Unit 1

• Human • Resource• Management • Human resource• Resource management• Human Resource Management

What is human resource management?•The process of acquiring, training, appraising, and compensating employees, and of attending to their labor relations, health and safety, and fairness concerns.

HRM: Objectives• Primary objective of HRM is to ensure the availability of a competent

and willing workforce to an organization• HRM objectives are four fold- societal, organizational, functional and

personal

Societal objectives• To be ethically and socially responsible to the needs and challenges of

the society while minimizing the negative impact of such demands upon the organization

• To ensure that the organization becomes socially responsive

Organizational objectives• To recognize the role of HRM in bringing about organizational

effectiveness• To make sure that HRM is not a stand-alone department, but rather a

means to assist the organization reach its primary objective

Functional Objectives• To maintain the department’s contribution at a level appropriate to

the organization’s needs• Remind the HRM that it has only functional value and should not

become too expensive at the cost of the organization it serves

Personal objectives• To assist employees in achieving their personal goals, at least insofar

as these goals enhance the individual’s contribution to the organization

• Assist employees in achieving their personal goals

• In order to realize the objectives stated above, HRM must perform certain functions

• There is a correlation between the objectives and the functions• Some functions help realize specific objectives

HRM Objectives and FunctionsHRM Objectives Supporting Functions

1. Societal objectives 1. Legal compliance2. Benefits3. Union-management relations

2. Organizational objectives 1. Human resource planning2. Employee relations3. Selection 4. Training and development5. Appraisal 6. Placement7. Assessment

3. Functional objectives 1. Appraisal 2. Placement3. Assessment

4. Personal objectives 1. Training and development2. Appraisal3. Placement4. Compensation5. Assessment

Human Resources Management: Scope and Function

Recruitment

Recruitment• The process by which a job vacancy

is identified and potential employees are notified.• The nature of the recruitment process

is regulated and subject to employment law.

• Main forms of recruitment through advertising in newspapers, magazines, trade papers and internal vacancy lists.

Recruitment• Job description – outline of the role

of the job holder• Person specification – outline

of the skills and qualities required of the post holder

• Applicants may demonstrate their suitability through application form, letter or curriculum vitae (CV)

Selection

Selection• The process of assessing candidates and appointing a post holder• Applicants short listed –

most suitable candidates selected• Selection process –

varies according to organisation:

Selection• Interview – most common method• Psychometric testing – assessing the personality of the applicants – will they fit

in?• Aptitude testing – assessing the skills

of applicants• In-tray exercise – activity based around what the applicant will be doing, e.g.

writing a letter to a disgruntled customer• Presentation – looking for different skills

as well as the ideas of the candidate

Employment Legislation

Employment Legislation• Increasingly important aspect of

the HRM role• Wide range

of areas for attention• Adds to the cost of the business

Even in a small business, the legislation relating to employees is important – chemicals used in a hairdressing salon for example have to be carefully stored and handled to protect employees.

Discrimination• Crucial aspects

of employment legislation:• Race• Gender• Disability

Disability is no longer an issue for employers to ignore, they must take reasonable steps to accommodate and recruit disabled workers.Copyright: Mela, http://www.sxc.hu

Discipline

Discipline• Firms cannot just ‘sack’ workers• Wide range of procedures and steps

in dealing with workplace conflict• Informal meetings• Formal meetings• Verbal warnings• Written warnings• Grievance procedures• Working with external agencies

Development

Development• Developing the employee

can be regarded as investing in a valuable asset

• A source of motivation• A source of helping the employee fulfil potential

Training

Training• Similar to development:

• Provides new skills for the employee• Keeps the employee up to date

with changes in the field• Aims to improve efficiency• Can be external or ‘in-house’

Rewards Systems

Rewards Systems• The system of pay and benefits used by the firm to reward workers• Money not the only method• Fringe benefits• Flexibility at work• Holidays, etc.

Trade Unions

Trade Unions• Importance of building relationships with employee representatives• Role of Trade Unions has changed• Importance of consultation

and negotiation and working with trade unions

• Contributes to smooth change management and leadership

Productivity

Productivity• Measuring performance:• How to value the workers contribution• Difficulty in measuring some types of output – especially in

the service industry• Appraisal

• Meant to be non-judgmental• Involves the worker and a nominated appraiser• Agreeing strengths, weaknesses and ways forward

to help both employee and organisation

HRD: Conceptual Basis

• Of all the resources, the ‘human resource’ is the most significant and the only active factor of production

• HRD is the key to enhancing and effective utilization of intellectual, technological and entrepreneurial skills of human resources

• HRD is the process of helping people to acquire competencies and skills so as to ensure their usefulness to the organisation in terms of both present and future organisational conditions. HRD also helps the employees understand their own capabilities better so that they can best utilise them and also fulfil their expectation both professional and personal.

• In an organisational context HRD is a process by which the employees of an organisation are helped in a continuous and planned way to :

acquire or sharpen capabilities required to perform various functions associated with their present or expected future roles,

develop their general capabilities as individuals and team, and discover and exploit their inner potential for their own and/or organisational development purposes,

develop an organisational culture in which supervisor-subordinate relationships, team work, and collaboration among sub-units are strong and contribute to the professional well-being, motivation, and pride of employees.

• HRD is defined as the development of people by providing the right environment where each individual may grow to his fullest potentials

• Megginson viewed human resources as the “total knowledge, skills, creative abilities, talents and aptitudes of an organization’s workforce as well as the values, attitudes and beliefs of the individual involved

Beliefs of HRD

1. Human resource is the most important asset in the organization2. Unlike other resources, human resource can be developed and increased to an unlimited

extent3. A healthy climate, characterized by the values of openness, enthusiasm, trust, mutuality

and collaboration is essential for developing human resource4. HRD can be planned and monitored in ways that are beneficial both to the individuals and

the organization5. Employees feel committed to their work and the organization, if the organization

perpetuates a feeling of belonging6. Employees feel highly motivated if the organization provides for satisfaction of their

basic and higher level needs7. Employee commitment is increased with the opportunity to discover and use one’s

capabilities and potential in one’s work

8. It is every manger’s responsibility to ensure development and utilization of the capabilities of subordinates to create a healthy and motivating work climate and to set examples for subordinates to follow

9. The higher the level of manager, the more attention should be paid to the HRD function in order to ensure its effectiveness

10. The maintenance of a healthy organizational climate and the development of its human resource are the responsibility of every organization

Objectives of HRDi. Provide an opportunity and comprehensive framework for the development of human

resources in the organization for full expression of their talents and manifest potentialsii. Develop the constructive mind and overall personality of each employeeiii. Develop each individual’s capabilities to perform the present job and to handle future

likely rolesiv. Develop and maintain high motivation level of employeesv. Strengthen superior-subordinate relationshipsvi. Develop the sense of team spirit, team work and inter-team collaborationvii. Develop the organizational health, culture and climateviii. General systematic information about human resources

Need and significance of HRD• Need of HRD is felt to create a climate which will improve the work life by overcoming

monotony, ensuring better communication and creation of familiar sort of work conditions where creativity of all the members comes into full play

• Focus of HRD essentially is on enabling people to self-actualize through a systematic process of developing their existing potentialities and creation of new ones, unfolding and tapping potentialities of people both in the present and in the future

Benefits of HRDi. It helps in the integrated growth of employeesii. It helps employees to know their strengths and weaknesses and thus enable them to

improve their performance and that of the organizationiii. It facilitates the creation of an environment where opportunities are available for fuller

utilization of the known potentials of the employees. The climate of such an organization is one of mutuality, trust, collaboration, openness, etc.

iv. It generates valid data about employees for personnel functions like training, placement, selection, promotion, etc

v. It insists on the provision of feedback and guidance by the superior to the employees for the improvement of their performance

vi. It leads to greater organizational effectiveness

HRD instruments, processes and outcomes

1

HRD Mechanisms or Sub-systems or Instruments

• HRD Department • Performance Appraisal • Review Discussions, Feedback Counselling Sessions • Role Analysis Exercises • Potential Development Exercises • Training • Communication Policies • Job Rotations • OD Exercises • Rewards • Job-enrichment Programmes • Other Mechanisms

3

HRD Outcomes Variables

• More Competent People • Higher Work-commitment & Job Involvement • More Problem Solving • Better Utilisation of Human Resources • Higher Job-satisfaction and Work Motivation • Better Generation of Internal Resources • Better Organisational Health • More Team Work, Synergy and Respect for Each Other

2

HRD Process & HRD Climate Variables

• Role Clarity • Planning of Development by Every Employee • Awareness of Competencies Required for Job Performance • Proactive Orientation • More Trust • Collaboration & Team Work • Authenticity • Openness • Risk-taking • Value Generation • Clarification of Norms and Standards • Increased Communication • More Objective Rewards • Generation of Objective, Data on Employees etc.

4Organisational Effectiveness Dimensions

• Higher Productivity • Growth and Diversification • Cost Reduction • More Profits • Better Image

A systematic presentation of linkages between HRD instruments, processes, outcomes and organizational effectiveness

5

Other factors Personnel Policies, Top Management Styles, Investments on HRD. Top Management’s Commitments, History, Previous Culture, Line Manager’s Interest etc.

6

Other factorsEnvironment, Technology, Resource Availability, History, Nature of Business etc.

A Simplified HRD Model

Human resource development plans or interventions

Skill + Knowledge + Attitude development

Trained and developed employees Healthy organizational climate

Organizational effectiveness

Work culture + Development plans + Facility development + quality of working

life

Individual development plan Organizational development plan

HRD FUNCTIONS

• Providing skill input to apprentices and trainees

• Identifying training needs and imparting training

• Outside deputation for competency enhancement

• Competency mapping

• Organizational development activities

• Conducting sessions and workshops

• Training and development (T&D)

HRM HRD

HRM deals with all aspects of the human resources function

HRD only deals with the development part.

HRM is concerned with recruitment, rewards among others

HRD is concerned with employee skills development.

HRM functions are mostly formal HRD functions can be informal like mentorship.

HRM is a routine and administrative process. HRD is continuous process

Difference Between Personnel Management & HRMDimension Personnel Management Human Resource Management

1. Employment contract Careful delineation of written contracts

Aim to go beyond contract

2. Rules Importance of devising clear rules Can do outlook, impatience with rules

3. Guide to management action Procedures Business need

4. Behavior referent Norms/customs and practices Values/mission

5. Managerial task vis-à-vis labor Monitoring Nurturing

6. Key relations Labor management Customer

7. Initiatives Piecemeal Integrated

8. Speed of decision Slow Fast

9. Management role Transactional Transformational

10. Communication Indirect Direct

Dimension Personnel Management Human Resource Management

11. Prized management skill Negotiation Facilitation

12. Selection Separate, marginal task Integrated, key task

13. Pay Job evaluation (fixed grades) Performance related

14. Conditions Separately negotiated Harmonization

15. Labor management Collective bargaining contracts Individual contracts

16. Job categories and grades Many Few

17. Job design Division of labor Team work

18. Conflict handling Reach temporary truce Manage climate and culture

19. Training and development Controlled access to courses Learning companies

20. Focus of attention for interventions

Personnel procedures Wide-ranging cultural, structural and personnel strategies

Dimension Personnel management Human Resource Management

21. Respect for employees Labor is treated as a tool which is expendable and replaceable

People are treated as assets to be used for the benefit of an organization, its employees and the society as a whole

22. Shared interests Interests of the organization are uppermost

Mutuality of interests

23. Evolution Precedes HRM Latest in the evolution of the subject

24. Locus of control External Internal

25. Organizing principles Mechanistic Top-downCentralized

OrganicBottom-upDecentralized

Organization of HR Department• Two issues become relevant in a discussion on organization of an HR

department1. Place of the HR department in the overall set-up2. Composition of the HR department itself• Status of the HR department in the overall organizational structure

depends on the,Size of the firmNature of businessManagement-philosophyGlobal presence

Size of Business• In small start up organizations where employee strength is around 100, the HR

activities are very basic• The functions are largely transactional• Mid-sized firms with a head count of 200-500 each will have a structured HR

function• Key HR activities are clearly established and responsibilities assigned • Service Level Agreements (SLA’s) are defined for HR deliverables and tracked to

ensure that business objectives are not compromised• In large organizations with employee strength of 1000 to 3000, HR function is

highly matured and organized • HR processes are well documented, defined and implemented meticulously• Sophisticated HR tools are in place and technology is leveraged to ensure that HR is

contributing to the goal realization

• HR organizational structure is more advanced, defining centers of excellence for each of HR activities

• Multinational organization is where the HR structure functions at its most matured level with clear alignment to business priorities and strategies

• HR functions are matrixes and drive global and local initiatives • HR has a place at the table and is a party to each and every business strategy

and decision

Nature of business• Nature of business largely determines the HR department structure• HR functions are commonly distributed to three categoriesi. HR generalists who carry out generic activities like payroll, leave and

benefitsii. HR specialists who assume responsibility for areas like hiring, training and

development etciii. HR heads who head either functions across locations or head HR for a

divisions within an organizationKnowledge –based organizations witness highly sophisticated HR structuresIn services sector, HR team is kept lean and simple, and the focus is on transactional people related activities

Philosophy of senior management• The philosophy of founders/ seniors managers of the organization defines the

nature of HR function

Global presence • Organizations with global presence tend have fully blown and highly

elevated HR structures

HRM in a small-scale unitOwner/manager

Production manager Sales manager Office manager Accountant

Personnel Assistant

HRM in a large-scale unitChairman and managing

director

Director operations

Director finance

Director Personnel/

HRM

Director Marketing Director R&D

What Managers Do

Managerial Activities• Make decisions• Allocate resources• Direct activities of others to

attain goals

Managers (or administrators)Individuals who achieve goals through other people.

Where Managers WorkOrganizationA consciously coordinated social unit, composed of two or more people, that functions on a relatively continuous basis to achieve a common goal or set of goals.

Management Functions

ManagementFunctions

Planning Organizing

LeadingControlling

Management Functions (cont’d)PlanningA process that includes defining goals, establishing strategy, and developing plans to coordinate activities.

Management Functions (cont’d)OrganizingDetermining what tasks are to be done, who is to do them, how the tasks are to be grouped, who reports to whom, and where decisions are to be made.

Management Functions (cont’d)LeadingA function that includes motivating employees, directing others, selecting the most effective communication channels, and resolving conflicts.

Management Functions (cont’d)ControllingMonitoring activities to ensure they are being accomplished as planned and correcting any significant deviations.

Mintzberg’s Managerial Roles

Source: Adapted from The Nature of Managerial Work by H. Mintzberg. Copyright © 1973 by H. Mintzberg. Reprinted by permission of Pearson Education.

Mintzberg’s Managerial Roles (cont’d)

Source: Adapted from The Nature of Managerial Work by H. Mintzberg. Copyright © 1973 by H. Mintzberg. Reprinted by permission of Pearson Education.

Mintzberg’s Managerial Roles (cont’d)

Source: Adapted from The Nature of Managerial Work by H. Mintzberg. Copyright © 1973 by H. Mintzberg. Reprinted by permission of Pearson Education.

Functions of HR• Planning • Staffing• Developing• Monitoring• Maintaining • Managing relationships• Managing change• Evaluating

Management SkillsTechnical skillsThe ability to apply specialized knowledge or expertise.

Human skillsThe ability to work with, understand, and motivate other people, both individually and in groups.

Conceptual SkillsThe mental ability to analyze and diagnose complex situations.

Effective Versus Successful Managerial Activities (Luthans)

1. Traditional management• Decision making, planning, and controlling

2. Communication• Exchanging routine information and processing paperwork

3. Human resource management• Motivating, disciplining, managing conflict, staffing, and

training

4. Networking• Socializing, politicking, and interacting with others

HRM Models• Five major models have been identified and all these serve four purposes.1. They provide an analytical framework for studying HRM2. They legitimize certain HRM practices; a key issue here being the

distinctiveness of HRM practices: “It is not the presence of selection or training but a distinctive approach to selection or training that matters

3. They provide a characterization of HRM that establishes variables and relationship to be researched

4. They serve as a heuristic device-something to help us discover and understand the world for explaining the nature and significance of key HR practices

The Fomburn, Tichy and Devanna Model

Selection

Rewards

Appraisal

Human resource development

Organizational effectiveness

• First model dates back to 1984• Emphasizes just four functions and their interrelatedness• It ignores all environmental and contingency factors that impact HR

functions• First model has set the stage for other theories to emerge• Simple model serves as a heuristic framework for explaining the

nature and significance of the key HR activities• Emphasizes interrelationship among the four activities and their

collective impact on organizational effectiveness

The Harvard ModelStakeholder interests

ShareholdersManagement

Employee groupsGovernmentCommunity

Unions

Situational factorsWorkforce

characteristicsBusiness strategy and

conditionsManagement

philosophyLabor market

Unions Task technology

Laws and societal values

Human resource management policy

choicesEmployee influence

Human resource flowReward systemsWork systems

Human resource outcomes

CommitmentCompetenceCongruence

Cost-effectiveness

Long-term consequences

Individual well-beingOrganizational effectiveness

Societal well-being

• Claims to be comprehensive in as much as it seeks to comprise six critical components of HRM

The Guest Model

HRM STRATEGIES

HRM Practices Hiring

TrainingAppraisal

CompensationRelations

HR OutcomesCommitment

Quality Flexibility

Behavioral outcomes Motivation

Co-operationOrganizational

citizenship

Performance outcomesPositive

ProductivityInnovation

Quality Negative

Low productivityAbsenteeism

Turnover

Financial outcomes

Profits ROI

• Developed by David Guest in 1997• HR manager has specific strategies to begin with thereby it will result

in outcomes• This model clearly maps out the field of HRM and delineates the

inputs and outcomes• How HRM can contribute to organizational effectiveness is clearly

shown in the model• But the dynamics of people management are so complex that no

model can capture them comprehensively

Warwick ModelSocio-economic

TechnicalPolitical-legalCompetitive

Culture Structure

Politics/ leadershipTask-technologyBusiness outputs

Role Definition

OrganizationHR outputs

HR flowsWork systems

Reward systemsEmployee relations

Objectives Product market

Strategy and tactics

Outer context

Inner context

HRM context

HRM content

Business strategy content

The Ulrich Model

Change Champion

AdministrativeEmployee Champion

Strategic Partner

Future/StrategicFocus

People

Day-to-dayOperational Focus

Process

Linking Ulrich’s Roles to Deliverables

Metaphor Role Activity Deliverable

Strategic partner Management of strategic resources

Aligning HR with business strategy

Executive strategy

Administrative expert Management of firm’s infrastructure

Re-engineering Building an efficient infrastructure

Employee champion Management of employee contribution

Listening to employees Increasing employee commitment and capability

Change agent Management of transformation and change

Managing changing environment

Creating a renewed infrastructure

Personnel Policies and Principles • Policies are plans of action • Organizations need to evolve HR policies as they ensure consistency

and uniformity in treating people• They help motivate and build loyalty• Policies become benchmarks to compare and evaluate performance

• When the management drafts a policy statement to cover some features of its personnel programmes, the statement may often contain an expression of philosophy and principle as well

• Although it is perfectly legitimate for an organization to include its philosophy, principles and policy in one policy expression, it is desirable for a student of HRM to separate a principle from a policy

• A policy statement is more specific and commits the management to a definite course of action

• A policy does not spell out the detailed procedure by which it has to be implemented

• That is the role of a procedure• A procedure is in reality a method for carrying out a policy

• A policy should be stated in terms broad enough for it to be applicable in varying situations

• Lower level managers who apply a policy must be allowed some discretion in carrying out the policy

• A rigid and excessively detailed policy statement might cause injustice, if not granted some latitude

Evolution of HRM• Emerged during 1970s• Concern for the welfare of workers in the management of business

enterprises has been in existence since ages• Kautilya’s Arthahastra states that there existed a sound base for systematic

management of resources as early as the 4th century BC• In 1800 BC ‘minimum wage rate’ and ‘incentive wage plan’ were included in

the Babylonian Code of Hammurabai• In our country, the growth of the subject has been traced back to 1920s• Royal Commission (1931) recommended the appointment of labor–welfare

officers to deal with the selection of workers and to settle their grievances• Factories Act, 1948, made appointment of welfare officers compulsory in

industrial establishments employing 500 or more workers each

• Two professional bodies, the Indian Institute of Personnel Management (IIPM) and the National Institute of Labor Management (NILM), were set up

• These two places were the premier centers of traditional industry (jute and cotton respectively) in pre-independent India

• During the 1960s, the personnel function began to expand beyond the welfare aspect, with labor welfare, IR and personnel administration integrating into the emerging profession called personnel management (PM)

• The massive thrust given to the heavy industry in the context of planned economic development, particularly since the Second Five-Year Plan and the accelerated growth of the public sector in the national economy resulted in a shift in focus towards professionalization of management

• By the 1970s, the focus shifted from a concern for welfare to a focus on efficiency

• In the 1980s, professionals began to talk about new technologies, HRM challenges and HRD

• Two professional bodies, IIPM and NILM, merged in 1980 to form National Institute of Personnel Management (NIPM)

• Technology entered (HR) domain in the 1980’s, allowing HRM professionals to focus less on administrative work and more on strategic issues

• With the advent of sophisticated human resources information and communication systems, HRM was getting a better handle on its resources, and thus, the effectiveness of its programs

• In the 1990s, the emphasis shifted to human values and productivity through people

• Reflecting this trend the American Society for Personnel Administration (ASPA) was renamed as the Society for Human Resources Management (SHRM)

• Beginning in the 1920s, the subject of people management has grown into a matured profession

• The profession might be called HCM in the near future

Evolution of HRM in IndiaPeriod Development Status Outlook Emphasis Status

1920s-1930s Beginning Pragmatism of capitalists

Statutory, welfare, paternalism

Clerical

1940s-1960s Struggling for recognition

Technical, legalistic Introduction of techniques

Administrative

1970s-1980s Achieving sophistication

Professional, legalistic, impersonal

Regulatory, conforming, imposition of standards on other functions

Managerial

1990s Promising Philosophical Human values, productivity through people

Executive

Line and staff aspects of HRM

• Authority: The right to make decisions, direct others’ work, and give orders• Line authority: the authority exerted by an HR manager by directing the activities

of the people in his or her own department and in service areas (like the plant cafeteria)

• Staff authority: staff authority gives the manager the right (authority) to advise other managers or employees

• Line manager: a manager who is authorized to direct the work of subordinates and is responsible for accomplishing the organization’s tasks

• Staff manager: a manager who assists and advise line managers

• Line authority gives managers the right (or authority) to issue orders to other managers or employees. It creates a superior-subordinate relationship

• Staff authority gives the manager the right (authority) to advise other managers or employees. It creates an advisory relationship

• Line managers have line authority• Staff managers have staff authority. They cannot issue orders down the

chain of command• In popular usage, managers associate line managers with managing

functions (like sales or production) that the company needs to exist• Staff managers generally run departments that are advisory or supportive,

like purchasing, human resource management, and quality control• This distinction makes sense as long as the “staff” department is, advisory• The line manager can issue orders. The staff manager can advise

• Human resource managers are staff managers • They assist and advise line managers in areas like recruiting, hiring

and compensation• However, line managers still have human resource duties

Line manager’s human resource duties1. Placing the right person on the right job2. Starting new employees in the organization (orientation)3. Training employees for job that are new to them4. Improving the job performance of each person5. Gaining creative cooperation and developing smooth working relationships6. Interpreting the company’s policies and procedures7. Controlling labor costs8. Developing the abilities of each person9. Creating and maintaining department morale10. Protecting employees’ health and physical condition

Human resource manager’s duties1. Line function2. A coordinative function3. Staff (assist and advise) functions

Examples of HRM specialties include• Recruiters• Human resource development specialties• Job analysts• Compensation managers• Training specialists• Employment/industrial relations specialist• Employee welfare officers

Image and qualities of HR Manager• Fairness and firmness• Tact and resourcefulness• Sympathy and consideration• Knowledge of labor and other terms• Broad social outlook• Academic qualifications• Others