HUMAN RESOURCE MANAGEMENT

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FUNDAMENTALS OF H
HUMAN RESOURCE A

MANAGEMNT
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 ORGANIZATION
 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 )
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RESOURCES
 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

 Human Resources. – Men & Women

 Financial Resources.- Money
 Physical Resources. – Material, Machine
Or Land, Labour and Capital

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 Human Resources
 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.

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 Human Resources
 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 )

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 Human Resources

It is viewed as capital i.e. The human

capital, which unlike finance has three
components – Intellectual capital,
Social capital and Emotional capital
(Sumantra Ghoshal, 1999 )

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 Human Resources
 The intellectual capital consists of
knowledge, skills, learning capacity
etc.
 Social capital is made up of network of
relationship, trustworthiness,
sociability etc.
 Emotional capital refers to self
confidence, ambition, courage, risk
taking abilities etc.

human resources
Thus it can be concluded that
refers to the quantitative and
qualitative aspects of employees in
the organization.
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Significance of Human Resources

 Activation of Non human Resources

 Means for developing Competitive

Advantages.

 Source of Creative Energy

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 Human Resource Management
 Is the efficient and effective utilization of
human resources.

 HRM is the design of formal system in an

organization to ensure effective and efficient use of
human talent to accomplish the organizational goals.

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 Human Resource Management
 A strategic and coherent approach to
management of the most valued assets of an
organization, i.e. people, 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
resources in ways that contribute to organizational
effectiveness.
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Human Resource Management

 Consists of the policies, practices, and

decisions that concern making effective
and efficient use of the employees of an
organization in order to achieve the
organization’s objectives.

 Involves all management decisions and

practices that directly affect the people of an
organization

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Human Resource Management
 HRM refers to activities by which an
organization recruits, selects, trains, develops,
motivates, evaluates, compensates, and
rewards people fairly.

 Is the planning, organising, directing and

controlling of the procurement,
development, compensation, integration,
maintenance and separation of human
resources to the end that individual,
organizational and societal objectives are
achieved.
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 Human Resource Management
 Thus it can be concluded that human
resource management means people
management. It is the management
of employees’ aspirations,
expectations , knowledge, skills, &
attitude etc to the end that individual,
organizational and societal objectives are
achieved.

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Why is HRM Important to an
Organization?
 HRM is of vital importance to the
organizations as a means for achieving
their objectives.
There is no such things as a technology
problem, a financial problem or a sales
problem – it all begins with people.
People bring competence and
commitment and the company
provides trust and an environment.
MAX INDIA LTD.
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Why is HRM Important to an
Organization?
Dag Hammarskjold Former Secretary-General united
Nations stated,

“Fundamentally, man is the key to all

problems, not money. Funds are valuable
only when used by trained, experienced
and devoted men and women. Such
people, on the other hand, can work
miracles even with small resources and
draw wealth out of a barren land.”

(Report of the United Nations Expert Group Meeting on Human

Resources Development in the Public Sector held at United
Nations Headquarters, New York 22 to 23 June 1994)

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Evolution of the Human Resource
Function
1. Industrial Revolution Era – 19th Century
2. Trade Union Movement Era – Close to 2oth century
3. Social Responsibility Era – Beginning to 2oth century
4. Scientific Management Era - 1900 – 1920s
5. Human Relations Era – 1930s – 1950s
6. Behavioural Science Era – 1950s – 1960s
7. Systems & Contingency Approach Era – 1960s onwards
8. Human Resource Management Era – 1980s onwards

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 Industrial Revolution Era
The industrial revolution sparked a great interest in
business growth and expansion, and large scale
business operations began to emerge throughout
Europe and the USA. As these businesses grew
and became increasingly complex, owners
began to step aside and turn the operations of
their firms to full time professional managers.
This transition in turn, resulted in greater
awareness of the various functions of management
that were necessary for long term organizational
success. In order to manage people in the
factory system of industrial revolution, three
systems of HRM were developed: recruitment
of workers, training of workers & control of workers

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The basic philosophy of managing workers revolved around master servant relationship
Trade Union Movement Era
Soon after emergence of factory system, workers
started to organize themselves based on their
common interests to form workers’ associations
which were subsequently known as trade unions. the
basic objectives of such associations were to
safeguard their interests and to sort out their
problems. These developments forced managers
to the adoption of employee grievance handling
system, disciplinary practices, the expansion of
employee benefit programmes, regulated
working hours , holiday and vacation time etc.

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Social Responsibility Movement Era
Few early management pioneers and management
writers like Robert Owen, Marry Parker Follette and
Munsterberg recognized the importance of people in
organizations. It was argued that a more
humanistic and paternalistic approach be
adopted towards workers. In order to increase
productivity, it is necessary to improve the
conditions of employees by removing them from an
adverse environment. All these practices led to
the development of social welfare aspect of
labour management.

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Scientific Management Era
The first serious study of management practice set
during the early years of twentieth century was
based on scientific management. Scientific
management was concerned with how to
structure individual jobs to maximize
efficiency and productivity. SM principles
relevant to management of workers are – Job
analysis, scientific selection and training of
workers, financial incentives and
standardization.

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Human Relations Era
The human relations era was instigated by the
Hawthorne studies, a series of studies conducted
to test some principles of scientific management.
The pattern of results seemed to contradict some of
the ideas of scientific management, and the human
relations era emerged as a result of efforts to
explain the results of these 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.

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Behavioural Science Era
Stimulated by the findings of the Hawthorne studies,
managers began to focus more and more attention
on better understanding the human character of
their employees.
During this era, Among the many social & individual
psychologists who have contributed to management
are Maslow (popularized hierarchy of human
needs)& McGregor (proposed theory X, theory Y.)
Major contributions of behavioural scientists are in the
areas of motivation leadership, communication,
organizational change & development, group
dynamics etc.
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Systems & Contingency Approach Era
HRM is a subsystem of organization as a system. Therefore it
must be linked to other subsystems of the organization. It
implies that HRM can not be stand alone process but it
must be derived from the corporate strategy of the
organization. In fact, the effectiveness of HRM
depends on how well it is linked to the corporate
strategy an how its internal processes are carried on.
Contingency approach of management emphasizes on two
points.
1. It focuses on situational factors that influence managerial
decisions.
2. It highlights the need for developing skills for managers in
situational analysis.

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Human Resource Management Era
The industrial revolution paved way for factory
system, 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. With the
increasing competition for market share and
increased role of people in the competition the
personnel department was renamed as human
resource department.
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Personnel Management
As organizations grew, they began to create
specialized units to cope with their increasing hiring
needs & to deal with government regulations.
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. The manager who ran the personnel
department was called as personnel manager.

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 Evolution & development of HRM in
India
Period Development Outlook Emphasis Status
Status
1920s – Beginning Pragmatism of Statutory, Clerical
1930s capitalists welfare,
paternalism
1940s – Struggling for Technical, Introduction of Administrativ
1960s recognition legalistic techniques e

1970s – Impressing with Professional, regulatory Managerial

1980s sophistication legalistic Conformance,
standardization
1990s Promising Philosophical Human values, Executive
Productivity
through people

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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,
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’

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Personnel Management & HRM : A
Comparison
 Some scholars are of the view that on certain issues
both are same but on others, 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. it could indeed
be no more and no less than another name for
personnel management, but as usually perceived,
at least it has the virtue of emphasizing the virtue
of treating people as a key resource, the
management of which is the direct concern of top
management as part of the strategic process of the
enterprise”

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Personnel Management & HRM : A
Comparison
 There is another set of scholars who strongly feel that there is
a difference between HRM and PM, they stress that such a
difference exist in terms of both contents as well as emphasis.
 Legge ( 1999) has found the difference between PM &
HRM as
1. PM is mostly concerned with non managers;
HRM is aimed at managerial personnel.
2. PM attempts to influence line mgt; HRM involves
an integrated line mgt activity
3. PM keeps itself detached from OD; HRM has
utmost focus on development issues.

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 Difference between PM & HRM
Dimension PM HRM
Nature of relations Pluralist / labour - Unitarist/
Mgt customer
Perception of Institutionalized Pathological
conflict
Contract Emphasis on Beyond contract
compliance commitment

Role of procedures Rules dominated Culture & values

Planning Reactive Proactive
perspective
Unions Acceptable Not desirable
Levels of trust Low High
Basis of design Division of labour Teams
Key people PM / IR specialist Line people /
HRM 30
Objectives of HRM

Facilitating Enhancing
organizational productivity
competitiveness and quality

Human
Resource
Management

Complying with
Promoting
legal & social
individual growth
and development

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Objectives of HRM

 Social Objectives.

 Organizational Objectives.

 Individual objectives.

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 Objectives of HRM - 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.

Social objectives of HRM are concerned with

balancing work and family, maintaining the
harmonious and productive relations with the
society. Meeting legal obligations

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 Objectives of HRM - 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.

 To help the organization to meet the challenges of

the environmental factors by developing people on
continuous basis.

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 Objectives of HRM - Individual
 To provide the career avenues to the
employees.
 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 environment and incentives and
right compensation.
 To provide the QWL.
 To help them to separate from the organization
happily and satisfactorily.

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 Objectives
• To facilitate the retention of skilled and competent
employees.
• 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.
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Basic functions:
 Procurement

 Development

 Compensation

 Integration & Maintenance and

 Separation
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 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, to achieve
the organization’s objectives. Procurement function
involves

 Job Analysis
 Human Resource Planning
 Recruitment & Selection

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 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

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 Compensation
 Rewarding people for their contribution is major
function of HRM. A well thought out
compensation system provides employees with
adequate and equitable rewards for their
contributions to meeting of organizational
goals. Compensation includes the total of all
rewards provided to employees for their
contribution. The reward may be one or a
combination of
 Pay
 Benefits & Non financial rewards.
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 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

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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.

The marketing
function

The human
The finance The operations
Resource
function function
function

The other 43
functions
Who performs the HRM tasks
 Human Resource Manager – An individual who
normally acts in an advisory or staff capacity, working with
other managers regarding human resource matters. HR
mgrs were primarily responsible for coordinating the mgt
of human resources to help the org. achieve its goals.
 Shared Service Centers – A center that takes routine,
transaction based activities dispersed throughout the
organization and consolidates them in one place. Benefits
& pension administration, payroll, relocation a&
recruitment support, Global T & D etc.

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Who performs the HRM tasks
 Line Managers- individuals directly involved in
accomplishing the primary purpose of the
organization. As the traditional work of HR
managers diminishes, line managers are stepping
up and performing duties often done by the HR
managers. Line managers often perform many of
the staffing functions such as interviewing, T & D,
compensation etc.

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The HR functions in Organizations of
various sizes
 In Small Businesses -
The Human Resource Function

Manager/
Owner

Sales Operations Finance

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In Medium Sized Firms

President

Sales Operations Finance Human

Manager Manager Manager Resource Mgr.

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In a Large Firms

President/ CEO

Human
VP - MKTG VP - Operations VP - Finance
Resource Mgr.

Mgr. Safety
Mgr. T & D Mgr. Comp. Mgr. Staffing
& Health 48
 An Evolving HR Organization

President/ CEO

Director
Human
VP - MKTG VP - Operations Health &
Resource Mgr.
Safety

outsourced
Mgr. other Employee SSC
Exec. Dev Mgr. Trg.
HRM Functions Benefits 49
Human Resource Management
Environment
External Environment
Labour Force Legal Considerations
Internal Environment

Society
Economy

Marketing Operations

g
in

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a
Human
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ai
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at
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Technology

na n
n pe
ce m

Unions
C o Others
Finance

Customers Competition Shareholders

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Human Resource Management
Environment
 The set of interrelated, interdependent and
interacting factors that affect human resource
management.
 Factors out side its boundaries that affect a firm’s
human resources make up the external
environment. External factors include –
 Labour Force, Legal Considerations, Society, Unions,
Shareholders, Competition, customers, technology
and the economy.

Each factor, either separately or in combination with

others, can place constraints on how HRM tasks are
completed.

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