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Human Resource Management is An Art for Businesses,

Science for Corporations, and a Subject for Others....

Human Resource Management (HRM) act as a catalyst for overall development of nation’s economy.
HRM is a way of management that links people-related activities to the strategy of a business or
organisation. HRM is often referred to as "strategic HRM". It has several goals:

 To meet the needs of the business and management (rather than just serve the interests of
 To link human resource strategies / policies to the business goals and objectives;
 To find ways for human resources to "add value" to a business;
 To help a business gain the commitment of employees to its values, goals and objectives.

It is an approach to the management of people in an organization. Organizations are made up of people

i. e employees and function through them. It is the human resource which brings success and prosperity to a
business enterprise. Human Resource Management also called Personnel Management, deals with various
problems relating to manpower employed. Such problems include personal planning, recruitment and
selection, induction, performance appraisal, employee training and development, promotions and transfer of
employees, compensation payment, career planning and participative management. The person who looks
after personnel functions/ problems is called Personnel/Human Resource Manager. HRM is relatively a new
term for what was earlier called as personnel management. The term HRM got popularity in the USA by
1970s. This is a management function which helps managers to plan, recruit, select, train, develop,
remunerate and maintain members for an organization. HRM is the latest nomenclature use to denote
personnel management. The policies of management relating to personnel matters/problems are called
policies. Human Resource Management in a Business Context provides an international focus on the theory
and practice of people management. A thorough and comprehensive overview of all the key aspects of
HRM, including case studies, articles from HRM Guide and other sources, key concepts, review questions
and problems for discussion and analysis.


The link between Human Resources and Business Strategy

All elements of the business strategy have implications for human resources, as illustrated in the table
below. The

challenge for management is to identify and respond to these HR challenges:

Examples of Key Strategy Possible Human Resource

Issues Implications.

What markets should the What expertise is required in these

business compete in? markets? Do existing management
and employees theright experience
and skills.
Where the business should be Where do we need our people? How
located to compete optimally? many do we need?

How can we achieve How productive is the workforce

Improvements in our unit currently? How does this compare
production costs to with competitors? What investment
remain competitive? in the workforce (e.g. training,
recruitment) and their equipment is
required to achieve the desired
improvement in productivity?

How can the business effect What are the current values of the
cultural change? workforce? How can the prevailing
culture be influenced/changed to
help implement a change



How can the business respond What technological skills does the
to rapid technological change business currently possess? What
in its markets? additional skills are needed to
respond to technological change?
Can these skills be acquired through
training or do they need to be

An important part of HRM is the Human Resources Plan. The purpose of this plan is to analyse the
strategic requirements of the business in terms of manpower - and then to find a way of meeting the
required demand for labour. This is the subject of a separate revision note.

Human Resource Management, in the sense of getting things done through people. It's an essential part
of every manager's responsibilities, but many organizations find it advantageous to establish a specialist
division to provide an expert service dedicated to ensuring that the human resource function is performed

"People are our most valuable asset" is a cliché which no member of any senior management team
would disagree with. Yet, the reality for many organizations is that their people remain

 under valued
 under trained
 under utilized
 poorly motivated, and consequently
 perform well below their true capability

The rate of change facing organizations has never been greater and organizations must absorb and
manage change at a much faster rate than in the past. In order to implement a successful business strategy to


face this challenge, organizations, large or small, must ensure that they have the right people capable of
delivering the strategy.

The market place for talented, skilled people is competitive and expensive. Taking on new staff can be
disruptive to existing employees. Also, it takes time to develop 'cultural awareness', product/ process/
organization knowledge and experience for new staff members.

As organizations vary in size, aims, functions, complexity, construction, the physical nature of their
product, and appeal as employers, so do the contributions of human resource management. But, in most the
ultimate aim of the function is to: "ensure that at all times the business is correctly staffed by the right
number of people with the skills relevant to the business needs", that is, neither overstaffed nor understaffed
in total or in respect of any one discipline or work grade.


1. According to Edwin Flippo:

“Personnel management is the planning, organizing, directing and controlling of the procurement,
development, compensation, integration, maintenance and separation of human resources to the end that
individual, organizational and social objectives are accomplished”.

2. According to George R. Terry:

“Personnel management is concerned with the obtaining and maintaining of a satisfactory and satisfied
work force”.


3. According to Michale Armstrong:

“HRM is strategic approach to the acquisition, motivation, development and management of the
organizations human resources. It is develop to shaping an appropriate corporate culture, and introducing
programmes which reflects and support the core values of the enterprise and ensure its success”.

4. “HRM is a process of bringing people and organizations together so that the goals of each are
met. It is a part of management process which is concerned with the management of human resources in an


 Organizational management
 Personnel administration
 Manpower management
 Industrial management

But these traditional expressions are becoming less common for the theoretical discipline. Sometimes
even employee and industrial relations are confusingly listed as synonyms, although these normally refer to
the relationship between management and workers and the behavior of workers in companies.

The theoretical discipline is based primarily on the assumption that employees are individuals with
varying goals and needs, and as such should not be thought of as basic business resources, such as trucks
and filing cabinets. The field takes a positive view of workers, assuming that virtually all wish to contribute
to the enterprise productively, and that the main obstacles to their endeavors are lack of knowledge,
insufficient training, and failures of process.

HRM is seen by practitioners in the field as a more innovative view of workplace management than the
traditional approach. Its techniques force the managers of an enterprise to express their goals with
specificity so that they can be understood and undertaken by the workforce and to provide the resources
needed for them to successfully accomplish their assignments. As such, HRM techniques, when properly
practiced, are expressive of the goals and operating practices of the enterprise overall. HRM is also seen by
many to have a key role in risk reduction within organizations.



Objectives are pre-determined goals to which individual or group activity in an organization is directed.
Objectives of personnel management are influenced by organizational objectives and individual and social
goals. Institutions are instituted to attain certain specific objectives. The objectives of the economic
institutions are mostly to earn profits, and of the educational institutions are mostly to impart education
and / or conduct research so on and so forth. However, the fundamental objective of any organization is
survival. Organizations are not just satisfied with this goal. Further the goal of most of the organizations is
growth and / or profits.

Institutions procure and manage various resources including human to attain the specified objectives.
Thus, human resources are managed to divert and utilize their resources towards and for the
accomplishment of organizational objectives. Therefore, basically the objectives of HRM are drawn from
and to contribute to the accomplishment of the organizational objectives. The other objectives of HRM are
to meet the needs, aspirations, values and dignity of individual employees and having due concern for the
socio-economic problems of the community and the country.

The objectives of HRM are as follows:

1. To create and utilize an able and motivated workforce, to accomplish the basic organizational goals.
2. To establish and maintain sound organizational structure and desirable working relationships among all
the members of the organization.
3. To secure the integration of individual or groups within the organization by co-ordination of the
individual and group goals with those of the organization.
4. To create facilities and opportunities for individual or group development so as to match it with the
growth of the organization.
5. To attain an effective utilization of human resources in the achievement of organizational goals.
6. To identify and satisfy individual and group needs by providing adequate and equitable wages,
incentives, employee benefits and social security and measures for challenging work, prestige, recognition,
security, status.
7. To maintain high employees morale and sound human relations by sustaining and improving the various
conditions and facilities.


8. To strengthen and appreciate the human assets continuously by providing training and development

9. To consider and contribute to the minimization of socio-economic evils such as unemployment, under-
employment, inequalities in the distribution of income and wealth and to improve the welfare of the society
by providing employment opportunities to women and disadvantaged sections of the society.
10. To provide an opportunity for expression and voice management.
11. To provide fair, acceptable and efficient leadership.
12. To provide facilities and conditions of work and creation of favorable atmosphere for maintaining
stability of employment.

Management has to create conductive environment and provide necessary prerequisites for the
attainment of the personnel management objectives after formulating them.

To be socially responsible to the needs and challenges of society while minimizing the negative impact
of such demands upon the organization. The failure of organizations to use their resources for society's
benefit may result in restrictions. For example, societies may pass laws that limit human resource decisions.

Organizational objective. To recognize that HRM exists to contribute to organizational effectiveness.

HRM is not an end in itself; it is only a means to assist the organization with its primary objectives. Simply
stated, the department exists to serve the rest of the organization.

Functional objective:

To maintain the department's contribution at a level appropriate to the organisation's needs. Resources
are wasted when HRM is more or less sophisticated than the organisation demands. A department's level of
service must be appropriate for the organisation it serves.

Personal objective:

To assist employees in achieving their personal goals, at least insofar as these goals enhance the
individual's contribution to the organisation. Personal objectives of employees must be met if workers are to


be maintained, retained and motivated. Otherwise, employee performance and

satisfaction may decline, and employees may leave the organisation


The scope of human resource management outlined below includes an outline of transformation and
development issues, tentative generic skills required in performing HRM roles, as well as the roles of a
human resource management practitioner (line management and HRM professionals). With regard to the
latter, the assumption is made that roles are inter-linked and interdependent, even though these relationships
may not be expressly stated in each case.

Transformation and development issues

 Knowledge management which entails accumulating & capturing

 Knowledge in large organisations for future application & use (organisation memory)
 Reconciliation management
 Work creation as opposed to job creation
 Manage the transfer of HRM functions and skills to line management
 Marketing of HRM to line management
 Development of contextual approaches to HRM
 Multi-skilling and /or multi-tasking
 Increased societal responsibility
 Managing people in virtual work environments
 Focus on deliverables rather than doable
 Develop additional means of assessing HRM
 Appreciation and assessment of intellectual capital
 Take HRM from a business partner to a business itself / Managing HRM as a business unit
 Adviser / consultant to line management

Supportive generic skills


This is not intended to be final outline of human resource skills but the following have emerged during
the process as important skills for human resource practitioner to possess. These are:

 Project management
 Consulting skills
 Entrepreneurship
 Self management
 Communication skills
 Facilitation skills
 Presentation skills
 Skills for transforming groups into self-directed mutually controlled high performing work
 Trans-cultural skills
 Mediation & arbitration skills
 Financial skills
 Problem-solving
 Diagnostic skills

Core roles in Human Resource Management

The core roles of human resource management are grouped below into four categories. The titles of the
clusters are tentative, and are open for comment.


 Strategic perspective
 Organisation design
 Change management
 Corporate Wellness management
 Staffing the organisation
 Training & development
 Career Management
 Performance Management
 Industrial relations



 Compensation management
 Information management
 Administrative management
 Financial management

HRM vis-à-vis HRD

HRM (Human Resource Management)

HRD (Human Resource Development)
As these two words cannot be one and the same nor synopsis. They are used in a different contexts and
they represent different concepts. At the same time HRD is at the centre of HRM. HRD is examined in
detail elsewhere.
As a result of the fundamental changes in attitudes, approaches, outlook, philosophy, perspective
and practices emerged in the personnel area in the form of HRM strategy, it has become a necessary for
every organisation to develop skills, talent, potentialities, capabilities and active of company’s own people
to meet the emerging challenges. Hence HRD policies have been adopted by many companies. It is now-a-
days spreading to many others. HRD strategies are suppose to bring fourth necessary changes in skills,
capabilities and attitude of people who are required to cope with the emerging changes. Thus, HRD has
become an integral part HRM.
The new HRD approach, that stress the need for developing the company’s own people to suit the
update technology, modernisation of machinery and equipments and changing trends in attitudes and
approaches, necessities to develop individual employee in accordance with his aspiration and potentialities
on the one hand, and the company’s requirement on the other. This is what the HRD does. Quiet often
organisation development (OD) programs are effectively integrated with the HRD programs. O fcourse, OD
programs are the programms which the OD interventionists prescribed for the effectiveness of the
organisation. It need not be what the individuals members of the organisation seek. HRD interventionists
primarily seek to know what the individuals seek to have, and then try to match it with the organisational
needs. Training and development programs from part of OD while training and development are the most
decisive aspects of HRD too.
At present, therefore, the end result of both HRD and OD are pre-received as synonymous. Of course,
no change can be effectively and totally incorporated nor their result achieved, overnight. It need constant


effort and continuous monitoring for a considerably long period. This efforts must go on simultaneously
HRM strategy.
HRM has its various tools like appraisal schemes feedback system, quality circle and organisation
development interventions, Team-grouping, MbO objective setting, consensus in decision making, and so
on. All such tools are useful in HRD also at present, however training programms seem to dominated the
HRD scene. An effective management information system backed by information collecting, storing and
retrial system and research and analysis must be the basis for every HRD program. This would enable the
organisation to motivate its own people to strive to be develop in accordance with the organisational
needs(existing and expected). This HRM is the integrated approach to actuating and managing the
company’s own people while deals with the process of developing people in accordance with their
aspirations and to suit the organisational needs. Both are not synonyms; the letter is at the centre of the
former, and both are interdependent and integrated into one system.

Functions overview and strategy for HRM

These issues motivate a well thought out human resource management strategy, with the precision and
detail of say a marketing strategy. Failure in not having a carefully crafted human resources management
strategy, can and probably will lead to failures in the business process itself.

These sets of resources are offered to promote thought, stimulate discussion, diagnose the
organizational environment and develop a sound human resource management strategy for your
organization. We begin by looking at the seven distinguishable functions human resource management
provide to secure the achievement of the objective defined above.

Following on from this overview we look at defining a human resource strategy.

Finally, some questions are posed in the form of a HRM systems diagnostic checklist for you to
consider, which may prove helpful for you to think about when planning your development programs for
the human resources in your organization, if they are truly "your most valuable asset."


Function 1: Manpower planning

The penalties for not being correctly staffed are costly.

 Understaffing loses the business economies of scale and specialization, orders, customers and
 Overstaffing is wasteful and expensive, if sustained, and it is costly to eliminate because of
modern legislation in respect of redundancy payments, consultation, minimum periods of
notice, etc. Very importantly, overstaffing reduces the competitive efficiency of the business.

Planning staff levels requires that an assessment of present and future needs of the organization be
compared with present resources and future predicted resources. Appropriate steps then be planned to bring
demand and supply into balance.

Thus the first step is to take a 'satellite picture' of the existing workforce profile (numbers, skills, ages,
flexibility, gender, experience, forecast capabilities, character, potential, etc. of existing employees) and
then to adjust this for 1, 3 and 10 years ahead by amendments for normal turnover, planned staff
movements, retirements, etc, in line with the business plan for the corresponding time frames.

The result should be a series of crude supply situations as would be the outcome of present planning if
left unmodified. (This, clearly, requires a great deal of information accretion, classification and statistical
analysis as a subsidiary aspect of personnel management.)

What future demands will be is only influenced in part by the forecast of the personnel manager, whose
main task may well be to scrutinize and modify the crude predictions of other managers. Future staffing
needs will derive from:

 Sales and production forecasts

 The effects of technological change on task needs
 Variations in the efficiency, productivity, flexibility of labor as a result of training, work study,
organizational change, new motivations, etc.
 Changes in employment practices (e.g. use of subcontractors or agency staffs, hiving-off tasks,
buying in, substitution, etc.)
 Variations, which respond to new legislation, e.g. payroll taxes or their abolition, new health
and safety requirements
 Changes in Government policies (investment incentives, regional or trade grants, etc.)


What should emerge from this 'blue sky gazing' is a 'thought out' and logical staffing demand schedule
for varying dates in the future which can then be compared with the crude supply schedules. The
comparisons will then indicate what steps must be taken to achieve a balance.

That, in turn, will involve the further planning of such recruitment, training, retraining, labor reductions
(early retirement/redundancy) or changes in workforce utilization as will bring supply and demand into
equilibrium, not just as a one–off but as a continuing workforce planning exercise the inputs to which will
need constant varying to reflect 'actual' as against predicted experience on the supply side and changes in
production actually achieved as against forecast on the demand side.

Function 2: Recruitment and selection of employees

Recruitment of staff should be preceded by:

An analysis of the job to be done (i.e. an analytical study of the tasks to be performed to determine their
essential factors) written into a job description so that the selectors know what physical and mental
characteristics applicants must possess, what qualities and attitudes are desirable and what characteristics
are a decided disadvantage;

 In the case of replacement staff a critical questioning of the need to recruit at all (replacement
should rarely be an automatic process).
 Effectively, selection is 'buying' an employee (the price being the wage or salary multiplied by
probable years of service) hence bad buys can be very expensive. For that reason some firms (and
some firms for particular jobs) use external expert consultants for recruitment and selection.
 Equally some small organizations exist to 'head hunt', i.e. to attract staff with high reputations from
existing employers to the recruiting employer. However, the 'cost' of poor selection is such that,
even for the mundane day-to-day jobs, those who recruit and select should be well trained to judge
the suitability of applicants.

The main sources of recruitment are:

 Internal promotion and internal introductions (at times desirable for morale purposes)
 Careers officers (and careers masters at schools)
 University appointment boards
 Agencies for the unemployed


 Advertising (often via agents for specialist posts) or the use of other local media (e.g. commercial

Where the organization does its own printed advertising it is useful if it has some identifying logo as its
trade mark for rapid attraction and it must take care not to offend the sex, race, etc. antidiscrimination
legislation either directly or indirectly. The form on which the applicant is to apply (personal appearance,
letter of application, completion of a form) will vary according to the posts vacant and numbers to be

It is very desirable in many jobs that claim about experience and statements about qualifications are
thoroughly checked and that applicants unfailingly complete a health questionnaire (the latter is not
necessarily injurious to the applicant’s chance of being appointed as firms are required to employ a
percentage of disabled people).

Before letters of appointment are sent any doubts about medical fitness or capacity (in employments
where hygiene considerations are dominant) should be resolved by requiring applicants to attend a medical
examination. This is especially so where, as for example in the case of apprentices, the recruitment is for a
contractual period or involves the firm in training costs.

Interviewing can be carried out by individuals (e.g. supervisor or departmental manager), by panels of
interviewers or in the form of sequential interviews by different experts and can vary from a five minute
'chat' to a process of several days. Ultimately personal skills in judgment are probably the most important,
but techniques to aid judgment include selection testing for:

 Aptitudes (particularly useful for school leavers)

 Attainments
 General intelligence

(All of these need skilled testing and assessment.) In more senior posts other techniques are:

 Leaderless groups
 Command exercises
 Group problem solving

(These are some common techniques - professional selection organizations often use other techniques
to aid in selection.)


Training in interviewing and in appraising candidates is clearly essential to good recruitment. Largely
the former consists of teaching interviewers how to draw out the interviewee and the latter how to xratex
the candidates. For consistency (and as an aid to checking that) rating often consists of scoring candidates
for experience, knowledge, physical/mental capabilities, intellectual levels, motivation, prospective
potential, leadership abilities etc. (according to the needs of the post). Application of the normal curve of
distribution to scoring eliminates freak judgments.

Function 3: Employee motivation

To retain good staff and to encourage them to give of their best while at work requires attention to the
financial and psychological and even physiological rewards offered by the organization as a continuous

Basic financial rewards and conditions of service (e.g. working hours per week) are determined
externally (by national bargaining or government minimum wage legislation) in many occupations but as
much as 50 per cent of the gross pay of manual workers is often the result of local negotiations and details
(e.g. which particular hours shall be worked) of conditions of service are often more important than the
basics. Hence there is scope for financial and other motivations to be used at local levels.

As staffing needs will vary with the productivity of the workforce (and the industrial peace achieved) so
good personnel policies are desirable. The latter can depend upon other factors (like environment, welfare,
employee benefits, etc.) but unless the wage packet is accepted as 'fair and just' there will be no motivation.

Hence while the technicalities of payment and other systems may be the concern of others, the outcome
of them is a matter of great concern to human resource management.

Increasingly the influence of behavioral science discoveries are becoming important not merely because
of the widely-acknowledged limitations of money as a motivator, but because of the changing mix and
nature of tasks (e.g. more service and professional jobs and far fewer unskilled and repetitive production

The former demand better-educated, mobile and multi-skilled employees much more likely to be
influenced by things like job satisfaction, involvement, participation, etc. than the economically dependent
employees of yesteryear.


Hence human resource management must act as a source of information about and a source of
inspiration for the application of the findings of behavioral science. It may be a matter of drawing the
attention of senior managers to what is being achieved elsewhere and the gradual education of middle
managers to new points of view on job design, work organization and worker autonomy.

Function 4: Employee evaluation

An organization needs constantly to take stock of its workforce and to assess its performance in existing
jobs for three reasons:

 To improve organizational performance via improving the performance of individual contributors

(should be an automatic process in the case of good managers, but (about annually) two key
questions should be posed:
 what has been done to improve the performance of a person last year?
 what can be done to improve his or her performance in the year to come?).
 To identify potential, i.e. to recognize existing talent and to use that to fill vacancies higher in the
organization or to transfer individuals into jobs where better use can be made of their abilities or
developing skills.
 To provide an equitable method of linking payment to performance where there are no numerical
criteria (often this salary performance review takes place about three months later and is kept quite
separate from 1. and 2. but is based on the same assessment).

On-the-spot managers and supervisors, not HR staffs, carry out evaluations. The personnel role is
usually that of:

 Advising top management of the principles and objectives of an evaluation system and designing it
for particular organizations and environments.
 Developing systems appropriately in consultation with managers, supervisors and staff
representatives. Securing the involvement and cooperation of appraisers and those to be appraised.
 Assistance in the setting of objective standards of evaluation / assessment, for example:
 Defining targets for achievement.
 Explaining how to quantify and agree objectives.
 Introducing self-assessment.
 Eliminating complexity and duplication.
 Publicizing the purposes of the exercise and explaining to staff how the system will be used.


 Organizing and establishing the necessary training of managers and supervisors who will carry out
the actual evaluations/ appraisals. Not only training in principles and procedures but also in the
human relations skills necessary. (Lack of confidence in their own ability to handle situations of
poor performance is the main weakness of assessors.)
 Monitoring the scheme - ensuring it does not fall into disuse, following up on training/job exchange
etc. recommendations, reminding managers of their responsibilities.

Full-scale periodic reviews should be a standard feature of schemes since resistance to evaluation /
appraisal schemes is common and the temptation to water down or render schemes ineffectual is ever
present (managers resent the time taken if nothing else).

Basically an evaluation / appraisal scheme is a formalization of what is done in a more casual manner
anyway (e.g. if there is a vacancy, discussion about internal moves and internal attempts to put square pegs
into 'squarer holes' are both the results of casual evaluation). Most managers approve merit payment and
that too calls for evaluation. Made a standard routine task, it aids the development of talent, warns the
inefficient or uncaring and can be an effective form of motivation.

Developing a HRM strategy

Faced with rapid change organizations need to develop a more focused and coherent approach to
managing people. In just the same way a business requires a marketing or information technology strategy it
also requires a human resource or people strategy.

In developing such a strategy two critical questions must be addressed.

 What kinds of people do you need to manage and run your business to meet your strategic
business objectives?
 What people programs and initiatives must be designed and implemented to attract, develop
and retain staff to compete effectively?

In order to answer these questions four key dimensions of an organization must be addressed. These

 Culture: the beliefs, values, norms and management style of the organization
 Organization: the structure, job roles and reporting lines of the organization
 People: the skill levels, staff potential and management capability


 Human resources systems: the people focused mechanisms which deliver the strategy -
employee selection, communications, training, rewards, career development, etc.

Frequently in managing the people element of their business senior managers will only focus on one or
two dimensions and neglect to deal with the others. Typically, companies reorganize their structures to free
managers from bureaucracy and drive for more entrepreneurial flair but then fail to adjust their training or
reward systems.

When the desired entrepreneurial behavior does not emerge managers frequently look confused at the
apparent failure of the changes to deliver results. The fact is that seldom can you focus on only one area.
What is required is a strategic perspective aimed at identifying the relationship between all four dimensions.

If you require an organization which really values quality and service you not only have to retrain staff,
you must also review the organization, reward, appraisal and communications systems.

The pay and reward system is a classic problem in this area. Frequently organizations have payment
systems which are designed around the volume of output produced. If you then seek to develop a company
which emphasizes the product's quality you must change the pay systems. Otherwise you have a
contradiction between what the chief executive is saying about quality and what your payment system is
encouraging staff to do.

There are seven steps to developing a human resource strategy and the active involvement of senior line
managers should be sought throughout the approach.

Steps in developing HRM strategy

Step 1: Get the 'big picture'

Understand your business strategy.

 Highlight the key driving forces of your business. What are they? e.g. technology, distribution,
competition, the markets.
 What are the implications of the driving forces for the people side of your business?
 What is the fundamental people contribution to bottom line business performance?


Step 2: Develop a Mission Statement or Statement of Intent

That relates to the people side of the business.

Do not be put off by negative reactions to the words or references to idealistic statements - it is the
actual process of thinking through the issues in a formal and explicit manner that is important.

 What do your people contribute?

Step 3: Conduct a SWOT analysis of the organization

Focus on the internal strengths and weaknesses of the people side of the business.

 Consider the current skill and capability issues.

Vigorously research the external business and market environment. High light the opportunities and
threats relating to the people side of the business.

 What impact will/ might they have on business performance?

 Consider skill shortages?
 The impact of new technology on staffing levels?

From this analysis you then need to review the capability of your personnel department. Complete a
SWOT analysis of the department - consider in detail the department's current areas of operation, the
service levels and competences of your personnel staff.

Step 4: Conduct a detailed human resources analysis

Concentrate on the organization's COPS (culture, organization, people and HR systems)

 Consider: Where you are now? Where do you want to be?

 What gaps exists between the reality of where you are now and where you want to be?


Exhaust your analysis of the four dimensions.

Step 5: Determine critical people issues

Go back to the business strategy and examine it against your SWOT and COPS Analysis

 Identify the critical people issues namely those people issues that you must address. Those
which have a key impact on the delivery of your business strategy.
 Prioritize the critical people issues. What will happen if you fail to address them?

Remember you are trying to identify where you should be focusing your efforts and resources.

Step 6: Develop consequences and solutions

For each critical issue highlight the options for managerial action generate, elaborate and create - don't
go for the obvious. This is an important step as frequently people jump for the known rather than challenge
existing assumptions about the way things have been done in the past. Think about the consequences of
taking various courses of action.

Consider the mix of HR systems needed to address the issues. Do you need to improve
communications, training or pay?

What are the implications for the business and the personnel function?

Once you have worked through the process it should then be possible to translate the action plan into
broad objectives. These will need to be broken down into the specialist HR Systems areas of:

 employee training and development

 management development
 organization development
 performance appraisal
 employee reward
 employee selection and recruitment


 manpower planning
 communication

Develop your action plan around the critical issues. Set targets and dates for the accomplishment of the
key objectives.

Step 7: Implementation and evaluation of the action plans

The ultimate purpose of developing a human resource strategy is to ensure that the objectives set are
mutually supportive so that the reward and payment systems are integrated with employee training and
career development plans.

There is very little value or benefit in training people only to then frustrate them through a failure to
provide ample career and development opportunities.


 Employee needs extend beyond the training classroom

 Includes coaching, group work, and problem solving
 Need for basic employee development
 Need for structured career development
 ASTD changes its name to the American Society for Training and Development

Relationship Between HRM and HRD

 Human resource management (HRM) encompasses many functions

 Human resource development (HRD) is just one of the functions within HRM

Primary Functions of HRM

 Human resource planning

 Equal employment opportunity
 Staffing (recruitment and selection)
 Compensation and benefits


 Employee and labor relations

 Health, safety, and security
 Human resource development.

Secondary HRM Functions

 Organization and job design

 Performance management/ performance appraisal systems
 Research and information systems.

HRD Functions

 Training and development (T&D)

 Organizational development
 Career development

1. Training and Development (T&D):

Training – improving the knowledge, skills and attitudes of employees for the short-term,
particular to a specific job or task – e.g.,
 Employee orientation
 Skills & technical training
 Coaching
 Counseling
Development – preparing for future responsibilities, while increasing the capacity to perform
at a current job
 Management training
 Supervisor development

2. Organizational Development:
 The process of improving an organization’s effectiveness and member’s well-being through
the application of behavioral science concepts
 Focuses on both macro- and micro-levels
 HRD plays the role of a change agent

3.Career Development:

Ongoing process by which individuals progress through series of changes until they achieve
their personal level of maximum achievement.
 Career planning
 Career management

 Learning & Performance


Critical HRD Issues

1. Strategic management and HRD

2. The supervisor’s role in HRD
3. Organizational structure of HRD


1.Strategic management:
It aims to ensure organizational effectiveness for the foreseeable future – e.g., maximizing profits
in the next 3 to 5 years.
HRD aims to get managers and workers ready for new products, procedures, and materials.

2. Supervisor’s Role in HRD:

 Implements HRD programs and procedures.
 On-the-job training (OJT).
 Coaching/mentoring/counseling.
 Career and employee development.
 A “front-line participant” in HRD.

3. Organizational Structure of HRD Departments:

 Depends on company size, industry and maturity.
 No single structure used.
 Depends in large part on how well the HRD manager becomes an institutional part of the
company – i.e., a revenue contributor, not just a revenue user.

Challenges for HRD

 Changing workforce demographics

 Competing in global economy
 Eliminating the skills gap
 Need for lifelong learning
 Need for organizational learning

A Framework for the HRD Process

HRD efforts should use the following four phases (or stages):
1. Needs assessment
2. Design
3. Implementation
4. Evaluation
Training & HRD Process Model

1.Needs Assessment Phase:

 Establishing HRD priorities

 Defining specific training and objectives
 Establishing evaluation criteria

2.Design Phase:

 Selecting who delivers program

 Selecting and developing program content
 Scheduling the training program

3. Implementation Phase:


 Implementing or delivering the program

4. Evaluation Phase:

Determining program effectiveness –

 Keep or change providers?
 Offer it again?
 What are the true costs?
 Can we do it another way?

HRD is too important to be left to amateurs. HRD should be a revenue producer, not a revenue
user. HRD should be a central part of company. You need to be able to talk MONEY.


Challenges before HR Management


In fact in the face of enornous and the rapid changes in the business environment in India backed by
liberalisation of economy, globalisation of business, modernisation of technology and large scale
employment, a need exist for a fresh look at the human resources. Multinationals, foreign investors and
NRIs entering the Indian business in a big way communist countris adopting the path of capitalism and
large scale technology transfer, all such factors necessitate a wider perspective of human resoures in the
days to come.some of the factors,which pose grater challagenes to the HRM in future are :

1.A larger, faster and greater growth of industrialization is expected in the next decade.

2.There is a possibility for more takeovers, acquisations and mergers in future in India.

3.With the presence and influence of more multinational and tranationals, as well as higher standards and
competitions, there is a possibility for many small indigenous units to be sick

4.There is a possibility for the emergence of many large and giand enterprises havening economies of scale,
leading the units without the merits of economies of scale and large scale production to wind up.

5.ISO 9000 and other international standardization requirement are bound to dictate higher quality
specification making it difficult for less quality conscious business enterprises to survive.

6.Large investment and modernization would require highly skilled and technically trend people who would
replace less train, unskilled and redundant workforce.

7.Increasing number of industrial houses are bound to introduce scheme for golden handshake.

8.Import of technology may become more common in the days to come resulting in increasing requirement
of highly skill manpower.

9.Greater and greater training needs are bound to be identified for updating the technological behavior skill.

10.There would arise greater needs for interpersonal skill, behavioral and counciling skills of executive and
hence greater training needs in his directions are bound to arise.

11.Greater privatization of business and increase of employment in the private sector may leads to greater
training needs in the private sector.

12.Quality of work life and quality circle programmes may receive greater acceptance.


HRM Challenges faced by Managers

The HR Managers of today may find it difficult because of the rapidly changing business
environment and therefore they should update their knowledge and skills by looking at the organization's
need and objectives. The HRM challenges are

1. Managing the Vision:

Vision of the organization provides the direction to business strategy and helps managers to evaluate
management practices and make decisions. So vision management becomes the integral part of Man
management in future.

2. Internal environment:

Creating an environment which is responsive to external changes, providing satisfaction to the employees
and sustaining through culture and systems is a challenging task.

3. Changing Industrial Relations:

Both the workers and managers has to be managed by the same HRM Philosophy and this is a daunting task
for the managers.

4. Building Organizational capability:

Even in the adverse circumstances the employees have to be made to live in psychological state of readiness
to continually change.

5. Job Design & Organizational structure:

Instead of depending on foreign concepts we need to focus on understanding the job, technology and the
people involved in carrying out the tasks.


6. Managing the large work force:

Management of large workforce poses the biggest problem as the workers are conscious of their rights.

7. Psycho-Social environment:

Nowadays employees participation required not only in performing job but also in democratizing and
humanizing the institution.

8. Employee Satisfaction:

Managers should be aware of techniques to motivate their employees so that their higher level needs can be

9. Modern technology:

There will be an unemployment due to modern technology and this could be corrected by assessing
manpower needs and finding alternate employment.

10. Computerized Information System:

This is revolutionary in managerial decision making and is having impact on coordination in the

11. Legal environment:

To meet the changes in legal environment, adjustments have to be made to the maximum utilization of
human resources.

12. Managing Human Relations:

As the workforce comprises of both educated and uneducated, managing the relations will be of great


In spite of all the problems HR Managers are able to overcome all these problems with the support
of management and employees. In the current business world managing employees are becoming complex
task and this can be handled effectively only by our great HR Leaders.

Limitation of HRM

Human resource management has its own limitations also. Though personnel management has been
in practice for quite sometime now, human resource management is of recent origin. Some companies have
already has their personnel management departments while some have taken initiative to appoint human
resource managers to look after their personnel function. Such superficial actions may not bear much fruit.
What is actually needed is the fundamental change in attitudes, approaches and the very management
philosophy. Without such a change, particularly at the top management level renaming of personnel
department or predestinating the personnel officer may not serve the people.
At least some HRD people hold the view that HRM people hold the view that HRM is something
very distinct from personnel management and neglect the importance of personnel management. This is
very dangerous approach. It must be understood that a balanced and integrated approach is necessary.
Actually speaking the philosophy outlook, attitude, and approach to the company own people may undergo
a change not only of top management but other levels of management. Then an integrated approach is to
HRM is necessary that is it becomes the part of the personnel management, while the whole personnel
function must be viewed through the human resource angle.
HRM Philosophy and thrust must come from the top and accepted by people at all levels. But
unfortunately in many organization top bosses remains passive leaving the HRD functions to be carried out
by the personal manager waiting for the result to come. If good result emerges the credit will go to the
magnanimity of the boss and all the discredit remains with the personal manager. Hence the personnel
manager may look at the HRD programme with suspicion. This is very serious limitation.
Management must be not satisfied with the few training programme at it happens in some
organization now. HRM functions must constantly strive to determine the actual needs and an aspiration of
the companies own people and plans to satisfy them, develop their potentiality and use them. But
unfortunately management’s productivity and profitability approach still remains undisturbed in many
HRM is of recent origin as it lacks universally approved academic base. Different professionals tent to
decline the term in different ways. Until a general definition is accepted and operational frame work is
universally approved, the approach of the practitioner may continue this is another draw back. However, a


generally accepted approach is expected to emerge in near future because of the strenuous efforts of HRM
professionals and thinkers.
Most of the HRD programmers are limited to the classroom training in many organizations. This is
another drawback of HRD. On the job training developmental programmers, carrier planning and
counseling are used to develop people. Actually, speaking, unless a proper learning atmosphere is created
no training programmed would be able to produce expected results.
In many organizations adequate information and data base may be lacking. This is serious threat to
accuracy of information without which HRM practice is difficult. Collection storing and retrieval of
information must therefore be given first priority which many manager neglect.
In many organizations even the personal professionals misunderstand HRM as synonymous to HRD.
Some classroom training programmers are generally arranged which are called HRD programmers. These
programmers are understood as Human Resource Management. Such cursory classrooms are not the actual
HRD programmers even a well-planned and executed HRD programmed is not HRM. HRD is the only part
of HRM, which is integrated approach to management. Human Resource Management suffers from such
limitation. However, the impact, it has made on the managerial effectiveness has been spectacular wherever
it was introduce. Actually speaking a real need exists in every Indian Organization for an HRM approach

Employment & Structural Changes

Human Resources in INDIA

India is a vast country with equally vast population, second only to china. According to official
admission about 300 million people in India are below poverty line. According to planning commission, an
annual income of Rs.7980 for rural and Rs.9120 for urban areas. Although the life expectancy has increased
during the years after independence, infant mortality is still very high--95 per 1000 births. Out of every 10
illiterates in the world, three are in India.
Every 7 out of 10 illiterates are women. About 25 % of girls are illiterate. The drop-out in school ranged
between 47 and 77 % during 1985-86, according to latest information available. During the 20 years after
the adoption of constitution, the number of illiterate persons in the country had risen from 300 million in


1951 to 387 million in 1971. According to 1981 census, the literacy rate continues to be only 36%. School
dropouts in the case of scheduled tribes are as much as 87.2% and for scheduled castes 79%.
India has also got one of the largest child labor populations in the world, some 40 million mostly
engaged in hazardous jobs. HUMAN RESOURCES DEVELOPMENT is not an academic pursuit, nor
isolated from the strategy and pattern of economic development. The two are interrelated--one subserves the
other. It cannot be gainsaid that despite diversified industrial development during the planning period, the
spectacular growth of public sector in building up infrastructure, growth in agricultural sector, the vast
human resources, urban and rural go largely wasted and are hardly utilized.


It should not be confined to short-run narrow sectional interests, but should have wider perspective of
social development towards a progressive direction for the benefits of our people at large. An efficient and
satisfied in organizational effectiveness and managerial excellence. Dynamic employees are essential for
any organization that would like to be dynamic and growth-oriented. HUMAN RESOURCES
DEVELOPMENT aims at developing such dynamism in employees along with several other qualities that
in combination make the organization perform well.
The central theme in the HUMAN RESOURCES DEVELOPMENT approach is the development of the
individual and the development of work groups. The emphasis has shifted from “Maximization of
performances “and "compensation" towards "employee potential awareness creation" and "employee
potential realization." The Personnel function has reduced human resources in organization’s history and
destiny. The employees are no longer cogs in the organisational wheels but as the active agents shaping not
only their own futures but also future of the organisation. The HUMAN RESOURCES DEVELOPMENT
approach, therefore, postulates a proactive rather than a reactive approach.
Human Resources are organic and complex and so is their development. While education is an
instrument for the general development of the individual, HUMAN RESOURCES DEVELOPMENT in the
context of an organisation refers to the improvement in the capacities and capabilities of the personnel in
relation to the needs of the organisation. It involves the creation of a climate in which the flower of human
knowledge, skill, capabilities and creativity care bloom. It involves the setting up of systems through which
human capabilities and potential can be identified and topped to the mutual satisfaction of the individual
and the organization.
HUMAN RESOURCES DEVELOPMENT, in the organizational context, is a process by which
employees of an organization are continuously held in a planned way. Human resources are thought of as
“the total knowledge, skills, creative abilities, talents and aptitudes of an organisation’s work-force, as well


as the values and attitudes of an individual involved. It is the sum total of inherent abilities, acquired
knowledge and skills represented by the talents and aptitudes of the employed persons. “The HUMAN
RESOURCES DEVELOPMENT is concerned with the improvement of the above said attributes of an
individual as well as a group of persons. It is the process of increasing the knowledge, the skills and the
capacities of all the people in an undertaking and a society.
Human resources can be developed by providing formal education from elementary to the higher level,
technical and professional, on-the-job training, adult education programmes, correspondence or distance
education, improvement in the health of masses through medical facilities and improvement in nutrition.

The process of economic development tends to be associated with fundamental structural change in an
economy. These structural changes take place in the form of sectoral composition as wll as occupational
structure of the work force. Such a change emerges as a result of rising productivity in agriculture and the
industrial and the tertiary sectors. The size of a country and its population has also an influence on the
structural changes in the the economy brought about by the process of economic growth.

Human resources are a term used to refer to how people are managed by organizations. The field has
moved from a traditionally administrative function to a strategic one that recognizes the link between
talented and engaged people and organizational success. The field draws upon concepts developed in
Industrial/Organizational Psychology and System Theory. Human resources have at least two related
interpretations depending on context. The original usage derives from political economy and economics,
where it was traditionally called labor, one of four factors of production although this perspective is
changing as a function of new and ongoing research into more strategic approaches at national levels.
This first usage is used more in terms of 'human resources development', and can go beyond just
organizations to the level of nations. The more traditional usage within corporations and businesses refers to
the individuals within a firm or agency, and to the portion of the organization that deals with hiring, firing,
training, and other personnel issues, typically referred to as 'human resources management'.

Human resource management's objective, on the other hand, is to maximize the return on investment
from the organization's human capital and minimize financial risk. It is the responsibility of human resource
managers in a corporate context to conduct these activities in an effective, legal, fair, and consistent manner.



Human resource management serves these key functions:

1. Recruitment & Selection
2. Training and Development (People or Organization)
3. Performance Evaluation and Management
4. Promotions/Transfer
5. Redundancy
6. Industrial and Employee Relations
7. Record keeping of all personal data.
8. Compensation, pensions, bonuses etc in liaison with Payroll
9. Confidential advice to internal 'customers' in relation to problems at work
10. Career development
11. Competency Mapping
12. Time motion study is related to HR Function
13. Performance Appraisal


Modern analysis emphasizes that human beings are not "commodities" or "resources", but are creative
and social beings in a productive enterprise. The 2000 revision of ISO 9001 in contrast requires identifying
the processes, their sequence and interaction, and to define and communicate responsibilities and
authorities. In general, heavily unionized nations such as France and Germany have adopted and
encouraged such job descriptions especially within trade unions. The International Labour Organization
also in 2001 decided to revisit, and revise its 1975 Recommendation 150 on Human Resources
One view of these trends is that a strong social consensus on political economy and a good social
welfare system facilitates labor mobility and tends to make the entire economy more productive, as labor
can develop skills and experience in various ways, and move from one enterprise to another with little
controversy or difficulty in adapting. Another view is that governments should become more aware of their
national role in facilitating human resources development across all sectors.

As person 38th round, there were 255.7 million persons employed in the ‘usual status’ sense, that is
employed for major part of time of 365 days reference period. For the purposes of comparing the 38th
round employment estimates with the 32nd and 27th round employment estimate, an estimate of 31.7


million marginally employed obtained on the basis of usual subsidiary status of the non-workers was added
to 255.7 million to make it 287.4 million employed.
This number constituted 48.51% of the respective total 1977-78, as per 32nd round, the
total employed which included marginal workers constituted 42.34% of the respective total population. This
indicated an overall increase of 6.17% in total employment in relation to population during the period 1977-
78 to 1983.


The sectoral composition of the working force, in general, indicates the type and level of economic
development of the country. One aspect of structural change manifests itself in the form of a change in the
industrial structure involving a greater shift of the working force to the tertiary sector and that to the
secondary sector from the primary sector of the economy. The sectoral composition of the working force
which had remined constant till 1971 is now-changing.

Current status of HRM in India


Over many centuries India has absorbed managerial ideas and practices from around the world. Early
records of trade, from 4500 B.C. to 300 B.C., not only indicate international economic and political links,
but also the ideas of social and public administration. This treatise presented notions of the financial
administration of the state, guiding principles for trade and commerce, as well as the management of
people. Increasing trade, that included engagement with the Romans, led to widespread and systematic
governance methods by 250 A.D. During the next 300 years, the first Indian empire, the Gupta Dynasty,
encouraged the establishment of rules and regulations for managerial systems, and later from about 1000
A.D. Islam influenced many areas of trade and commerce. A further powerful effect on the managerial
history of India was to be provided by the British system of corporate organisation for 200 years. Clearly,
the socio cultural roots of Indian heritage are diverse and have been drawn from multiple sources including
ideas brought from other parts of the old world. Interestingly, these ideas were essentially secular even
when they originated from religious bases.

In the contemporary context, the Indian management mindscape continues to be influenced by the
residual traces of ancient wisdom as it faces the complexities of global realities. One stream of holistic
wisdom, identified as the Vedantic philosophy, pervades managerial behaviour at all levels of work
organisations. This philosophical tradition has its roots in sacred texts from 2000 B.C. and it holds that
human nature has a capacity for self transformation and attaining spiritual high ground while facing realities


of day to day challenges (Lannoy 1971). Such cultural based tradition and heritage can have a substantial
impact on current managerial mindsets in terms of family bonding and mutuality of obligations. The caste
system, which was recorded in the writings of the Greek Ambassador Megasthenes in the third century
B.C., is another significant feature of Indian social heritage that for centuries had impacted organisational
architecture and managerial practices, and has now become the focus of critical attention in the social,
political and legal agenda of the nation.

One of the most significant areas of values and cultural practices has been the caste system.
Traditionally, the caste system maintained social or organisational balance. Brahmins (priests and teachers)
were at the apex, Kshatriya (rulers and warriors), Vaishya (merchants and managers) and Shwdra (artisans
and workers) occupied the lower levels. Those outside the caste hierarchy were called ‘untouchables’. Even
decades ago, a typical public enterprise department could be dominated by people belonging to a particular
caste. Feelings associated with caste affairs influenced managers in areas like recruitment, promotion and
work allocation (Venkatranam & Chandra 1996). Indian institutions codified a list of lower castes and tribal
communities called ‘scheduled castes and scheduled tribes’. A strict quota system called, ‘reservation’ in
achieving affirmative equity of castes, has been the eye of political storm in India in recent years. The
central government has decreed 15 per cent of recruitment is to be reserved for scheduled castes, and a
further seven and half per cent for scheduled tribes. In addition, a further 27 per cent has been decreed for
other backward castes. However, the liberalisation of markets and global linkages have created
transformation of attitudes towards human resource (HR) policies and practices (Khalilzadeh-Shirazi &
Zagha 1994, Gopalan & Rivera 1997). Faced with the challenge of responding to the rationale of Western
ideas of organisation in the changing social and economic scenario of Indian organisation, practitioners are
increasingly taking a broader and reflective perspective of human resource management (HRM) in India.

This manuscript has three main parts. In the first part is provided an overview of important historical
events and activity that has influenced contemporary managerial tenets, the second part of the manuscript
describes the emerging contemporary Indian HRM practices and indicates some interesting challenges.
Much of the second part is also summarised on four informative Figures. The concluding section, the third
part of the manuscript, succinctly integrates the two preceding parts.


The managerial ideologies in Indian dates back at least four centuries. Arthãshastra written by the
celebrated Indian scholar-practitioner Chanakya had three key areas of exploration, 1) public policy, 2)
administration and utilisation of people, and 3) taxation and accounting principles (Chatterjee 2006).
Parallel to such pragmatic formulations, a deep rooted value system, drawn from the early Aryan thinking,


called vedanta, deeply influenced the societal and institutional values in India. Overall, Indian collective
culture had an interesting individualistic core while the civilisational values of duty to family, group and
society was always very important while vedantic ideas nurtured an inner private sphere of individualism.

There has been considerable interest in the notion that managerial values are a function of the
behaviours of managers. England, Dhingra and Agarwal (1974) were early scholars who contended that
managerial values were critical forces that shape organisational architecture. The relevance of managerial
values in shaping modern organisational life is reflected in scholarly literature linking them to corporate
culture (Deal & Kennedy 1982), organisational commitment and job satisfaction (O’Reilly, Chatham &
Caldwell 1991), as well as institutional governance (Mowday, Porter & Steers 1982). Thus, understanding
the source of these values and in particular societal work values (which link the macro-micro relationships
and in turn organisational practices) had become a popular line of enquiry, and a great deal of evidence has
been presented to support the importance of national culture in shaping managerial values. One of the most
widely read formulations of this literature is the seminal work of Hofstede (1980) who popularised the
notion of clustering culture in generic dimensions such as power distribution, structuring, social orientation,
and time horizons. In turn, these dimensions could be employed to explain relevant work attitudes, job
incumbent behaviors and the working arrangements within organisational structures. Two of these
dimensions were individualism and collectivism.

The traditional social ethos from the ancient roots, which was developed over centuries, underwent
profound transformation during the British rule. Consequently, in the contemporary context multiple layers
of values (core traditional values, individual managerial values, and situational values) have emerged
(Chatterjee & Pearson 2000). Though the societal values largely remain very much anchored in the ancient
traditions they are increasingly reflecting corporate priorities and values of global linkages. But in the arena
of globalisation where priorities of consumerism, technological education, mass media, foreign investment
and trade union culture predominate, newer tensions are becoming evident. For instance, contemporary
Indian multi national companies and global firms in India have started shifting their emphasis to human
resources with their knowledge and experience as the central area of attention in extending new
performance boundaries (Khandekar & Sharma 2005). Considerable research evidence attests to this trend
with particular relevance to greenfield organisations with little or no historical baggages in their
organisational culture (Settt 2004, Roy 2006).

Within Indian traditions the choice of individualistic or collectivistic behavior depends on a number of
culturally defined variables. The dynamics of these variables are underpinned through three key elements
guiding Indian managerial mindscapes. These three constructs are Desh (the location), Kaal (the timing),
and Patra (the specific personalities involved). Sinha and Kunungo (1997) claim that the interaction of these


three variables determines the guidelines for decisional cues. This managing or nurturing of the outer layer
of collectivism in an inner private sphere of individualism is expressed in Figure 1 which demonstrates the
behavioural anchors in Indian organisational life.

Figure 1
Behavioral Anchors in Indian Organisational Life
DECISIONAL Desh Kaal Patra
CUES (place) (Timing) (Actors)
SPIRITUAL Sattava guna Tamas guna Rajas guna
ORIENTATION (Virtue focus) (Negative focus) (Action focus)
Sradha Sneha Bandhan
(Upward respect / Loyalty) (Downward affection) (Bonding)

Figure 1 also presents another powerful insight of the Indian

tradition of the notion of ‘Guna’ dynamics. According to Sharma (1996), this culture based framework,
which has three types of gunas (attraction), is being increasingly used in employee assessment and
organisational team building strategies. The contention is that each guna is a separate contribution to the
core of human personalities. The Sattava (or truth orientation) is the sentiment of exalted values in people,
organisations or society. Alternatively, the Tamasik guna depicts a negative orientation which can be
expressed behaviourally as ignorance, greed or corruption. Those individuals with a Rajasik guna are
inherently driven by a desire to make a worthwhile contribution to their surroundings. Collectively, these
spiritual orientations, which manifest as Sattava, Tamas or Rajas gunas, articulate as positive or
negative HRM functions such as leadership, motivation or other institutional behavioural activity. The third
row of Figure 1 highlights the linking of HRM trends to socio cultural roots. The culture of Sradha (upward
loyalty) and Sneha (mentoring with affection) outline the behavioural anchors derived from the
civilisational roots. The acceptance of ‘Sradha’ by youngers and the display of ‘Sneha’ by the seniors have
been the root of sustainability of all types of Indian oragnisations. This has a striking similarity to the
concepts of ‘oyabun’ and ‘kobun’ in the Japanese cultural context.


In a recent survey of Indian CEO’s, it was suggested that Indian managerial leaders were less dependent
on their personal charisma, but they emphasised logical and step by step implementation processes. Indian
leaders focused on empowerment and accountability in cases of critical turnaround challenges, innovative


challenges, innovative technology, product planning and marketing or when other similar challenges were
encountered (Spencer, Rajah, Narayan, Mohan & Latiri 2007). These social scientists contend.

Leaders in other countries often tell about why they chose a peculiar person for a certain role per task,
detailing the personal characteristics that made that person right for that situation. They may also consider,
in detail, how an assignment would help someone grow and develop their abilities. In general, Indian
leaders simply did not discuss how they matched particular people to certain roles or tasks, nor did they
usually consider in detail how the personal characteristics of individuals might shape or inform the best way
to influence that person.

Indian HRM in Transition

One of the noteworthy features of the Indian workplace is demographic uniqueness. It is estimated that
both China and India will have a population of 1.45 billion people by 2030, however, India will have a
larger workforce than China. Indeed, it is likely India will have 986 million people of working age in 2030,
which well probably are about 300 million more than in 2007. And by 2050, it is expected India will have
230 million more workers than China and about 500 million more than the United States of America (U.S.).
It may be noted that half of India’s current population of 1.1 billion people are under of 25 years of age.
While this fact is a demographic dividend for the economy, it is also a danger sign for the country’s ability
to create new jobs at an unprecedented rate. As has been pointed out by Meredith (2007).

When India’s young demographic bubble begins to reach working age, India will need far more jobs
than currently exist to keep living standards from declining. India today doesn’t have enough good jobs for
its existing workers, much less for millions of new ones. If it cannot better educate its children and create
jobs for then once they reach working age, India faces a population time bomb: The nation will grow poorer
and not richer, with hundred of millions of people stuck in poverty.

With the retirement age being 55 to 58 years of age in most public sector organisations, Indian
workplaces are dominated by youth. Increasing the retirement age in critical areas like universities, schools,
hospitals, research institutions and public service is a topic of considerable current debate and agenda of
political parties.

The divergent view, that each society has an unique set of national nuances, which guide particular
managerial beliefs and actions, is being challenged in Indian society. An emerging dominant perspective is
the influence of globalisation on technological advancements, business management, and education and
communication infrastructures are leading to a converging effect on managerial mindsets and business
behaviours. And when India embraced liberalisation and economic reform in the early 1990s, dramatic
changes were set in motion in terms of corporate mindsets and HRM practices as a result of global


imperatives and accompanying changes in societal priorities. Indeed, the onset of a burgeoning competitive
service sector compelled a demographic shift in worker educational status and heightened the demand for
job relevant skills as well as regional diversity. Expectedly, there has been a marked shift towards valuing
human resources (HR) in Indian organisations as they become increasingly strategy driven as opposed to
the culture of the status quo. Accordingly, competitive advantage in industries like software services,
pharmaceuticals, and biotechnology (where India is seeking to assert global dominance), the significance of
HRs is being emphasised. These relativities were demonstrated in a recent study of three global Indian
companies with (235 managers) when evidence was presented that positively linked the HRM practices
with organisational performance. In spite of this trend of convergence, a deep sense of locality exists
creating more robust ‘cross vergence’ in the conceptual as well as practical domain


Figure 2
Drivers of Contemporary Indian HRM Trends

Figure 2 presents the key drivers for contemporary Indian HRM trends. In Figure 2 there are four
external spheres of intervention for HRM professionals and these spheres are integrated in a complex array
within organisational settings. The intellectual sphere, which emphasis’s the mindset transaction in work
organisations, has been significantly impacted by the forces of globalisation. Indeed, Chatterjee and Pearson


(2000) argued, with supporting empirical evidence from 421 senior level Indian managers, that many of the
traditional Indian values (respect for seniority, status and group affiliation) have been complemented by
newer areas of attention that are more usually linked to globalisation, such as work quality, customer
service and innovation. The most important work related attribute of the study was the opportunity to learn
new things at work. Such cross verging trends need to be understood more widely as practitioners face a
new reality of human resource development of post industrial economic organisations.

The other three spheres, of Figure 2, namely the emotional, the socio cultural and the managerial
domains are undergoing, similar profound changes. For instance, the socio cultural sphere confronts the
dialects of the national macro level reform agenda as well as the challenge of innovating by addressing the
hygiene and motivational features of the work place. Consequently, this sphere, which is underpinned by
the anchors of Sradha and Sneha, has the opportunity to leverage work setting creativity in dimensions of
autonomy, empowerment, multiskilling and various types of job design. And the emotional sphere, which
focuses on creativity and innovation to encapsulate the notions of workplace commitment and collaboration
as well as favorable teamwork, brings desirable behavioral elements of transparency and integrity into
organisational procedures and practices. The managerial sphere provides the mechanisms for shifting
mindsets, for in Indian organizations. HRM is viewed to be closely aligned with managerial technical
competency. Thus, understanding of the relativity of HRM to strategic intended organisational performance
is less well articulated in Indian firms. The current emphasis of reconfiguring cadres (voluntary and
nonvoluntary redundancy schemes), downsizing, delayering and similar arrangements will become less
relevant as holistic perspectives gain ground. A hallmark of future Indian workplaces is likely to be a
dominant emphasis on managerial training, structural redesign and reframing of institutional architectures to
achieve enterprise excellence. Thus, a primary role of Indian managers will be to forge new employment
and industrial relationships through purposeful HRM policies and practices. In Figure 3 is presented a
variety of HRM practices that are being employed in Indian organisations.

Progress of personnel management in India

Personnel management - The renewed emphasis on the importance of human resources in the 1980s and
90s drew attention to the way in which people management was organized. Specifically, this meant a critical
review of the functions of personnel management.

Personnel management has been a recognized function in the USA since NCR opened a personnel
office in the 1890s. In other countries the function arrived more slowly and came through a variety of


routes. This excerpt from Human Resource Management in a Business Context looks at Personnel
Management from a historical perspective.

Specialist Personnel Functions:

 Recruitment - advertising for new employees and liaising with employment agencies.
 Selection - determining the best candidates from those who apply, arranging interviews, tests
and references.
 Promotion - running similar selection procedures to determine progression within the
 Pay - a minor or major role in pay negotiation, determination and administration.
 Performance assessment - coordinating staff appraisal and counseling systems to evaluate
individual employee performance.
 Grading structures - as a basis for pay or development, comparing the relative difficulty and
importance of functions.
 Training and development - coordinating or delivering programmes to fit people for the roles
required by the organisation now and in the future.
 Welfare - providing or liaising with specialists in a staff care or counseling role for people with
personal or domestic problems affecting their work.
 Communication - providing an internal information service, perhaps in the form of staff
newspapers or magazines, handouts, booklets, videos.
 Employee Relations - handling disputes, grievances and industrial action, often dealing with
unions or staff representatives.
 Dismissal - on an individual basis as a result of failure to meet requirements or as part of a
redundancy, downsizing or closure exercise, perhaps involving large numbers of people.
 Personnel administration - record-keeping and monitoring of legislative requirements related to
equal opportunities and possibly pensions and tax.

Management theory

The human relations and human factors approaches were absorbed into a broad behavioral science
movement in the 1950's and 1960's. This period produced some influential theories on the motivation of
human performance. For example, Maslow's hierarchy of needs provided an individual focus on the reasons
why people work. He argued that people satisfied an ascending series of needs from survival, through
security to eventual 'self-actualization'.


In the same period, concepts of job design such as job enrichment and job enlargement were
investigated. It was felt that people would give more to an organization if they gained satisfaction from their
jobs. Jobs should be designed to be interesting and challenging to gain the commitment of workers - a
central theme of HRM.

By the 1970s most managers participating in formal management training were aware of: Theory X and
Theory Y (McGregor, 1960); of Maslow and Herzberg's motivation theories; and knew where they should
be in terms of the managerial grid (Blake and Mouton, 1964). These theorists advocated participative, 'soft'
approaches to management. However, only a minority of managers in the USA received such training, with
even fewer in other countries. Most operational managers - concerned with production, engineering, or
distribution - had worked their way up from low-level jobs: they were probably closer in spirit to F.W.
Taylor than the theorists of the 1950s and 1960s. This contrasted with personnel departments with a higher
proportion of people who had received academic training; additionally, 'personnel' was an area where
women were prevalent - as opposed to production which was male dominated. Were women naturally more
open to human relations concepts than men?

Development of the personnel specialism

Personnel management has been a recognized function in the USA since NCR opened a personnel
office in the 1890s. American personnel managers worked within a unitarist tradition, identifying closely
with the objectives of their organization. It was natural for HRM to emerge comparatively smoothly from
this perspective.

In other countries the personnel management function arrived more slowly and came from a number of
routes. Moreover, its orientation was not entirely managerial. In Britain its origins can be traced to the
'welfare officers' employed by Quaker-owned companies such as Cadburys. At an early stage it became
evident that there was an inherent conflict between their activities and those of line managers. They were
not seen to have a philosophy compatible with the worldview of senior managers. The welfare officer
orientation placed personnel management as a buffer between the business and its employees. In terms of
'organizational politics' this was not a politically viable position for individuals wishing to further their
careers, increase their status and earn high salaries.

Management thinking

Like fashions in hairstyle and clothing, management ideas come and go. Today's best-selling
management concept will not survive long before being overtaken by the next 'big idea'. Significantly,


however, a consistent theme has prevailed for more than two decades: the most successful organizations
make the most effective use of their people - their human resources.

The emergence of HRM was part of a major shift in the nature and meaning of management towards the
end of the twentieth century. This happened for a number of reasons. Perhaps most significantly, as we will
see in Part 2 of this book, major developments in the structure and intensity of international competition
forced companies to make radical changes in their working practices .

From the 1970s onwards, managers in the industrialized countries felt themselves to be on a roller-
coaster of change, expected to deliver improved business performance by whatever means they could
muster. Their own careers and rewards were increasingly tied to those improvements and many were
dispatched to the ranks of the unemployed for not acting quickly and imaginatively enough. Caught
between the need to manage decisively and fear of failure, managers sought credible new ideas as a
potential route for survival.


The World Competitiveness Report rated India’s human resource capabilities as being comparatively
weaker than most Asian nations. The recognition of world class human resource capability as being pivotal
to global success has changed Indian HRM cultures in recent years. While the historical and traditional
roots remain deeply embedded in the subjective world of managers, emphasis on objective global concepts
and practices are becoming more common. Three very different perspectives in HRM are evident. Firstly,
Indian firms with a global outlook; secondly, global firms seeking to adapt to the Indian context; and
thirdly, the HRM practice in public sectors undertakings (PSV’S). As the Indian economy becomes more
globally linked, all three perspectives will move increasingly towards a cross verging strengthening.
Interestingly, within the national context, India itself is not a homogenous entity. Regional variations in
terms of industry size, provincial business culture, and political issues play very relevant roles. The nature
of hierarchy, status, authority, responsibility and similar other concepts vary widely across the nations
synerging system maintenance. Indeed, organisational performance and personal success are critical in the
new era.



Rajasthan steel manufacturing company is a well established company manufacturing and marketing
steel furniture items. The head office of the company is at Jaipur and the plant is also located near Jaipur.
Nearly 140employee are working in the plant.

The foundry of the plant provides employment to 24 workers and use high technical equipment.
However foundry has always been regarded as one of the worst places to work in steel manufacturing units.
The same is the position in Rajasthan steel manufacturing company. The atmosphere of the foundry is hot,
dirty and tense. Physical fitness is the basic requirement of the workers for working in the foundry.
Technical education, intelligence, skill, etc. are secondary job requirement. However as per the job
evaluation plan of the company. “Physical ability” and “working condition” are weighted relatively lower
than “training”, “skill” and “responsibility”. As a result, most of the job in the foundry rated at the bottom
of the wage scales of the company. The people working in the foundry are low paid and have low status
among the total labour force of the company.

In the course of the last two years, the company finds it difficult to get workers for foundry work.
Unsuitable person are appointed because of the non-availability of suitable person such unsuitable person
work for one or two months and leave the job due to hard work, unsuitable work atmosphere and low wage
rate. The labour turnover is also high in the case of foundry workers, which reduce the sale. Vacancies are
always available but job seekers rarely accept foundry jobs. In the same months, out of 24 workers required,
only 5 to 10 workers working and 15 to 20 posts are vacant. In spite of all efforts, the personal manager
finds it’s difficult to appoint adequate staff for the foundry. People not getting job elsewhere accept foundry
jobs but are eager to leave foundry jobs immediately when any other job are available. This situation affects
the foundry work. The unit works slowly creating inconvenience to other departments. The quality of
production is inferior and minor accidents are also common. Now recruitment for foundry is a continuous
problem before the personnel manager.

In June 2002, the situation in the foundry was extremely bad. Out of 25 workers required, only seven
workers were working. The pending work was substantial and other departments were complaining due to
limited supply of material from the foundry. One new worker from the foundry was caught in an accident
on 10th June 2002. He died in the hospital after five days. The company is mew facing police case in this
regard. All efforts for appointment of new workers are ineffective due to low wage rate offered to foundry


The general manager of the company has noted the seriousness of the problem. He instructed personnel
manager to give immediate attention to this urgent problem. He also assured that the management is willing
to take all necessary steps to solve this problem of foundry department. The personal manager was asked to
make his recommendation within ten days. The personal manager Mr. Samant has difficult task. However
he can now make suitable recommendation to solve the problem on permanent basis.

Mr. Samant studied the whole issue once again and submitted his concrete recommendation to the
general manager.

{1} Which policy of the company increases the labour turnover


{2} How the high labor turnover ratio increases the cost and
reduces the sale?

{3} Which, of the following, is the appropriate measure for

solving the present problem?

{1} Which policy of the company increases the labor

turnover ratio?
Ans: There are various polices of the company which increases the worker turnover ratio are as :

[1] They use high technical equipment but weighted on

“Physical ability” and “working condition” and not on
“training”, “skill” and “responsibility”.

[2] Low wages scales

[3] Low status among the total labor force of the company.

[4] Unsuitable work atmosphere for worker


Due to these polices of the company, workers leave the jobs with in two to three month; this is the main
reason for high labor turnover ratio.

{2} How will the high labour turnover ratio increases the cost and reduces the sale?
Ans: This can be explained with the help of triangle diagram:


Internal Marketing External Marketing

Interactive Marketing

The right side of the triangle shows the external marketing i.e. setting promises. It is the normal activity of
the firm to develop price, promotion and distribute the service offering to the customers. Anything that is
communicated to the customers before service delivery is seen as a part of external marketing.
In the figure at the bottom of the triangle is Interactive marketing or real-time marketing, where the
focus is on the skills of the employees in handling customers contact. Here the actual service delivery takes
place and the firms employees interact directly with the customers. Customer judges the service quality not
only on the basis of the technical quality of the product-service package, but also by its functional quality.


Hence, having a positive link between what is delivered through external marketing and what is delivered
through internal marketing is useless if promises cannot be kept.

The left side of the triangle shows the internal marketing i.e. enabling the promise. The internal
marketing activities of the firm are to train and motivate its employees to work as a team in order to deliver
the service. It emphasizes on the critical role that enables the employee to keep the promises made to the
customer. In an organization every single individual plays some role in marketing, a product or service, and
therefore any effort by the organization by way of training in product handling, customer knowledge,
product knowledge etc. Motivation is an internal marketing tool. Employee satisfaction and customer
satisfaction are closely linked. Therefore, services marketing Triangle will collapse, if service employs are
unable to deliver the promises made, which in turn would adversely affect customer satisfaction and

But in the case of the Rajasthan steel manufacturing company, they not motivated the employee by
providing the good working environment; training facilities, fair wages rate.
Person work for one or two months and leave the job due to hard work, unsuitable work atmosphere
and low wage rate and for a new appointed worker company not provide any training facilities so that the
new appointed worker not liable to complete his job and supply the raw-material to his internal customer
with in a sate time period which increase the cost of production and reduce the sale because when we
marketing the our product that time we promise the customer to supply good quality of product with in a
time period, if we not supply the product
with in a fixed period that time customer canceling the order. Due to cancellation of the order sale of the
company is decline.

{3} As a human resource manager what appropriate measure will you follow for solving the
present problem?
Ans: The appropriate measures for solving the present problem are
{A} Improvement in the working condition of factory.

{B} Increase in the wages rate of factory workers.

{C} Appointing the right worker for right job.

{D} Provide training facilities.


{E} Motivate the employee by delegation of authority.