B M S 2

HUMAN
RESOURCE
MANAGEM
ENT
SIGNIFICANCE OF HRM
• Human beings are the most important, valuable and critical resource.

The reasons:
1. They can make or break a company.
2. Human beings are imbued with fertile minds.
3. Human beings are capable of producing an output greater than the sum of parts.
4. They can help the organization to achieve the results quickly, efficiently and effectively.
5. People, in short, can take the organization to commanding heights of economy or even pull them down to
levels unheard.
6. The only differentiating element between successful and unsuccessful organization is people factor.
7. When the organization ignores human factor, it will pay an enormous price.
WHY IS MANAGING PEOPLE NOT
EASY?
1. Commoditization does not work.
2. Unpredictable behaviour patterns.
3. Equity in terms of what others are getting.
4. Revolution of rising expectations.
DEFINITIONS
• Human resource is the total of knowledge, skills, creative abilities, talents and aptitudes of the
organization’s workforce, as well as the values, attitudes, and beliefs of the individuals involved.
• HRM is a strategic, integrated, coherent approach to the employment, development and well-
being of the people working in the organization.
• HRM is the process of acquiring, training, apprising, compensating employees and of attending to
their labour relations, health, safety and fairness concerns.
• HRM is a distinctive approach to the employment management to achieve competitive advantage
through the strategic deployment of highly committed and capable workforce, using an integrated
array of cultural, structural, and personnel techniques.
T H E A N A LY S I S O F H R M D E F I N I T I O N S C A N
BE SUMMARIZED AS FOLLOWS:

1. It is concerned with employees as individuals and as a group in attaining goals. It is also concerned with behavioural, emotional and
social aspects of personnel.
2. It is concerned with the development of human resource, i.e., knowledge, capability, skill, potentialities, and achieving and attaining
employee goal, including job satisfaction.
3. HRM covers all levels of employees, both organized and unorganized.
4. It applies to employees in all types of organizations in the world.
5. It is a continuous and never-ending process and aims at attaining goals of the organization, individual, and society, in an integrated
approach.
6. It is the responsibility of all line managers and a function of staff managers in an organization.
7. It is concerned with managing human resources at work.
8. It is a central subsystem of the organization and permeates to all types of functions such as production management, marketing
management and financial management.
9. It aims at securing cooperation from all employees in order to attain predetermined goals.
L I N E A N D S TA F F A S P E C T S
• All managers are in sense human resource managers because they get involved in activities like
recruiting, interviewing, selecting and training.
• Authority is the right to make decisions to direct the work of others, or to give orders. In
management, we usually distinguish between line and staff authority. The line authority gives the
managers the right to issue orders to other managers or employees. It creates superior-subordinate
relationship. The staff authority gives the managers the right to advise the managers or other
employees. It creates advisory relationships. The line managers have line authority and staff
managers have staff authority.
• In popular usage, the managers associate line managers with functions like sales, production, etc. The
staff managers run the departments, which are advisory or supportive, like purchasing, HRM, and
quality control.
SCOPE AND ACTIVITIES OF HRM
• Human resource and manpower planning
• Recruitment, selection and placement of personnel
• Training and development of employees
• Appraisal of the performance of the employees and taking corrective steps
• Motivation of workforce by providing financial incentives and avenues for promotion
• Remuneration of employees
• Social security and welfare of employees
• Review of personnel policies, procedures and practices
HUMAN RESOURCE
DEVELOPMENT
• HRD assumes significance in view of fast-changing organizational environment and the need of
the organization to adopt to new techniques. The changing organizational factors include:
1. Unprecedented increase in the competition, within and outside the country due to liberalization
2. Trend towards market economy are more prevalent in most of the countries
3. Organization to be dynamic, growth-oriented and fast-growing, should develop their human
resource
4. Human resource to be dynamic should acquire capabilities continuously, adopt the values and
beliefs and aptitudes, in accordance with the changing requirements of the organization
CHARACTERISTICS OF HUMAN
RESOURCE
1. Human resource are complete human beings, i.e., economic, social and psychological.
Employees enter the organization with their values, aptitudes and sentiments.
2. The competencies are developed through HRD programmes.
3. Employees’ background, expectations, values, vary from person to person. So, each employee
should be managed differently, based on different principles of approach.
4. The value of human resource increases over time due to continuous learning process.
DEFINITION OF HRD
1. Leonard Nadler has defined HRD as “those learning experiences which are organized for a specific time
and designed to bring about possibility of behavioural changes.”
2. T Venkateshwara Rao defines HRD in the organizational context as a continuous process by which the
employees of the organization are helped in a continuous, planned way to:
a) Acquire or sharpen capabilities required to perform various functions associated with their present or
expected future roles
b) Develop their general capabilities as individuals and discover and exploit their own inner potential for
their own and organizational development purpose
c) Develop an organizational culture in which superior-subordinate relationship, teamwork and
collaboration among sub-units are strong and contribute to the professional well-being, motivation and
pride of the employees.
3. P Subba Rao says HRD is a process in which the employees of the organization are helped or
motivated to acquire and develop technical, managerial and behavioral knowledge, skills and
abilities and mold the values, beliefs and attitudes necessary to perform the present and future roles,
by realizing the highest human potential with a view to contribute positively to the organizational
group, individual and social goals.
F E AT U R E S O F H R D
1. HRD is a systematic and planned approach for the development of individuals in order to achieve
organizational, group and individual goals.
2. HRD is a continuous process for the development of technical, managerial, behavioral and
conceptual skills and knowledge.
3. It develops the skills and knowledge at individual level, group level and organization level.
4. HRD is multidisciplinary. It draws inputs from engineering, technology, psychology, anthropology,
commerce, economics, medicine, etc.
5. It is embodied with techniques and processes.
6. HRD is essential, not only for manufacturing and service industries, but all types of organizations.
SCOPE OF HRD
1. Recruiting the employees within the dimension and possibilities for developing human resource.
2. Selecting those employees having potentialities for development to present and future organization
needs.
3. Analyzing, apprising and developing the performance of employees, as individual members of the
group and organization, with a view to develop them by identifying the gaps in skills and
knowledge.
4. Help the employees to learn from their superiors through performance consultations, performance
counseling and performance interview.
5. Train all the employees in acquiring new technical skills and knowledge.
6. Develop the employees in managerial and behavioral skills and knowledge.
7. Planning for employee’s career and introducing developmental programmes.
8. Planning for succession and develop the employees.
9. Changing the employee’s behavior through OD.
10. Develop employee learning through group dynamics, intra- and inter-team interactions.
11. Develop learning through social interactions and programmes.
12. Develop learning through job rotation, job enrichment and empowerment.
13. Develop learning through quality circles and schemes of worker participation in management.
NEED FOR HRD
1. Changes in economic policies
2. Changing job requirements
3. Need for multi-skilled human resource
4. Organization viability and transformation process
5. Technological advances
6. Organizational complexity
7. Human relations
HRD OBJECTIVES
1. To prepare the employee to meet the present and changing future job requirements
2. To prevent employee obsolescence
3. To develop creative abilities and talents
4. To prepare the employees for higher level jobs
5. To impart new entrants with basic HRD skills and knowledge
6. To aid total quality management
7. To promote individual and collective morale, a sense of responsibility, cooperative attitude and good relations
8. To broaden the minds of senior managers by providing them opportunities to exchange their experiences within and
outside
9. To ensure the smooth and efficient working of the organization by enhancing organizational capabilities
10. To create a climate congenial to the full potential of employees
HRD FUNCTIONS
1. Performance appraisal
2. Employee training
3. Executive development
4. Career planning and development
5. Succession planning and development
6. Organization change and organization development
7. Involvement in social and spiritual organizations
8. Involvement in quality circles
H R D C L I M A T E VA R I A B L E S
These include:
1. Openness
2. Confrontation
3. Trust
4. Autonomy
5. Proaction
6. Authenticity
7. Collaboration
D E V E L O P M E N T O F H R D C L I M AT E
1. A tendency at all levels to treat people as the most important resource
2. A perception that developing competencies in employees is the job of every individual in the
organization
3. A tendency to be open in communication
4. A faith in the capability of the people to change and acquire new competencies at any stage of
life
5. A tendency to encourage risk-taking
6. A tendency to help the employees recognize their strengths and weaknesses
7. A general climate of trust
8. A tendency on the part of employees to be helpful to each other and collaborate
9. A tendency to discourage favoritism and biasness
10. Supportive HR policies
11. Development oriented appraisal, training, reward system, job orientation, career planning and
potential appraisal
HRM IN A DYNAMIC
ENVIRONMENT
• There is a new trend which is sweeping across businesses today. Even though the enterprises are
running successfully and earning profits, the managers are taking a lot of action that reflects
rethinking of how business organizations function. They are making radical changes in their
practices to achieve their results which were impossible. All the organizations are making
significant changes, not just finetuning what currently exists, but making their organizations more
quality oriented.
GLOBAL VILLAGE
• It is a term that reflects the state of business in our world. The HR manager has to ensure the appropriate mix of
employee in terms of knowledge, skills and cultural adaptability and availability to handle the global
assignments. In order to meet this goal, the individuals working in the organization have to be trained to meet the
challenges of the global village.
• In addition to language, HR managers must also ensure that workers going overseas understand the host
country’s culture and all countries have different values, morals, customs and laws. Accordingly, people going to
another country must have the exposure to those issues before they can be expected to commence working. It is
also important for HR managers to understand how the host society will react to these mobile employees.
• HRM must develop mechanisms which will help multicultural individuals work together. As background,
language, customs become more prevalent, there are implications that employee conflicts will increase. HRM
must make every effort to acclimate different groups to each other, finding ways to build teams and reduce
conflict.
MAKING GLOBAL HR SYSTEM
M O R E A C C E P TA B L E
1. Remember that global systems are more accepted in a truly global organization.
2. Investigate the pressures to differentials and determine their legitimacy. HR managers seeking
to standardize selection, training, appraisal, compensation and other HR practices worldwide
always meet resistance from local managers.
3. Try to work within the context of a strong corporate culture.
DEVELOPING A MORE EFFECTIVE
GLOBAL HR SYSTEM
1. Form global HR network.
2. Remember that it is important to standardize the end results and competencies than specific
methods.
S TA F F I N G G L O B A L
O R G A N I Z AT I O N S
• Multinationals employ several types of international managers.
• Locals are the citizens of the country where they are working. Expatriates are non-citizens of the
countries in which they are working.
• Home country nationals are the citizens of that country in which the MNC has its headquarters.
• Third country nationals are citizens of the country other than parent or host country.
• Offshoring means local employees abroad do the jobs that a firm’s domestic employees
previously did in-house. It is a uniquely HR-dependent activity.
I N T E R N AT I O N A L S TA F F I N G
POLICY
1. Ethnocentric policy: The firm fills key managerial positions with parent country nationals. The
notion is that home country attitudes, management styles, knowledge, evaluation criteria, and
managers are superior to anything that the host country has to offer.
2. Polycentric oriented organization would staff the foreign subsidiaries with host country
nationals and its home office with parent country nationals. A conscious belief is that host
country managers can really understand the culture and behavior of the host country market.
3. Geocentric staffing policy seeks the best people for key jobs throughout the organizations,
regardless of their nationality. The belief is that firm’s whole management staff must be
selected on a global basis and the assumption is that the best manager for a specific position
may come from anywhere, may be in any country in which the firm operates.
C U LT U R A L E N V I R O N M E N T
• Understanding the cultural environment is very critical to the success of an organization’s operations.
Many multinationals are hiring nationals in foreign countries in which they operate and these corporations
have a ready supply of qualified employees, who are well-versed with the country’s language and
customs. These individuals comes from different backgrounds and are mixed together. They are able to
note the differences which may exist between their cultures.
• HRM will be required to train the management to be more flexible in practices because tomorrow’s
workforce will come from different colors, nationalities and so on. The managers will have to appreciate
and learn to celebrate these differences.
• The various requirements of the workers because of cultural backgrounds, customs, work schedules and
the like, must be taken into account. In addition, extensive training has to be imparted to the managers to
recognize these differences and change the way they think about people.
WORKFORCE DIVERSITY
• It is concerned with similarities and differences in such characteristics as age, gender, ethnic
heritage, physical abilities and disabilities, race and sexual orientation among the employees of
the organization.
• In India, the diversity is based on religion, race, caste, language and gender. Also, the large
number of women entering the work arena is emerging as a contributing factor.
DIMENSIONS OF DIVERSITY
• Primary dimensions: These are the core elements about each member of the workforce that
cannot be changed, such as, age, gender, physical and mental abilities, and sexual orientation. The
greater the number of primary differences between the people, the more it is difficult to establish
trust and respect.
• Secondary dimensions: These constitute elements that can be changed or at least modified. They
include a person’s health habits, religious beliefs, education and training, general appearance,
status relationship, ethnic customs, communication styles and level of income. All these factors
add an additional layer of complexity to the way we see ourselves and others and in some
instances, we can have a powerful impact on our core identities.
A D VA N T A G E S O F W O R K F O R C E
DIVERSITY
It represents both a challenge and an opportunity.
1. An organization with well managed diversity will solve the conflicts resulting from opposing viewpoints into
more complete and inventive solutions.
2. An organization that promotes equal employment opportunity for diverse groups will generally do better at
attracting and retaining talent from all backgrounds, thereby increasing the pool of skilled employees.
3. Business with workforce from varied backgrounds can effectively serve customers who are themselves diverse.
4. Organizations with diverse workforce are able to present their product and service in a better way.
5. Organizations with effective diversity programmes have a better corporate image.
6. The global marketplace of the business today demands a workforce with language skills, cultural diversity,
awareness of differences across the market of multinational companies.
CHALLENGES OF WORKFORCE
DIVERSITY
1. Problematic gender relations
2. Cultural differences
3. Communication problems
4. Mistrust
5. Discriminatory treatment
6. Resistance to change
MANAGEMENT OF DIVERSITY
1. Commitment of the top management
2. Change of employment policies
3. Creation of a support group
4. Diversity training programmes
5. Diversity monitoring mechanism
REASONS FOR GROWING
INTEREST IN DIVERSITY
1. Growth of servicing economy
2. Globalization of the markets
3. Mergers and strategic alliances
4. Increasing role of work teams
5. Changing composition of workforce
6. Managing labor markets
7. Legal requirements
CONSEQUENCES OF IGNORING
DIVERSITY
• Many skilled professionals and talented employees may leave the organization, which may result in excessive
turnover.
• This will result in additional retraining and recruitment of employees, which will result in additional expenditure.
• Discrimination complaints from smaller groups may result in the mismanagement of diverse employees.
• A comment, a gesture delivered without malaise may be received as an insult and create tension among coworkers.
• Because of lack of fair treatment, some employees may develop the feeling of being second-rate employees and
may experience stress at workplace.
• This stressful environment may lead to higher rate of absenteeism.
• There may be lack of openness and trust between various groups and the communication in these organizations
may be ineffective.
CHANGING SKILL
ENVIRONMENTS
• We have to address the issue of skill requirements in the changing world of work. Today the
economy is essentially driven by service, as manufacturing jobs have been replaced by efficient
machines or sent overseas, to be done by low-cost labor. To correct this functional illiteracy, the
business organizations and government agencies together have to make plans for providing
remedial education.
DOWNSIZING
• Downsizing means reducing the size of the organization in order to cut the cost and hive off the
unprofitable operations and improve operational efficiency. It is a restructuring process to meet
the challenges of the environment. The downsizing involves restructuring, which results in the
decrease in the size, leading to flat organizational structure, so as to respond readily to the pace of
environmental changes. Jobs are also redesigned to merge the duplicate operations and eliminate
the redundant jobs, to decrease the paybill. Downsizing is a strategy adopted throughout the
world to achieve operational economies and increase the efficiency, to be able to survive and
grow in the wake of uncertain environment and cut-throat competition. VRS is the result of
downsizing.
D O W N S I Z I N G M AY B E C O M E N E C E S S A R Y
DUE TO THE FOLLOWING REASONS:
1. An organization might suffer from over-staffing due to faulty HR planning.
2. A change in man-machine ratio may occur, due to technological advances.
3. The redesigning of jobs may render some people surplus.
4. An organization may outsource some business activities and services.
ROLE OF HR MANAGERS
1. Communication with employees
2. Win the support of trade unions
3. Take care of uncertainties
4. Providing training
5. Providing out placement services
A LT E R N AT I V E T O D E A L W I T H
O V E R S T A F F I N G & AV O I D I N G
S E PA R AT I O N
1. Transfer and re-assignment of surplus employees
2. Freezing employment after attrition
3. Offering incentives for voluntary retirement
4. VRS scheme
VRS SCHEME
• Downsizing of workforce is generally implemented through VRS scheme.
• Under this scheme, the organization and employees enter into a mutual agreement under which the
employees agree to voluntarily retire on payment of agreed compensation by the employer.
Reasons for VRS:
1. To undertake restructuring of operations and getting rid of uneconomical and unprofitable activities
2. To reduce the labor cost
3. To get rid of the surplus workforce without resorting to termination
4. To get rid of inefficient employees
5. To pave the way for hiring talent employees with latest knowledge and skills
• The employees themselves may opt for VRS for the following reasons:
1. Inability to perform duties due to bad health
2. Lack of job satisfaction and unhealthy environment
3. Possibility of retrenchment and layoff in the future
4. Undertaking a new career
5. Joining the family business
6. Using retirement benefits to start a personal business
BENEFITS OF VRS SCHEME
• It is a more humane way to reduce the surplus labor force than terminating the service.
• Payment of heavy compensation prevents the resentment from employees.
• Trade unions do not object to VRS as it is voluntary in nature.
• Despite heavy initial upfront cost, VRS reduces payroll costs significantly over a period of time.
N E G AT I V E C O N S E Q U E N C E S O F
VRS
1. Efficient employees may leave the organization.
2. VRS may increase the work load of existing employees.
3. It might create a sense of insecurity among the present employees.
I M P L E M E N TAT I O N O F V R S
1. Identifying the need for VRS
2. Cost benefit analysis
3. Designing of the scheme:
a) Employees to be covered under the scheme
b) Compensation package to be offered
CONTINGENT WORKFORCE
• In a number of organizations, the transformational changes in the business situation have led the organization to employ two
types of employees.
• The first group are called core employees; who hold full-time job in the organizations and these employees perform some
essential job tasks, which require permanence in the organization and they enjoy full-scale employee benefits, provided to all
full time employees.
• But there are many individuals who sell their services to the organization and they are collectively called contingent
workforce. They include individuals who are typically hired for shorter duration of time. They perform specific tasks which
require special job skills and are employed when the organization is experiencing significant deviations in its workflow.
• Mainly there are three types of contingent workforce:

1. Part time employees

2. Temporary employees
3. Contractual employees
H R M I M P L I C AT I O N S O F
CONTINGENT WORKFORCE
• When an organization makes its strategic decision to employ a sizeable portion of its workforce from contingent ranks,
several HRM issues come to the forefront.
• No organization can make transition to contingent workforce without sufficient planning and HRM will be a partner of
the strategic decision.
• HRM will bring such people who will quickly adapt themselves readily to the organization. Even contingent
workforce need to be aware of the organization’s personality.
• HRM must give some thought how effectively to attract quality temporaries.
• HRM has to examine the compensation philosophy to attract the best.
• HRM will need to begin understanding especially what these employees want, whether it is flexibility in scheduling or
the autonomy these jobs offer.
• Finally, HRM must be prepared to deal with the conflicts which may arise between core and contingent employees.
DECENTRALIZED WORKSITES
• These decentralize worksites are those worksites which exist away from the organization’s facilities.
• Computers, modems, fax machines, telephones are making decentralized worksites more attractive.
Telecommuting capabilities that exist today have made it possible for employees to be anywhere on the
globe and with this potential the employers no longer consider locating a business near the workforce.
• Telecommuting offers an opportunity for business in a high-labor cost area to have its work done in an area
where lower wages prevail.
• Decentralized worksites also offer opportunities that may meet the needs of diverse workforce, i.e. those
who have family responsibilities like childcare may prefer to work from homes, rather than travel to the
organization’s facilities.
• Telecommuting provides flexibility in work scheduling that many members of a diverse workforce may
desire.
H R M I M P L I C AT I O N S
• Most of the challenges revolve around training managers how to establish appropriate work
standards and ensure that the work is done on time. As traditional face time is removed in
decentralized worksites, the managers who need to control the work will have to change. There
will be more autonomy to the employee, allowing the discretion to make those decisions which
may affect them. The emphasis then will be on the final product, and not the means by which they
were accomplished. HRM will have to think about the adequate compensation policy and think of
only those jobs which can be quantified and the standards are set for them can be assigned to be
them.