BUSINESS ADMINISTRATION

YEAR 1

HUMAN RESOURCE
MANAGEMENT
 Contents
Human Resource Management
UNIT 1

1.1 Introduction to Human Resource Management 02

1.1.1 Meaning and Definition of Human Resource Management

1.1.2 Features of Human Resource Management

1.1.3 Scope and Functions of Human Resource Management

1.1.4 Evolution and Trends in Human Resource Management

1.1.5 Human Capital Managdment

1.2 Role of the HR Manager 07

1.3 Characteristics of the Workforce 08

1.3.1 Meaning

1.3.2 Traits of the Workforce

1.4 Human Resource Planning 10

1.4.1 Definition and Objectives of Human Resource Planning

1.4.2 Process of Human Resource Planning

1.4.3 Human Resource Demand Forecasting Techniques

1.4.4 Human Resource Supply Forecasting Techniques

1.5 Factors Affecting Human Resource Information System (HRIS) 17

1.5.1 Introduction to HRIS

1.5.2 Additional Concepts

1.5.3 Factors Influencing HRIS Implementation

1 HUMAN RESOURCE MANAGEMENT

Define the Human Resource Management concept and its key features.

Analyse the various responsibilities and roles of HR managers.

By the end
Analyse the strategic level strategies and issues needed for the selection
of this unit, and development of human resources.
you should Identify the essential traits and characteristics of an effective workforce.
be able to: Define and comprehend the objectives of Human Resource Planning.

Evaluate the factors that influence the implementation of HRIS.

Opening Case: Navigating Challenges: Amazon's HR Response to

Worker Protests and Policy Reform
In recent years, Amazon has faced significant scrutiny over the working conditions in its warehouses
and delivery centres. Numerous reports and investigations have highlighted several issues faced by
workers, including long working hours, stringent productivity demands, limited breaks, and safety
concerns. This led to widespread discontent among employees, culminating in organised protests
aimed at shedding light on these issues and pushing for substantial changes.

Worker Concerns and Protests

Amazon workers articulated their frustrations through public protests, highlighting several key
areas of concern:
• Wage Discrepancies: Workers voiced their dissatisfaction with wage structures that they
believed did not fairly compensate them for their intensive labour.1
• Productivity Pressures: Many reported that the productivity quotas set by Amazon were
unrealistic and contributed to a stressful work environment.
• Work-Life Balance: Employees struggled to maintain a healthy balance between their work
responsibilities and personal life, exacerbated by long hours and demanding schedules.
• Safety and Ergonomics: There were numerous reports of inadequate safety measures and
poor ergonomic practices within the workplace, leading to injuries and health issues among
staff.2
• Union Representation: Amidst these conditions, there was a strong push for unionisation as a
means to formally represent workers’ interests and negotiate better terms collectively.3

HR Interventions and Improvements

In response to the mounting pressure and public outcry, Amazon’s Human Resource department
undertook several initiatives aimed at addressing these concerns and reforming workplace
policies:
• Wage Increases: One of the first measures was to reevaluate and enhance the wage
packages for warehouse and delivery personnel, ensuring better compensation for their
efforts.
• Enhanced Safety Protocols: Amazon implemented more rigorous safety protocols and
introduced new safety equipment to protect employees from workplace hazards.

1 Introduction to human resource management

 • Employee Engagement Initiatives: The company rolled out various engagement activities, including
regular feedback forms and forums where employees could voice concerns directly to management.
• Technological Enhancements: Significant investments were made in technology to improve the
ergonomic setup of workstations and reduce the physical strain on workers.4
Amazon's situation underscores the dynamic and multifaceted nature of Human Resource Management
in contemporary settings, highlighting the need for HR to act swiftly and effectively to align company
policies with the well-being of its workforce.

Discussion Questions

1. Discuss the effectiveness of Amazon’s HR response to the

worker protests? What additional steps could have been taken
to address the employees' concerns more thoroughly?

2. Considering Amazon operates globally, how might cultural

differences impact the implementation of HR policies and
employee perceptions in different countries?

INTRODUCTION TO HUMAN RESOURCE

1.1 MANAGEMENT
Human resource management day to day
In today’s competitive global business environment, the success of an organisation significantly
depends on its people. Human Resource Management (HRM) is crucial in managing these vital assets,
influencing an organisation's culture, productivity, and performance. This unit will introduce you to key
HRM concepts and processes—from recruitment to performance management—highlighting their
impact on both the organisation's success and employee well-being.
As we explore the evolving role of HRM amid technological and societal changes, you'll learn how it
supports diversity, boosts engagement, and aligns with strategic goals. By the end of this unit, you'll
understand HRM’s critical role and be prepared to address its challenges, propose solutions, and
enhance organisational sustainability. So, let's embark on this enlightening journey into the domain of
Human Resource Management, where every day brings new opportunities and challenges, and where
people are at the heart of every organisational achievement.

MEANING AND DEFINITION OF HUMAN

1.1.1 RESOURCE MANAGEMENT
Human resources are the backbone of any organisation, distinguished from material resources
because they encompass the human element in business operations. Unlike inanimate resources,
employees can feel, think, and react, necessitating a tactful management approach. In production,
while both human resources and machines are essential, the human aspect is paramount due to its
capacity for creativity and innovation.
According to Peter F. Drucker, the future success of a business relies heavily on the performance of its
managers, emphasising that material resources alone cannot achieve organisational goals. Human
resources, spanning all levels from top to operative management, play a crucial role in leveraging
material resources to meet business objectives and drive organisational advancement.
Human resources are vital for the success of any organisation and their effective management is
crucial. HRM challenges arise from the need to ensure that employees are efficient, satisfied, and

2 Introduction to human resource management

cooperative, as the organisation's progress depends significantly on these factors. Dissatisfaction and
uncooperativeness among employees can lead to numerous organisational problems and impede
growth.
Human Resource Management (HRM) aims to match organisational needs with the right personnel,
fully develop their potential, and use their abilities for mutual benefit. It also focuses on maintaining a
stable workforce through fair compensation and adequate welfare facilities, all to achieve
organisational objectives. This management function supports recruitment, selection, training, and

“
development, placing significant emphasis on the human dimension within organisations.

Definition of Human Resource Management

Human resource management is that branch of management which is

responsible on a staff basis for concentrating on those aspects of
relationship of management to employees and employees to
employees and with the development of the individual and the group.
The objective is to attain maximum individual development, desirable
working relationship between employers and employees and employees
and employees, and effective moulding of human resources as
“
contrasted with physical resources.

Scott and others

FEATURES OF HUMAN RESOURCE

1.1.2 MANAGEMENT
Human Resource Management (HRM) plays a critical role in managing people across various organi-
sational levels, catering to their needs and expectations. It's a comprehensive function focused on opti-
mising workplace management and extends its application beyond just commercial businesses to
government, educational, and other sectors, making it a universal discipline.

Key Functions of HRM

• Employee-Centric Approach: HRM is fundamentally about fostering employee engagement, moti-
vation, and cooperation. It aligns the goals of individuals with those of the organisation, ensuring
both personal and professional growth.

• Fosters Employee Growth: Dedicated to maximising the potential of employees, HRM incorporates
Human Resource Development (HRD) activities like training, career planning, and organisational
development.

• Integral to Organisations: HRM is crucial in recruiting, selecting, and developing talent, ensuring that
the best individuals are brought on board and adequately nurtured.

• Continual Function: As a persistent activity within organisations, HRM addresses ongoing personnel
issues, which are critical for maintaining operational continuity.

Strategic Impact of HRM

• Promotes Cooperation: HRM is essential for securing employee cooperation to achieve organisa-
tional goals, fostering a team spirit that contributes to overall success.

• Objective and Future-Oriented: HRM not only focuses on current organisational needs but also
prepares for the future by developing competent and motivated employees, aligning individual
aspirations with organisational goals for mutual long-term benefits.

3 Introduction to human resource management

 • Challenging and Multidisciplinary: Managing human resources is complex due to the dynamic and
emotional nature of individuals. HRM requires a multidisciplinary approach, drawing from psycholo-
gy, economics, and sociology, to handle these challenges effectively and foster organisational
growth through a dedicated workforce.

HRM is vital for the holistic development of human resources, ensuring their alignment with organisa-
tional objectives, which in turn drives overall success and sustainability.

SCOPE AND FUNCTIONS OF HUMAN

1.1.3 RESOURCE MANAGEMENT
The functions of HRM can be classified into two categories:
a. Managerial functions involve planning, organizing, directing, and controlling the manpower of an
organization. Similar to other managers, HR managers perform these four functions along with other
operating/service functions, which are explained below.

b. Operating functions of HRM are concerned with specific activities related to procuring, developing,
compensating, and maintaining an efficient workforce for the benefit of an organization.

1. Procurement of Manpower (Human Resource Acquisition): Procurement involves the strategic plan-
ning and acquisition of necessary manpower based on human resource planning. This includes fore-
casting, recruitment, selection, appointment, and induction, along with managing promotions and
transfers.
2. Development of Manpower: This function focuses on enhancing employee skills through training,
career development programs, and executive development for higher-level managers. It addresses
the evolving needs of the organisation as it grows and diversifies.
3. Performance management and compensation: Performance management involves planning,
appraising, and counselling employees' performance for various purposes. Additionally, a fair system
of remuneration payment needs to be established to provide monetary compensation to employees.
This helps create a satisfied and motivated workforce.
4. Integration of interests of manpower and the organisation: HR management aims to reconcile the
interests of individual members with those of the organisation, ensuring cordial industrial relations.
Balancing individual, social, and organisational goals and interests is a challenge in personnel man-
agement.
5. Motivation and maintenance of manpower: Creating a motivational environment favourable to the
organisation enhances the quality of production and reduces costs. Attention must be given to health
and safety measures, proper working conditions, welfare facilities, and non-monetary benefits to
motivate employees. Maintaining a stable and satisfied workforce is crucial, requiring cordial indus-
trial relations, raised employee morale, and measures for employee retention.
6. Provision of welfare facilities: Employees are provided with various welfare facilities such as medical,
educational, recreational, housing, and transportation services. These facilities contribute to employ-
ee efficiency and well-being, creating a satisfied workforce. Ensuring safety and security measures at
the workplace is also a function of HR management.
7. Cordial industrial relations: This function focuses on maintaining good relations between manage-
ment and employees, particularly the operative staff. It involves designing an industrial relations
system, managing discipline, settling employee grievances, and resolving disputes between man-
agement and workers.
8. Miscellaneous functions: These include maintaining employee service records, promotions and
transfers, maintaining cordial industrial relations, introducing rational grievance procedures, evalu-
ating employee performance, career planning, maintaining discipline, administering disciplinary
actions, and ensuring compliance with labour laws. These functions are performed regularly to bene-
fit employees and ensure continuity in organisational production activities, thereby preventing man-
power-related issues.

4 Introduction to human resource management

 EVOLUTIONS AND TRENDS OF HUMAN
1.1.4 RESOURCE MANAGEMENT
The historical evolution of HRM can be summarised as follows:

Pre-Industrial Era
Historical shifts, like the
end of feudalism and rise
of free employment, led
to the emergence of HRM.
Mediaeval Era
The relationship was
Master and Slave. But,
Masters used to have
some concern for the
Industrial Era slaves' difficulties.
A shift from craftsmen to
laborers, accompanied
by strict supervision and
a hire-and-fire system.
Trade Union Era
As laborers realized the
strength of collective
action, the trade union
movement gained
Social Responsibility Era momentum.
Employers embraced
social responsibility,
introducing welfare
measures, improving
working conditions. Scientific Management I
The relationship was
between an expectant
owner and a skilled
worker.
Scientific Management II
Scientific management
principles faced criticism
for its impact on worker
alienation and the loss of
control over the Human Relations Era
production process.
The relationship was
between Employer and
Employees (equal
human beings).

5 Scope and Functions of Human Resource Management

1. Pre-Industrial Era (1400-1700 AD): Between 1400 and 1700 AD, while formal HRM didn't exist, key devel-
opments laid its foundation. The end of feudalism freed labourers, creating modern labour markets. A
shift from subsistence agriculture to a commercial economy, urban growth, and wealth redistribution
fostered economic change. Town expansions and the rise of a skilled middle class, including crafts-
men and merchants, paved the way for structured workforce management.
2. Mediaeval Era: Serfdom was a labour system where landless peasants worked for landlords in
exchange for accommodation, support, and resources. While serfs gained some benefits, their free-
dom was restricted by debt and obligations to landlords. Unlike slaves, serfs were not bought or sold
but were required to pay rent for the land they cultivated.
3. Industrial Revolution Era (1850-1900): The First Industrial Revolution transformed the labour land-
scape as merchants set up factories and employed workers under contracts that largely benefited
employers. Skilled craftsmen became labourers, subjected to strict supervision, discipline, and the
uncertainties of a hire-and-fire system. During this era, Adam Smith, known as the father of Econom-
ics, championed ideas for maximising wealth and profits. The introduction of machines enabled mass
production, marking a significant shift in economic and industrial practices.
4. Trade Union Era (1900-1970): Labourers' efforts to organise were initially suppressed, but their
increasing numbers led to the rise of the trade union movement, harnessing the power of collective
action. In response, governments introduced labour acts to ensure safety, while employers acknowl-
edged the need for better working conditions, adopting measures like reduced working hours and
workplace amenities.
5. Social Responsibility Era (1970-1990): In the 20th century, more humane approaches led to the intro-
duction of welfare measures and improved working conditions. Employers embraced social respon-
sibility by providing housing, reducing long working hours, and minimising child labour—practices
early advocated by Robert Owen. Recognizing the need for better conditions, they implemented
initiatives like housing colonies and educational opportunities for workers.
6. Scientific Management I (1990-2000): This era, divided into two parts, introduced Frederick Winslow
Taylor's Scientific Management principles, focusing on efficiency through standardised tasks, time
and motion studies, and clear work division.

Taylor emphasised productivity enhancements using better tools and incentives like piece-rate wages.
His approach restructured production lines, divided tasks, and increased supervision to optimise efficien-
cy and output.

Frederick W. Taylor's principles of Scientific Management emphasise:

• Systematic Approach: Advocating science-based techniques over rule-of-thumb methods.
• Work Harmony: Promoting harmony rather than discord.
• Collaborative Effort: Focusing on cooperation instead of individualism.
• Efficiency and Productivity: Encouraging maximum output instead of restricted production.

Taylor's influence extended to organisational structure, highlighting the need for distinct HR functions,
including:

• Job Analysis and Design: Demonstrating that work can be systematically analysed and improved for
better job matching and efficiency.
• Employee Selection and Training: Emphasising the importance of meticulous selection procedures
and effective training methods.
• Performance-based Compensation: Proposing differential pay based on productivity.
• Leadership and Worker Engagement: Stressing the necessity for management to earn workers’ trust
and lead effectively.

7. Scientific Management Era - II: The second phase of the Scientific Management Era, shaped by the
First World War, saw women entering the workforce to fill labour shortages, prompting negotiations
with trade unions and the appointment of Welfare Secretaries to safeguard their rights. However, Tay-
lor's principles faced criticism for task monotony, excessive mechanisation, and worker alienation.
Karl Marx's concept of alienation further underscored workers' lack of control and influence over pro-
duction decisions.

6 Scope and Functions of Human Resource Management

8. Human Relations Era ( 2000- present): The Human Relations Era emerged with a focus on the human
factor in the workplace, driven by studies like the Hawthorne experiments and insights from
behavioural scientists and industrial psychologists. The establishment of the International Labour
Organisation (ILO) underscored the importance of treating workers as individuals. Research, includ-
ing Maslow's hierarchy of needs, emphasised the role of recognition, job security, social and psycho-
logical fulfilment, and collective interests in motivating employees.
9. The Human Relations Era evolved further as welfare offices transitioned into personnel managers,
adapting to a changing business landscape and a more diverse workforce. Management empha-
sised employee motivation, incorporating theories like Frederick Herzberg's Motivation-Hygiene
Theory and Douglas McGregor's Theory X and Theory Y. Rensis Likert's Participative Decision-Mak-
ing Theory marked the shift into the modern era of Human Resource Management, which continues
today.

1.2 THE ROLE OF THE HR MANAGER

Connecting to the Core:

Think of your current skills. Are there personal or professional skills you
would like to develop?

HR roles have expanded to include diversity and well-being programs, crucial for adapting to global
market dynamics and driving business success.
1. Recruitment and Staffing: Identifying staffing needs, advertising job openings, interviewing candi-
dates, and hiring qualified individuals.
2. Training and Development: Organising orientation for new employees, providing ongoing training for
staff, and helping with professional development.
3. Employee Engagement: Creating a positive work environment, planning team-building activities,
and boosting employee morale to retain talent.
4. Compensation and Benefits: Managing payroll, designing competitive compensation structures, and
handling employee benefits like health insurance and retirement plans.
5. Performance Management: Setting performance standards, evaluating employee performance, and
providing feedback to help employees improve.
6. Diverse Functional Roles:
• Counsellor: Offering advice and support to employees.
• Mediator: Resolving conflicts between different parties within the organisation.
• Spokesperson: Representing the HR department internally and externally.
• Problem Solver: Addressing and resolving workplace issues.
• Change Agent: Leading and managing change within the organisation.
7. Administrative Responsibilities: Handling the administrative aspects of the HR department.
8. Welfare-Oriented Tasks: Focusing on employee well-being and welfare programs.
9. Crisis Management: Addressing and managing emergencies or unexpected situations.
10. Workplace Safety: Implementing safety policies, conducting safety training, and ensuring a safe
working environment for all employees.

7 Scope and Functions of Human Resource Management

11. Legal and Ethical Responsibilities: Ensuring all HR practices comply with labour laws and ethical
standards.
12. Managerial and Job-Related Qualities: Demonstrating managerial qualities like intelligence, emo-
tional stability, and analytical skills, as well as job-related skills such as effective communication and
strong human relations.
13. Strategic Contributions: Making strategic contributions to help the organisation maintain a competi-
tive advantage.
14. HR Policy Formulation: Developing and updating human resource policies and procedures to guide
how various HR matters are handled.

Think and Answer:

What are your perceptions of what an HR manager does on a

dayto-day basis? Research this job title and describe your findings. Is
this the type of job you expected?

1.3 CHARACTERISTICS OF THE WORKFORCE

The workforce, also known as the working class, comprises individuals who earn a livelihood by selling
their labour to employers. It consists of three main groups: industrial workers, agricultural workers, and
office or shop employees. Each category possesses its own professional skills and experiences changes
in numerical strength and composition. Among these groups, industrial workers are considered the most
powerful, organised, and influential segment of the workforce.

Traits of the Indian Workforce

The Indian workforce encompasses unskilled, semi-skilled, and skilled workers. It also includes techni-
cians, engineers, and experts in fields such as telecommunication and computer programming. The
industrial labour force, involved in industrial production, is employed in public sector undertakings,
private sector enterprises, as well as the small-scale sector. Workers engaged in the production field are
considered factory workers, falling under the purview of the Factories Act. The Indian workforce operates
in both the organised and unorganised sectors, and there are ample employment opportunities avail-
able for the workforce in India. However, unemployment remains a significant issue.

Key Characteristics of Today's Indian Workforce:

1. Composition of Workforce: By 2030, India is expected to become a
global workforce leader with 1.04 billion working-age individuals,
contributing 24.3% to global workforce growth. With a median age
of 28.4 years and a significant youth segment, India's demo-
graphic advantage is distinct compared to ageing populations
in developed nations. Successful economic contribution will
depend on integrating this youthful workforce effectively.5
2. Employment in Factories: In the financial year 2022-2023,
India's factory employment reached 18.5 million workers, mark-
ing a 7.4% increase from the previous year. This growth reflects a recovery in the
manufacturing sector following the impacts of the COVID-19 pandemic.6 Despite
being a small fraction, this industrial labour force is crucial due to its significant contribution to indus-
trial production and is seeing rapid growth.

8 Scope and Functions of Human Resource Management

3. Industrial Labour Force in India: The term "industrial labour" in India refers to workers in organised
industries under the Factories Act, excluding cottage industry workers. Growth has been slow due to
sluggish factory expansion and the adoption of automation and computer technology. Despite
significant production capabilities, the demand for labour in these units is limited. The decline in tradi-
tional sectors like textiles in Mumbai and the rise of IT and telecom sectors illustrate a shift towards
more skilled industrial labour. This workforce is becoming a dominant force in the economy, thanks to
industrial expansion, globalisation, and SEZs.
4. Roots in Villages: Traditionally, India's industrial workforce has migrated from villages to cities, main-
taining ties to rural life. This trend is changing; many workers are now city-based over generations,
with newer workers lacking rural connections. This urban workforce benefits from stable jobs and
access to training, leading to better employment conditions.
5. Educational Advancements: Previously uneducated and exploited, the industrial workforce has
become more educated, leading to higher wages and better job positions. Modern workers often
have formal qualifications and are proactive in seeking training and career advancement, making
them well-prepared for modern industrial challenges.
6. Unity and Diversity: Historically fragmented by religion, language, and caste, the industrial work-
force's unity has been weak, affecting trade union strength. However, as workers become settled in
urban environments, economic issues are increasingly uniting them, overcoming traditional divisions.
7. Labour Turnover: Historically high labour turnover due to socio-economic factors is decreasing
among industrial workers, attributed to fewer job opportunities, the need for specialised training, and
stable working conditions in industrial townships. However, turnover remains high among supervisory
and highly qualified positions in certain sectors.
India's industrial workforce is undergoing significant transformations, with improvements in size, struc-
ture, education, and earnings. They are increasingly unified in addressing challenges and are poised for
substantial growth, expected to significantly enhance industrial productivity and share in the sector's
prosperity.

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9 Characteristics of the Workforce

 1.4 HUMAN RESOURCE PLANNING

OBJECTIVES OF
1.4.1 HUMAN RESOURCE PLANNING
"Manpower Planning" and "Human Resource Planning" (HRP) are synonymous, with the latter being the
modern, more comprehensive term. HRP involves assessing the quantity and quality of manpower an
organisation needs and planning accordingly. This includes estimating future workforce size and composi-
tion, and creating managerial succession and replacement plans. Essentially, HRP strategically manages
the procurement, development, allocation, and utilisation of human resources, laying the groundwork for
recruitment and selection processes.

There are four main areas of focus in HRP:

Forecasting the enterprise's future

manpower requirements.
1.

Acquiring the necessary manpower from

2. various internal and external sources through
recruitment and selection.

Developing the workforce through education,

training, and development programs to ensure 3.
the availability of qualified personnel.
Maintaining a stable workforce through
4. competitive wages, welfare initiatives, scientific
personnel policies, and other facilities.

Fig 2 : Areas of focus in HRP

HRP involves forecasting an organization's future demand for the right type and quantity of people.It
covers aspects such as manpower allocation, manpower utilization, and human resource development
(HRD).

Definition of human resource planning:

01
The process of determining
manpower requirements and
the means for meeting those
requirements in order to carry
02 Strategy for the acquisition,
utilisation, improvement and
preservation of an enterprise's
human resources. It relates to
establishing job specifications
03 Human resource planning is a
process of determining and
assuming that the organisa-
tion will have an adequate
number of qualified persons,
out the integrated plan of the
or the quantitative require- available at the proper times,
organisation.
ments of jobs determining the performing jobs which meet
- Coleman number of personnel required the needs of the enterprise
and developing sources of and which provide satisfac-
manpower. tion for the individuals
involved.
- Stainer
- Beach

10 Characteristics of the Workforce

 THE PROCESS OF HUMAN RESOURCE
1.4.2 PLANNING
The Human Resource Planning (HRP) process is of utmost importance and encompasses several critical
steps. It is a comprehensive and extensive process that involves predicting personnel requirements,
evaluating personnel availability, and aligning demand and supply factors through various
personnel-related initiatives. The overall objectives of the organization and the business environment
significantly influence this HRP process. Determining the required workforce based on organizational
objectives and plans serves as the initial phase of the HRP process. This necessitates HR forecasting, where
the manpower needed for the organization's growth and expansion initiatives must be estimated. Several
techniques are available for such estimations. In essence, estimating HR requirements acts as the starting
point for the HRP process, followed by subsequent stages such as recruitment, selection, appointment,
placement, orientation, training, and more.

The steps involved in the Human Resource Planning process are as follows:

Step 1 Analyzing organizational plans.

Step 2 Forecasting the demand for human resources (Manpower forecasting).

Step 3 Forecasting the supply of human resources.

Step 4 Estimating gaps in manpower.

Step 5 Formulating action plans to address shortages or surpluses in manpower.

Step 6 Monitoring and controlling the implementation of action plans.

Details of steps Involved In Human Resource Planning:

1. Analysing organisational plans: In this first or starting step in the process of HRP, the objectives and
strategic plans of the organisation are critically analysed. Plans relating to production targets, technol-
ogy to be used, marketing and finance, etc give an idea about the volume of future work activity. It is
also necessary to decide the time/period for which human resource plans are to be prepared. The
future organisation structure and job design should be made clear so as to anticipate manpower
requirements of the organisation in the near future. It is equally necessary to study business plans
because all manpower plans stem from business plans relating to nature, level and organisation of
activity. HR plans need to be based on organisational objectives and plans. Once organisational objec-
tives are decided and communicated, the HR Department has to specify its objectives as regards HR
requirements and utilisation.
2. Forecasting demand for human resources (HR Demand Forecasting): Demand forecasting is the pro-
cess of estimating the future quality and quantity of manpower required. In this second step in the HRP
process, the future needs for human resources in the organisation are anticipated on the basis of
organisational and functional plans. The number of people/employees and the skill levels needed in
the future depends on the production and sales budgets in a manufacturing organisation. However, the
HR requirements for a given level of operations vary as per the production technology, process, make
or buy decisions, job contents and control systems.

11 Human Resource Planning

Techniques used in forecasting manpower needs in HRP demand are as briefly
explained below:
In business, various forecasting techniques (ranging from subjective judgemental methods to
sophisticated multi-variate analysis and models) are used for different purposes. Such techniques have
their own contributions, uses and limitations. In the case of forecasting human resource needs in an
organisation, there is less emphasis on highly quantitative techniques because of emphasis on qualitative
aspect of forecasting. How to forecast requirement for human resources in the future is a basic issue. Here,
various techniques, varying from simple to sophisticated ones are employed in human resource
forecasting. For forecasting human resource demand, the following techniques are usually used:
(a) Managerial Judgement Method,
(b) Work-Study Method,
(c) Ratio Trend Analysis,
(d) Delphi Technique, and
(e) Flow Models.

Let us explore the Manpower Forecasting Techniques in detail:

a. Managerial Judgement Method: The managerial judgment method is a widely used and traditional
approach to forecasting manpower requirements. In this method, experienced managers rely on their
knowledge of expected future workload and employee efficiency to estimate the manpower needs of
their respective departments. These departmental estimates are then aggregated and approved by
top management to determine the overall future HR need for the organization. The HR department
utilizes this information to prepare a comprehensive human resource plan. This method can be
implemented through either a top-down or bottom-up approach, without the need for mathematical
calculations.

b. Work-Study Method: The work-study method is employed when it is feasible to measure work and
establish standards, and when job methods do not frequently change. This technique utilizes time and
motion studies to determine the standard time required to complete a specific task. Based on this
data, the number of workers needed to accomplish the standard work can be calculated. Through
such studies, the standard time required per unit of work is determined. The formula for calculating the
number of workers required is as follows:

Planned Output

Standard Output per hour standard hours per person

The example given below, suggests how this method operates:

1 Planned output/production for the next year 50,000 units.

2 Standard hours per unit 2 hours.

3 Planned hours required for the year (50,000 x 2) =100,000

4 Productive hours per worker in the year 2,000

5 Number of workers required 100000/2000 =50

Fig 3: Work-Study Method

12 Process of Human Resource Planning

If the span of control is ten, then the number of supervisors required will be calculated as 50 divided by 10,
resulting in five supervisors. These supervisors will be responsible for overseeing a group of 50 workers
each. This analysis can be applied to all units within the organization to determine the overall manpower
requirement. The work study method is particularly suitable for repetitive and manual jobs where work can
be measured and standards can be set. However, a separate analysis is necessary for supervisory and
other staff positions due to the distinct nature of their work compared to manual workers.

c. Ratio Trend Analysis: Ratio trend analysis is based on time series data to forecast future manpower
requirements. This technique involves examining historical ratios, such as total output divided by the
number of workers, and using them to predict future ratios. When calculating future ratios, it is
important to consider expected changes in the organization, methods, and jobs. The future demand
for human resources is estimated based on established ratios between two variables. This method
emphasizes the use of ratios derived from past data on employee numbers and production or sales
levels. Future ratios are projected when changes are anticipated in the organization's human
resources structure. Past ratio trends serve as a basis for estimating future manpower requirements.

Example:

1 Production level in 2010-11 50,000 units

2 Workers employed in 2010-11 50

3 Ratio of worker and production 1:1000

4 Number of supervisors in 2010-11 5

5 Ratio 1:10

6 Estimated production in 2011-12 60,000 units

7 Number of workers required during 2011-12 60000 x 1/1000 = 60

8 Number of supervisors required during 2011-12 60x1/10 =6

Fig 4 : Ratio Trend Analysis

With the increase in production, the previous ratio trend suggests that 60 workers and 6 supervisors will be
required. However, it is important to revise this estimate if there are any changes in other aspects of the
production process.

Ratio trend analysis is a statistical technique that is helpful in estimating human resources. It is a quick and
easily calculable forecasting technique. There is flexibility in adjusting the estimation of manpower
requirements for the current year. This technique primarily focuses on the ratio between production and
direct operatives (workers).

d. Delphi Technique: The Delphi Technique is a method used for forecasting personnel needs or
manpower supply. Its name is derived from the ancient Greek oracle at the city of Delphi. It is a
subjective method for forecasting the human resource requirements in an organization and involves
group decision making. The Delphi Technique is a time-consuming process that does not involve
face-to-face meetings among group members. It involves soliciting estimates of manpower needs
from a group of experts, typically managers. The following steps are typically followed in the Delphi
Technique:

13 Process of Human Resource Planning

Steps of the Delphi Technique
Action based
on findings

The Delphi technique

Third round
of questions
07
comprises a series of
seven steps:
Second round
of questions 06
First round 05
of questions

Problem 04
definition

Identification of
subject-matter
03
experts

Selection and
appointment
02
of a facilitator

01

Fig 5 : Steps of the Delphi Technique

Step 1: Selection and appointment of a facilitator: The initial stage involves the designation of a facilita-
tor, ideally an impartial individual well-versed in research and data analysis.

Step 2: Identification of subject-matter experts: This technique relies on a panel of experts, who may be
drawn from various sources such as the project team, stakeholders, or industry professionals. The selec-
tion of these experts is crucial as it directly influences the quality of the insights generated.

Step 3: Problem definition: Clearly defining the issue or problem at hand is essential to guide the experts
in their assessments. A precise and comprehensive problem statement is necessary for effective deliber-
ation.

Step 4: First round of questions: General inquiries are posed to the experts to gauge their initial perspec-
tives on future developments. Responses are collected, summarised, and analysed to identify common
themes.

Step 5: Second round of questions: Building upon the insights gathered from the initial round, more
specific questions are formulated to delve deeper into the subject matter. Again, responses are collated
and analysed to seek consensus among the experts.

Step 6: Third round of questions: The focus shifts towards consolidating agreement among the experts,
particularly on areas of consensus. Additional rounds of questioning may be necessary to reach a closer
alignment of opinions.

Step 7: Action based on findings: Following the rounds of questioning, the experts should have arrived at
a consensus regarding future events. These insights can then inform decision-making processes.

While predicting the future is inherently uncertain, the Delphi technique serves as a valuable tool for
understanding the likelihood of future events and their potential impact on strategic initiatives or projects.

14 Process of Human Resource Planning

e. Flow Models: Flow models are commonly employed to estimate the manpower needs of an
organization. This model involves gathering information and making estimates to determine the
required manpower. One commonly used flow model is the Markov Model, which follows these steps
for forecasting manpower needs:

1 Determining the time period to be covered by the

forecast.

2
Establishing distinct employee categories or states,
Steps for ensuring minimal overlap between categories.
forecasting
manpower
needs 3 Enumerating the annual flows between various
categories or states over multiple time periods.

4 Estimating the probability of flows from one category

to another based on historical trends.

Fig 6 : Steps for forecasting manpower needs

Markov analysis is advantageous as it is easily understood by decision makers, who can grasp its
underlying assumptions and accept the results. However, this analysis heavily relies on past-oriented data,
which may not accurately reflect periods of significant change. Accuracy in individual forecasts is traded
off for accuracy across groups.

It is worth noting that statistical techniques like Ratios and Trend Analysis, Econometric Models, Regression
Analysis, and Bureks-Smith Model are also utilized for forecasting an organization's manpower needs.
Mathematical models are also employed to forecast the demand for human resources. The key
requirement is that the chosen method should provide reasonably accurate forecasts of human
resources demand for a specific period.

3. Forecasting supply of human resources: Personnel demand analysis facilitates the estimation of
number and kind of employees that will be required. Forecasting human resource supply is another
important ingredient of HRP. In this third step in HRP process, the manpower supply within the
organisation is estimated.

Every organisation has two sources of supply of human resources (manpower)-internal sources and
external sources. Internally, human resources can be obtained for certain posts through promotions
and transfers. Human resources flow in or out of organisation due to several reasons. For example,
inflows are possible due to promotions, transfers and new recruits.

Outflows are due to deaths, resignations, terminations, transfers and promotions. Policies relating to
inflows and outflows need to be reviewed periodically to assess their impact on the internal supply of
human resources. Human resource audit or human resource inventory is also useful for estimating
supply of human resources in future. Manpower inventory provides assistance in determining and
evaluating the quantity and quality of the internal human resources.

In short, manpower needs of an organisation depend on the number of employees required due to
loss of current manpower and the additional staff needed due to anticipated expansion of the
organisation. After estimating the future internal supply of human resources, the external sources of
supply are analysed. External factors consist of working population, unemployment level, education
and training institutions, housing/transport facilities and so on.

It may be noted that supply forecasting measures the number of people likely to be available from
within and outside the organisation. The supply analysis covers existing human resources, internal
sources of supply and external sources of supply of human resources.

15 Process of Human Resource Planning

Techniques used in forecasting human resource supply are as briefly explained
below:
After forecasting human resource needs, it is logical and necessary to determine how these needs can be
met. In the case of a new organisation, all personnel required have to be procured from outside. This is
comparatively easy through direct recruitment and selection. However, in the case of operating
organisations, there are existing personnel who may be a source of supply to fill those needs. In assessing
the availability of human resources from internal sources, an organisation has to consider inflow and
outflow of personnel during the plan period, and the type of personnel that would be available. These are
undertaken by two methods mentioned below:

a. Human Resource Flow Model b. Human Resource Inventory

a. Human Resource Flow Model: An organisation can be considered as a system of flows-both outflows
and inflows of resources. Based on this concept, a flow model of human resources has been
developed and is known as Markov chain analysis model (or simply as Markovian model). This model
can be applied for organisation as a whole or to any of its subsystems. The assumption of this model is
that in a system, there are inflows and outflows of personnel during a period.

In this model, the forecast of human resource supply is calculated as per the
following details:

(i) Determination of period for which HR flows are to be measured.

(ii) Establishment of categories/states to which an individual can be assigned.

(iii) Counting of annual flows of individuals among the categories for several time
periods.

(iv) Estimating the probability of transactions from one category to another category
based on the past trend.

Similar exercise can be done for other categories of personnel. The aggregate of all categories of
personnel is the total supply of personnel at the end of the plan period. This model is based on the past
trends and naturally prove correct only when those trends continue in future also.

Markov-chain analysis model is a probabilistic model for forecasting internal supply of manpower. In this
model, first of all possibilities are calculated for the movement of people from one job to the other within
the organisation or of leaving the organisation on the basis of past record. Thereafter, forecasts are made
of future manpower supply on the basis of these probabilities.

Markov analysis is easy to apply and is widely used. However, it suffers from some limitations. It assumes
that the probability of movement is determined solely by the employee's initial job state. In actual practice,
people move within the organisations due to the pull of vacancies rather than the push of other current
assignments. Secondly, probabilities in Markov analysis will be reliable only when there are at least fifty
people in each job.

b. Human Resource Inventory: This method is utilized for forecasting human resourcesupply and can be
time-consuming due to the involved steps. The process includes:
1. Identification of personnel for inventory preparation.
2. Compilation of factual information about each individual.
3. Systematic evaluation of individuals.
4. Detailed assessment of individuals with potential for development.

16 Process of Human Resource Planning

4. Estimating manpower gaps: This step involves estimating the gap in manpower by comparing
demand forecasts and supply forecasts. The goal is to reconcile or balance the two to adjust the gap.
This provides an estimate of net human resource requirements, indicating either a deficit or surplus of
human resources in the future. Deficits suggest the need to recruit individuals externally, while
surpluses imply the need to terminate or redeploy redundant personnel. The gap may be identified in
terms of knowledge, skills, and aptitudes. Employees identified as deficient can undergo training, while
those with higher skills may be offered more challenging roles. This step is crucial as it informs the HR
action plan or programming, which is based on the estimated manpower gap.

5. Developing an action plan to address manpower shortages or surpluses: After identifying the
manpower gap, the next step is to create an action plan to bridge these gaps. The HR department
initiates a series of action programs to align the manpower with the organization's needs. Plans to
address surplus manpower may involve reallocating surplus employees to other departments, and if
necessary, retrenchment measures are undertaken in consultation with trade unions. For manpower
deficits, recruitment, selection, transfer, promotion, and training programs can be implemented.
Realistic programs should be established to acquire and develop manpower within the organization.
The action plan to address the manpower gap typically includes multiple components such as
recruitment and selection plans, redeployment plans, promotion plans, transfer plans, training and
development plans, productivity plans, redundancy plans, and retention plans. These action plans
should be realistic and results-oriented.

6. Monitoring and controlling the action plan: This final step in the HR planning process is crucial during
the implementation of the action plan. Once the action plans are in motion, it is essential to review and
control the human resource structure and system. Reviewing the manpower plans helps identify and
rectify any deficiencies. Prompt remedial measures can be implemented to ensure the action plans
yield the expected results. Corrective actions should be taken in a timely manner to address any
shortcomings. It is also necessary to modify the manpower plans in response to changing
environmental factors and organizational needs. Control and evaluation of the HR plan are important
in this regard. Appraising the manpower plans serves as a guide for future manpower planning.

The diagram given on the below shows the details of steps in Human Resource Planning Process:

Human Resource Planning Process

1

Analysing Organisational Plans

1. Objectives and Strategic Plans
2. Production Targets and Technology
3. Financial Plans
4. Period of HR Plan
2 3
4
Demand Forecast Supply Forecast
Manpower Gaps 1. Human Resource Inventory
1. Numbers
2. Job Categories Surplus or Shortage In 2. Losses and Additions
3. Skill Requirements Numbers and Skills 3. External Sources of
Manpower Supply
5
Manpower Plans
1. Recruitment and Selection
2. Training and Development
3. Retrenchment and Retention
4. Promotions and Transfers

Monitoring and Control

1. Removing deficiencies In manpower plan
(Surplus/Shortage of Manpower)
2. Corrective actions and modification

Fig 7 : Steps in Human Resource Planning Process

17 Process of Human Resource Planning

 FACTORS AFFECTING HUMAN
1.5 RESOURCE INFORMATION SYSTEM (HRIS)

INTRODUCTION TO HRIS (HUMAN

1.5.1 RESOURCE INFORMATION SYSTEM)
The Human Resource Information System (HRIS) refers to a software or online solution designed to fulfill the
data entry, tracking, and information needs of Human Resources, payroll, management, and accounting
functions within an organization. Typically presented as a database, numerous companies offer various
HRIS options, each with its own set of capabilities. It is crucial to select an HRIS carefully, considering the
specific requirements of your company.

Typically, the better Human Resource Information Systems (HRIS) provides overall:

1. Comprehensive management of employee information.

2. Generation of reports and analysis based on employee data.
3. Storage of company-related documents, such as employee handbooks, emergency evacuation
procedures, and safety guidelines.
4. Administration of employee benefits, including enrollment, status changes, and updates to personal
information.
5. Seamless integration with payroll systems, financial software, and other accounting systems utilized
by the company.
6. Tracking of job applicants and management of resumes.

An HRIS that effectively caters to companies encompasses the following

features:
1. Tracking attendance and paid time off (PTO) usage.
2. Recording pay raises and work history.
3. Managing pay grades and positions held.
4. Documenting performance development plans.
5. Tracking training received.
6. Recording disciplinary actions taken.
7. Storing personal employee information.
8. Occasionally including management and key employee succession plans.
9. Identifying high-potential employees.
10. Managing applicant tracking, interviewing, and selection processes.

A proficient HRIS offers comprehensive information on various aspects related to employees, former
employees, and applicants, enabling companies to track and analyze relevant data. It is essential for your
company to choose a Human Resources Information System and customize it to meet specific
requirements.

With a suitable HRIS in place, the HR staff can empower employees to update their own benefits and
personal information, thus freeing up HR personnel to focus on more strategic functions. Moreover, the
system facilitates the collection of data necessary for employee management, knowledge development,
career growth, and ensuring equal treatment. Finally, managers can access the information they need to
provide legal, ethical, and effective support to their team members, contributing to their overall success.

The Human Resource Information System (HRIS) is a method by which an organization collects, Notes
analyses and reports information about people and jobs. It applies to information needs at macro and
micro levels. HRIS is basically a data base system that offers important information about employees in a
central and accessible location. When such information is needed, the data can be retrieved and used to
facilitate human resource planning decisions.

18 Factors Affecting Human Resource Information System (HRIS)

VRS (Voluntary Retirement Scheme)

The Voluntary Retirement Scheme (VRS) is a voluntary separation initiative aimed at removing old and
unproductive employees from an organization. It is also known as theGolden Handshake Plan and serves
as a method to downsize the workforce. Both public and private sector organizations adopt this practice
to indirectly eliminate unwanted or surplus employees, including officers and workers. Under this scheme,
the organization announces the voluntary retirement option, and interested employees can submit
applications to retire voluntarily. Once approved, the employees are relieved from their positions
according to the terms and conditions outlined in the scheme.

VRS operates on a mutual agreement between the organization and the employees involved. In recent
years, numerous banks, state governments, and private sector organizations have implemented such
schemes. Many private companies began introducing VRS schemes after the 1990s, including ACC, Blue
Star, Sandoz, Mahindra and Mahindra, among others.

Banks have also adopted VRS schemes to reduce excess manpower. It's important to note that voluntary
retirement differs from dismissal, removal, or retrenchment of employees, as the employee chooses to
retire before their due retirement date. In return for their voluntary retirement, employees receive fair
monetary compensation, ensuring no injustice is done to them.

An organization may consider implementing a Voluntary Retirement Scheme (VRS) under various
circumstances:

1. Excess manpower within the organization.

2. Business operations affected by a recession.
3. Adverse business situations due to market competition, among other factors.
4. Takeover or merger scenarios.
5. Reduction in export orders, decreased market demand, or the availability of substitutes.

Outsourcing

What do you mean by Outsourcing?

The concept of outsourcing is widely used in today's business world, and it has gained significant traction
since the 1980s, particularly in the USA and other countries, where there has been a noticeable trend
towards vertical disintegration. Outsourcing is commonly practiced in both the production and service
sectors, with the IT sector being a prominent example. Many Indian IT companies benefit from outsourcing
arrangements with American and European counterparts. Similarly, numerous automobile manufacturers
outsource the production of components, which are later assembled by the automobile company. This
shift from in-house component manufacturing to outsourcing can be observed in Tata's new car
production. Overall, outsourcing is an increasingly popular practice in the global business landscape.

The term outsourcing has been defined in different ways as mentioned below:

1. "Reliance on external sources for manufacturing components and other value adding activities."
2. "Buy rather than make strategy or vertical disintegration."
3. "Another firm's employees carrying out tasks previously performed by one's own employees."

The make-or-buy practice, which involves

choosing between internal production and
external sourcing, has long been established
in the business realm. Making refers to internal
production, while buying refers to
outsourcing. In today's large-scale business
environment, the latter, outsourcing, has
become more prevalent.

19 Factors Affecting Human Resource Information System (HRIS)

Outsourcing refers to contracting external agencies to perform work in exchange for payment. It is
applicable to various aspects, including components, services, and even HR functions such as recruitment,
training, labor dispute settlement, and more. Outsourcing involves assigning work to individuals who are
not full-time employees of the organization. This practice is widely adopted in various business activities.
The concept of outsourcing has made significant inroads into HRM practices in overseas companies and
has now gained traction in the Indian business landscape. From recruitment and training to profiling,
compensation management, and payroll, HR outsourcing encompasses a broad range of functions in
India. The potential for outsourcing HRM functions in India is considerable, considering that global HRM
outsourcing was valued at $46 billion in 2003.

The terms "Outsourcing," "Offshore outsourcing," and "Offshoring" are closely related and frequently used.
Outsourcing refers to the practice of assigning organizational functions or work to external agencies
based on specific terms. In offshore outsourcing, the external agency handling the outsourced work is
located in a foreign country. Offshoring, on the other hand, refers to the relocation of an organizational
function to a foreign country.

Organisation downsizing
What is Downsizing?
In any business organisation, there should be adequate staff (employees) as per the need. Excess
employees as well as inadequate employees are undesirable as both the situations are harmful. Shortage
of manpower disturbs normal working of an organisation and excess manpower leads to increase in the
cost of labour. The best policy is to have fair manpower i.e. manpower as per the needs of an organisation
- neither too less nor too more. The term downsizing is used to indicate reduction of excess manpower
through suitable measures. Downsizing of an organisation means reducing the number of employees and
adjusting the manpower as per need of the organisation so that the problem of excess manpower will be
solved smoolhly/peacefully. In order to overcome the problem of surplus staff, downsizing strategy is used
extensively. Downsizing is a restructuring process in which the organisation reduces its activities and also
excess manpower.

Accordingly, it is essential to have an appropriate number of staff members based on the requirements.
Having an excess or inadequate workforce can be detrimental in both cases. A shortage of manpower
disrupts the smooth functioning of an organization, while an excess of manpower increases labor costs.
The ideal approach is to maintain a balanced workforce, neither too few nor too many employees, aligning
with the organization's needs. Downsizing refers to the reduction of excess manpower through
appropriate measures. It involves decreasing the number of employees and adjusting the workforce
according to the organization's requirements, effectively resolving the issue of surplus manpower.
Downsizing strategies are commonly employed to overcome the problem of surplus staff. It is a
restructuring process that involves streamlining activities and reducing excess manpower.

Retrenchment
Retrenchment refers to the permanent separation of an employee by an employer with proper notice in
accordance with statutory provisions, and the employee is entitled to receive compensation. In India,
retrenchment of employees for economic reasons is quite prevalent. The Industrial Disputes Act of 1947
defines retrenchment as the "termination by the employer of the services of workmen for any reason." It is
important to note that termination of services as a disciplinary action, punishment, retirement (voluntary
or upon reaching superannuation age), continued ill-health, or due to the closure and winding up of a
business does not fall under the definition of retrenchment. The term is commonly used when a part of the
workforce is deemed surplus in ongoing operations. The principle followed in retrenchment procedures is
that the most recent employee hired in each category is the first to be retrenched, known as the "last
come, first go" principle. After retrenchment, if vacancies arise, the employer offers the retrenched workers
an opportunity for re-employment with preference given to them. Such vacancies are typically
announced at least 10 days prior to being filled. Retrenchment is unfortunate for the affected worker as
they become unemployed until they secure a new job. It poses hardships for both the worker and their
family members. However, it becomes unavoidable when the organization is facing significant challenges.
Retrenchment instills fear and insecurity among industrial employees and can lead to resentment among
the workforce. The Industrial Disputes Act of 1947 specifies the conditions for retrenchment, including
providing one month's written notice or wages in lieu of notice to the employee, along with indicating the
reasons for retrenchment.

20 Factors Affecting Human Resource Information System (HRIS)

Termination

Termination refers to the permanent separation of an employee from an organization due to a violation of
organizational rules such as dishonesty, carelessness, or drunkenness. It is an extreme measure that
should be carefully considered and supported by valid reasons. The termination process must adhere to
appropriate procedures, ensuring that the action taken is genuine and not intended as a punitive measure
or an act of victimization. Dismissal, on the other hand, involves the termination of an employee's service
as a form of punishment for misconduct or unauthorized and prolonged absence from duty. Voluntary
retirement occurs when the employer offers an attractive compensation package to employees who
willingly choose to separate from the organization. This form of retirement results in the permanent
separation of the employee from their job and the organization.

Pink slip

Pink Slip, an American term, denotes being fired or laid off from one's job. It serves as an official notice sent
to an employee, informing them of their termination from employment. Synonyms for pink slip include
dismissal or dismission, indicating the individual's removal from their job. In the United States, companies
historically used to dismiss employees by distributing notices printed on pink slips of paper. Employees
from diverse backgrounds fear the prospect of receiving "Pink Slips" from their employers, as these notices,
often distributed with paychecks, inform them that their services are no longer required. The term pink slip
signifies a long-standing practice employed by companies when terminating an employee.

Separation

Separation represents a progression beyond demotion, involving the cessation of an individual's services
from an organization. The employment relationship between the organization and the employee comes to
an end, and the contractual agreement is terminated. Separation can occur when a person retires at the
age of sixty, signifying one type of separation. However, separation can also take place before the
expiration of a contract period, typically initiated by the employer. Layoffs, retrenchment, discharge, or
voluntary retirement are examples of separation that are initiated by the employer or management.
Conversely, in retirement cases, the employee takes the initiative to separate from the organization.

Contracting and Sub-contracting

Contracting and sub-contracting are two methods used to transfer specific jobs to external agencies on
a contractual basis, alongside outsourcing. These methods aim to reduce costs and delegate routine and
simple tasks to outside agencies, allowing internal employees to focus on more important and
non-repetitive work.

The practice of contracting and sub-contracting is employed in both the production and services sectors.
In large-scale construction projects with strict deadlines, contracting is commonly utilized. For instance, a
builder may hire a contractor to handle tasks such as coloration, tiling, or plumbing. The contractor is
responsible for completing the work according to specifications and receives predetermined
compensation. In some cases, a contractor may delegate the plumbing work for a subset of buildings to a
sub-contractor. The sub-contractor operates under the instructions of the main contractor and receives
payment as agreed upon. This illustrates how contracting and sub-contracting are employed in the
construction industry, enabling the rapid completion of extensive housing projects. Due to this practice,
simultaneous activities like plastering, tiling, plumbing, and electrification can be observed in housing
complexes. This approach reduces costs, facilitates division of labor and specialization, expedites work,
and provides convenience to builders who struggle to oversee every aspect of a housing complex.

The contracting system emerged as a response to labor shortages faced by industrial units in major cities.
Companies hire contract labor in addition to their permanent employees to meet the extra manpower
requirements in production, sales, marketing, and other areas. Labor contractors play a necessary and
useful role by providing labor on a contractual basis. Contract labor has become commonplace in
production activities and can sometimes exceed the number of permanent employees.

Contractors can function as independent contractors, general contractors, or sub-contractors. An

independent contractor, whether an individual, business, or corporation, provides goods or services to
another entity based on terms specified in a contract or verbal agreement.

21 Factors Affecting Human Resource Information System (HRIS)

Unlike employees, independent contractors work on an as-needed basis rather than regularly for a single
employer. Typically, independent contractors are paid on a freelance basis and may operate through their
own limited company or an umbrella company.

A sub-contractor, on the other hand, signs a contract to fulfill part or all of the obligations outlined in
another contract. They are hired by a general contractor to perform specific tasks as part of an overall
project. Sub-contractors are commonly found in building works and civil engineering projects.

A general contractor is a group or individual that enters into a contract with an organization or individual
(the owner) for the construction, renovation, or demolition of a building, road, or other structures.

In addition to building construction, contractors and sub-contractors also play a role in industrial
production and services. They are appointed to provide specific services or are contracted for the supply
of components. Consider the example of an automobile manufacturer that may choose not to
manufacture every component required for its plants. Instead, it may contract an external agency or
agencies to supply components based on its specifications. A contract is established, and the contractor
commences the supply of components according to the agreed terms and conditions. This represents a
case of contracting for the supply of products/components. The automobile company benefits from this
arrangement, as it provides convenience and flexibility. The contractor also gains new job opportunities
and earns from such contracts. Furthermore, the contractor may even subcontract some services. This
example showcases contracting for the supply of products/components.

Contracting and sub-contracting offer advantages to both parties involved. Contractors play a crucial
role in ensuring the smooth operation of production activities and assume responsibility for managing the
appointed labor. As a result, this practice is extensively followed in various business sectors, including
construction and manufacturing activities of diverse nature.

Promotion as Contracting and Sub-Contracting

Promotion of an employee entails granting them a higher position, status, and salary. Promotions are
typically awarded after a few years of service or when higher-level positions become vacant. Employees
are promoted according to well-defined rules and procedures. Such promotions are necessary when
vacancies arise at higher levels due to retirement, resignation, or employee transfers. Promotions are
commonly granted in business enterprises, as well as in banks and government departments. Industrial
workers receive promotions to higher posts and positions when vacancies become available or when new
positions are created at higher levels. According to Pigors and Myers, the term "promotion" refers to
"advancing an employee to a better job." Promotion is rightly described as "advancement within an
organization." Internal promotions are crucial as they offer opportunities for employee advancement and
allow for the filling of vacancies at higher levels. Promotion serves as an incentive for self-development
through training and active engagement in assigned work. It is an essential aspect of an individual's
career and signifies advancement within an organization.

Transfer

In business organizations, employees are moved from one position, department, unit, plant, or branch to
another. This process is referred to as job transfer or employee transfer, facilitating internal mobility of
human resources within the organization. Such transfers are also common in banks, government
departments, manufacturing companies, and other service organizations. Transfers are typically initiated
by the employer or management, although sometimes they may be made upon an employee's request
for their convenience. Transfers can be either temporary or permanent.

A transfer is defined as "a change in job where the new job is substantially similar to the old one in terms of
pay, status, and responsibilities." Yoder and associates define transfer as "a lateral shift causing individuals
to move from one position to another, usually without significant changes in duties, responsibilities,
required skills, or compensation."

Management has the authority to transfer the services of its employees for various reasons, and
employees are obligated to accept such transfers. Service rules generally grant the management the
power to make transfers. However, this authority should be exercised to meet organizational needs and
not as a means of punishing employees. Likewise, transfers should be carried out in accordance with
well-established rules and necessary procedures.

22 Factors Affecting Human Resource Information System (HRIS)

Transfers of employees may evoke some resentment among affected employees, which is natural since
transfers can create personal and family issues. Additionally, an employee must adapt to the new
situation. It should be noted that a transfer is neither a promotion nor a demotion but simply a horizontal
or lateral movement of an employee from one job to another within the same organization.

Factors Affecting Human Resource Information System -

1. Growth and expansion: As an organization undergoes growth and expansion, its HR needs may
become more intricate, necessitating adaptations in the HRIS. This could involve the addition of new
features or modules to the system, augmenting storage capacity, and enhancing system
performance.

2. Legal considerations: Complying with local and national laws and regulations is imperative for any
organization. Modifications or updates to the HRIS may be necessary to ensure adherence to legal
requirements, such as data privacy laws, anti-discrimination laws, and labor laws.

3. Technological advancements: With the continual advancement of technology, updates to the HRIS
may be required to leverage new features and capabilities. For instance, artificial intelligence and
machine learning can automate HR tasks like resume screening, employee scheduling, and
performance evaluations.

4. Demographic shifts: Changes in workforce demographics, such as an aging workforce, increased

diversity, or remote work arrangements, can influence the design and implementation of the HRIS. For
instance, accommodating different languages, time zones, or accessibility needs may be necessary.

5. Organizational nature: The specific type of organization can also impact the design and
implementation of the HRIS. For instance, the HR needs of a non-profit organization may differ from
those of a for-profit corporation, thus requiring customization of the HRIS to address unique
organizational requirements.

6. Employee turnover: High turnover rates can hinder the effectiveness of the HRIS, making it more
challenging to maintain accurate and up-to-date employee data. To mitigate this, the HRIS should be
designed to facilitate smooth onboarding and offboarding processes, as well as ensure the accuracy
and timeliness of employee information.

7. Organizational structure: The structure of an organization can influence the design and
implementation of the HRIS. For example, a decentralized organization may necessitate a flexible and
adaptable HRIS system, while a centralized organization may favor a more standardized approach.

8. Economic considerations: Economic factors such as budget limitations or changes in the business
environment can impact the implementation of the HRIS. Thus, the HRIS should be designed to be
cost-effective, scalable, and adaptable to evolving economic conditions.

SUMMARY
1. HRM is defined as the art of procuring, developing and maintaining a competent workforce to achieve
the goals of an organisation in an effective and efficient manner.

2. HRM is responsible for the people dimension of the organisation. It is a pervasive force, action-oriented,
individually-oriented, development-oriented, future-focused, and integrative in nature and is a
comprehensive function.

3. Human resources planning is defined as the process for identifying an organisation's current and
future human resource requirements, developing and implementing plans to meet these
requirements and monitoring their overall effectiveness.

4. The fast-changing nature of technology is also a challenge in HRM. As new technologies are
developed, employees may be able to implement innovative ways of working such as flextime. HR
managers are also responsible for developing policies dealing with cyberloafing and other workplace
time wasters revolving around technology. Employee stress and lack of work-life balance are also
greatly influenced by technology.

23 Summary
5. Awareness of the changes in the economy allows the human resource manager to adequately plan
for reductions and additions to the workforce.

6. The aging and changing workforce is our final factor. As baby boomers retire, there likely will not be
enough people to replace them, and many of the skills the baby boomers have may be lost. In addition,
having to work with multiple generations at once can create challenges as different expectations and
needs arise from multigenerational workforces.

7. HR Planning is essentially the process of getting the right number of qualified people into the right job
at the right time so that an organisation can meet its objectives.

8. Organisations use HRP as a means of achieving greater effectiveness.

9. The HR Planning process, should be tuned to organizational objectives and strategies.

10. It includes forecasting the demand for employees, preparing manpower inventory, determining
manpower gaps and formulating HR plans.

11. While developing HR Plans, managers should scan the external environment carefully to identify the
effects of economic, social, competitive and governmental influences.

12. Rightsizing is about reordering the important and changing priorities of complex business. It refers to
the transformation or changing of vast resources, technological, physical, manpower, and complex
process, with the change in the business strategies and polices.

13. There are many factors that would affect human resource management. However, the main four are
considered to be: Political Climate, Economic Climate, Company Strategies and Technological
developments.

14.. HRIS is a computerised system that assists in the processing of HRM information. It supplies up-to-date
information about people and jobs in an organisation at a reasonable cost.

15 HRIS offers a wide range of HR uses, the most basic being the automation of payroll and benefit
activities.

16. HRIS can be set up through a four step process: identifying the needs of a firm, organising flow of
information, implementing the plan and evaluating the whole exercise to find gaps and to rectify
things in time.

Case Study 1 Changes! Changes! Changes!

Jennifer, the owner and manager of a company with ten employees, has hired you to take over the HRM
function so she can focus on other areas of her business. During your first two weeks, you find out that the
company has been greatly affected by the up economy and is expected to experience overall revenue
growth by 10 percent over the next three years, with some quarters seeing growth as high as 30 percent.
However, five of the ten workers are expected to retire within three years. These workers have been with the
organization since the beginning and provide a unique historical perspective of the company. The other
five workers are of diverse ages. In addition to these changes, Jennifer believes they may be able to save
costs by allowing employees to telecommute one to two days per week. She has some concerns about
productivity if she allows employees to work from home. Despite these concerns, Jennifer has 25 even
considered closing down the physical office and making her company a virtual organization, but she
wonders how such a major change will affect the ability to communicate and worker motivation. Jennifer
shares with you her thoughts about the costs of health care on the organization. She has considered
cutting benefits entirely and having her employees work for her on a contract basis, instead of being
full-time employees. She isn’t sure if this would be a good choice. Jennifer schedules a meeting with you to
discuss some of her thoughts. To prepare for the meeting, you need to perform research so you can
impress your new boss with recommendations on the challenges presented.

24 Case Study
 Think and Answer:
Identify and list the changes occuring in the business that would affect HRM.

What are some considerations the company and HR should be aware of when
making changes related to this case study?

What would the initial steps be to start planning for these changes?

What would your role be in implementing these changes? What would Jennifer’s
role be?

Case Study 2 HR Plan for Trading Assistants

Magnum Financial Services Ltd. (MFSL) is a large financial services company with over 4000 employees
scattered all over India in their twelve branches. In view of the ups anddowns in the stock market, which
affect the demand for and supply of qualified finance graduates, from time to time, in different cities, it has
been decided sometime back to centralise manpower planning activities at the corporate head quarters,
viz., New Delhi itself.

The company has trading terminals spread over the whole of India. In addition to collecting fixed deposits
from corporate houses and general public, it has also been managing funds from high net worth
individuals. It has plans to launch a number of mutual fund products for which approval has come from
Securities Exchange Board of India. It has considerable reputation in the market as a merchant banker and
as a money changing agent.

Hiring people with requisite skills, especially after the introduction of the online trading mechanism, is
proving to be a tough job. The stock indices have been galloping day by day, thanks to the dramatic
growth rates reported by information technology companies in recent months. Looking at the increasing
number of trading centres that are opening in various parts of the country, the company wanted to hire
twenty five trading assistants by offering competitive salaries. While assessing manpower needs at
various locations, the Notes following things are generally taken into account:

Manpower Needs
1. Details of previous selections in each centre
2. Current employee strength in each centre
3. Sanctioned posts for each centre
4. Number of vacancies, likely to arise due to competition, unforeseen events, expansion, etc.
5. Surplus, if any, from other centres.
6. Over and above the next vacancies that are likely to arise in each centre, two additional posts have
been earmarked so as to serve as a 'cushion' to absorb sudden fluctuations. The actual details about
trading assistants in various centres were:

Details of Employees and Posts

1. Number of people with 2 years' experience : 94
2. Number eligible for promotion to next grade : 28
3. Number of vacancies on hand : 25
4. Number on rolls : 142
5. Anticipated needs to be filled up owing to market conditions : 24 ('two' in each centre)
6. 'Reserve' to be kept over and above sanctioned posts : 5
7. Total requirements over a period of 12 months : 54

25 Case Study
In the first batch, it was planned to hire 25 people having one year's exposure to online market operations,
in the ₹ 5000 -8500 grade. The chief HR manager arrived at Mumbai to coordinate the recruitment activity.
The Mumbai office got the fax message from headquarters on Monday advocating caution and restraint
while hiring trading assistants. Around 150 short listed graduates have been called for the interview on that
day.

Think and Answer:

Prepare a comprehensive human resource plan for each centre of MFSL.

Looking at the scenario, what should the chief HR manager do?

Is it advisable to decentralise the hiring process, so as to avoid problems of the

nature mentioned above? Why? Why not?

Theory to Practice:
In a group of two to three people, research possible career paths in HRM and
prepare a PowerPoint presentation to discuss your findings.

Interview an HR manager and discuss his or her career path, skills, and daily
tasks. Present your findings to your class.

Role Play
Perform this role play, writing the dialogues both for the Manager and for the Graduate. The focal theme is
"PRAISE AND DEVELOP".

Brief for the Manager

You are the manager of a design department, whose task is to plan, organise and control layout and
equipment changes in the manufacturing division of the company. One of your staff, a graduate aged 25,
has just completed a project to install a new layout of conveyors, sorters and packing machines at the end
of a line, producing small plastic bottles. This has been highly successful. The manager of the line and the
staff working on it are all pleased with it and prefer it to the original layout.

Now is the time to talk to your young graduate, show how pleased you are with this project and try to
discover which areas are ones in which further help, training and development of skills are required.

Brief for the Graduate

You have been working for one year in this design

department, whose task is to plan, organise and
control layout and equipment changes in the
manufacturing division of the company. You have just
completed a project to install a new layout of
conveyors, sorters and packing machines at the end
of a line, producing small plastic bottles. This has been
highly successful. The manager of the line and the
staff working on it are all pleased with it and prefer it to
the original layout.

26 Role Play
Your boss has asked to see you. You hope he is as pleased as you are with the outcome of this project. If
you get the chance, you would like to become involved in an automation and computerisation project
next. You have heard that the main line producing the shrink wrapped 6-pack of half-litre bottles is due to
be automated further later this year. You would like to do that. The most difficult issue during this last
project was negotiating with several different companies for the purchase of the conveyor equipment;
their salesmen were fairly aggressive and you found it difficult to deal with them.

Reflection Corner:
Take a moment to think about your personal growth during this course.

1. How has your understanding of HRM evolved?

2. What specific concepts or ideas resonated with you the most?

3. Did any of the case studies or real-world examples spark your interest in pursuing a career in HRM?

MCQs
Choose the correct answer from options given below:

1. Which of the following statements best describes Human Resource Management?

a) It focuses on managing financial resources of a company.

b) It is a strategic approach to efficiently managing people within an organization.
c) It primarily deals with managing physical resources in a company.
d) It is a discipline that focuses on marketing and sales management.

2. Which of the following is a characteristic of Human Resource Management?

a) People-oriented c) Product-oriented
b) Profit-oriented d) Process-oriented

3. What are the key responsibilities of a Human Resource Manager?

a) Talent management, workforce safety, training and development

b) Financial analysis, production planning, inventory management
c) Sales forecasting, market research, advertising campaigns
d) Quality control, project management, customer service

27 Reflection Corner
 4. Which of the following is a step in the Human Resource Planning process?

a) Conducting performance evaluations

b) Implementing training and development programs
c) Analyzing organizational goals
d) Reviewing employee benefits packages

5. Which of the following is a demand forecasting technique used in Human Resource Planning?

a) Ratio-trend analysis c) Delphi method

b) Succession analysis d) Markov analysis

True/False

State whether the following statements are True or False :

1. The purpose of human resource management is primarily

focused on hiring and firing employees.

2. Human Resource Planning (HRP) involves forecasting

personnel demand and supply.

3. Termination is always a result of poor performance.

4. Pink slip, downsizing, retrenchment, and separation all refer to

the same process of letting employees go.

5. Transfers are always initiated by the employee's request.

Short-answer questions
Answer the following questions briefly:

1. Define Human Resource Management and state its functions.

2. State the role of the Human Resource Manager.
3. Describe factors affecting Human Resource Information System.
4. Explain the following concept:

a. Downsizing
b. Outsourcing
c. Pink slip
d. Voluntary Retirement Scheme
e. Promotions

5. Elaborate on the Human Resource Planning Process with the help of a flow chart.

28 True or False
 Long-answer questions

Answer the following questions in detail:

1. Why do we need to study human resource management? State the importance of studying HRM in
today’s context?

2. If you were the HR manager of Next Consulting, what variables may have an impact on Human
Resource Planning?

3. One of your company's employees intends to retire before reaching the mandatory retirement age.
You must outline the benefits of the voluntary retirement scheme and the significance of the term
"Golden Handshake" in your capacity as HR Manager.

4. ABC Company is considering implementing a Human Resource Information System (HRIS). Identify and
discuss the key factors that can affect the successful implementation and functioning of an HRIS in an
organization.

5. You work as a senior software developer in a multinational IT company. Recently, a new project has
started in a different location, and your expertise is required to ensure its success. You are interested in
transferring to the new location to take on this exciting opportunity. Write a persuasive letter to your
current manager requesting a transfer, highlighting the benefits it would bring to both you and the
company. Provide specific examples of how your skills and experience would contribute to the
project's success and address any potential concerns your manager might have.

ANSWERS

Choose the correct answers from options given below:

Answer 1 : b) It is a strategic approach to efficiently managing people within an organization.

Answer 2 : a) People-oriented

Answer 3 : a) Talent management, workforce safety, training and development

Answer 4 : c) Analyzing organizational goals

Answer 5 : a) Ratio-trend analysis

State whether the following statements are True or False

Answer: False
Explanation: While hiring and firing are essential aspects of human resource management, its purpose
extends beyond that. HR management involves activities such as employee training and development,
performance management, compensation and benefits, employee relations, and creating a positive work
environment.

Answer: True
Explanation: HRP is a strategic process that involves forecasting the future personnel needs of an
organization (demand) and assessing the availability of employees to meet those needs (supply). It aims
to align the organization's human resources with its strategic objectives.

Answer: False
Explanation: Termination can occur for various reasons, including poor performance, but it can also be
due to misconduct, violation of company policies, downsizing, or restructuring.

Answer: True
Explanation: Pink slip, downsizing, retrenchment, and separation are terms used interchangeably to
describe the process of reducing the workforce or letting employees go, usually due to financial
constraints, organizational changes, or economic downturns.

29 Answers
Answer: False
Explanation: Transfers can be initiated by either the employee or the employer. Employees may request
transfers for various reasons, such as career advancement or personal circumstances, while employers
may initiate transfers to optimize workforce distribution, fill vacancies, or provide development
opportunities.

Exam Tips
In questions requiring analysis of any business function, remember to consider
its inter-dependency with the functions of the HR.

In questions related to use of HRIS, remember a company need not always use
the latest technology in all circumstances. There are substantial cost to be
paid and some businesses thrive on using old fashioned methods.

References
Dessler, G., & Pearson. (2017). Human resource management (15th ed.). Pearson, Cop.
Semma Sanghi, Human Resource Management, Macmillan India Publication. 2012
K. Aswathapa, Human Resource Management, Text and Cases, 8th Ed., Tata McGraw Hill, New Delhi
V.S.P. Rao, Human Resource Management, Himalaya Publication House.
Peter Reilly, Human Resource Planning: An Introduction, Institute for Employment Studies, 1996
Smith, J. D., & Johnson, A. B. (2022). The impact of employee engagement on organizational
performance. Journal of Human Resource Management, 15(3), 123-145. doi:10
Anderson, L. M. (2023). Emerging trends in Human Resource Management: A global perspective.
International Journal of HRM Trends, 6(3), 80- 95

US Department of Labor finds Amazon exposed workers to unsafe conditions, ergonomic hazards at
three more warehouses in Colorado, Idaho, New York | U.S. Department of Labor. (2023, February 1).
Www.dol.gov.

Stone, R. J., Cox, A., & Gavin, M. (2021). Human Resource Management. (10th ed.). Wiley.

Endnotes
1. Is Amazon a good place to work? (2024,
April 10). Oxfam

2. Silberling, A. (2023, January 18). Amazon

fined by regulators for unsafe ware-
house work conditions. TechCrunch.

3. News Release. (n.d.). DOL.

4. Staff, A. (2023, March 14). Amazon

releases 2022 workplace safety Report.

5. Ernst & Young Global Ltd.,(n.d.). Reaping

the demographic dividend.

6. ET Bureau. (2024, September 30).

Investment, factory jobs grow, wipe out
Covid impact. The Economic Times.

30 References