Module - 1: Introduction to Human Resource Management and Human Resource Planning

Human Resource Management – Meaning, Importance, Objectives, Functions, Human Resource

Management Process – Human Resource Management as a Strategic tool.

Human Resource Planning: Objectives, Need and Benefits, Process of Human Resource Planning,
Challenges in Human Resource Planning.

Introduction
Men and resources are involved in all activities. Men were taken for granted for a long time. Greater
accent was given to resources, production machinery and top managers. But during the last few decades, with
modern large scale production of innumerable products for a wide market, the importance of human resources
and their development has come to the fore. The importance of human resources to any organization need not
be over-emphasized. Human resource is the wealth of a nation and an organisation. The development process
is wide and varied. In this lesson, let us understand the importance and concept of Human Resources
Management. (HRM).

The important resources that have to be managed by the organization include: human, finance, operations
and information. Out of these, human resource management is the only resource that is living part of the
organization. It is this living part which vibrates positive energy and leads to the planning, organizing,
controlling, coordinating and directing of the rest of the resources within the organization. It is the sub-system
which will ultimately lead to the overall growth of the organization. Thus, human resource is a crucial sub-
system in the process of management.

Human Resource Management – Meaning & Definitions

Human Resource Management is a process of bringing people and organization together so that the goals of
each are met. It is that part of the management process which is concerned with the management of human
resource in an organization. It tries to secure the best from people by winning their whole hearted co-operation

According to the Invancevich and Glueck, “HRM is concerned with the most effective use of people to
achieve organizational and individual goals. It is the way of managing people at work, so that they give their
best to the organization ”.

According to Dessler (2008), “The policies and practices involved in carrying out the “people”or human
resource aspects of a management position, including recruiting, screening, training, rewarding, and
appraising comprises of HRM”.

According to Leon C. Megginson, the term human resource can be thought of as, “the total knowledge, skill,
creative abilities, talents and aptitudes of an organization’s workforce, as well as the values, attitudes and
beliefs of the individuals involved.”

According to Dyer, Delery and Doty, “Strategic Human Resource Management (SHRM) focuses on the
overall HR strategies adopted by business units and companies and tries to measure their impacts on
performance”.
 Strategic HRM focuses on actions that differentiate the organization from its competitors and aims to make
long term impact on the success of organization.

Human Resource Management – Importance

The importance of HRM can be viewed in three contexts; organizational, social and professional.

Organizational significance recruit, retain, develop and utilize

i. Effective utilization of human resources to motivate them and to change their attitudes to work and the
organization.

ii. To develop personnel to meet the demands of the work effectively; and

iii. To ensure proper recruitment and to retain the personnel in the organization so that right people are
available.

Social significance

This aspect aims in achieving the need satisfaction of personnel in the organisation. It is often said that a
happy worker is not only happy in his work place but also at home and in society also.

Hence HRM seeks to achieve the following

1. Maintaining balance between jobs and job-seekers, taking into consideration job requirements, job seekers’
abilities and aptitudes
eliminate wasteful, utilize match govt rewards, balance, satisfy
2. Providing most productive employment from which socio psychological satisfaction can be derived.

3. Utilizing human capabilities effectively and matching with government rewards.

4. Eliminating wasteful organizational and individual practices.

Professional Significance

This aspect involves developing people and providing appropriate environment for effective utilization of their
capabilities and involves the following.

1. Developing people on a continuous basis to meet the challenges of their jobs.

2. Maintaining the dignity of personnel at the work place.

enviornment, dignity, develop
3. Providing proper physical and social environment at the work place to create a congenial working
atmosphere.

Human Resource Management- Objectives

The primary objective of HRM is to ensure the availability of competent and willing workforce to an
organization. The specific objectives include the following:

1) Human capital : assisting the organization in obtaining the right number and types of employees to fulfill its
strategic and operational goals
2) Developing organizational climate: helping to create a climate in which employees are encouraged to
develop and utilize their skills to the fullest and to employ the skills and abilities of the workforce efficiently

3) Helping to maintain performance standards and increase productivity through effective job design;
providing adequate orientation, training and development; providing performance-related feedback; and
ensuring effective two-way communication.

4) Helping to establish and maintain a harmonious employer/employee relationship

5) Helping to create and maintain a safe and healthy work environment

6) Developing programs to meet the economic, psychological, and social needs of the employees and helping
the organization to retain the productive employees

7) Ensuring that the organization is in compliance with provincial/territorial and federal laws affecting the
workplace (such as human rights, employment equity, occupational health and safety, employment standards,
and labour relations legislation). To help the organization to reach its goals

8) To provide organization with well-trained and well-motivated employees

9) To increase the employees satisfaction and self-actualization

10) To develop and maintain the quality of work life

11) To communicate HR policies to all employees.

12) To help maintain ethical polices and behavior.

climate > quality work life > safe healthy enviornment > social / health needs employee > retain
perf std, productivity, T&D, 2wComm > harmonius reltnship > well motivated emp >
laws > ethical policies
The above stated HRM objectives can be summarized under four specific objectives: societal, organizational,
and functional and personnel.

Societal Objectives– The societal objectives of HRM include the following:-

a) To manage human resources in an moral and socially responsible manner.

 b) To ensure agreement with legal and ethical standards. c) To minimize the negative impact of social
demands upon the organization.

Organizational Objectives – The organizational objectives of HRM include the following:-

a) HR department, like any other department in an organization should focus on achieving the goals of the
organization first. If it does not meet this purpose, the HR department cannot exist in the long run.

b) HR department should recognize its role in bringing about organizational effectiveness.

c) HRM is not an end by itself. It is only a means to assist the organization with its primary objectives

Functional Objectives – The functional objectives of HRM include the following:-

a) To maintain the HR department’s contribution at a level appropriate to the organization’s needs.

Resources are wasted when HRM is either more or less sophisticated to suit the organization’s demand.

b) The department's level of service must be tailored to fit the organization it serves.

c) HRM should employee the skills and abilities of the work force efficiently. It should aim at making
people's strengths more productive and beneficial to the organization.

Personnel Objectives– The personnel objectives of HRM include the following:-

a) HRM should increase employees’ job satisfaction to the fullest.

b) HRM should also meet the self-actualization needs of the employees.

c) HRM should assist the employees in achieving their individual goals at least so far as these goals enhance
the individual’s contribution to the organization.

d) HRM should develop and maintain a quality of work life (QWL). Organizational performance can never
be improved without improving QWL.

e) HRM should communicate HR policies to all the employees, it will help in tapping the ideas, opinions,
feelings and the views of the employees.
Human Resource Management – Functions

HRM functions (also called processes) are carried out by the HR managers to fulfil the goals and objectives of
the organization. They perform two sets of functions, namely managerial functions and operative functions.
The managerial functions are the basic functions performed by the HR managers in their capacity as managers
or heads of their own departments. In fact, all managers, irrespective of their departments, perform these
functions.

The operative functions, on the other hand, are specialized activities performed exclusively by the HR
managers, usually for all the departments. We shall first discuss the managerial functions.

Managerial Functions- Functions like planning, organizing, staffing, directing and controlling constitute the
core managerial functions of an organization. The specific activities performed under each of these functions
are explained as follows:

Planning: It is an effective tool to deal with the future. It involves the process of predetermining the personnel
programmes that are necessary to attain the organizational goals. In this context, accurate forecasting is vital
to the success of any plan. Planning is such a crucial function for an organization that it is the key to all other
managerial functions. The steps involved in planning are

• Establishing goals and objectives to be achieved

• Developing rules and procedures

• Determining plans and forecasting techniques

Organizing: Once the plans are formulated, the next step is to organize the men and material in order to
accomplish those plans. Organizing is a process through which the firm establishes its structure and
determines the authority, responsibility and accountability of each member in relation to the job. Thus,
organizing involves

• Giving each member a specific tasks

• Establishing departments and divisions

• Delegating authority to the members

• Establishing channels of authority and communication

• Creating a system to coordinate the works of the members

Staffing: This function deals with the creation and maintenance of human resources through employment,
compensation, benefits, training and development, and industrial relations measures. It aims to put in place
HR policies in order to deal with wage fixation, working conditions, and promotional opportunities for
prospective employees. The steps involved in the staff function are

• Determining the type of people to be hired

• Recruiting prospective employees and selecting the best ones from them

• Compensating the employees

• Training and developing the employees

• Setting performance standards and evaluating the employees’ performance

• Counselling the employees

Directing: Directing is the sum of several activities like communication, leadership and motivation. Directing,
as a function, aims at securing willing cooperation from the individuals and the groups to achieve the
predetermined goals. It includes the following activities:

• Getting work done through subordinates

• Ensuring effective two-way communication for the exchange of information with the subordinates

• Motivating subordinates to strive for better performance

• Maintaining the group morale

Controlling: Controlling is the process of checking the efficiency of the individuals and the groups in
fulfilling the plans and goals through follow-up measures. It is essential for continuous improvement in the
managerial activities. The processes involved in controlling are

• Establishment of standard performance

• Measurement of actual performance

• Comparison of actual performance with the standard one to find the deviation

• Initiation of corrective actions, if there are any deviations

Next, let us look at the operative functions.

Operative Functions Staffing is one of the managerial functions. But this function is normally performed by
the HR managers for all the departments of the firm. In most organizations, the HR department establishes
personnel policies and coordinates the HR functions of all the departments. This function is also called the
operative function or HRM function. It includes, amongst others, the processes of hiring, training,
compensating, appraising and retaining employees, and attending to their labour relations, health and safety,
and equality concerns.

Employment/ Procurement: Employment of proper kind and number of persons necessary to achieve the
objectives of the organisation. To achieve this objective, the right amalgamation of certain functions is most
important. These are:

(i) Job Analysis: It is the process of study and collection of information relating to the operations and
responsibilities of a specific job. It includes job description and job specification.
(ii) Human Resource Planning: The basic goal of human resource planning is to predict the future and
based on these predictions, implement programmes to avoid anticipated problems. Humans resource
planning is the process of examining an organisation’s future human resource needs.
(iii) Recruitment: It is the process of searching for prospective employees and stimulating them to apply
for jobs in an organisation. Alternatively, recruiting is the discovering of potential candidates for
actual or anticipated organisational vacancies.
(iv) Selection: The process of ascertaining the qualifications, experience, skill, knowledge, etc., of an
applicant with a view to appraising the candidate’s suitability to a job.
(v) Placement and Orientation: After the new employee enters the organisation or workplace, he/she
should be provided with basic background information about the employer, working conditions and
the information necessary to perform his/her job satisfactorily. The new employee’s initial orientation
helps him perform better by providing him information of the company rules, and practices

Human Resource Development Human Resource Development is the process of improving, moulding, and
changing skills, knowledge, creative abilities, attitudes, and values etc., based on present and future job and
organisational requirements. These include:

(i) Performance Appraisal: It is the systematic assessment of an individual with respect to his or her
performance on the job and his or her potential for development in that job. Performance
appraisal is a systematic and objective way of evaluating the relative worth or ability of an
employee in performing his job.
 (ii) Training: Training is a planned activity for increasing the knowledge and skills of people for a
definite purpose. It involves systematic procedures for transferring technical knowhow to the
employees so as to increase their knowledge and skills for doing specific jobs with proficiency.
(iii) Management Development: It is the process of designing and conducting suitable executive
development programmes so as to develop the managerial and human relation skills of
employees.
(iv) Career Planning and Development: It is planning of one's career and implementation of career
plans by means of education, training, job search and acquisition of work experience. Career
development is viewed today as a kind of partnership with employees. It is also a key
component of a company’s attraction and retention strategy. Many candidates will not consider
employment with an organisation unless it offers career development as a basic component of its
culture.
(v) Organisation Development: It is a planned process designed to improve organisational
effectiveness and health through modifications in individual and group behaviour, culture and
systems of the organisation, using knowledge and technology of applied behavioural science.

Compensation This function is concerned with the determination of adequate and equitable remuneration of
the employees in the organisation of their contribution to the organisational goals. Factors which must be
borne in mind while fixing the remuneration of personnel are their basic needs, requirements of jobs, legal
provisions regarding minimum wages, capacity of the organisation to pay, wage level afforded by
competitors, etc. This include:

(i) Job Evaluation: It is the process of determining the relative worth of job in monetary terms.
(ii) Wage and Salary Administration: The process of developing, practicing and maintaining a
suitable wage structure for employees.
(iii) Incentives: Also called “payment by results” incentives paid by in addition to salary and wages
based on performance.
(iv) Bonus: Bonuses are compensation for employees for work performed; they are paid in addition
to salary or wages. It includes payment of statutory bonus according to the Payment of Bonus
Act, 1965 and its latest amendments.
(v) Fringe Benefits: These are various benefits at the fringe to wages. Common examples of fringe
benefits include medical insurance, use of a company car, housing allowance, educational
assistance, vacation pay, sick pay, meals and employee discounts. Total compensation includes
regular income and all of these paid benefits.
(vi) Social Security Measures: Social Security is defined by the International Labour Organisation
(ILO) as “The protection which society provides for its members through a series of public
measures against the economic and social distress that otherwise would be caused by the
stoppage or substantial reduction of earnings resulting from sickness, maternity, employment
injury, invalidity and death; the provision of medical care; and the provision of subsidies for
families with children” (1984).

Maintenance The maintenance function aims at retaining efficient and experienced employees in the
organization. This calls for creative HR practices. In this regard, HR managers are responsible for offering a
wide range of HR programmes covering occupational safety, health promotion and physical fitness, canteen
facilities, recreation activities, transportation programmes, employee suggestion schemes, career counselling
and growth for creating a positive work environment.
Integration It is an area of management in integrating people into work situation in a way that motivates
them to work together productively, cooperatively and with economic, psychological, and social satisfaction.

Industrial Relations – It consists mainly of industrial relations and aims at ensuring good relations between
the management and the employees. HR managers have to implement industrial relations programmes that
would ensure ethical and fair treatment in disciplinary action, grievance redressal, and career management
processes. They should also counsel the employees and the management to prevent and, when necessary,
resolve disputes over labour agreements or other labour relation issues. Practicing various human resources
policies and programs like employment, development and compensation and interaction among employees
create a sense of relationship between the individual worker and management, among workers and trade
unions and the management. Human Relations is the process of interaction among human beings.

It is to be understood here that the functions of HRM can vary widely from one organization to another,
depending upon its nature, size, and objectives. For instance, a smaller organization may follow a shorter
HRM process with a greater emphasis on functions like procurement and compensation and little or no
priority for activities like training and development and industrial relations maintenance. On the contrary,
large organizations may pursue a longer and more comprehensive HRM process to meet the requirements of
both the management and the workforce.

PROCESS OF HRM

Objectives and organization of HRM

Strategic HRM

Employment

• Job design and analysis

• Human resources planning
• Recruitments, selection
• Placement and induction

Human resources developments

• Performance appraisal
• Training and development
 • Career planning and development
• Promotion, transfer and demotion
• Absenteeism and labour turnover
• Management of change, development and culture

Compensations management

• Job evaluation
• Wages and salary administration
• Social security and welfare

Human relations

• Motivations and job satisfaction

• Morale
• Communication
• Leadership
• Work environment, industrial accidents, safety and health

Industrial relations

• Indian labour market

• Industrial relations
• Trade unionism
• Collective bargaining
• Industrial conflicts
• Workers participation in management and
• Quality circles

Recent trends in HRM

• Quality of worklife and empowerment

• Total quality HRM
• HR accounting, audit and research
• Recent techniques in HRM
Additional Reading

STRATEGIC HUMAN RESOURCE MANAGEMENT

“Strategic human resource management is the process of linking the human resource function with the
strategic objectives of the organisation in order to improve performance.” — John Bratton

An effective human resources strategy is useful in a number of related areas. These areas include number of
employees required, training needs, skill levels required, compensation, performance appraisal and so on.
Relationship with labour unions is an important aspect of human resources strategy. Executive development
programmes require strategic attention. For example, if an organisation anticipates opening new plants in the
near future, it must plan on locating and developing potential managers for these plants. Training managers
for foreign assignments is a very important strategic task for international organisations.

Generic HR strategies

Identifying the need to highlight the prevalence of generic HR strategies pursued by organisations in
different contexts, Budhwar and Sparrow (2002) propose four HR strategies. These are:

Talent acquisition: HR strategy (emphasises attracting the best human talent from external sources)

Effective resource allocation: HR strategy (maximises the use of existing human resources by always
having the right person in the right place at the right time)

Talent improvement: HR strategy (maximises the talents of existing employees by continuously training
them and guiding them in their jobs and career) and

Cost reduction: HR strategy (reduces personnel costs to the lowest possible level).

STRATEGIC HUMAN RESOURCE MANAGEMENT PROCESS

SHRM process involves three steps

1. Forecasting

2. Strategy Formulation

3. Implementation
Forecasting is the attempt to predict future events that will impact the organisation and its needs through the
analyses of the organisation’s internal and external environments (e.g., mission statement, goals, labor
markets, opportunities, and threats). Forecasting is more effective when forecasting techniques are
compatible with levels of predictability and control.

HR strategy formulation — that is, strategic human resource planning (SHRP) — involves the
development of initiatives that are aligned with the organisation’s mission statement, strategic objectives,
strengths and weaknesses, and opportunities and threats. The HR strategy formulation phase is a complex
process that involves making decisions about HR activities based on forecasts, organisational strategy, and
the anticipated effects of HR programmes on strategic objectives. An important process in SHRP is linking
HR functions to other processes in the organisation.

HR strategy implementation involves putting the HR plan into action with HR programmes that support
the organisation's overall strategy. Strategy implementation involves the integration of the larger
organisational strategy into the HR functions of the organisation, and it is arguably as-or more-complex than
strategy formulation. Employee recruitment and selection, training and development, performance
management, and labor and employee relations may all have to be altered by HR in order to integrate with
the organisational strategy. Unlike the formulation process, implementation is an organisational intervention

Benefits of integration of HRM into the corporate strategy.

(Budhwar and Sparrow, 1997; Truss et al., 1997; Budhwar, 2000a; 2000b)

• Providing a broader range of solutions for solving complex organisational problems;

• Assuring the successful implementation of corporate strategy;
• Contributing a vital ingredient in achieving and maintaining effective organisational performance;
• Ensuring that all human, technical, and financial resources are given equal and due consideration in
setting goals and assessing implementation capabilities;
• Limiting the subordination and neglect of HR issues to strategic considerations;
• Providing long-term focus to HRM; and helping a firm to achieve competitive advantage.

References

• Human Resource Management – Dr. P. Subba Rao

• Human Resource Management - K. Aswathappa