in preventing such issues.
7. Career Planning: Each employee would like to stay in an organization which
provides him with continuous career growth. Hence it is a responsibility of HR
managers to do the career planning of all employees and to look after their growth in
the organization. Career planning activities include assessing an individual employee’s
potential for growth and advancement in the organization.
8. Compensation: Human resource personnel provide a rational method for determining how much employees should be paid for performing certain jobs. Compensation is a major cost to many organizations and hence it needs a careful consideration in human resource planning. Compensation levels affect staffing as people are generally attracted towards organisations offering a higher level of pay in exchange of the work performed. It is also related to employee development as it provides an important incentive in motivating employees to achieve higher levels of job performance and to get higher paying jobs in the organisation.
9. Labour Welfare: Employee welfare includes various services, benefits and facilities
offered to employees by the employers. It can be in any form; either monetary or
non-monetary. This includes items such as allowances, housing, transportation,
medical insurance and food. Employee welfare also includes monitoring of working
conditions, creating harmony through establishing infrastructure for health, and
providing insurance against disease, accident and unemployment for the workers and
their families. Through such generous benefits the employer makes the standard of
living better for employees.
10. Industrial Relations: This is concerned with managing the relationship between the management and workers and playing the role of regulatory mechanism in resolving any industrial disputes.
It covers collective bargaining, which is a mechanism for resolving industrial disputes
and grievances, setting disciplinary policy and practice, looking into legal aspects of
labor etc. IR is acknowledged differently e.g. some term them as class conflicts and
some term them as mutual cooperation. HR manager is expected to understand
these various understandings by applying different approaches to them like Unitary
Approach, Pluralistic Approach and Marxist Approach.
11. Record-keeping: The most basic function of HRM is employee’s record-keeping.
This function involves recording, maintaining and retrieving employee related
information for a variety of purposes. Records which must be maintained include
application forms, health and medical records, employment history, seniority lists,
earnings, hours of work, absences, turnover and other employee data. Complete and
up-to-date employee records are essential for most personnel functions. Employees
today have a great interest in their personnel records more than ever.
Challenges of HRM :
There are many challenges before human resource management. Some are listed below:
Fig no 1.6
(a) Finding the Right Talent: For running any business, finding the right people with the right attitude is very important but is an equally difficult task. HRM does not want to waste its valuable time in interviewing thousands of potential candidates who are not fit for its organization. In today’s time, finding the right talent has become a challenging task.
(b) Managing Labour and Benefit Costs: Managing diversified labor and employees with their demands has become tricky. Most companies, in such cases, first reduce benefits of employees and cut down the staff. Employees who retain their jobs often end up working harder for getting less in terms of health insurance and paid time off. This can discourage entire staff-reducing employee productivity and leading to greater turnover. However, the organization needs to maintain the profit margin with their employees.
(c) Maintaining Work Culture: Due to globalization and diversity, organization is required to maintain a healthy environment for all.
(d) Managing Low Attrition Rate: More competition leads to high attrition. There is an opportunity for the HR manager to play safe and introduce good retention strategies.
(e) Economical and Technological Change: Changing economy has immense impact on organizations. Also, to adopt the latest technology, recruit people with required skills or train them as per organizational requirements all the time, is costly as well as time consuming. Human resource department always has to be ready with their back up of the employees who can complete the expectations of the organization.
Role of HR Manager
It includes:
(a) Role as a Policy Maker: One of the important aspects of any organization is making policies towards achievement of its goals. Policy made by the administrator has to be followed by managers and employees.
(b) Role as an Advisor: One of the main responsibilities of personnel manager is to guide line and staff manager from time to time to comply with the statutory matters. Their main functions are guiding, counseling and helping the line managers
(c) Role as a Record-keeper: Record keeping is one of the routine level functions which includes maintaining important documents and records etc.
(d) Role as a Counselor: Organisation always has to take new steps which not only shows concern for employees but for their family members as well. This greatly boosts employee morale and includes activities such as understanding employees’ personal problems, guiding them on a correct path, helping in their financial problems as far as possible etc.
(e) Role as a Legal Advisor: Statutory compliance puts organization into a safe zone but somebody has to be there to guide employees properly about the legal matters. Personnel manager plays a role in grievance handling, settling disputes, handling disciplinary matters, collective bargaining, implementation of various laws, civil courts etc.
Routine level operations are carried through subordinates and need to be monitored closely by their supervisors. In such cases personnel managers can act as a recruiter, coordinator, mediator and trainer.
Fig 1.7 Role of a Personnel Manager Reference
Difference between HRM & Personnel Management
Human Resource Management:
Human Resource Management is a bundle of diversified functions and includes the activities which manage all the human resources and develop them.
It is a proactive function which takes care of present as well as future needs of an organisation.
It is an ongoing process for an organisation that works at all the levels of management. It uses people’s skills, knowledge and aptitude as a resource and boosts them to get the best out of them.
It involves functions such as recruitment, selection and industrial relations.
Employees are treated as an asset which is to be utilised for the benefits of an organisation.
Personnel Management:
Personnel Management is concerned with people at the workplace and their interaction and relations with each other. It includes various functions and activities which are designed to achieve personal and organisational goals.
It works as an auxiliary function and responds to the demands of an organisation. It contains daily operations or routine work and focuses on improving the efficiency of an employee by providing them the resources and by motivating them.
Employees are treated as a tool which can be used for the organisation's benefit.
It is looked as a cost centre which always needs to be put under control.
The American Society of Personnel Management [ASPA], the largest professional association in the field of management; changed its name to the Society for Human Resource Management [SHRM] in the year 1990 and since then, the term human resource management is gradually replacing the term personnel Management
To ensure that job requirements and expectations are free from bias and promote diversity and inclusion. A thorough job analysis can help in identifying and eliminating discriminatory practices.
To identify potential hazards and risks associated with a job, helping in the development of safety protocols and ensuring compliance with health and safety regulations.
To assess and modify existing jobs or create new ones based on changes in technology, organizational structure, or business strategy. Job analysis supports organizational adaptability and efficiency.
To ensure that job-related practices comply with labor laws and regulations. Accurate job analysis documentation can be crucial in legal disputes and ensures that the organization follows fair employment
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