HRMG1021 Unit-1 K.

Rakshit

HRMG (1021) Human Resource Management

Unit-1 Introduction
Introduction: Nature, scope and signi cance of HRM - Evolution of HRM – Recent trends
in HRM – Functions of HRM – Challenges of HR managers.

1.1 Introduction:
Human Resource Management (HRM) is a relatively new approach to managing people in
any organisation. People are considered the key resource in this approach. it is
concerned with the people dimension in the management of an organisation. Since an
organisation is a body of people, their acquisition, development of skills, motivation for
higher levels of attainments, as well as ensuring maintenance of their level of commitment
are all signi cant activities. These activities fall in the domain of HRM.

Human Resource Management is a process, which consists of four main activities,

namely, acquisition, development, motivation, as well as maintenance of human
resources.

French Wendell, de nes ―Human resource management as the recruitment, selection,

development, utilisation, compensation and motivation of human resources by the
organisation.

According to Edwin B. Flippo, ―Human resource management is the planning,

organising, directing and controlling of the procurement, development, and resources to
the end that individual and societal objectives are accomplished.

1.2 Nature of Human Resources Management:

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 than 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 areas of management such as production management, nancial

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management, and marketing management. That is every manager from top to bottom,
working in any department has to perform the personnel functions.

4. people-centred: Human Resource Management is people-centred 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 classi cation 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 e ciently, a separate department
known as Personnel Department is created in most 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. Human beings can‘t be dealt with
like physical factors of production. Every person has di erent 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.

1.3 Scope of Human Resources Management:

The scope of human resources management in modern days is vast. In fact, the scope of
HRM was limited to employment and maintenance of and payment of wage and salary.
The scope gradually enlarged to providing welfare facilities, motivation, performance
appraisal, human resources management, maintenance of human relations, strategic
human resources and the like. The scope has been continuously enlarging.

The scope of HRM refers to all the activities that come under the banner of HRM. The
activities are as follows

1. Human resources planning: – Human resource planning is a process by which the

company identi es the number of jobs vacant, whether the company has excess sta
or a shortage of sta and deals with this excess or shortage.

2. Job analysis design: – Another important area of HRM is job analysis. Job analysis
gives a detailed explanation of each and every job in the company. Based on this job
analysis the company prepares advertisements.

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3. Recruitment and selection: – Based on information collected from job analysis the
company prepares advertisements and publishes them in the newspapers. A number
of applications are received after the advertisement is published, interviews are
conducted and the right employee is selected thus recruitment and selection are yet
another important area of HRM.

4. Orientation and induction: – Once the employees have been selected an induction
or orientation program is conducted. The employees are informed about the
background of the company. They are told about the organizational culture and values
and work ethics and introduce to the other employees.

5. Training and development: – Every employee goes under a training program which
helps him to put up a better performance on the job. The training program is also
conducted for existing sta that have a lot of experience. This is called refresher
training. Training and development is one area where the company spends a huge
amount.

6. Performance appraisal: – Once the employee has put in around 1 year of service, a
performance appraisal is conducted i.e. the HR department checks the performance
of the employee. Based on these appraisals future promotions, incentives, and
increments in salary are decided.

7. Compensation planning and remuneration: – There are various rules regarding

compensation and other bene ts. It is the job of the HR department to look into
remuneration and compensation planning.

8. Motivation, welfare, health and safety: – Motivation becomes important to sustain

the number of employees in the company. It is the job of the HR department to look
into the di erent methods of motivation. Apart from this certain health and safety
regulations have to be followed for the bene t of the employees.

9. Industrial relations: – Another important area of HRM is maintaining co-ordinal

relations with the union members. This will help the organization prevent strike
lockouts and ensure smooth working in the company.

1.4 Objectives of Human Resources Management:

According to Scott, Clothier and Spriegal, ―The objectives of Human Resource
Management, in an organization, are to obtain maximum individual development,
desirable working relationships between employers and employees and employees and
employees, and to a ect the moulding of human resources as contrasted with physical
resources.

The basic objective of human resource management is to contribute to the realisation of

organizational goals. However, the speci c objectives of human resource management
are as follows:

• To ensure e ective utilisation of human resources, all other organizational resources will
be e ciently utilised by the human resources.

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• To establish and maintain an adequate organizational structure of relationships among

all the members of an organization by dividing organization tasks into functions,
positions and jobs, and by de ning clearly the responsibility, accountability, authority
for each job and its relation with other jobs in the organization.

• To generate maximum development of human resources within the organization by

o ering opportunities for advancement to employees through training and education.

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

• To ensure reconciliation of individual/group goals with those of the organization in such

a manner that the personnel feel a sense of commitment and loyalty towards it.

• To identify and satisfy the needs of individuals by o ering various monetary and non-
monetary rewards.

1.5 Importance of Human Resource Management:

Human Resource Management has a place of great importance. According to Peter F.
Drucker, ―The proper or improper use of the di erent factors of production depends 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 e cient management to guide it.

• It helps management in the preparation adoption and continuing evolution of personnel

programmes and policies.

• It supplies skilled workers through a scienti c selection process.

• It ensures maximum bene t out of the expenditure on training and development and
appreciates the human assets.

• It prepares workers according to the changing needs of industry and the environment.

• It motivates workers and upgrades them so as to enable them to accomplish the

organisation's goals.

• Through innovation and experimentation in the elds of personnel, it helps in reducing

costs and helps in increasing productivity.

• It contributes a lot to restoring industrial harmony and healthy employer-employee

relations.

• It establishes a mechanism for the administration of personnel services that are

delegated to the personnel department.

1.6 Evolution and Developments of HRM:

The history of the development of HR management in India is comparatively of recent
origin. But Kautilya had dealt with some of the important aspects of human resources
management in his “Arthasastra,” written in 300 B.C. The government in those days
adapted the techniques of HRM as suggested by Kautilya.

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In its modem sense, it has developed only since independence. Though the importance
of labour o cers was recognized as early as 1929, the appointment of o cers to solve
labour and welfare problems gained momentum only after the enactment of the Factories
Act of 1948. Section 49 of the Act required the appointment of Welfare O cers in
companies employing more than 500 workers. In the beginning, the Government was
concerned only with limited aspects of labour welfare. The earliest labour legislation in
India dealt with certain aspects of Indian labourers (Regulation of Recruitment,
Forwarding and Employment) sent to various British colonies in 1830.

1.7 Recent Developments:

Recent developments in the area of human resources management include treating the
employees as economic, social, psychological and spiritual men and women. The
important aspects of the development of human resources management year wise is
shown below:

• In the year 1995, emphasis has been shifted to human resources development (HRD).

• In the year 1998, emphasis on HRD, cultural diversity, teamwork and participative
management has been continuing. Further, the emerging areas are total quality in
management in HRM, empowering the employees and developing empowered teams
and integrating HRM with strategic management as the top management, realised that
HRM is the core of competencies of the 21st-century corporations.

• In the year 1999, the second National Commission on Labour was setup to study the
labour conditions.

• In the year 2001, emphasis has been on 'smart sizing of the organisations'.

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• In the year 2002, emphasis has been shifted to the positive attitude of the candidate
employee rather than skill and knowledge.

• In the year 2003, shift from intelligence quotient (IQ) to emotional quotient (EQ).

• In the year 2004, shift from skilled workers to knowledge workers.

• In the year 2005, shift from a hierarchical structure to exible and virtual structures.

• In the year 2006, HRM has become the core of the strategic management level.

• In the year 2007, the concept of HRM has been relegated to human capital
management.

• In the year 2008, emphasis has been on retention management and development of
own human resources by companies through alliances with universities/colleges. In the
same year, there was a decline in business operations due to the global economic
recession and crisis.

• In the year 2009, a continuation of job cuts, pay costs and lay-o s due to prolonged
global recession and crisis.

• In the year 2014, emphasis is shifted to talent management and exible human
resource policies and practices.

1.8 HR Challenges:
Organizations have to face lots of challenges in the present scenario. These challenges
may be categorized according to their primary focus; the environment, the organization,
or the individual.

Environmental Challenges:
The environmental challenges are the forces external to the rm which in uences the
performances beyond management's control. The strategist has to monitor the external
environment constantly for opportunities and threats. The organization has to prosper and
survive in a volatile environment of change. The rapid change can put employees under a
great deal of stress, unless the rm has to develop a support mechanism to keep it
manageable both the organization and employees may have to face a heavy price.

Globalization is one of the most important challenges faced by organizations by

competing against foreign rms, both domestically and abroad. The organizations are
always in the trouble with international laws. The e ectiveness of human resources largely
depends on how e ectively deals with international laws. Expansion of service sector
employment is linked to a number of factors, including changes in consumer tastes and
preferences, legal and regulatory changes in the way businesses are organized and
managed.

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Organizational Challenges:
Organizational challenges are concerned or internal to a rm and is the byproduct of
environmental forces because the organizations cannot run in a vacuum. The challenges
include the need for competitive position and exibility, the problems of down sizing and
organizational restructuring, the use of self-managed work teams, the rise of small
businesses, the need to create a strong culture, the role of technology and the rise of
outsourcing.

The rise of telecommunications and information technology has a greater impact on the
overall working mechanism of the organization. Outsourcing has now become a fade in
modern rms. Their motivation is very simple; Outsourcing saves money. It creates
several HR challenges for rms. The employees may face layo and also the rm should
remain accountable for the actions of its subcontractors. The subcontractors have to be
evaluated and watched carefully.

Induvidual Challenges:
Human resource issues at the individual level address the decisions most important to the
organizations competitive position, which is likely to be a ected to most of the
employees. It has much impact on the environment. The most important individual
challenges today involve matching people and organizations, ethics and social
responsibility, productivity, empowerment, brain drain and job security. This can
contribute to rm performance most when the rm uses these strategies to attract and
retain the potential employees who can best t with the company culture and overall
business objectives. The employee's expectations that the organization has to behave in
the best possible behave ethically are increasing.

The rm has to develop a committed, enthusiastic workforce by implementing the

process of empowerment. This encourages employees to be creative, risk-taking, which
acts as the organization a competitive edge in a fast-changing environment. The brain
drain and job insecurity is the common phenomenon in the present organizational
scenario.

1.9 Di erences between Personnel Management and Human

Resources Management:
Personnel Management is di erent from Human Resources Management. Personnel
means persons employed. Hence, personnel management views the man as economic
man who works for money or salary. Human resources management treats the people as
human beings having economic, social and psychological needs. Thus, HRM is broader in
scope compared to personnel management.

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Di erences Between Personel Management and HRM

Dimension Personnel Management Human Resource
Management
Beliefs and Assumptions
Contract Rules Careful delineation of Aim to be ‘beyond contract’
written contracts. ‘can do’ outlook.
Guide to Management Clear rules/mutality Business-need’
Action procedures
Behaviour referrent Norms/customs and Values/Mission
practise
Managerial task Monitoring Nurturing
Nature of relations Pluralist Unitarist
Con ict Institutionalised De-emphasised
Strategic Aspects
Key relations Labour management Customer
Initiatives Piecemeal Integrated
Corporate plan Marginal to Central
Speed of decision Slow Fast
Line Management
Management role Transactional Transformational leadership
Key managers Personnel/ IR Specialists General/Business/Line
managers
Communication Indirect Direct
Standardisation High (e.g., Parity an issue) Low (e.g., ‘parity’ not seen
as relevant)
Prized management skills Negotiation Facilitation
Key Levers
Selection Separate, marginal test Integrated, key task
Pay Job evaluation ( xed grade) Performance-related
Conditions Separately negotiated Harmonization
Labour management Collective bargaining Towards induvidual
contracts contracts
Thrust of relations with Regulated through facilities Marginalized (with
stewards and training exception of some
bargaining for change
models)
Job categories and grades Many Few
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Di erences Between Personel Management and HRM

Dimension Personnel Management Human Resource
Management
Communication Restricted ow Increased ow
Job design Division of labour Teamwork
Con ict handling Reach temporary truces Manage climate and culture
Training and development Controlled access to Learning companies
courses
Foci of attention for Personnel procedures Wide ranging cultural
interventions structural and personnel
strategies

1.10 Challenges of HRM:

Managing Human Resources in an organization has never been an easy task. In the past
few years, challenges of HRM have only grown with the rapid growth of technology, the
fast-paced software updates and remote working has made HR management even more
challenging. For an e ective HR management system, the challenge of HRM is to make
sure that the time, money, and resources of the organization are well-spent. Furthermore,
they make sure that employees have the required resources to perform their best and
reach their highest productivity levels.

Challenges of HRM faced by Managers:

1. Attracting Top Talent: As the demand for highly trained professionals at the ‘top of
their game’ grows, it becomes a challenge for HR managers to attract the best
talents. Managers should pay attention to how well an employee ts into the
organization; along with the job role. Factors like an employee’s dedication, work
ethic, and t in your company are more crucial than any other skills he/she might have
at present.

2. Embracing Change with an Open Mind: One of the major challenges in HRM is to
keep up with continuous changes in the world Change is the only constant, however,
it is up to the HR managers to embrace the change, and prepare their employees for
the same. Since HR managers are the strategic resource planners of the organization
they must ensure that the company doesn’t have a de cit or a surplus of human
resources.

3. Developing the Leaders of Tomorrow: HR Managers constantly face the challenge

of mentoring and developing the future pillars of an organization. This is one of the
trickier challenges HR Managers face because a lot of employees have a poor
relationship with their managers. However, developing your employees for better roles
helps you save the costs of recruiting and training a new employee. Furthermore, an
employee that has grown within the company has grassroots knowledge. While there

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isn’t a one size ts all solution here, HR managers can take steps to develop
employees into leaders of tomorrow.

4. Building a Culture of Continuous Learning: Learning is a key factor in any

organization. Upskilling employees helps a company to gain an edge in the market
however, it is a di cult challenge in HRM. Likewise, employees feel stimulated, and
engaged, and gain development opportunities. However, managers should ensure
that the skills gained by a set of employees serve to enhance their job roles. If the
workplace has a culture of learning and developing oneself this will ensure that every
employee grows with every passing year.

5. Building a Diverse Team: As connectivity improves, the world becomes a smaller

place. One of the HR challenges now faces is the challenge of managing a workforce
with diverse backgrounds, ideas, and experiences. Also, This challenge of HRM
comes with the responsibility to build a corporate work environment that’s welcoming
for everyone. Building an inclusive team doesn’t just bring fresh perspectives into the
company but also builds a chain of a diverse network. If di erent voices are heard in
your organization, the company will be more innovative and more sensitized to
cultures.

6. Looking after Health and Safety: Maintaining health and safety standards ranks very
high on any HR Managers priority list. The general well-being of employees is what
keeps an organization running and growing. Along with physical well-being, HR
professionals must also closely monitor the workload and stress levels of employees
in an organization. A sustained period of high stress and anxiety is a cause of concern
for the workforce.

7. Managing the Turnover Rates: One of the largest challenges of HRM is the
challenge of reducing the turnover rates in an organization. One solution to this is to
create a quality employee experience. High turnover rates in any organization lead to
an increase in cost and use of resources. Apart from the cost, high turnover rates can
also a ect the morale of employees in an organization. Understanding the problems of
employees can play a major role in reducing turnover rates.

8. Globalization: HR managers often deal with teams and workforces in geographically

distributed areas. A company’s customer demographic is also more diverse. HR
managers are tasked with devising new plans and strategies to build an inclusive
workforce that leverages the technology of the 21st century. In addition, managers
must embrace the diversity of their workforce, and work towards reaching a new
audience through them. It might be di cult to have the same e ect virtually on an
employee however, there is software that can help you build a work culture online.

9. Compliance with Laws and Regulation: Many HR professionals struggle with

keeping track of laws as well as regulations applicable to the company. Also, this is
one of the crucial challenges in HRM. Not having the correct policies in place can
a ect the company’s growth and resources. Failure to have the right policies might
lead to lawsuits, nes, or even closure of the company at times. As well as HR
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professionals should always stay updated with the changes in regulations ranging
from labour laws and working conditions to CSR.

10. Retaining Top Talent: Retaining top talent is a challenge for HRM that truly a ects
the organization. Not only nurturing but also retain the top talent is important in the
organization. A high turnover rate is not only bad news for any company but also it
costs resources and adds pressure to the top management. Without the top talents
working for your organization, it will be di cult to truly build a company that lasts.
Without a steady set of leaders, an organization will su er greatly.

Challenges of HRM faced by Organizations:

1. Turnover: A high employee turnover rate can not only a ect the bottom line of
business in any organization but also, the employees who are satis ed with their jobs
don’t usually leave. A company must collect data and also, try to observe the turnover
trends over time. This might be a pointer as to where the problem is. Companies can
provide desirable bene ts, pleasant working conditions, opportunities for
advancement and also, decent pay to their employees.

2. Productivity: The constant e ort to enhance employee productivity has become the
new business norm. Not only Managing but also maintaining high employees
productively needs quick, smart, and consistent procedures and also, and HR
professionals are tasked with keeping a track of all employees, addressing their issues
& lling the gaps.

3. Relationship with Customers: Customer service is arguably the most critical factor
in an organization’s long term success. Especially, Customers can quickly use social
media platforms to express their displeasure if they aren’t satis ed. Consultants must
keep a keen eye on feedback as well as leverage 21st-century technology to improve
their customer satisfaction.

4. Uncertainty about the Future: Organizations not only hire trained professionals but
also experts to look at trends and patterns in the current market and determine the
future course of action. Being able to predict and act upon the changing corporate
scenario is the di erence between success and failure in an organization.

5. Financial Management: A CFO or a nancial consultant is crucial for any

organization, no matter how small it is. A nancial advisor helps in making robust
nancial calls regarding cash ows, pro t margins, reducing costs as well as help to
increasing productivity. A business idea backed by numbers is one that is more than
likely to succeed.

6. Monitoring Performance: Performance indicators provide metrics for how well a

business is doing. KPI– which covers employee as well as customer satisfaction,
internal process quality & nances is a key indicator. Organizations must monitor their
performance with in-depth reviews and analysis; rather than just relying on ambiguous
sales numbers.

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7. Regulation and Compliance: As mentioned earlier, it can be di cult for CEOs or top
managers to keep a track of laws and regulations applicable to their company. Some
laws and regulations might not be apparent at rst glance, hence the documentation
should be read thoroughly. Also, it is advisable to hire an external consultant or
entrust someone within the company to keep up with all the regulations. Non-
compliance may cost nes or worse for a company.

8. Understanding Generation Z: In the past few years, businesses have had to adapt to
new social market channels ( Instagram as well as Facebook), and also deal with
globalization, and adapt to the change. Businesses have to learn to work with the
millennial generation. Also, They have to work to understand their point of view, work
style, and what they might potentially bring to the table.

9. Technology: Technology is changing at a lightning-fast pace. New methods of

working (Remote work), new procedures for development (DevOps), new channels for
marketing (social media), app development, and cloud computing have all evolved
within the last decade. Additionally, for existing organizations, this becomes a matter
of keeping up with the technology.

10. Meeting Aspirations of Employees: Once a company is done with the process of
onboarding new employees, the next challenges for HRM are to retain them.
Companies can start with simple activities such as mapping their employee goals,
establishing a workplace based on trust and respect, and keeping communication
open to meet the aspirations of their employees and build loyalty.

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