Unit_8

Human Resource Management:

Human resource management is the process of managing the human resources
of an organization in tune with the vision of the top management.
Human resources management (HRM) is a management function concerned with
hiring, motivating and maintaining people in an organization. It focuses on people in
organizations. Human resource management is designing management systems to
ensure that human talent is used effectively and efficiently to accomplish organizational
goals.
HRM is the personnel function which is concerned with procurement,
development, compensation, integration and maintenance of the personnel of an
organization for the purpose of contributing towards the accomplishments of the
organizations objectives. Therefore, personnel management is the planning,
organizing, directing, and controlling of the performance of those operative functions
(Edward B. Philippo).
According to the Invancevich and Glueck, HRM is concerned with the most
effective use of people to achieve organizational and individual goals. It is the way of
managing people at work, so that they give their best to the organization.
According to Dessler (2008) 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 comprises of HRM.
Generally HRM refers to the management of people in organizations. It
comprises of the activities, policies, and practices involved in obtaining, developing,
utilizing, evaluating, maintaining, and retaining the appropriate number and skill mix of
employees to accomplish the organizations objectives. The goal of HRM is to maximize
employees contributions in order to achieve optimal productivity and effectiveness,
while simultaneously attaining individual objectives (such as having a challenging job
and obtaining recognition), and societal objectives (such as legal compliance and
demonstrating social responsibility).
In short Human Resource Management (HRM) can be defined as the art of
procuring, developing and maintaining competent workforce to achieve the goals of an
organization in an effective and efficient manner
Functions of HRM:
Human Resources management has an important role to play in equipping
organizations to meet the challenges of an expanding and increasingly competitive
sector. Increase in staff numbers, contractual diversification and changes in
demographic profile which compel the HR managers to reconfigure the role and
significance of human resources management. The functions are responsive to current
staffing needs, but can be proactive in reshaping organizational objectives. All the
functions of HRM are correlated with the core objectives of HRM (Table 1.1). For
example personal objectives is sought to be realized through functions like
remuneration, assessment etc.

HR management can be thought of as seven interlinked functions taking place

within organizations, as depicted in Figure. Additionally, external forceslegal,
economic, technological, global, environmental, cultural/geographic, political, and social
significantly affect how HR functions are designed, managed, and changed. The
functions can be grouped as follows:
Strategic HR Management:
As a part of maintaining organizational competitiveness, strategic planning for
HR effectiveness can be increased through the use of HR metrics and HR technology.
Human resource planning (HRP) function determine the number and type of employees
needed to accomplish organizational goals. HRP includes creating venture teams with a
balanced skill-mix, recruiting the right people, and voluntary team assignment. This
function analyzes and determines personnel needs in order to create effective
innovation teams. The basic HRP strategy is staffing and employee development.
Equal Employment Opportunity:
Compliance with equal employment opportunity (EEO) laws and regulations
affects all other HR activities.
Staffing:
The aim of staffing is to provide a sufficient supply of qualified individuals to fill
jobs in an organization. Job analysis, recruitment and selection are the main functions
under staffing.
Workers job design and job analysis laid the foundation for staffing by identifying
what diverse people do in their jobs and how they are affected by them.
Job analysis is the process of describing the nature of a job and specifying the
human requirements such as knowledge, skills, and experience needed to perform the
job. The end result of job analysis is job description. Job description spells out work
duties and activities of employees.
Through HR planning, managers anticipate the future supply of and demand for
employees and the nature of workforce issues, including the retention of employees. So
HRP precedes the actual selection of people for organization. These factors are used
when recruiting applicants for job openings. The selection process is concerned with
choosing qualified individuals to fill those jobs. In the selection function, the most
qualified applicants are selected for hiring from among the applicants based on the
extent to which their abilities and skills are matching with the job.
Talent Management and Development:
Beginning with the orientation of new employees, talent management and
development includes different types of training. Orientation is the first step towards
helping a new employee to adjust himself to the new job and the employer. It is a
method to acquaint new employees with particular aspects of their new job, including
pay and benefit programmes, working hours and company rules and expectations.
Training and Development programs provide useful means of assuring that the
employees are capable of performing their jobs at acceptable levels and also more than
that. All the organizations provide training for new and in experienced employee. In
addition, organization often provide both on the job and off the job training
programmes for those employees whose jobs are undergoing change.
Likewise, HR development and succession planning of employees and managers
is necessary to prepare for future challenges. Career planning has developed as result

of the desire of many employees to grow in their jobs and to advance in their career.
Career planning activities include assessing an individual employees potential for
growth and advancement in the organization.
Performance appraisal includes encouraging risk taking, demanding innovation,
generating or adopting new tasks, peer evaluation, frequent evaluations, and auditing
innovation processes. This function monitors employee performance to ensure that it is
at acceptable levels. This strategy appraises individual and team performance so that
there is a link between individual innovativeness and company profitability. Which tasks
should be appraised and who should assess employees performance are also taken into
account.
Total Rewards:
Compensation in the form of pay, incentives and benefits are the rewards given
to the employees for performing organizational work. Compensation management is the
method for determining how much employees should be paid for performing certain
jobs. Compensation affects staffing in that people are generally attracted to
organizations offering a higher level of pay in exchange for the work performed. To be
competitive, employers develop and refine their basic compensation systems and may
use variable pay programs such as incentive rewards, promotion from within the team,
recognition rewards, balancing team and individual rewards etc. This function uses
rewards to motivate personnel to achieve an organizations goals of productivity,
innovation and profitability. Compensation is also related to employee development in
that it provides an important incentive in motivating employees to higher levels of job
performance to higher paying jobs in the organization.
Benefits are another form of compensation to employees other than direct pay
for the work performed. Benefits include both legally required items and those offered
at employers discretion. Benefits are primarily related to the area of employee
maintenance as they provide for many basic employee needs.
Risk Management and Worker Protection:
HRM addresses various workplace risks to ensure protection of workers by
meeting legal requirements and being more responsive to concerns for workplace
health and safety along with disaster and recovery planning.
Employee and Labor Relations:
The relationship between managers and their employees must be handled legally
and effectively. Employer and employee rights must be addressed. It is important to
develop, communicate, and update HR policies and procedures so that managers and
employees alike know what is expected. In some organizations, union/management
relations must be addressed as well. The term labour relation refers to the interaction
with employees who are represented by a trade union. Unions are organization of
employees who join together to obtain more voice in decisions affecting wages,
benefits, working conditions and other aspects of employment. With regard to labour
relations the major function of HR personnel includes negotiating with the unions
regarding wages, service conditions and resolving disputes and grievances.
Job Evaluation:
An attempt to determine and compare the demands which the normal
performance of particular job makes on normal workers without taking account of the
individual abilities or performance of workers concerned. It rates the job not the rank.

Objectives:
1.
To establish correct wage correct wage differentials for all jobs within the
factory.
2.
To bring new jobs into their proper relatively with jobs previously
established.
3.
To help clarify lines of authority, responsibility and promotion.
4.
To accomplish the foregoing by means of the facts and principles, which can
be readily explained to and accepted by all concerned.
5.
To establish a general wage level for a given factory which will have parity
with those of neighboring factories
Advantages:
1. It is simple, inexpensive and expeditions
2. It is easily understood and easily administered
3. It helps setting better rates than the arbitrary rates based purely an judgment
and experience
4. Same unions prefer it, because it leases more room for bargaining.
Disadvantages:
1.
Job may be ranked on the basis of incomplete inform action and
without the benefits of well defined standards.
2.
The rank position of different jobs is likely to be influenced by the
prevailing wage ranks.
3.
No one committee number is likely to be familiar with all the jobs
Procedure:
1. Fixing the job to be evaluated.
2. Describe and analyze the requirements of the job.
3. Compare the job with the pre-identifies key jbs and decide its value.
4. Information obtained should be analyzed to arrive at a suitable wage structure
for the job.
Method of Job Evaluation: It is broadly be classified as
1) Qualitative Method
2) Quantitative Method
1) Qualitative Method: It can broadly be classified as ranking or classifying the job
from lowest to highest.
a) Ranking technique:
In this method, the jobs in the organization are arranged in either in the
ascending or descending order and numbered serially. The basis of such arrangement
could be the job description in terms of duties, responsibilities, qualifications needed,
relative difficulty involved in don the job, or value to the company.
Points considered:
1. Amount of work involved
2. Supervision needed
3. Extent of responsibility required
4. Difficulties involved in the work
5. Work conditions required
b) Classification Method:

This is also called job-grading method. Here, the number of grades and the salary
particulars for each grade are worked out first. The grades are clearly described in
terms of knowledge, skill and so on.
Major steps for job evaluation:
1. Deciding the number of grades
2. Writing grade descriptions
3. Identifying/listing of the jobs to be evaluated
4. Preparing job descriptions
2) Quantitative Method:
Where point values are assigned to the various demands of a job and relative
value is obtained by summing all such point values.
a) Factor comparison method:
Every job requires certain capabilities on the part of the person who does the
job. These capabilities are considered as critical factors, which can be grouped as
follows:
_ Mean effort
_ Skill
_ Physical
_ Responsibility
_ Working conditions
Step involved in the factor comparison method:
_ Identify the key jobs
_ Rank the key job, factor by factor
_ Apportion the salary among each factor and rank the key jobs
_ Compare factor ranking of each job with its monetary ranking
_ Develop a monetary comparison scale
_ Evaluate non-key jobs based on the monetary comparison scale
b) Point-rating method: There are four widely accepted factors used in the pointrating
method, skill, effort, responsibility and job conditions each of these factors is divided
into sub-factors.
Skills

1. Education and training

2. Experience
3. Judgment and initiative

Efforts

1. Physical
2. Mental

Responsibility towards

1.
2.
3.
4.

Materials or product
Equipment or process
Safety of others
Work of others

Job Analysis:
Job analysis can be defined as the process of identifying the tasks comprising a
particular job to assess whether they could be organized in a productive manner. This
will identify the main features of the job, the major tasks undertaken, the results to be
achieved, and how one job is related to the other jobs in the organizational hierarchy.
The product of job analysis is job description.

Job Description:
Job description is an accurate and concise description of (a) the overall purposes
of the job (b) the principal duties of the person doing this job. The job description
emphasizes the job requirements. Clear job description constitutes the basis for
advertising the vacancy positions and for drawing up job specifications. Once individuals
are selected to the posts, job description allows them to know exactly what their roles
are and what is expected of them.
Job Specification
Job specification identifies the requirements on the part of the person to perform
the given job. It provides the interviewer an understanding of the job and helps him to
assess the qualities necessary for its performance to an acceptable standard, at the
time of interview. This helps him to compare the performance of candidates objectively
and to eliminate unsuitable candidates.
Merit Rating:
Merit rating is the process of evaluating the relative merit of the person on a
given job. It is an essential task of the personnel manager to distinguish the
meritorious employees from the other. The data collected from this task is used for
strategic decisions such as releasing an increment in pay, promotion, transfer, and
transfer on promotion to a critical assignment or even discharge.
Objectives of Merit Rating:
_ To determine salary increments
_ To decide who has to be transferred, promoted, or demoted
_ To discover the workers needs for retaining and advanced training
_ To unfold the exceptional skills among the employees based on their innate potentials
_ To guide and monitor the performance of those who are lagging behind.
Method of Merit Rating:
Ranking method:
In this method, all the staff of a particular cadre or a department are arranged
either in the ascending or the descending order in order of merit or value to the firm.
Though this is a simple method, it cannot be followed where the employees in the
department are many in number.
Paired comparison method:
Here, every employee is compared with all others in a particular cadre in the
department. By comparing each pair of employees, the rater can decide which of the
employees is more valuable to the organization.
Rating scale:
Here, the factors dealing with the quantity and quality of work are listed and
rated. A numeric value may be assigned to each factor and the factors could be
weighed in the order of their relative importance. All the variables are measured against
a three or five point scale.
Forced distribution method:
Here, employees are given a set of alternatives and they have to choose one,
which reflects their understanding of the true nature of the job. Their thinking is
conditioned by the given set of answers.
Narrative or essay method:
Here, the candidate is required to narrate in an essay format his/her strengths,
weaknesses, and potential to perform. Here, the candidate is not restricted by any

given set of alternatives. The candidate is free to decide what to furnish or what not to
furnish.
Management by objectives (MPO):
The short-term objectives mutually agreed upon by the management and the
employees are used as performance standards. This method considers the actual
performance as the basis for evaluation. It is a systematic method of goal setting. In
addition, it provides for reviewing performance based on results rather than personality
traits or characteristics. However, this is not practical at all levels and for all kinds of
work in the organizations.

Job Evaluation vs Merit Rating

Job Evaluation

Merit Rating

(1)

It evaluated a job or work

(2)

It is for the purpose of fixing a base-wage for (2)

It is for the purpose of deciding reward for

a job.

exceptional merit of worker.

It is independent of operator or worker. It is (3)

It is independent of job. It is impersonal in

impersonal in nature.

nature.

Useful for decision regarding wage and salary (4)

Useful

administration, skill match, etc.

placement, promotion, counseling, etc.

(3)

(4)

(5)

It considers requirement of job.

(1)

(5)

It evaluated a worker

for

decision

regarding

training,

It considers ability and performance of

individual.

Distinction Between Job Evaluation and Merit Rating:

The following are the important points of differences between Job Evaluation and
Merit Rating:
(1) Job evaluation is the assessment of the relative worth of jobs within a company and
merit rating is the assessment of the relative worth of the man behind the job.
(2) Job evaluation and its accomplishments are means to setup a rational wage and
salary structure whereas merit rating provides a scientific basis for determining fair
wages for each worker based on his ability and performance.
(3) Job evaluation simplifies wage administration by bringing uniformity in wage rates
whereas merit rating is used to determine fair rate of pay for different workers.

Difference Between Merit Rating and Job Evaluation

1. Rating or job/Employees:
Job evaluation is related with the rating of the job whereas merit rating is a
systematic process or evaluation of the capacities and abilities of the man doing the
job.
2. Purpose:
The purpose of the job evaluation is to fix wages for the jobs by considering
certain factors such as skill, responsibility etc. In case of merit rating, the purpose is to
evaluate the employee for the purpose of promotion, training, pay increase or
incentives etc.
3. Job difference/Individual differences:
Job evaluation considers the differences in jobs whereas merit rating recognizes
the individual differences.
4. Objectives/Subjective Qualities:
The type of factors to be considered are objective in case of job evaluation,
whereas in case of merit rating subjective qualities are considered.
5. Performance of individual versus job:
Job evaluation becomes the basis of determining wages whereas merit rating is
undertaken to find out the efficiency of the individual for doing specific jobs.
6. Test of worth versus merit:
In job evaluation, an attempt is made to know the worth of a job in terms of
certain factors such as responsibility and effort (mental as well as physical). Merit rating
identifies the capacity and capability of an individual for doing specific job.
7. Uses:
Job evaluation is meant for determining the wages on an employee. On the other
hand, merit rating is utilized for placement and training etc.
Wage incentive:
Wage may be defined as payment for the use of labor. Wage include both money
and non-money payments. Non-money payments may also be called as Fringe benefits,
etc. Fair wage is a wage paid to a worker which is fair as regards work accomplished by
him and which is sufficient to fulfill his basic necessities of lige. The word wages means
compensation paid on a hourly basis, and the term salary is used to mean

compensation for executives, supervisors, salesmen and other employees paid on the
basis other than an hourly rate.
Time Wages:
The payment of wages on the basis of a year, a month, a week, a day or an hour
is probably the most common method. Wages paid under this method are often spoken
of as time wages.
Real wages:
Real wages represent the amount of goods and services that the money wages
can buy. The amount of money that one earns is important only in relation to the cost
of living. There is no real increase in wages if the cost of living rises at the same rate as
wages.
Wage payment types:
Wages are and have been the single most important factor influencing the
employee-employer relations. A good wage payment plan is one which satisfies the
workers and at the same time brings profits to management. Wage payment can be
classified under two groups.
1. Non-incentive plans
2. Incentive plans.
Incentive:
A reward which is given to a worker for his efficiency and hard wofk is incentive.
Incentives motivate and encourage a worker to produce more and better. Incentives are
said to be additional monetary reward to the job that he does after the normal working
times.
Incentives may be classifies as :
(a)
(b)

Direct and Indirect incentives and

Financial, Non-Financial and Semi-Financial incentives.

Direct incentives are those which are given to an individual worker for his own
contribution whereas indirect incentives are paid to a group of workers. Financial
incentives involve direct monetary payment or benefits whereas Non-Financial ones
include food working conditions, amenities and social benefits in the organization.
Financial incentives besides incentives for the immediate work contribution, worker may
receive additional financial benefits in the form of bonus, profit sharing.

Non-Financial benefits include:

1.
2.
3.
4.
5.
6.
7.

Job satisfaction.
Better and healthy working conditions and surroundings.
Chances of promotion.
Job security.
Respect and recognition in the organization.
Training and other employee-improvement programmes.
Housing, medical, recreational and educational facilities to workers and their
families.

Semi-Financial benefits include:

1.
2.
3.
4.

Provision of subsidized lunch.

Recreational and medical facilities to the workers.
Subsidized educational facilities for their children.
Pension and other benefits.

Wage incentive plans:

Wage incentive plans reward an employee for his good job-performance. The
various aspects of job-performance are:

Product Quantity
Product Quality
Utilization of materials, path, tools and services.
Efficiency

The wage incentive plan should be agreeable to employee as well as employer.

Requirements:
The requirements of a good wage incentive plan are:

It should be simple, and should involve least clerical work.

It would be well planned and guarantee a minimum wage.
A worker should be rewarded in proportion to his efforts and achievements.
The scheme should preferably be based on Time-Study data.
It should give incentive both for quantity and quality of production.
Standards should be fairly set.
The scheme should be just for workers as well as for the management.
No limit should be put on a workers incentive earnings.

Objectives of wage incentive plan:

The incentive scheme should be profitable to both workers and management.

It should help increasing production and thereby lower the related costs.
It should reward workers in proportion to their output.
The characteristics of an incentive scheme should be such that an able worker is
in a position to earn sufficient amount of money to raise his standard of living.

An incentive scheme should aid improvement in the utilization of equipment

materials and services.
An incentive scheme should furnish a basis for cost control and labour control.
An incentive scheme should help in reducing labor turnover and absentee rate.

Type of wage incentive plan:

Straight piece rate

Straight piece rate with a guaranteed minimum wage.
Differential piece rate system
Hasley plan
Rowan plan
Gantt plan
Bedallx plan
Emersons efficiency plan
Group plan

Straight piece rate system:

In the straight piece rate system, a worker is paid straight for the number of
pieces which he produces per day.
Earning of a worker = no. of pieces produced x Rate per piece
In other words, if a worker paints 30 sq/m of area per day and for each sq/m the
wage rate is Rs.10 then he earns at the rate of Rs. 300 per day.
Advantages:

The method is very simple, easy to understand and to operate.

A workers earnings are solely based upon his contributions towards production.
This method of payment helps boosting production fast.

Disadvantages:

Maintaining the required product quality is in danger in urge to make more

pieces.
A worker is not guaranteed minimum wages.
With a desire to earn more and excel others, a worker may spoil his relations
with his co-workers.

Because of these disadvantages the method is not much used in industries today.
This type of wage incentive scheme is very suitable where

Repetitive jobs are involved.

Management desires to increase total production.

Straight piece rate with a guaranteed base wage:

This method is an improvement over the straight piece rate system as it

guarantees a minimum (hourly or daily) base wage. Suppose the standard of output set
by the management is 20 pieces per day. If a worker produces less than this amount he
still gets the minimum guaranteed wage and if another worker exceeds this standard,
he is given a wage in direct proportion to the number of pieces produced by him at the
straight piece rate.
Advantages:

The system provides a guaranteed minimum wage.

By guaranteeing a minimum wage, this system automatically takes some care of
the enforced idleness beyond the control of the workers.

Differential piece rate system:

A differential piece rate system tends to overcome the disadvantages of the
piece rate system by providing a guaranteed base. It bases itself on differential wage
rates; a worker who exceeds the output standard is paid a higher wage rate per piece
and another who fails to do so gets his earnings at a low piece rate. This system as
suggested by the F.W. Taylor had the disadvantage that the inferior fresh workers, who
were unable to reach output standard, could earn very little and hardly survive.