You are on page 1of 16












What Is Human Resource Management?

Human Resource Management (HRM) is the function within an organization that focuses on recruitment of, management of, and providing direction for the people who work in the organization. It also deals with issues related to people such as compensation, hiring, performance management, organization development, safety, wellness, benefits, employee motivation, communication, administration, and training. It also has a strategic and comprehensive approach to managing people and the workplace culture and environment. Effective HRM enables employees to contribute effectively and productively to the overall company direction and the accomplishment of the organization's goals and objectives. Human Resource Management: Nature Human Resource Management is a process of bringing people and organizations together so that the goals of each are met. The various features of HRM include: It is pervasive in nature as it is present in all enterprises. Its focus is on results rather than on rules. It tries to help employees develop their potential fully. It encourages employees to give their best to the organization. It is all about people at work, both as individuals and groups. It tries to put people on assigned jobs in order to produce good results. It helps an organization meet its goals in the future by providing for competent and wellmotivated employees. It tries to build and maintain cordial relations between people working at various levels in the organization. It is a multidisciplinary activity, utilizing knowledge and inputs drawn from psychology, economics, etc.


Page 1

Human Resource Management: Scope 1. Personnel aspect-This is concerned with manpower planning, recruitment, selection, placement, transfer, promotion, training and development, layoff and retrenchment, remuneration, incentives, productivity etc. 2. Welfare aspect-It deals with working conditions and amenities such as canteens, crches, rest and lunch rooms, housing, transport, medical assistance, education, health and safety, recreation facilities, etc. 3. Industrial relations aspect-This covers union-management relations, joint consultation, collective bargaining, grievance and disciplinary procedures, settlement of disputes, etc.

Human Resource Management: Objectives To help the organization reach its goals. To ensure effective utilization and maximum development of human resources. To ensure respect for human beings. To identify and satisfy the needs of individuals. To ensure reconciliation of individual goals with those of the organization. To achieve and maintain high morale among employees.


Page 2

To provide the organization with well-trained and well-motivated employees. To increase to the fullest the employee's job satisfaction and self-actualization. To develop and maintain a quality of work life. To be ethically and socially responsive to the needs of society. To develop overall personality of each employee in its multidimensional aspect. To enhance employee's capabilities to perform the present job. To equip the employees with precision and clarity in transaction of business. To inculcate the sense of team spirit, team work and inter-team collaboration.


Page 3


Page 4

Human Resource Management: Functions HRM is the part of the organization concerned with the people dimension. HRM can be viewed in one of two ways. First, HRM is a staff or support function in the organization. Its role is to provide assistance in HRM matters to line employees, or those directly involved in producing the organizations goods and services. Second, HRM is a function of every managers job. Whether or not one works in a formal HRM department, the fact remains that to effectively manage employees, all managers must handle the activities well describe in this book. Thats important to keep in mind! Every organization is comprised of people. Acquiring their services, developing their skills, motivating them to high levels of performance, and ensuring that they maintain their commitment to the organization are essential to achieving organizational objectives. This is true regardless of the type of organizationgovernment, business, education, health, recreation, or social action. Hiring and keeping good people is critical to the success of every organization. To look at HRM more specifically, we propose that it consists of four basic functions: (1) staffing, (2) training and development, (3) motivation, and (4) maintenance. In less academic terms, we might say that HRM is made up of four activities: (1) hiring people, (2) preparing them, (3) stimulating them, and (4) keeping them. Even the smallest entrepreneurial organization with one or two employees must recognize responsibility for all four HR functions. In organizations that are too small for a formal human resource management department, these functions will be the responsibility of each line manager. Line managers will always have many of these responsibilities whether a formal human resources department exists or not. HR departments are generally responsible for assisting the line manager in these activities. Organizational strategy, structure, or culture may dictate that such activities, although supportive of line management, will be more effective if handled in a more centralized


Page 5

In order to achieve the above objectives, Human Resource Management undertakes the following activities: 1. Human resource or manpower planning. 2. Recruitment, selection and placement of personnel. 3. Training and development of employees. 4. Appraisal of performance of employees. 5. Taking corrective steps such as transfer from one job to another. 6.Remuneration of employees.

7. Social security and welfare of employees. 8. Setting general and specific management policy for organizational relationship. 9. Collective bargaining, contract negotiation and grievance handling. 10. Staffing the organization. 11. Aiding in the self-development of employees at all levels. 12. Developing and maintaining motivation for workers by providing incentives. 13. Reviewing and auditing manpower management in the organization 14. Potential Appraisal, Feedback Counseling. 15. Role Analysis for job occupants. 16. Job Rotation.


Page 6

Human Resource Management: Primary Activities

Human resource management (HRM)

Manpower Planning Manpower Planning which is also called as Human Resource Planning consists of putting right number of people, right kind of people at the right place, right time, doing the right things for which they are suited for the achievement of goals of the organization. Human Resource Planning has got an important place in the arena of industrialization. Human Resource Planning has to be a systems approach and is carried out in a set procedure. The procedure is as follows: 1.Analyzing the current manpower inventory 2.Making future manpower forecasts 3.Developing employment programs HRM Page 7

2. Recruitment, selection and placement of personnel Recruitment This is the process of searching for and obtaining sufficient number and quality of potential job seekers or applicants to enable the organization to select the most appropriate people to fill its job needs. It is pertinent to note that the process of recruitment must begin with a clear specification or understanding of manpower needs. It should consider the time that the manpower requirement must be met for instance the Labor market for fresh graduates with less than year experience in the National Youths Service Corps. Labor market simple means an area where employers could easily get the type of workers they need to carry out relevant duties and employees are available to sell their labor or seek employment .

Selection and Placement Selection is a process of gathering information for the purposes of evaluating and deciding who should be employed or hired for the short and Long-term interests of the individual and the organization.In other words it is the process of getting the best of most qualified candidates from the pool of job seekers adjudged to have potential for job performance.

The importance of selection and placement; To fairly and without any element of discrimination evaluate job applicants in view of individual differences and capabilities. To employ qualified and competent hands that can meet the job requirement of the organization HRM Page 8

To place job applicants in the best interest of the organization and the individual. To help in human resources manpower planning purposes in organization. To reduce recruitment cost that may arise as a result of poor selection and placement exercises. 3. Training and development of employees. Employee Training and Development is a key ingredient in performance improvement. However, the first step in designing an employee training and development program is to identify the training needs. The training needs are based on what is needed to achieve the organizations strategic objectives. Key steps for performance improvement include Assess and define performance improvement issues and gaps Gain management commitment for performance improvement Develop a business plan to manage performance improvement Establish best practices for work processes and performance standards Provide employee training and development to develop required skills Establish new practices that support improved performance Measure and monitor results and provide coaching where needed 4. Appraisal of performance of employees Once an annual ritual, performance appraisal has become a continuous process by which an employee understands of a companys goals and his or her progress toward contributing to them are measured. Performance measurement is an ongoing activity for all managers and their subordinates. Performance measurement uses the following indicators of performance, as well as assessments of those indicators. Quantity: The number of units produced, processed or sold is a good objective indicator of performance. II. Quality: The quality of work performed can be measured by several means. The percentage of work output that must be redone or is rejected is one such indicator. In a sales environment, the percentage of inquiries converted to sales is an indicator of salesmanship quality. III. Timeliness: How fast work is performed is another performance indicator that should be used with caution. In field service, the average customers downtime is a good indicator of timeliness. In manufacturing, it might be the number of units produced per hour. IV. Cost-Effectiveness: The cost of work performed should be used as a measure of performance only if the employee has some degree of control over costs. For example, a customer-service representatives performance is indicated by the percentage of calls that he or she must escalate to more experienced and expensive reps. V. Absenteeism/Tardiness: An employee is obviously not performing when he or she is not at work. Other employees performance may be adversely impacted by absences, too. VI. Creativity: It can be difficult to quantify creativity as a performance indicator, but in many white-collar jobs, it is vitally important. Supervisors and employees should keep track of creative work examples and attempt to quantify them. I.


Page 9











Adherence to Policy: This may seem to be the opposite of creativity, but it is merely a boundary on creativity. Deviations from policy indicate an employee whose performance goals are not well aligned with those of the company. Gossip and Other Personal Habits: They may not seem performance-related to the employee, but some personal habits, like gossip, can detract from job performance and interfere with the performance of others. The specific behaviors should be defined, and goals should be set for reducing their frequency. Personal Appearance/Grooming: Most people know how to dress for work, but in many organizations, there is at least one employee who needs to be told. Examples of inappropriate appearance and grooming should be spelled out, their effects upon the employees performance and that of others explained, and corrective actions defined. Manager Appraisal: A manager appraises the employees performance and delivers the appraisal to the employee. Manager appraisal is by nature top-down and does not encourage the employees active participation. It is often met with resistance, because the employee has no investment in its development. Self-Appraisal: The employee appraises his or her own performance, in many cases comparing the self-appraisal to management's review. Often, self-appraisals can highlight discrepancies between what the employee and management think are important performance factors and provide mutual feedback for meaningful adjustment of expectations. Peer Appraisal: Employees in similar positions appraise an employees performance. This method is based on the assumption that co-workers are most familiar with an employees performance. Peer appraisal has long been used successfully in manufacturing environments, where objective criteria such as units produced prevail. Recently, peer appraisal has expanded to white-collar professions, where soft criteria such as works well with others can lead to ambiguous appraisals. Peer appraisals are often effective at focusing an employees attention on undesirable behaviors and motivating change. Team Appraisal: Similar to peer appraisal in that members of a team, who may hold different positions, are asked to appraise each others work and work styles. This approach assumes that the teams objectives and each members expected contribution have been clearly defined. Assessment Center: The employee is appraised by professional assessors who may evaluate simulated or actual work activities. Objectivity is one advantage of assessment centers, which produce reviews that are not clouded by personal relationships with employees. 360-Degree or Full-Circle Appraisal: The employees performance is appraised by everyone with whom he of she interacts, including managers, peers, customers and members of other departments. This is the most comprehensive and expensive way to measure performance and it is generally reserved for key employees. MBO (Management by Objectives): The employees achievement of objective goals set in concert with his or her manager is assessed. The MBO process begins with action statements such as, reduce rejected parts to 5 percent. Ongoing monitoring and review


Page 10

of objectives keeps the employee focused on achieving goals. At the annual review, progress toward objectives is assessed, and new goals are set. 5. Remuneration of employees

Employee Remuneration refers to the reward or compensation given to the employees for their work performances. Remuneration provides basic attraction to an employee to perform job efficiently and effectively. Remuneration leads to employee motivation. Salaries constitute an important source of income for employees and determine their standard of living. Salaries affect the employees productivity and work performance. Thus the amount and method of remuneration are very important for both management and employees. There are mainly two types of Employee Remuneration 1. Time Rate Method 2. Piece Rate Method 1. Time Rate Method: Under time rate system, remuneration is directly linked with the time spent or devoted by an employee on the job. The employees are paid a fixed pre-decided amount hourly, daily, weekly or monthly irrespective of their output. It is a very simple method of remuneration. It leads to minimum wastage of resources and lesser chances of accidents. Time Rate method leads to quality output and this method is very beneficial to new employees as they can learn their work without any reduction in their salaries. This method encourages employees unity as employees of a particular group/cadre get equal salaries. 2. Piece Rate Method: It is a method of compensation in which remuneration is paid on the basis of units or pieces produced by an employee. In this system emphasis is more on quantity output rather than quality output. Under this system the determination of employee cost per unit is not difficult because salaries differ with output. There is less supervision required under this method and hence the per unit cost of production is low. This system improves the morale of the employees as the salaries are directly related with their work efforts. There is greater work-efficiency in this method.

LINE & STAFF: Formal Relationships: The relationship with which the managers in an organization deal with one another are broadly classified into LINE & STAFF Informal Relationships are those that emerge from formal relationships and are established unofficially by persons employed. Line Managers : Authority -Making decisions-Directing work, Giving orders -Accomplishing goals Staff Managers : Assisting and advising line managers.


Page 11

STAFF RELATIONS : STAFF RELATIONS : The staff concept is an old / ancient one. Line has to perform all their functions and concentrate on management of people and activities. This gives rise to securing advice and help from specialists. - This creates staff relationships. The relationships between two managers when it is created for Taking/giving advice, information, counseling etc for achieving organizational goals is called staff relations. Staff Managers analyze problems, collect information and develop alternative suggestions and help the line managers to make right decisions. Staff responsibility is monitoring and reporting ---results and information to the line managers to reduce their work load.

How External Influences Affect HRM The four HRM activities are highly affected by what occurs outside the organization. It is important to recognize these environmental influences, because any activity undertaken in each of the HRM processes is directly or indirectly affected by these external elements. For example, when a company downsizes its workforce in response to a downturn in the economy (sometimes referred to as rightsizing), does it lay off workers by seniority? Does the layoff affect an inordinate number of minority employees? Although any attempt to identify specific external influences may prove insufficient, we can categorize them into four general areas: the dynamic environment, laws and regulation, labor unions, and current management practice. The Dynamic Environment of HRM It has been stated that the only constant during our lifetimes is change. We must therefore prepare ourselves for events that have a significant effect on our lives. HRM is no different. Many events help shape this field. Some of the more obvious include globalization, technology, workforce diversity, changing skill requirements, continuous


Page 12

improvement, decentralized work sites, teams, employee involvement, and ethics. Laws and Regulation Today, employees who want to take several weeks of unpaid leave to be with their newborn children and return to their jobs without any loss of seniority have an easier time making it a reality. Although some employers may think such leaves negatively affect work flow, government legislation has given employees the right to take this leave. Laws supporting this and other employer actions are important to the HRM process. Listed in Exhibit 2-4 are laws that have had a tremendous effect on HRM in organizations. Well explore this critical area in depth in Chapter 3. Labor Unions Labor unions were founded and exist today to assist workers in dealing with the management of an organization. As the certified third-party representative, the union acts on behalf of its members to secure wages, hours, and other terms and conditions of employment. Another critical aspect of unions is that they promote and foster what is called a grievance procedure, or a specified process for resolving differences between workers and management. In many instances, this process alone constrains management from making unilateral decisions. For instance, a current HRM issue is the debate over employers ability to terminate employees whenever they want. When a union is present and HRM practices are spelled out in a negotiated agreement, employers cannot fire for unjustified reasons. Because of the complexities involved in operating with unionization and the special laws that pertain to it, we will defer that discussion until Chapter 14, when we will explore the unique world of labor relations and collective bargaining.


Page 13


Page 14