HUMAN RESOURCE MANAGEMENT

Prepared By:

Dr Zulfiquer Ahmed Amin

M Phil (HHM), MPH (HM), PGD (HE), MBBS

ARMED FORCES MEDICAL INSTITUTE

HUMAN RESOURCE MANAGEMENT

Definition

1. Human Resource Management is the process of hiring and developing employees so that they become more valuable to the organization. Human Resource Management includes conducting job analyses, planning personnel needs, recruiting the right people for the job, orienting and training, managing wages and salaries, providing benefits and incentives, evaluating performance, resolving disputes, and communicating with all employees at all levels. Examples of core qualities of HR management are extensive knowledge of the industry, leadership, and effective negotiation skills.

2. Human Resource Management (HRM) is the term used to describe formal systems devised for the management of people within an organization. The responsibilities of a human resource manager fall into three major areas: staffing, employee compensation and benefits, and defining/designing work. Essentially, the purpose of HRM is to maximize the productivity of an organization by optimizing the effectiveness of its employees. This mandate is unlikely to change in any fundamental way, despite the ever-increasing pace of change in the business world. As Edward L. Gubman observed in the Journal of Business Strategy, "the basic mission of human resources will always be to acquire, develop, and retain talent; align the workforce with the business; and be an excellent contributor to the business. Those three challenges will never change." (1,2,3)

3. Until fairly recently, an organization's human resources department was often consigned to lower rungs of the corporate hierarchy, despite the fact that its mandate is to replenish and nourish what is often cited—legitimately—as an organization's greatest resource, it's work force. But in recent years recognition of the importance of human resources management to a company's overall health has grown dramatically. This recognition of the importance of HRM extends to small businesses, for while they do not generally have the same volume of human resources requirements as do larger organizations, they too face personnel management issues that can have a decisive impact on business health. As Irving Burstiner commented in The Small Business Handbook, "Hiring the right people—and training them well—can often mean the difference between scratching out the barest of livelihoods and steady business growth'¦. Personnel problems do not discriminate between small and big business. You find them in all businesses, regardless of size."

4. A company’s human resources department is responsible for creating, implementing and/or overseeing policies governing employee behaviour and the behaviour of the company toward its employees. Human resources are the people who work for the organization; human resource management is really employee management with an emphasis on those employees as assets of the business. In this context, employees are sometimes referred to as human capital. As with other business assets, the goal is to make effective use of employees, reducing risk and maximizing return on investment (ROI). Areas of HRM oversight include – among many others -- employee recruitment and retention, exit interviews, motivation, assignment selection, labor

law compliance, performance reviews, training, professional development, mediation, and change management.

Introduction

5. For more than a century now, human resource management, as a discipline and practice in the management of people in an organisation, has evolved and developed into different areas. These disciplines and practices have gone through a process of trial and error, theory building and testing of various concepts by practicing managers and academics (Farnham & Pimlott 1979; Storey 1989; Armstrong 1995). The underlying forces behind the evolution and development of human resource management have been (and still are) mainly environmental, and the quest for knowledge of better ways of acquiring and utilising labour. The changing organisational environment in the marketplace pushed managers to improve efficiency in the production and service delivery processes by increasing their ability to use the best practices of people management at the time. That is, employee management techniques or methods that would improve production, reduce service delivery costs, and at the same time ensure sustained availability of competent staff in the organisation.

Legacy of HRM :

(The days of beating employees into submission are, fortunately, past)

Antecedent theoretical developments

6. The legacy of HRM needs to be analysed from two different perspectives to get a better insight into its nature. These are (a) the Western context (b) the Indian context (3,4,5)

(a) Western Context : The origin of HRM, as is known today, date back to ancient times. One find a reference of HR policy as early as 400 B.C., when the Chaldeans had a sound incentive wage plan. All that has changed over the years is the status of the

employees, their roles and relationship-inter personal and inter- group. The status of labour prior to industrial revolution was extremely low and the relationships were characterised by slavery, seldom and guild system. The slaves performed manual tasks to agricultural, military and clerical responsibilities. The efficiency levels were low due to over-dependence on negative incentives and negligence of positive incentives.

(b). The slavery structure was replaced by seldom, were neither slaves nor hired labourers. The structure was related to rural and agrarian pursuits. Workers were offered positive incentives which resulted in enhanced productivity and reduced need for supervision. Seldom disappeared during Middle Ages with growth in manufacturing and commercial enterprises. It was replaced by the Guild System (6). The guild system involved the owners, the journeyman and the apprentice. It was here that real HRM started. One noticed, proper selection procedures being adopted, workers being imparted training and collective bargaining being adopted to settle issues pertaining to wages and working conditions.

(c). With the advent of Industrial Revolution, the guild system disappeared. The doctrine of laisser-faire was advocated and the cottage system got transformed to factory system leading to enhanced specialisation. But this period was dominated by many unhealthy practices like unhealthy work environment, long working hours, increased fatigue rate, monotony, strains, likelihood of accidents and poor work relationship. Progressive entrepreneurs like Owen believed that healthy work environment could be effectively used to improve productivity. But his opinion faced severe opposition.

(d). A major change was noticed in personnel practices after the World War I. The modern HRM started in 1920. Groups were formed to conduct research on personnel problems. A number of studies were undertaken to analyse the fallacies in the personnel field. For the first time, psychology was applied to management. The Hawthorne studies advocated the need to improve industrial relations for increasing production. The application of psychology brought a dramatic change in the work relationship and productivity started increasing. But this prosperity ended during the great depression. Thereafter, organisations started offering fringe benefits to workers to induce them to work. Findings of behavioural science were used to enhance productivity.

(e). In todays world, stress is on scientific selection, training and development. There is an increasing emphasis on interrelationship between the leader, follower and the environment. Attempts are also on to provide scope to an individuals personal dignity, status and sense of achievement. The concern is increasing profits through people.

(f). The Human Resources field evolved first in 18th century Europe from a simple idea by Robert Owen and Charles Babbage during the industrial revolution. These men knew that people were crucial to the success of an organization. They expressed that the wellbeing of employees led to perfect work. Without healthy workers, the organization would not survive.[6] HR later emerged as a specific field in the early 20th century, influenced by Frederick Winslow Taylor (1856-1915). Taylor explored what he termed "scientific management" others later referred to "Taylorism", striving to improve

economic efficiency in manufacturing jobs. He eventually keyed in on one of the principal inputs into the manufacturing process—labor—sparking inquiry into workforce productivity.[7]

(g). Meanwhile, in England C S Myers, inspired by unexpected problems among soldiers which had alarmed generals and politicians in the First World War, set up a National Institute of Industrial Psychology,[8] setting seeds for the human relations movement, which on both sides of the Atlantic built on the research of Elton Mayo and others to document through the Hawthorne studies (1924-1932) and others how stimuli, unrelated to financial compensation and working conditions, could yield more productive workers.[9] Contemporaneous work by Abraham Maslow (1908-1970), Kurt Lewin(1890-1947), Max Weber (1864-1920), Frederick Herzberg (1923-2000), and David McClelland (1917-1998) formed the basis for studies in industrial and organizational psychology, organizational behavior and organizational theory, giving room for an applied discipline.

(h). Indian Context: HRM in India is centuries old. The first reference of HRM was provided by Kautilya as early as 4th century B.C. in his book ‗Arthashastra‘. The work environment had logical procedures and principles in respect of labour organisation such as ‗Shreni‘ Wages were paid in terms of quantity and quality of work. Workers were punished for unnecessary delay or spoiling of work. Kautilyas contribution was based on ‗Shamrastra Concepts like job description, qualifications for jobs, selection procedures, executive development, incentive system and performance appraisal were very effectively analysed and explained.

(i). The guild system prevailed in the Indian economy too. It was based on ‗Varnashram‘ or caste system and resulted in division of labour accordingly. In the course of time, professions became hereditary. From 14th century B.C. to the latter half of 10th century B.C., the relationship of employer-employee was marked with justice and equity. The HRM experienced full in mediaeval India due to foreign aggressions over the next 700 years. During the Mughal rule, Karkhanas‘ were established, but the artisans and craftsmen were poor and lived on starvation level and the productivity was low.

(j). During the British rule, the work environment was appalling and full of inhuman cruelties. This continued till 1881 when the Factory Act was enacted. This Act provided for (i) weekly holidays (ii) fixation of working hours (iii) fixation of minimum age for children at 7 years subject to a maximum working period of 7 hours a day.

(k). In 1890, the first labour organisation was formed and was known as Bombay Mill Hands Association. This association started working for improving the work environment and for getting the workers their rightful dues. The success of this association Few amongst these were Printers Union Calcutta (1905), Postal Union, Bombay (1907) and Madras Labour Union (1918). The union movement was very weak till the early thirties. But the situation showed marked improvement 5 years before and after the Second World War. After independence, the activities of the personnel department have multiplied.

Birth of the discipline

9. By the time enough theoretical evidence existed to make a business case for strategic workforce management, changes in the business landscape (à la Andrew Carnegie, John Rockefeller) and in public policy (à la Sidney and Beatrice Webb, Franklin D. Roosevelt and the New Deal) had transformed the employer-employee relationship, and the discipline was formalized as "industrial and labor relations". In 1913, one of the oldest known professional HR associations—the Chartered Institute of Personnel and Development—was founded in England as the Welfare Workers' Association, then changed its name a decade later to the Institute of Industrial Welfare Workers, and again the next decade to Institute of Labour Management before settling upon its current name.[10] Likewise in the United States, the world's first institution of higher education dedicated to workplace studies—the School of Industrial and Labor Relations—was formed at Cornell University in 1945.[11] In 1948, what would later become the largest professional HR association—the Society for Human Resource Management (SHRM)—was founded as the American Society for Personnel Administration (ASPA).[12]

10. In the Soviet Union, meanwhile, Stalin's use of patronage exercised through the "HR Department" equivalent in the Bolshevik Party, its Orgburo, demonstrated the effectiveness and influence of human-resource policies and practices,[13][14] and Stalin himself acknowledged the importance of the human resource.[15] During the latter half of the 20th century, unionmembership declined significantly, while workforce management continued to expand its influence within organizations. In the USA, the phrase "industrial and labor relations" came into use to refer specifically to issues concerning collective representation, and many companies began referring to the proto-HR profession as "personnel administration". Many current HR practices can be traced to the needs of companies in the 1950s to develop and retain talent.[16]

11. In the late 20th century, advances in transportation and communications greatly facilitated workforce mobility and collaboration. Corporations began viewing employees as assets rather than as cogs in a machine. "Human resources management" consequently, became the dominant term for the function—the ASPA even changing its name to the Society for Human Resource Management (SHRM) in 1998.[12] "Human capital management" is sometimes used synonymously with HR, although human capital typically refers to a more narrow view of human resources; i.e., the knowledge the individuals embody and can contribute to an organization. Likewise, other terms sometimes used to describe the field include "organizational management", "manpower management", "talent management", "personnel management", and simply "people management".

The evolution and development of human resource management

Stages in the Evolution and Development of HRM

12. Human resource management as a practice happens wherever there is more than one person. It starts at the family level where family members take different roles and re-sponsibilities for the accomplishment of family objectives. The head of the household would harness all available resources including people to find the best in them in order to achieve whatever may be needed or desired. Indeed, the division of labour depends on the philosophies, values and expectations of family members and which are rooted in the wider society, be it a clan, a tribe or religion. Managing people in an organisational setting is well documented throughout the history of mankind (Munsterberg 1913; Taylor 1960; Cuming 1985). Organisational structures evolved, leadership emerged or was formed, roles and responsibilities were as- signed to people, accountability systems were laid down, and rewards and punishments were also provided. In this regard, division of labour, specialisation and accountability were systematically organised to achieve a specific purpose.

13. However, the documentation of the evolution and development of human resource management practices can be traced back to the booming European economy of the 1900s (Roethlisberg 1939). This economy created the necessary environment for more serious thought on the role of effective people management in the emerging labour market of the time. The economies were preparing for the First World War and its aftermath where industrial production required a mass of skilled, well organised and disciplined labour force. The challenges revolved around mobilisation of resources including people, which led to the evolution and development of four stages in managing labour. The stages were mainly identified by looking at the changing titles of officers responsible for managing the workforce and different roles that were emerging over time. There- fore, although personnel management literature often states particular dates or decades of transformation from one phase to another (Chruden & Sherman 1984; Cuming 1985), as a matter of principle, such dates or decades are more for convenience and reference purposesthan being actual historical events. The same recognition is used to provide a picture of the chronology of the evolution and development of human resource management as we see it today.

Welfare stage in industrial age

14. Historically, the 1900s was a time of increasing technological and economic break-throughs arising from continued advancement in general and scientific knowledge through creativity and innovations. Indeed, the advancements had serious impact on economic growth and demand for goods and services in Europe and in Germany in particular for the preparations of World War I (Roethlisberg & Dickson 1939). More goods were demanded, and the massive production of goods could be done more efficiently than ever before, under one industrial roof. This was a common phenomenon across

15. Western Europe particularly in Britain, France, Spain and Italy. For the Germans who were secretly preparing for war, the production of war materials created a chain of industrial networks with forward and backward linkages. Managing the increasing work- force in the emerging complex industrial production systems was an ever-more difficult challenge. The search for solutions, which included how to organise employees and ensure that their welfare was provided for, led to the need for better people management techniques that were not necessarily important only a few years before. Welfare services such as a canteen and other needs required some kind of officer whose sole purpose was to take care of workers. This is the genesis of employees’ welfare services in organisations and the famous title of welfare officers we have in some organisations even today (Eilbert 1954; Chruden & Sherman 1984).

Change of focus from welfare to personnel administration

16. The 1920s and mid 30s are generally regarded as decades of personnel administration. The growing size of organisations and pressure to improve productivity called for the need to recruit, select, train, keep records, appraise, motivate, control, and improve production of job entry level of employees and those in the job as part of job orientation. These administrative tasks were best handled by welfare officers because of their experiences in welfare matters. However, since the roles of welfare officers changed in nature and scope and became more demanding in terms of knowledge, skills and behavioural attributes, the whole situation suggested that the title of welfare officer was not good enough to describe what was actually happening. To address these new dimensions of a welfare job, the title had to change from welfare officer to personnel administrator (Cuming 1985).

Evolution and development of Personnel Management

17. This covers the period during and after World War II. In the 1940s and 50s, there was an ever growing role for personnel administration to cope with the rising challenges and demands of the job which included craft, supervisory training and labour disputes that were threatening employees and organisational efficiency. These new dimensions in employee management were exacerbated by developments in academia, professional managers interested in academics and consultants where efforts were devoted to study behavioural factors in job performance. Such developments include human relations’ school, which was pioneered by Elton Mayo and Kurt Lewin, who emphasised on im- proving the work environment and work groups as a strategy to improve productivity (Rush 1959; Robbins 1990; Torrington et al. 2005). Treating employees as

human beings rather than working tools was a new doctrine that was revealing other aspects of people management in other phases of personnel management. This period marked a shift of emphasis from managing an individual employee to managing groups/teams in the organisation (Davis 1980). Other contributions were from the work of Abraham Maslow on the human hierarchy of needs and the power of employee’s motivation on productivity (Maslow 1970). Later, Chris Argyris and Frederick Herzberg wrote about the concept of employee’s satisfaction and the significant impact this concept has had on the organisational practices in improving the quality of work in organisations (Deci & Ryan 1985). The organisation development school driven by Bennis & Schein pro- vided equally useful inputs to personnel practices particularly in areas of effective communication and the need to reduce conflict in the work place (Davis 1980; Walton & McKerzie 1991). Therefore, to suit the fashion of the time, there appeared to be a difference between ‘administration’ and ‘management’. Likewise, there is a difference between ‘administrator’ and ‘manager‘, where the former appears to be dealing more with routine activities, the latter deals with more strategic issues. There is however an on-going debate in academia on the semantics and the actual substance of personnel jobs.

18. During the 1950s and 60s personnel management as a professional discipline matured as characterised by most personnel management theories, practices, and processes we know today (Chruden & Sherma 1984; Cuming 1985). In addition to the services provided in the earlier phases, other areas covered in the functions of personnel management, particularly in the 1960s, were organisational development, management development, systematic training and manpower planning. Better processes and techniques of employee selection, training, wages and salary administration and performance appraisal were introduced. The other area was industrial relations in which person- nel managers became experts in labour law and represented their organisations in industrial relations disputes (Chruden & Sherman 1984). Therefore, personnel management as a type of management in organisations has evolved into a distinctive discipline. Perhaps one of the most widely accepted descriptions of the meaning of personnel management is the one given by Michael Armstrong in 1995. This definition is not very different from the ones found in revised editions and other textbooks on human resource management throughout the 2000s. Armstrong (1995) defines personnel management as ‘the process and practice of getting people in organization, assessing and rewarding for performance, and developing their full potential for the achievement of organisational objectives’.

19. By looking at personnel management in this perspective, as may also be noted from other work by the same author, and many other experts including Dessler (2005) and Bhatia (2007) there are many functions that ought to be performed in a designated functional department (Personnel Department). However, as shall be observed later, these functions are not by themselves necessarily different from those under a human resource management conceptual framework (Storey 1989; Armstrong 1995; Guest 2001).

Difference between Personnel Management And Human Resource Management

20. Human Resource Management is the new version of Personnel Management. There is no any watertight difference between human resource management and personnel management. However, there are some differences in the following matters:

a. Personnel management is a traditional approach of managing people in the organization. Human resource management is a modern approach of managing people and their strengths in the organization.

b. Personnel management focuses on personnel administration, employee welfare and labor relation. Human resource management focuses on acquisition, development, motivation and maintenance of human resources in the organization.

c. Personnel management assumes people as a input for achieving desired output. Human resource management assumes people as an important and valuable resource for achieving desired output.

d. Under personnel management, personnel function is undertaken for employee's satisfaction. Under human resource management, administrative function is undertaken for goal achievement.

e. Under personnel management, job design is done on the basis of division of labor. Under human resource management, job design function is done on the basis of group work/team work.

f. Under personnel management, employees are provided with less training and development opportunities. Under human resource management, employees are provided with more training and development opportunities.

g. In personnel management, decisions are made by the top management as per the rules and regulation of the organization. In human resource management, decisions are made collectively after considering employee's participation, authority, decentralization, competitive environment etc.

h. Personnel management focuses on increased production and satisfied employees. Human resource management focuses on effectiveness, culture, productivity and employee's participation.

i. Personnel management is concerned with personnel manager. Human resource management is concerned with all level of managers from top to bottom.

j. Personnel management is a routine function. Human resource management is a strategic function.

Item Personnel management Human resource managementGoals and values Incremental interventions in Strategic focus. competitiveness,

attracting, retaining, motivating

profitability, survival, competitive

workers advantage and workforce flexibilityProfessionalism Personnel managers are ac- Line managers are accountable for their

countable for employees’ staff (they are multi-skilled)matters (for which they aretrained)

Relations Limited trust, conflict and Harmony, mutuality of interests, activedifferentiation, control oriented

employee involvement

Employee manage-Narrow in focus, individualised

Broad and team focused

ment

Information and Control information andTransparency, objectivity, honesty, trust and

communication communication, bureaucratic, commitmentsecretive

Source: Armstrong (1995).

OBJECTIVES OF HUMAN RESOURCE MANAGEMENT

21. The basic objective of human resource management is to contribute to the realisation of the organisational goals. However, the specific objectives of human resource management are as follows:

a. To ensure effective utilisation of human resources, all other organisational resources will be efficiently utilised by the human resources.

b. To establish and maintain an adequate organisational structure of relationship among all the members of an organisation by dividing of organisation tasks into functions, positions and jobs, and by defining clearly the responsibility, accountability, authority for each job and its relation with other jobs in the organisation.

c. To generate maximum development of human resources within the organisation by offering opportunities for advancement to employees through training and education.

d. To ensure respect for human beings by providing various services and welfare facilities to the personnel.

e. To ensure reconciliation of individual/group goals with those of the organisation in such a manner that the personnel feel a sense of commitment and loyalty towards it.

f. To identify and satisfy the needs of individuals by offering various monetary and non-monetary rewards.

22. In order to achieve the above objectives, human resource management undertakes the following activities :

a. Human Resource Planning, i.e., determining the number and kinds of personnel required to fill various positions in the organisation.

b. Recruitment, selection and placement of personnel, i.e., employment function.

c. Training and development of employees for their efficient performance and growth.

d. Appraisal of performance of employees and taking corrective steps such as transfer from one job to another.

e. Motivation of workforce by providing financial incentives and avenues of promotion.

f. Remuneration of employees. The employees must be given sufficient wages and fringe benefits to achieve higher standard of living and to motivate them to show higher productivity.

g. Social security and welfare of employees.

FUNCTIONS OF HUMAN RESOURCE MANAGEMENT

23. The main functions of human resource management are classified into two categories:

a. Managerial Functions: Following are the managerial functions of Human Resources Management:

(1) Planning : The planning function of human resource department pertains to the steps taken in determining in advance personnel requirements, personnel programmes, policies etc. After determining how many and what type of people are required, a personnel manager has to devise ways and means to motivate them.

(2). Organisation : Under organisation, the human resource manager has to organise the operative functions by designing structure of relationship among jobs, personnel and physical factors in such a way so as to have maximum contribution towards organisational objectives. In this way a personnel manager performs following functions :

(a) Preparation of task force;

(b) Allocation of work to individuals;

(c) Integration of the efforts of the task force;

(d) Coordination of work of individual with that of the department.

(3). Directing : Directing is concerned with initiation of organised action and stimulating the people to work. The personnel manager directs the activities of people of the organisation to get its function performed properly. A personnel manager guides and motivates the staff of the organisation to follow the path laid down in advance.

(4). Controlling : It provides basic data for establishing standards, makes job analysis and performance appraisal, etc. All these techniques assist in effective control of the qualities, time and efforts of workers.

b. Operative Functions : The following are the Operative Functions of Human Resource Management

(1). Procurement of Personnel : It is concerned with the obtaining of the proper kind and number of personnel necessary to accomplish organisation goals. It deals specifically with such subjects as the determination of manpower requirements, their recruitment, selecting, placement and orientation, etc.

(2). Development of Personnel : Development has to do with the increase through training, skill that is necessary for proper job performance. In this process various techniques of training are used to develop the employees. Framing a

sound promotion policy, determination of the basis of promotion and making performance appraisal are the elements of personnel development function.

(3). Compensation to Personnel : Compensation means determination of adequate and equitable remuneration of personnel for their contribution to organisation objectives. To determine the monetary compensation for various jobs is one of the most difficult and important function of the personnel management. A number of decisions are taken into the function, viz., job-evaluation, remuneration, policy, inventive and premium plans, bonus policy and co-partnership, etc. It also assists the organisation for adopting the suitable wages and salaries, policy and payment of wages and salaries in right time.

(4). Maintaining Good Industrial Relation : Human Resource Management covers a wide field. It is intended to reduce strifies, promote industrial peace, provide fair deal to workers and establish industrial democracy. It the personnel manager is unable to make harmonious relations between management and labour industrial unrest will take place and millions of man-days will be lost. If labour management relations are not good the moral and physical condition of the employee will suffer, and it will be a loss to an organisation vis-a-visa nation. Hence, the personnel manager must create harmonious relations with the help of sufficient communication system and co-partnership.

(5). Record Keeping : In record-keeping the personnel manager collects and maintains information concerned with the staff of the organisation. It is essential for every organisation because it assists the management in decision making such as in promotions.

(6). Personnel Planning and Evaluation : Under this system different type of activities are evaluated such as evaluation of performance, personnel policy of an organisation and its practices, personnel audit, morale, survey and performance appraisal, etc.

IMPORTANCE OF HUMAN RESOURCE MANAGEMENT

24. Human Resource Management has a place of great importance. According to Peter F. Drucker, ―The proper or improper use of the different factors of production depend on the wishes of the human resources. Hence, besides other resources human resources need more development. Human resources can increase cooperation but it needs proper and efficient management to guide it. Importance of personnel management is in reality the importance of labour functions of personnel department which are indispensable to the management activity itself. Because of the following reasons human resource management holds a place of importance.

(1). It helps management in the preparation adoption and continuing evolution of personnel programmes and policies.

(2). It supplies skilled workers through scientific selection process.

(3). It ensures maximum benefit out of the expenditure on training and development and appreciates the human assets.

(4). It prepares workers according to the changing needs of industry and environment.

(5). It motivates workers and upgrades them so as to enable them to accomplish the organisation goals.

(6). Through innovation and experimentation in the fields of personnel, it helps in reducing casts and helps in increasing productivity.

(7). It contributes a lot in restoring the industrial harmony and healthy employer-employee relations.

(8). It establishes mechanism for the administration of personnel services that are delegated to the personnel department.

NATURE OF HUMAN RESOURCE MANAGEMENT

25. The emergence of human resource management can be attributed to the writings of the human relationists who attached great significance to the human factor. Lawrence Appley remarked, ―Management is personnel administrationǁ. This view is partially true as management is concerned with the efficient and effective use of both human as well as non-human resources. Thus human resource management is only a part of the management process. At the same time, it must be recognised that human resource management is inherent in the process of management. This function is performed by all the managers. A manager to get the best of his people, must undertake the basic responsibility of selecting people who will work under him and to help develop, motivate and guide them. However, he can take the help of the specialised services of the personnel department in discharging this responsibility. The nature of the human resource management has been highlighted in its following features :

(1). Inherent Part of Management : Human resource management is inherent in the process of management. This function is performed by all the managers throughout the organisation rather that by the personnel department only. If a manager is to get the best of his people, he must undertake the basic responsibility of selecting people who will work under him.

(2). Pervasive Function : Human Resource Management is a pervasive function of management. It is performed by all managers at various levels in the organisation. It is not a responsibility that a manager can leave completely to someone else. However, he may secure advice and help in managing people from experts who have special competence in personnel management and industrial relations.

(3). Basic to all Functional Areas : Human Resource Management permeates all the functional area of management such as production management, financial management, and marketing management. That is every manager from top to bottom, working in any department has to perform the personnel functions.

(4) .People Centered : Human Resource Management is people centered and is relevant in all types of organisations. It is concerned with all categories of personnel from top to the bottom of the organisation. The broad classification of personnel in an industrial enterprise may be as follows : (i) Blue-collar workers (i.e. those working on machines and engaged in loading, unloading etc.) and white-collar workers (i.e. clerical employees), (ii) Managerial and non-managerial personnel, (iii) Professionals (such as

Chartered Accountant, Company Secretary, Lawyer, etc.) and non- professional personnel.

(5). Personnel Activities or Functions : Human Resource Management involves several functions concerned with the management of people at work. It includes manpower planning, employment, placement, training, appraisal and compensation of employees. For the performance of these activities efficiently, a separate department known as Personnel Department is created in most of the organisations.

(6). Continuous Process : Human Resource Management is not a ‗one shot‘ function. It must be performed continuously if the organisational objectives are to be achieved smoothly.

(7). Based on Human Relations : Human Resource Management is concerned with the motivation of human resources in the organisation. The human beings can‘t be dealt with like physical factors of production. Every person has different needs, perceptions and expectations. The managers should give due attention to these factors. They require human relations skills to deal with the people at work. Human relations skills are also required in training performance appraisal, transfer and promotion of subordinates.

Guiding theories in Human Resource Management

26. Human resource management principles and techniques for people management in competitive organizations are drawn from theories found in different disciplines. Indeed, it is impractical to present all the disciplines and relevant theoretical aspects that have shaped the understanding of human resource management today. Therefore, it is believed that it is only important to give the reader a cursory view of some relevant theories underpinning human resource management and whoever may be interested in knowing more about the genesis and developments of a specific theory may do so by taking extra homework.

Organisation life cycle theory

27. Cameron & Whetton (1981) advanced organization life cycle theory. According to the theory, the driving force in all these stages is the nature of workforce. At the maturity stage the organization cannot continue to grow or survive if there is no organisational structure that supports human resource creativity, innovation, teamwork and high performance, which will withstand pressure from competitors.

Role behavior theory

28. Role behavior theory aims to explain and predict the behavior of individuals and teams in behavior17ions, which, in turn, inform managers for the purposes of decision making, and what steps they take on people management as well as the expected consequences. Some of the key ideas focus on the need to improve the working environment including the resources in order to

stimulate new behavior in employees in order for them to cope with new demands (Prachaska et al. 1982), it includes the use of rewards to induce and promote positive work behavior, and punishments to control negative behavior (Rogers 1983).

Resource dependency theory

29. One of the challenges faced by managers during the economic recessions in the 1970s is how organization can best acquire scarce resources and effectively utilize them in order to remain competitive in the market. The ability to utilize one’s own resources including (financial, technological and labour), and acquire more from the external environment was one of the areas of concern in many organizations. The more organizations were able to harness more resources, the more competitive they became. Therefore, resources were seen as the essence of organizational power.

Institutional theory

30. The word ‘institution’ means different things to different people depending on academic and professional orientation (Peters 2000). However, it is a discipline that combines politics, law, psychology, public administration, and economics amongst other things, in order to explain why certain decisions are made or actions taken and their impact on the organisation. Commons (1931: 648) defines ‘institutions’ as ‘collective action in control, liberation and expansion of individual action’. Collective action covers areas such as custom, law and procedures. The main objective of collective action is less or greater control of the acts of individuals, which result in either gains or losses in the process of executing joint transactions. Control is about prohibitions of certain acts in such a way that the control of one person or organisation leads to liberty of the others and hence better gains. According to Commons (1931) these institutions establish relationships of rights, duties, no rights, and no duties which influence behaviour of individuals. ‘The major role of institutions in society is to reduce uncertainty by establishing a stable (not necessarily efficient) structure to human interaction.’ Institutions could be formal, and have explicit rules, contracts, laws, and rights (institutional arrangements) or informal in the sense of social conventions that are not designed by anybody. Therefore organisations should set an appropriate institutional framework that will bind and influence the behaviour of employees towards an organisational commitment to excellence. Also put by Brunsson (1999): ‘the process of standardization of procedures affect behaviour’. Employment contracts, performance agreements and other employment related instruments should therefore be seen as useful aspects of human resource management.

Transaction cost theory

31. Transaction cost theory is based on the economic view of the costs of conducting busi-ness transactions. The thesis is that companies will grow if the costs of exchanging resources in the company are cheaper in comparison to competitors (Commons 1934; Coase 1984; Williamson 1998). Such costs include bureaucratic employment structures, procedures and the enforcement of employment contracts. For that matter employment relationships that may lead to high costs of exchange, should be minimized.

Comparative advantage theory

32. The main architect of comparative advantage theory is the economist David Ricardo who talked of the specialisation and division of labour among nations and firms. Ricardo postulated that nations should produce goods in which they have a domestic comparative advantage over others (Ricardo 1891). Since then, organisations and nations have focused on strengthening internal capacity in order to have more advantages relative to competitors and hence to reduce production and distribution costs per unit. Improving internal capacities include having the best human resources who are best utilised to produce cheaper and better quality goods and services (Porter 1980; Grant 1991).

General systems theory

33. No organisation can survive without interacting with its environment. Organisations get inputs from the external environment, they are processed and the outputs are released to the external environment, which provides feedback to the organisation. Customers who are part of the environment will give feedback by using different means including value judgment on quality, price, style and fashion. Therefore organisations are seen as systems with components and parts that are related and interconnected in such a manner that failure of a component or part leads to the failure of another (Laszio 1972; Haken 1980; Robbins 1990). The system approach to understanding organisations considers the human resource department as a component of the organisation’s system that also has other departments such as accounting, engineering, marketing etc. In order for the organisation to grow and remain competitive, each department, section or unit should support each other. One of the organisation’s inputs from the environment is human resources. For example, if an organisation makes an error with its recruitment strategy, it will have a negative effect on the whole organisation. Similarly, if at the input processing stage, human resources are not utilised in the best possible way, the same will be reflected in the quality and price of goods and services through feedback mechanisms. This may include the failure to sell goods or services at the expected prices.

Human capital theory

34. Human capital theory was initially well developed by Becker (1964) and it has grown in importance worldwide because it focuses on education and training as a source of capital. It is now widely acknowledged that one of the key explanations for the rapid development of Asian countries in the 1970s and 80s is high investment in human capital (Robert 1991; Psacharopolos & Woodhall 1997). Human capital theory changes the equation that training and development are ‘costs the organization should try to minimise’ into training and development as ‘returnable investments’ which should be part of the organizational investment capital. Therefore, humanresource training and development decisions and evaluations have to be done based on clearly developed capital investment models.

Strategic contingency theory

35. There is a growing body of knowledge stipulating that since an organization operates and thrives in a complex environment, managers must adopt specific strategies which will maximise

gains and minimise risks from the environment (Peter & Waterman 1982; Scott 1992; Robbins 1992). In this premise, the theory contends that there is no one best strategy for managing people in organizations. Overall corporate strategy and the feed- back from the environment will dictate the optimal strategies, policies, objectives, activities and tasks in human resource management.

Organisational change theory

36. Gareth (2009: 291) defines organizational change as the process by which organizationsmove from their present state to some desired future state to increase their effectiveness. Organisations change in response to many developments taking place in the internal and external environment such as technology, policies, laws, customer tests, fashions and choices that influence peoples’ attitudes and behavior. These developments influence different aspects of human resource management and in response, organizations have to change the way organizational structure, job design, recruitment, utilisation, development, reward and retention are managed (Hersay & Blanchard 1977; Robbins 1992; Johns 1996). The organizational change theory suggests the improvement of organisational change and performance by using diagnostic tools appropriate for the development of effective change strategy in human resource management.

Organisational learning theory

37. Globalisation has changed knowledge monopoly. Knowledge generated in one part of the world spreads faster than a decade ago. Today, what matters for organisational com-petitiveness is the ability to learn from emerging knowledge and adapt the learning to suit the organisational environment faster than others. Agyris & Schoen (1978) and Senge (1992) have emphasised the importance of total organisational learning whereby individuals and teams muster knowledge related to their work and the environment and share with common vision, models and strategies for addressing the present and future of the organisation. Therefore, poor organisational learning leads to poor organizational adaptation to the environment, less competitiveness, which leads inevitably to decline and ultimate collapse.

Comparison

38. Schuler (2000) has summarised these theories into a more manageable framework (see Table 1.1). This framework enables us to compare the human resource theories and their main objectives

Human resource theories

Theory Human Resource lessons/ assumptions/ implications

Resource Dependency Theory

Scarcities of resources determine policies, and procedures to be adopted by organisation

Employees are scarce resources, which should be carefully managedCompetitive Advantage Organisations should capitalize on competitive advantages it has over

Theory other organizations

An employee is a rare resource, immutable, non-substitutable, and valuable

In order to gain from competitive advantage, there should be creation and support of organizational culture that ensures effective management of training and performance management functions.

Institutional Theory Organisational norms, values, attitudes and myths are the sources of organizational failure or success

These needs be rationalized in order to ensure effectivenessAgency Theory The employers and employees have a principal-agent relationship

As there may be disagreement between the two, legal implications have to be carefully considered and if possible, litigation should be avoided

General Systems Theory Organisations are complex system

Human resource management is a sub-system

Failure/ success of each component will have overreaching impact to the organisation

Human Capital Theory It is an economic approach- people are valuable assets

Invest in people as one does in other assets; eg machineryOrganisational Life Cycle Theory

Organisations grow in stages. Start up, growth, maturity, decline, and revival

Manage human resources according to the stage of growth of the organisation

Role Behavior Theory The means used by an organization to send role information determine role response (Behavior)

Human Resource Management should focus on improving the role information for employees

Organisational Change Theory

Organisations pass through different forms, levels of quality, and states over time

Human Resource Management should focus on improving the role information for employees

Transaction Cost Theory It is an economic point of view of governance structure in business transactions

It considers costs of establishment, monitoring, evaluation, and

enforcement of exchanges (Contracts)

Since managers have limited information for decision making (Bounded Rationality) before transactions, there must be measures toreduce risks

Managers should seek opportunities to be used by employeesStrategic Contingency Theory

Organisations have several strategic typologies to adopt

The choice of typology depends on organizational environmentOrganisational learning Theory

The success of an organization depends on ability to learn

Employees prior knowledge facilitates learning and application of new related learning

Human resource management should facilitate continuous learning

Source: Adopted from Schuler (2000).

STEPS IN HUMAN RESOURCE PLANNING

39. HRP involves the following steps :

a. Analysis of Organisational Plans and Objectives :

Human resource planning is a part of overall plan of organisation. Plans concerning technology, production, marketing, finance, expansion and diversification give an idea about the volume of future work activity. Each plan can further be analysed into sub-plans and detailed programmes. It is also necessary to decide the time horizon for which human resource plans are to be prepared. The future organisation structure and job design should be made clear and changes in the organisation structure should be examined so as to anticipate its manpower requirements.

b. Forecasting Demand for Human Resources : Human resource planning starts with the estimation of the number and type of personnel required at different levels and in different departments. The main steps involved in HRP process are (a) to determine and to identify present and prospective needs of human resource, (b) to discover and recruit the required number of persons. (c) to select the right number and type from the available people. (d) to hire and place in the positions for which they are qualified, (e) to provide information to the selected people about the nature of work assigned to them, (f) to Promote or to transfer as per the needs and the performance of employees, (g) to denote if the employees are disinterested or their performance is not upto the mark, (h) to terminate if they are not needed or their performance is below standard and shows no hopes of

improvement. It is the most crucial and critical area of HRD. These HRD manager must pay attention to place right man to the right job through recruitment selection Training and Placement of employees. This calls for the adoption of a systematic procedure to complete recruitment and selection.

c. Forecasting Supply of Human Resources : One of the important areas of human resources planning is to deal with allocation of persons to different departments depending upon the work-load and requirements of the departments. While allocating manpower to different departments, care has to be taken to consider appointments based on promotions and transfers. Allocation of human resource should be so planned that available manpower is put to full use to ensure smooth functioning of all departments.

d. Estimating Manpower Gaps : Net human resource requirements or manpower gaps can be identified by comparing demand and supply forecasts. Such comparison will reveal either deficit or surplus of human resources in future. Deficits suggest the number of persons to be recruited from outside whereas surplus implies redundant to be redeployed or terminated. Similarly, gaps may occur in terms of knowledge, skills and aptitudes. Employees deficient in qualifications can be trained whereas employees with higher skills may be given more enriched jobs.

e. Matching Demand and Supply : It is one of the objectives of human resource planning to assess the demand for and supply of human resources and match both to know shortages and surpluses on both the side in kind and in number. This will enable the human resource department to know overstaffing or understaffing. Once the manpower gaps are identified, plans are prepared to bridge these gaps. Plans to meet the surplus manpower may be redeployment in other departments and retrenchment in consultation, with the trade unions. People may be persuaded to quit through voluntarily retirement. Deficit can be met through recruitment, selection, transfer, promotion, and training plans. Realistic plans for the procurement and development of manpower should be made after considering the macro and micro environment which affect the manpower objectives of the organisation.

Human resource management critiques

40. Human resource management has become so well established that if you talk about per-sonnel management it seems old fashioned. Yet, there are limitations, which have also triggered questions as to whether the whole debate is not more of an academic pastime rather than utility in practice (Storey 1989; Legge 1992; Schuler 2000). Some of the criticisms are presented below.

Ensuring strategic fit

a. Knowledge and skills of linking human resource strategy with business strategy are taken for granted. This task is housed in the human resource department whose staff is not necessarily trained in strategic business management. This casts doubts on the ability to establish that link.

Human resource managers may not be perceived as business partners

b. The doctrine that human resource managers should be seen by fellow managers as partners in business may be wishful thinking rather than what actually happens in practice. According to Schuler (2000), in reality, human resource managers are treated by other managers as a ‘second class citizen’, whose role is more of a supplier of personnel.

Conflict of roles

c. The assumption that a human resource manager takes the role of a partner in business implies that he/she should be on the side of the management and hence employees should represent themselves. This scenario increases employees’ feeling of isolation and neglect, which can give rise to conflicts and disputes.

Role ambiguity

d. The assumption that the human resource manager should be a generalist and at the same time be able to handle specific human resource functions, leaves much to be desired with regards to the type of training suitable and efficient in human resource functions.

Subjectivity

e. The use of other strategies like teamwork, 360 degrees appraisal, and performance based pay increase the use of subjective value judgement about individuals which mayde-motivate some employees and trigger counter disruptive behaviours including rent seeking or ‘just please the boss’ attitude.

Relevance

f. Eight years earlier, Legge (1992) had gone further in criticising the relevance of human resource management theories to the level of almost throwing the whole philosophy out of the window. To him, human resource management poses ambiguities and contradictions such that it does not offer much which is new to academia and practicing managers. It is regarded as similar to personnel management, or a different way of referring to an advanced form of personnel management, a change of emphasis on key employee management issues and others. Table 1.2 presents a few of the areas of scepticism, hence making personnel management (PM) seem similar to human resource management (HRM).

Experiences from the third world countries

42. It is common knowledge that with globalisation and the knowledge based economy, it is difficult to say with certainty the extent to which the concepts, theories, principles and practices learned in scholarly human resource management are applicable in the third world environment for the following reasons:

a. The concept of ‘third world’ or developing country is becoming more and more irrelevant because countries are not homogenous and are therefore difficult to compare. For example, Sri Lanka and Botswana are classified as third world countries but Bot-swana may have more characteristics featuring in a European or American environment and hence create a better environment for the adoption of more advanced aspects of human resource management than Sri Lanka or than even in a medium sized company in Canada.

b. Organisations in the third world countries are not homogenous either. A public enterprise, government department or agency will by definition have common features of a bureaucratic system where a purely private company will be able to learn fast- er and adapt to the emerging challenges in human resource management and hence adopting more proactive measures as would any other organisation in a more developed country. In extreme cases, there are organisations operating in developing countries that are indeed branches of multinational corporations and have adapted very advanced forms of human resource management comparable to other branches worldwide. There- fore, the fundamentals of human resource management remain intact. Such examples in Tanzania are Heidelberg Cement Company Ltd, Tanzania Breweries Ltd, Tanzania Leaf Tobacco Limited and Price Waterhouse Coopers.

c. Some concepts in human resource management may be more theoretical than practical and may only be useful for academic purposes. Therefore, they may not even be applicable in some big organisations in Japan, China or Australia. Such cases will be similar to the subject of debate on the differences between personnel and human re-source management or on whether employees are a capital or a resource. Therefore, the main point of discussion will be the way context specific factors influence human re-source management in third world countries.

Strategic Human Resource Management model (SHRM)

43. Strategic human resource management implies proactive management of the employeesof a company or organization. Strategic human resource management includes typical human resource components such as hiring, discipline, and payroll, and also involves working with employees in a collaborative manner to boost retention, improve the quality of the workexperience, and maximize the mutual benefit of employment for both the employee and the employer

44. There are several components that make up SHRM. Each of these blocks has underlying values and assumptions that, in principle, have already been described in chapter 1. However, there are also contentious debates on whether there is any well-grounded model on strategic human resource management based on a specific discipline (Storey 1989; Hendry 1995; Nankervis et al. 2000; Ismail & Long 2009; Calisken 2010; Inyang 2010). The major differences are areas of emphasis between business strategies as determinants of human resource strategies and hence aiming at ‘strategic fit’ on one side or a universal approach to making human resource functions responsive to strategic business requirements. The ‘universal approach’ or people as resource for gaining a competitive advantage are based on the ‘resource based theory’. This lack of clarity has led to a model that tries to capture important attributes of strategic human resource management model as depicted below. The figure displays ten main tenets of strategic human resource management which characterise the philosophical nature of strategic people management and what managers and employees ought to put in place and do in order to excel in a competitive business environment. The description for each tenet is provided below:

Strategic Human Resource Management model

Making strategic value choices

45. Although the model suggests ten strategic variables of human resource management that have to be embodied in systems, practices and competencies in order to guide employees as individuals and teams to higher level performance, managers have to focus on the most valuable aspects, depending on the 26 organization 26 l strategy. For example, an organisation that organization creativity and innovation will choose and reward employee 26organization that demonstrates risk taking initiatives. That is to say, each of the nine constituents of the model will have different aspects to deal with but managers will have to make decisions and choose

systems, processes, programmes or activities with the most strategic value for the individuals, teams and the organization.

Strategic integration

46. Since HRM is related to other 27rganizational strategies, integration is not only desirable but also necessary to ensure that human resource management decisions are not made for their own sake. HRM policies and procedures need to be linked with an organisa- tion‘s strategy, its objectives and its activities so that performance can be judged in terms of the degree of strategic fit between business strategies and human resource strategies.

Employees as most valuable

47. No organisation can excel without having the right human resources. Experience sug-gests that human resources are a key factor in attaining a competitive advantage. It needs to be developed through nurturing, coaching, training, respect and love, care, and encouragement, which are key components of motivation packages. The degree to which the emphasis on staff development of both current and future performance requirements is taken into account depends on the position of the organisation in its life cycle. The premise that human resources are the most valuable of all resources also pre- supposes that human resource functions cannot be left to personnel departments alone. There is need to place this function to all functional departments with the human re- source manager remaining a team leader. Optimal utilisation of this asset requires that there should be deployment of right numbers and skills at the right place at the right time. The old tradition where departmental managers struggled to build their own empires by recruiting and retaining staff no longer holds sway in strategic human resource management.

Emphasis on management of support staff

48. Along the same logic of valuing human resources, managers are challenged to support staff through various techniques so that the latter can have a sense of belonging, enjoyment from the job, gain confidence in the management, identify with the organisation and feel that they own it. Informal interactions, open door policy, coaching and mentoring, attractive employee welfare schemes are some of the techniques used to support staff and make them feel proud of their work and the organisation.

Strengthening management and employees commitment

49. Commitment at all levels of the organisational structure depends on the perceptions and attitudes of both the management and employees towards each other. Negative perceptions and attitudes are the source of low morale and lack of interest in both the job and the organisation. For example, if employees feel that management ignores them when the former attempts to exercise their rights, the level of commitment would be low. Similarly, if the management feel that the workers are lazy and too demanding, they are likely to lose commitment in supporting such staff. However, since in principle, strategic human resource management should be the responsibility of top management, any sign of low employee commitment is the result of poor handling of human resource management issues at the top management level.

50. Employee commitment can be secured through various techniques. Some are ritual- ised including 28rganization28l songs, slogans, attire or informal gatherings such as cock- tail parties etc. Employee involvement in the affairs of the 28rganization through the con- tribution of ideas, motivation through encouragement, recognition of individual as well as group efforts in accomplishing tasks by rewarding appropriately make a difference in inducing commitment from staff.

Effective communication

51. Effective communication occurs when a message is received and understood in the same way as the sender intended it. It involves the careful organisation of ideas, assessment of the right mode of transmission and the nature of the receiver. Studies have shown that most problems experienced in people management are due to poor communication. Strategic human resource management appreciates the role of communication as a critical tool in day-to-day human resource management. Open channels of communication that build trust and mutual understanding, helping employees to internalise the organisation’s vision, mission statement, core values, policies, objectives and activities are essential.

52. Frequent meetings with the top management, departmental and team meetings pre- sent the best opportunities for effective communication. Other channels include close interaction between staff and supervisors, billboards, brochures and instruction manuals. Informal communication is very useful in disseminating information if the danger of rumours and gossip is to be contained.

Decentralisation for empowerment

53. Strategic human resource management calls for a decentralisation of decision making and problem solving at the lowest levels possible in the organisational hierarchy. That is, allow decisions to be made at the very source of activity. Operational staff and teams are the public face of the organisation. Therefore they need power, authority, and motivation to take the right decisions at that level. Organisations with a human resource management culture cannot afford to embarrass themselves in front of a valued customer by failing to conclude business deals simply because a particular manager has to make a minor, unnecessary routine decision.

Flexibility and adaptation

54. The nature of today’s business’ success lies in the ability to promptly respond to the unpredictable and fast changing environment. Flexible but robust rules and regulations, flatter organisation structures, preference for a multi-skilled workforce, and use of convertible production technologies are some of the strategies used to improve an organisation’s ability to cope with environmental pressure.

Creativity and innovation

55. SHRM calls for the management and employees to work together and come up with new ideas that can be put into practice so that new business opportunities can be created. With

regards to employees’ management, creativity and innovation are required in areas such as pay schemes that are internally fair and externally competitive, job enrichment, enlargement, leadership, team building, retraining, and better employment arrangements.

Obsession with quality

56. In the language of total quality management, the customer is always right and quality is seen in the eyes of customers. In order to produce the best quality goods and provide the best quality services as perceived by the customer when compared to other producers or suppliers, the organisation need staff orientated towards, and a motivation for excellence in quality products and services. Careful recruitment and selection of staff, appropriate training and development programmes, use of quality circles, and performance management systems that reward employees according to contribution are some of the strategies used to build and sustain a culture of quality.

FUTURE CHALLENGES BEFORE THE MANAGERS

57. Because of continuous changing socio-economic, technological and political conditions, the human resource managers of the future shall have to face more problems in the management of labour. The human resource managers of today may find themselves obsolete in the future due to changes in environment if they do not update themselves some of the important challenges which might be faced by the managers in the management of people in business and industry are discussed below (27,28,29) :

a. Increasing Size of Workforce : The size of organisations is increasing. A large number of multinational organisations have grown over the years. The number of people working in the organisation has also increased. The management of increased workforce might create new problems and challenges as the workers are becoming more conscious of their rights.

b. Increase in Education Level : The governments of various countries are taking steps to eradicate illiteracy and increase the education level of their citizens. Educated consumers and workers will create very tough task for the future managers.

c. Technological Advances : With the changes coming in the wake of advanced technology, new jobs are created and many old jobs become redundant. There is a general apprehension of immediate unemployment. In the competitive world of today, industry cannot hope to survive for long with old technology. The problem, of unemployment resulting from modernisation will be solved by properly assessing manpower needs and training of redundant employees in alternate skills.

d. Changes in Political Environment : There may be greater Government‘s interference in business to safeguard the interests of workers, consumers and the public at large. Government‘s participation in trade, commerce and industry will also pose many challenges before management. The Government may restrict the scope of private sector in certain areas in public interest. It does not mean chances of co-operation between the Government and private sector are ruled out. In fact, there will be more and more joint sector enterprises.

e. Increasing Aspirations of Employees : Considerable changes have been noted in the worker of today in comparison to his counterpart of 1950s. The workers are becoming more aware of their higher level needs and this awareness would intensify further in the future workers.

f. Changing Psychosocial System : In future, organisations will be required to make use of advanced technology in accomplishing their goals while satisfying human needs. In the traditional bureaucratic model, the organisations were designed to achieve technical functions with a little consideration given to the psychosocial system. But future management would be required to ensure effective participation of lower levels in the management of the organisation system.

g. Computerised Information System : In the past, the automation of manufacturing processes had a major effect upon the systems of production, storage, handling and packaging, etc. More recently, there has been and in the future there will be the impact of revolutionary computerised information system on management. This revolutionary development would cover two primary areas of personnel management which are as follows :

(1) The use of electronic computers for the collection and processing of data,

(2) The direct application of computers in the managerial decision making process.

h. Mobility of Professional Personnel : Organisations will expand the use of boundary agents‖ whose primary function will be achieving coordination with the environment. One interesting fact will be an increase in the mobility of various

managerial and professional personnel between organisations. As individuals develop greater technical and professional expertise, their services will be in greater demand by other organisations in the environment.

i. Changes in Legal Environment : Many changes are taking place in the legal framework within which the industrial relations systems in the country are now functioning. It is the duty of the human resource or personnel executive to be aware of these changes and to bring about necessary adjustments within the organisations so that greater utilisation of human resources can be achieved. This, indeed, is and would remain a major challenge for the personnel executive.

j. Management of Human Relations : On the ‗industrial relations‘ front, things are not showing much improvement even after so many efforts by the government in this direction. Though a large number of factors are responsible for industrial unrest but a very significant cause is the growth of multiunions in industrial complexes having different political affiliations. Under the present conditions, it appears that inter-union rivalries would grow more in the coming years and might create more problems in the industry.

New Role of Human Resource Management

58. Management of human relations in the future will be more complicated than it is today. Many of the new generation of employees will be more difficult to motivate than their predecessors. This will be in part the result of a change in value systems coupled with rising educational levels. Greater skepticism concerning large organisations and less reverence for authority figures will be more common. Unquestioning acceptance of rules and regulations will be less likely.

59. Human Resource Management in the New Millenium‘ has undergone a great revolution by questioning the accepted practices and re-inventing the organisations as well as structures. Many traditional practices have been thrown out. As an example, it can be seen that hierarchies are vanishing and there is greater emphasis on flat organisations. It means a great deal of specialisation and skills. It also means upgrading the norms and standards of work as well as performance. The new role of human resource management is much more strategic than before. Some of the new directions of the role of HRM can be summed up as follows :

a. A Facilitator of Change : To carry people through upheaval requires the true management of human resources.

b. An Integrated Approach to Management : Rather than being an isolated function, human resource is regarded as a core activity, one which shapes a company‘s values. In particular, this can have an impact on customer service.

c. A Mediator : Establishing and balancing the new and emerging aspirations and requirements of the company and the individual.

60. These changes, which are taking place, involve more commitment of the organisation to the development of people by improving performance and cutting costs. As a result of this, the duration of tenure, which was traditionally long standing, is now limited, future is becoming less certain, management opportunities are self-determined and motivational factors are more concerned with enhancing future employability rather than loyalty to the company and, at the same time, the rewards are going up in terms of higher salaries. The future creative careers, will require more involved approach to career development, which will include (30,31):

a. Share employees with strategic partner organisations (customers of suppliers) in lieu of internal moves.

b. Encourage independence : Employees may go elsewhere for career development, possibly to return in a few years.

c. Fund-groups of employees to set-up as suppliers outside the organisation.

d. Encourage employees to think of themselves as a business and of the organisation‘s various departments as customers.

e. Encourage employees to develop customers outside the organisation.

f. Help employees develop self-marketing, networking and consultancy skills to enable them to search out, recognise or create new opportunities for both themselves and the organisation.

g. Identify skilled individuals in other organisations who can contribute on a temporary project basis or part-time.

h. Regularly expose employees to new people and ideas to stimulate innovation.

i. Balance external recruitment at all levels against internal promotion to encourage open competition, ―competitive tenderingǁ for jobs to discourage seeing positions as someone‘s territory which causes self-protective conformity.

j. Forster more cross-functional teamwork for self-development.

k. Eliminate the culture of valuing positions as career goals in favour of portraying a career as a succession of bigger projects, achievements and new skills learned. The concept of position‖ is part of the outside static concept of the organisation. Positions are out. Processes and projects are in.

l. Abandon top-down performance appraisal in favour of self- appraisal based on internal customer satisfaction surveys and assessing people as you would suppliers.

m. Replace top-down assessment processes with self- assessment techniques and measure performance in term of results.

Functions of a Human Resource Manager

61. A human resource manager, charged with fulfilling the objectives of an organisation, should be a leader with high intellectual powers, a visionary and a philosopher who provides the initiative to shape the future in terms of leading the human beings in an organisation towards more prosperous and progressive policies. Following are the functions and attributes of a Human Resource Manager (32):

a. Human Resource Man as an Intellectual : The basic skill in the human resource field as compared to technologists or financial experts is the skill to communicate, articulate, understand and above all, to be an expert when it comes to putting policies and agreements in black and white. The personnel man‘s skill lies in his command over the language. A personnel man has to deal with employees and he must possess the skills of conducting fruitful and systematic discussions and of communicating effectively. He should also be in a position to formulate principles and foresee the problems of the organisation. This means that he would require the mental ability to deal with his people in an intelligent manner as well as to understand what they are trying to say..

b. Human Resource Man as an Educator : It is not enough that a human resource man has command-over the language, which, however, remains his primary tool. He should be deeply interested in learning and also in achieving growth. Basically, human beings like to grow and realise their full potential. In order to harmonise the growth of individuals with that of the organisation, a personnel administrator must not only provide opportunities for his employees to learn, get the required training and assimilate new ideas but also he himself should be a teacher. A personnel man who simply pushes files and attends labour courts for conciliation purposes and other rituals of legal procedure for the settlement of industrial disputes is not a personnel administrator of the future.

c. Human Resource Man as a Discriminator : A human resource administrator must have the capacity to discriminate between right and wrong, between that which is just and unjust and merit and non-merit. In other words, he should be a good judge when he sits on a selection board, a fair person when he advises on disciplinary matters and a good observer of right conduct in an organisation.

d. Human Resource Man as an Executive : The human resource man must execute the decisions of the management and its policies with speed, accuracy and objectivity. He has to streamline the office, tone up the administration and set standards of performance. He has to coordinate the control functions in relation to the various other divisions and, in doing so he should be in a position to bring unity of purpose and direction in the activities of the personnel department. He must ask relevant questions and not be merely involvedin the office routine whereby the status quo is maintained. He should have the inquisitiveness to find out causes of delay, tardy work and wasteful practices, and should be keen to eliminate those activities from the personnel functions which have either outlived their utility or are not consistent with the objectives and purposes of the organisation.

e. Human Resource Man as a Leader : Being basically concerned with people or groups of people, and being placed in the group dynamics of various political and social functions of an organisation, a Human resource man must not shirk the role of leadership in an organisation. He, by setting his own example and by working towards the objectives of sound personnel management practices, must inspire his people and motivate them towards better performance. He should resolve the conflicts of different groups and build up teamwork in the organisation.

g. Human Resource Man as a Humanist : Deep faith in human values and empathy with human problems, especially in less developed countries, are the sine qua non for a Human resource man. He has to deal with people who toil at various levels and partake of their joys and sorrows. He must perform his functions with sensitivity and feeling.

h. Human Resource Man as a Visionary : While every leading function of an organisation must evolve its vision of the future, the primary responsibility for developing the social organisation towards purposive and progressive action fall on the personnel man. He should be a thinker who sets the pace for policy-making in an organisation in the area of human relations and should gradually work out new patterns of human relations management consistent with the needs of the organisation and the society. He must ponder on the social obligations of the enterprise, especially if it is in the public sector, where one has to work within the framework of social accountability. He should be in close touch with socio-economic changes in the country. He should be able to reasonably forecast future events and should constantly strive to meet the coming challenges.

Human Resource Development

62. Human resource or employees are the most dynamic and usually the most expensive of all the organisation‘s resources. They need to be supported and nurtured if they are to achieve their full potential, both for themselves and for the organisation. As a manager/ administrator one is responsible for the performance of all of his/her staff and he/she should be actively involved in the process of identifying and attempting to satisfy their training needs.

Education, training and development

63. A frequently asked question is ‘What is the difference between training and development or between education and training?’ Usually the difference is based on the theoretical paradigm one wishes to use to justify for training or education (Mankin 2009). For example, in human capital theory Becker (1964) propounds that although education and training are not the same in terms of scope and strategy used both help organizations to derive economic value from employees as a result of knowledge, skills and experience. What makes the two concepts different can be observed from the following definitions and descriptions.

Education64. This is basic instruction in knowledge and skills designed to enable people to make the most of life in general. It is personal, broadly based and tends to be classroom based and non-participatory. The instruction provided in schools to the population as a whole is usually what is meant by education (Holton & Yamkovenko 2008). Therefore, education tends to focus on the acquisition of knowledge.

Training65. Dessler (2005) defines training as methods used to give employees skills they need to perform their jobs. Therefore, training implies preparing an employee for an occupation or specific skills. In this case, it has to be narrow in its focus and be for the job, rather than personally oriented. Training is usually provided to adults and is aimed at producing an improvement in performance at work, by addressing weaknesses in knowledge, skills, or attitudes. It tends to be more practically focussed and can take place in a variety of environments and concerned with the acquisition of knowledge, skills and attitudes.

Development66. Usually education refers to the broadest view of knowledge and skills acquisition (Mankin 2009). It is more career-orientated than job-oriented and is concerned with the longer term development and potential of the individual. Managers look at employees as adaptable resources with a variety of skills and places within the organisation and are concerned with giving the individual the right mix of skills, experiences and contacts to enable them to achieve their full potential. Education tends to be a matter for the community and government to deal with. Training and development are traditionally the matters for the concern of individual organisations based on their specific needs. However, there are overlaps where the government intervenes to provide support for training sections of the population in certain widely needed skills. For example, skills enhancement courses for the long-term unemployed in developed countries to re-train them for new industries or needs.

Training needs analysis (TNA)

67. A training need is any shortfall between the knowledge, skills and attitudes of the employee vis-à-vis what is required by the job, or the demands of organisational change. Training needs are discrepancies between identifiable shortfalls in knowledge, attitudes or skills. A training needs analysis is a systematic process by which training needs are investigated and consolidated to provide the basis for the training programme. These ‘things’ are usually

associated with the organisation, departmental or individual performance. Some useful indicators for training needs analysis include the following:

a. Legislation or policy changes – this puts new demands on the human resource in terms of skills/competencies.b. Lack of basic skills – an assessment of the skill level of staff vis-à-vis the job requirements may be the evidence of a need.c. Poor performance – appraisal may reveal gaps in the performance of an individual or organisationd. New technology – the emergence of new technology may render the skills of current staff redundant and hence a human resource development need arises.e. Customer requests – the enlightened consumer is putting demands on public servants who may be ill equipped to provide the demanded service.f. New products/services – the emergence of new products/services requires that the human resources be adequately prepared to cope.g. Higher performance standards – high performance standards have emerged due to new technology, globalisation and an enlightened and demanding consumer.h. New jobs – this may be due to promotion, recruitment or the creation of new structures that lead to the emergence of new jobs.i. Career progression requirements – where there is a defined career growth path that calls for the acquisition of competencies as one develops a career.

Levels of training needs68. In principle no training should take place unless it is commercially justifiable (the benefits exceed the costs), and it complements the strategy of the organisation. Training needs analysis is done on three levels (Gomez-Mejia 2007). These are:

a. Organisational level needs – changes of the mandate of state agency, and expectations of consumers through surveys may reveal a need for organisations to change the behaviour of service providers or retooling them.b. Task analysis needs (job analysis) – skill required to perform a given task could help to determine the needs of the current jobholders.c. Person analysis needs – the competencies of current jobholders could also be assessed to determine their suitability for their jobs.

Systematic training model

69. The systematic training model (Mckenna & Beech 2002; Mankin 2009) sets out the process to be used in the task of ensuring that training and development initiatives are successful. It is a step-by step process (see Figure 8.1). The scope of human resource training and development activities depends on the corporate strategy and policies of the organisation as well as the availability of funds. Training itself is a process summarized below:

a. Deciding on the organisation’s approach towards training at the most basic level. For example, does the organisation hope to recruit staff that are already appropriately qualified for the job? Or does the organisation want to make a significant investment in training?b. Developing the training policy and strategy as the framework for training activities.c. Identifying training needs.d. Planning and designing the training. This involves deciding on how and when thetraining will be delivered, setting budgets, deciding on training objectives, writing the content and designing evaluation methods.e. Implementing the training. This is usually a joint activity involving both trainingspecialists and their line management colleagues who may have the required specialistknowledge.f. Evaluation: This involves reviewing the outcomes of training and feeding these results back into the planning process. Some organisations carry out many specialised activities, which require extensive training, and others respond to specific training needs on an ad hoc basis. The majority of organisations see training as an essential activity and have a positive training and development policy.

Human resource policies

70. No formal organisation can exist and function well without formal ‘rules of engagement’ in managing people. These are general guidelines that express how the management intends to manage people and what is expected of employees in the workplace (Cuming 1985; Armstrong 2006). Such guidelines include human resource policies. Other guidelines could be in the form of memos, circulars, codes of ethics and conduct and standing orders. Policies could be implicitly

embodied in the organisation’s vision and mission statements or explicitly established in its strategic plan and/or human resource strategic plan. Policies define philosophies and values that the organisations attach to employees. They will express how employees are valued or not valued as a resource, management position with regards to decision making in staffing matters and roles to be played by each stakeholder in the employment relationship. Without policies that are explicit and known to both the management and staff, there are dangers of arbitrary decision-making that can de-motivate both managers and staff and hinder the whole organisation’s performance.

The importance of human resource policies

71. As managers, before considering any human resource policy, it is important to pose a number of questions which have to be answered by the managers themselves because developing human resource policy to address specific areas of human resource management is an investment which, in principle should have positive returns in terms of facilitating decision making and creating a motivating environment for the employee. However, where human resource policies are discussed, the best arguments for establishing human resource policies are:

a. First, human resource policies help managers to ensure that people management is in line with corporate values. It is not an easy task to solicit employees’ commitment to the organisation if what is contained in the corporate vision, mission, and values is not further developed and put across in such a way that both managers and employees feel that the organisation is not just paying lip service. Indeed, human resource policy is useful in judging the extent to which the consistency between the declared philosophy in people management at the strategic level and the day-to-day management of human resources in terms of decisions and activities at operational level is sustained.b. Second, is about ensuring that human resource management decisions are made consistently. Managing employees is about decision-making and implementation of human resource intents in the whole spectrum of the terms and conditions of employment Human resource policies provide a reference and guidance for avoiding inconsistent decision making by substantive managers or those who make decisions in similar mattersand thus affecting different employees over time. This builds confidence and trust between managers and staff.

c. Third, is to minimise inequality in the treatment of employees. Although the merepresence of human resource policies cannot guarantee equality in the treatment of employees in various areas such as training, employment benefits or gender, lack of specific policies can create even more disparity between employees. It becomes difficultfor employees to demand equal treatment when there are anomalies and when there areno clear definitions and criteria for judging equality.

d. Fourth, human resource policies facilitate decentralisation, delegation and local empowerment. Staffing decision making can be delegated to lower levels of managementwithout the risk of the wrong decisions being taken because the policy will provideguidance on how certain issues or problems on staffing should be handled. The human

resource policy document becomes the source of power and authority for those entrustedwith the execution of duties affecting employee’s work and welfare.

Formulating human resource policies

72. The formulation of human resource policies requires thorough preparation and commitment to provide the necessary impetus for the preparation of the policy document, itsimplementation and continuous review (Cherrington 1995). In fact, it is better to have no policy at all than having one that is not implementable as it will be a potential source of conflict between the management and staff and could seriously hinder productivity. Following are the basic steps for formulating human resource policies:

a. Identifying the need: The process of identifying the need for a particular HRP should emanate from the review of the organisational vision, mission, goals, strategies, objectives and activities on the one hand, and human resource strategies (if available) on the other. These sources may explicitly or implicitly provide the necessary starting point for building arguments for a particular HRP. For example, if one of the statements observed says that ‘the organization strives to excel in error free products’, it means that there should be particular policy guidelines for human resource recruitment, rewards, retention and development in order to ensure the availability of staff of the quality and the size capable of producing error free products.

b. Developing appropriate strategies: Effective human resource polices will also depend on the ability to identify and use appropriate strategies to establish the foundation for generating relevant human resource policy documents. Such strategies include:

c. Drafting policy document: The above strategies will provide the necessary dataand information for drafting the policy document. Usually, the policy document will have a number of sections that point to specific aspects of the policy.

d. Policy implementation: The modality and pace of the implementation of the policy will depend upon many factors including the extent to which the need for the policy is established, strategies used to involve different stakeholders during preparations

and the technical quality of the policy document. The most successful organisations implement policies after a series of sensitisation seminars and workshops covering top, middle and lower level management as well as employees and employees’ associations. This helps to create a common understanding and a sense of ownership for all key stakeholders. While policy implementation will mainly be the responsibility of line managers, the human resource department will provide support and technical services.

e. Monitoring and evaluation: Policies are there to assist organisations and not vice versa. Continuous monitoring and evaluation is necessary in order to remove rigidity that may match the emerging situation and needs. For example, a change in organisational vision, mission and objectives, or a change of government policies and laws related to employment relationships or the labour market may make it necessary to look back at human resource policies and see how they may better assist both the organisation and the employees.

Conclusion

73. Human Resource Management should be seen as a strategic function of an organisation. It helps to build a competitive edge for an organisation by positively engaging its employees. Key ingredients of effective Human Resource Management are having in place an appropriate leadership style and effective two-way communications with employees. This creates an open and honest environment where employees feel that their ideas are being listened to and that they can make a contribution to decision making. Engaged employees are more likely to be proud to work for their organisation and therefore will believe in and live out the values of the organisation.

74. Human Resource Management focuses on matching the needs of the business with the needs and development of employees. Tarmac depends on its people because their skills contribute to achieving its business objectives. Within Tarmac, every employee has a valuable role to play. The emphasis is on helping individuals to work together. Workforce planning is part of this strategic process, which looks at the long-term needs across the organisation.Personal development plans enable every individual to grow both professionally and personally within the business. They also help Tarmac to create a distinct and important competitive advantage through selecting and developing highly motivated and skilled staff who are able to perform at high levels.

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