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CHAPTER 1
INTRODUCTION

Chapter 1 Title Page

1.1 Introduction to Human Resource Management 2
1.2 Definition of Human Resource Management 4
1.3 Human Resource Management Philosophy 8
1.4 Nature of Human Resource Management 8
1.5 Objectives of Human Resource Management 14
1.6 Functions of Human Resource Management 20
1.7 Scope of Human Resource Management 23
1.8 Importance of Human Resource Management 27
1.9 Human Resource Management Activities 32
1.10 Role of motivation in Human Resource Management 33
References 36
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CHAPTER 1
INTRODUCTION

1.1 INTRODUCTION TO HUMAN RESOURCE MANAGEMENT

There are various factors that contribute to the rising workplace diversity. These
various factors include increasing competition and the phenomenon of globalization, which
has transformed the world into a global village. Globalization has occurred because of a
combination of factors such as improved infrastructure and advancement in technology.

All organisations require employees to produce the good products or provide the
good services. In order to improve productivity and ensure the success of company,
employers have to find out different approaches or strategies to manage their employees.
Therefore, an understanding of how to effectively manage employees in the workplace is of
great importance and value.

Human Resource Management is the most important asset for any organization
and it is the source of achieving competitive advantage in the globalization era. Managing
human resources is very challenging as compared to managing technology or capital and for
its effective management; organization requires effective human resource management
system. The aim of human resource management is to balance the equation and bring about
required synergy to reinforce mutuality of effort towards the ‘common purpose. HRM is at the
forefront of management strategy in the contemporary times. It is expected to be proactive
rather than a reactive management function. It plays a vanguard role and imparts direction to
an organization.

Human resource management today involves more than just the management of
the HR function. It extends into areas such as compensation benefits, staffing, HR forecasting,
succession planning, management and executive development, performance management,
employee relations, organization development, total quality management, needs analysis,
instructional design and development training programme evaluation (Mazarrese, 1994)1.
Human resource management is therefore understood as the all significant art and science of
managing people in an organization. It’s significance lies in the fact that physical and
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monetary resources cannot and do not sustain increased rates of return on investments,
unless complemented and supplemented effectively by good human resource practices
which reflect in best standards of productivity and service delivery. Increasing research
output in behavioral sciences, new trends in managing ‘knowledge workers’ and advances in
training methodology and practices have led to substantial expansion of the scope of human
resource management function in recent years, besides adding to its understanding as a
theoretical area of enquiry.

Human Resource Management has come to be recognized as an inherent part of

management, which is concerned with the human resources of an organization. Its objective
is the maintenance of better human relations in the organization by the development,
application and evaluation of policies, procedures and programs relating to human resources
to optimize their contribution towards the realization of organizational objectives. It can be
summarized that HRM is concerned with getting better results with the collaboration of
people. It is an integral but distinctive part of management, concerned with people at work
and their relationships within the enterprise. HRM helps in attaining maximum individual
development, desirable working relationship between employees and employers, employees
and employees, and effective modeling of human resources as contrasted with physical
resources. It is the recruitment, selection, development, utilization, compensation and
motivation of human resources by the organization.

Human resource management is not just an arena of personnel administration

anymore but rather a central and pervasive general management function involving
specialized staff as assistants to main line managers. In order to achieve in organizational
administration, the human resource management system should be backed up by sound
human resource management activities.

Human resource management activities refer to organizational activities directed

at managing the pool of human resources and ensuring that the resources are employed
towards the fulfillment of organizational goals. Human Resource Management Activities
(HRMA) is a relatively new approach to managing people in any organization. It is concerned
with the people dimension in management of an organization. Since an organization is a body
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of people, their acquisition, development of skills, motivation for higher levels of attainments,
as well as ensuring maintenance of their level of commitment are all significant activities.
These activities fall in the domain of Human Resource Management. Human Resource
Management activities consists of four main activities, namely, acquisition, development,
motivation, as well as maintenance of human resources.

The first chapter of the study is focused on the definition, philosophy, nature,
objectives, function, scope, importance and human resource management activities. The
details of the mentioned heading are as follow:

1.2 DEFINITION OF HUMAN RESOURCE MANAGEMENT

Human Resource Management (HRM) is responsible for maintaining good human
relations in the organization. It is also concerned with development of individuals and
achieving integration of goals of the organization and those of the individuals. Human
resource management (HRM) has been defined by several scholars.

Lawrence Appley (1956)2 remarked that human resource management is a part of

the management process. It is inherent in the process of management which performed by
all the managers. A manager to get the best of his people must undertake the basic
responsibility of selecting people who will work under him and to help to develop, motivate
and guide them.

Scott, Clothier and Spriegel (1961)3 stated that Human Resource Management is
responsible on a staff basis for concentrating on those aspects of operations which are
chiefly concerned with the relationship of employees to employees and management to
employees and with the development of the group and the individual.

Nadler, E.D. (1984)4 described that human resource management is the function
within an organization that focuses on recruitment, management, and providing direction for
the people who work in the organization. Human resource management can also be
performed by line-managers. It is the organizational function that deals with issues related to
people such as compensation, hiring, performance management, organization development,
safety, wellness, benefits, employee motivation, communication, administration, and training.
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Flippo (1984)5 augured that human resource management is the process of
planning, organizing, directing, development, compensation, integration, motivation and
maintenance of human resource to the end those individual, organizational, and social
objectives are accomplished.

Decenzo & Robbins (1989)6 stated that human resource management is

concerned with the people dimension to management. Since every organization comprises
people, acquiring their services, developing their skills, motivating them to higher levels of
performance and ensuring that they continue at the same level of commitment to the
organization are essential to achieving organizational goal.

Armstrong (1991)7 pointed out that human resource management is a strategic

approach to the acquisition, motivation, development and management of the organization’s
human resources. It is devoted to shaping an appropriate corporate culture and introducing
programmes which reflect and support the core values of the enterprise and ensure its
success.

Northcott (1991)8 considers human resource management as an extension of

general management, that of prompting and stimulating every employee to make his fullest
contribution to the purpose of a business. Human resource management is not something
that could be separated from the basic managerial function. It is a major component of the
broader managerial function.

Tracey (1994)9 defined human resource management as the organization function

that focuses on the effective management, direction, and utilization of people; both the
people who manage produce and market and sell the products and services of an
organization and those who support organizational activities. It deals with the human element
in the organization, people as individuals and groups, their recruitment, selection, assignment,
motivation, empowerment, compensation, utilization, services, training, development,
promotion, termination and retirement.”

Storey (1995)10 states that human resource management is a distinctive approach

to employment management which seeks to achieve competitive advantage through the
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strategic deployment of a highly committed and capable workforce using an array of cultural,
structural and personnel techniques.

Milkovich & Boudreau (1997)11 explained that human resource management can
be referred to a series of integrated decisions that govern employer-employee relations. Their
quality contributes to the ability of organizations and employees to achieve their objectives.

French Wendell, et al. (2005)12 defines human resource management as the

recruitment, selection, development, utilization, compensation and motivation of human
resources by the organization.

Johnson, P. (2009)13 mentioned that human resource management is a function in

organizations designed to maximize employee performance in service of their employer’s
strategic objectives. It is primarily concerned with how people are managed within
organizations, focusing on policies and systems. Human resource management are typically
responsible for a number of activities, including employee recruitment, training and
development, motivation, performance appraisal, and rewarding.

Raghubar Jha (2009)14 gave three definition of human resource management:

Definition 1 – Integration “HRM is a series of integrated decisions that form the
employment relationships; their quality contributes to the ability of the organizations and the
employees to achieve their objectives.”
Definition 2 – Influencing “HRM is concerned with the people dimensions in
management. Since every organization is made up of people, acquiring their services,
developing their skills, motivating them to higher levels of performance and ensuring that they
continue to maintain their commitment to the organization are essential to achieving
organizational objectives. This is true, regardless of the type of the organization – government,
business, education, health, recreational, or social action.”
Definition 3 – Applicability “HRM 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.”
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Susan M. (2012)15 state that human resource management is the function within
an organization that focuses on recruitment, management, and providing direction for
the people who work in the organization. Human Resource Management is the organizational
function that deals with issues related to people such as compensation, hiring, performance
management, organization development, safety, wellness, benefits, employee motivation,
communication, administration, and training. Effective human resource management enables
employees to contribute effectively and productively to the overall company direction and
the accomplishment of the organization's goals and objectives.

Fadel, Khaled (2012)16 illustrated that human resources may be defined as the
total knowledge, skills, creative abilities, talents and aptitudes of an organization’s workforce,
as well as the values, attitudes, approaches and beliefs of the individuals involved in the
affairs of the organization. It is the sum total or aggregate of inherent abilities, acquired
knowledge and skills represented by the talents and aptitudes of the persons employed in
the organization.

From the definition of Human Resource Management mentioned above, it can be

concluded that Human Resource Management (HRM) is the function within an organization
that focuses on providing direction for the people who work in the organization. It is primarily
concerned with how people are managed within organizations, focusing on policies and
systems. Human resource management involved with the relationship of employees to
employees and management to employees and with the development of the group and the
individual. Human resource management (HRM) is typically responsible for a number of
activities, including employee recruitment, training and development, motivation,
performance appraisal, compensation, hiring, performance management, organizational
development, safety, wellness, benefits, and rewarding. Human resource management is the
source of achieving competitive advantage because of its capability to convert the other
resources. Effective Human Resource Management (HRM) enables employees to contribute
effectively and productively to the overall company direction and the accomplishment of the
organization's goals and objectives.
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1.3 HUMAN RESOURCE MANAGEMENT PHILOSOPHY
The Human Resource Management philosophy is based on the following beliefs:
Fadel, Khaled. (2012)17.
• Human resource is the most important asset in the organization and can be
developed and increased to an unlimited extent.
• A healthy climate with values of openness, enthusiasm, trust, mutuality and
collaboration is essential for developing human resource.
• HRM can be planned and monitored in ways that are beneficial both to the
individuals and the organization.
• Employees feel committed to their work and the organization, if the organization
perpetuates a feeling of belongingness.
• Employees feel highly motivated if the organization provides for satisfaction of
their basic and higher level needs.
• Employee commitment is increased with the opportunity to discover and use
one’s capabilities and potential in one’s work.
• It is every manager’s responsibility to ensure the development and utilization of
the capabilities of subordinates.
1.4 NATURE OF HUMAN RESOURCE MANAGEMENT
The human resources management is multidimensional in nature. It is a process
of bringing people and organizations together so that the goals of each are met. The nature
of human resource management has been highlighted by Lawrence (1956)18 in its following
features:
(1) Inherent Part of Management : Human resource management is inherent in the
process of management. This function is performed by all the managers throughout the
organization rather that by the personnel department only. If a manager is to get the best of
his people, he must undertake the basic responsibility of selecting people who will work
under him.
(2) Pervasive Function : Human Resource Management is a pervasive function of
management. It is performed by all managers at various levels in the organization. It is not a
responsibility that a manager can leave completely to someone else. However, he may
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secure advice and help in managing people from experts who have special competence in
personnel management and industrial relations.
(3) Basic to all Functional Areas : Human Resource Management permeates all
the functional area of management such as production management, financial management,
and marketing management. That is every manager from top to bottom, working in any
department has to perform the personnel functions.
(4) People Centered : Human Resource Management is people centered and is
relevant in all types of organizations. It is concerned with all categories of personnel from top
to the bottom of the organization. The broad classification of personnel in an industrial
enterprise may be as follows : (i) Blue-collar workers (i.e. those working on machines and
engaged in loading, unloading etc.) and white-collar workers (i.e. clerical employees),
(ii) Managerial and non-managerial personnel, (iii) Professionals (such as Chartered
Accountant, Company Secretary, Lawyer, etc.) and non-professional personnel.
(5) Personnel Activities or Functions : Human Resource Management involves
several functions concerned with the management of people at work. It includes manpower
planning, employment, placement, training, appraisal and compensation of employees. For
the performance of these activities efficiently, a separate department known as Personnel
Department is created in most of the organizations.
(6) Continuous Process : Human Resource Management is not a one
shot‘ function. It must be performed continuously if the organizational objectives are to be
achieved smoothly.
(7) Based on Human Relations : Human Resource Management is concerned
with the motivation of human resources in the organization. The human beings can‘t be dealt
with like physical factors of production. Every person has different needs, perceptions and
expectations. The managers should give due attention to these factors. They require human
relations skills to deal with the people at work. Human relations skills are also required in
training performance appraisal, transfer and promotion of subordinates.

Keith Sisson. (2009)19 pointed out the nature of human resource management in
the following features:
(1) There is stress on the integration of human resource policies with overall
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planning and underpinning latter with the former;
(2) Responsibility for personnel management no longer resides with specialist
managers but is increasingly assumed by the senior line management;
(3) The focus consequently shifts from management-trade union relations to
management-employee relations; from collectivizing to individuation; macro to micro; and;
(4) To reiterate, with the manager donning the role of “enabler”, or ‘facilitator’,
there is stress on commitment and initiative on the part of the employees.

Besides the features mentioned by Keith Sisson (2009)20, certain more

characteristics of human resource management could be summarized as follows:
(1) Human resource management is a pervasive function. It permeates all levels
of decision making in an organization. All sections perform human resource management in
some way. Academically, the nature of the subject is inter-disciplinary. It draws inputs from
other social sciences, particularly, sociology, psychology, political science, anthropology,
economics, etc. Human resource management has a suggestion of the contingency
paradigm. Chief among contingent variables is pressure from the government articulated
through policy interventions through directives or orders. The three main areas of potential
pressure are identified as: affirmative action in pursuance of social justice objectives;
concern for occupational safety and health in a welfare state; and pension regulation for well
being of workers
(2) Human resource management is also a comprehensive function, in that it is
concerned directly or indirectly with every decision that in any way relates, even collaterally to
human resource management, irrespective of the section it emanates from or the level at
which it is made.
(3) Cost effectiveness is a must to attract, induce and mobilize resources for its
policies, draw the attention of main line management to its policies and proposals.
(4) There is a need to spot trends and tailor personnel requirements accordingly
towards perceived direction or end, to make optimum utilization of available human capital.
(5) Human resource management department provides for an integrating
mechanism. It attempts to build and maintain coordination between all operative levels in an
organization. It is indispensable as a clearing house. Its added significance is due to its
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being an auxiliary service which is an indispensable maintenance activity. HR department
aids ‘line’ officials perform their respective allotted tasks, with direct or incidental bearing on
human resource. Policy- making does not proceed piecemeal and organizational functioning
is imparted a coherence that might otherwise be hard to achieve. Human resource manager
is therefore a specialist advisor and performs vital staff function.
(6) HRM is an imperative function for all complex organizations where inter section
interests are inextricably linked. It is action oriented as in it the focus is on action, rather than
record keeping, written procedures or rules. The problems of employees at work are solved
through rational, standard policies.
(7) HRM seeks to maximize employee motivation to make them contribute to their
maximum potential. The same is done through a systematic process of recruitment, selection,
training and development together with worker-friendly policies like fair wage, bonus and
reward system etc.
(8) HRM is people oriented. Peoples’ existence is defined or perceived in two
ways, that is, as individuals working for personal satisfaction and members of a group or
collectivity, contributing towards a common objective. Together they constitute the pillars of
organization or organization wide effort. ‘Organizational equilibrium’ is contingent on
matching or balancing personal need satisfaction (inducements offered) with organizational
goal fulfillment (contributions elicited/negative balance). Right man in the right place at the
right time maximizes benefit of collective endeavour both in the interest of the organization
and the individual employee. HRM is development oriented; it aids institution of employee-
friendly activities like career planning and development which help develop their full potential.
Job enlargement and job rotation practices are facilitated; employees are assigned a variety
of tasks, which helps them to gain maturity, experience and exposure.
(9) Tangible quantifiable benefits result to the organization as also externalities,
intangibles or unquantifiable gains (improved organizational culture, management-worker
relations, etc.) which optimize organizational performance. Enhanced productivity is then
used to reward employees monetarily and motivate them further towards better and improved
performance.
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(10) HRM is continuous activity, consistent function and not a short-term measure.
It requires constant alertness and awareness of human relations on the part of managers to
maintain healthy organizational climate. Sustenance of ‘organizational rationality’ (with
respect to decision making) and securing ‘organizational effectiveness’ are other pressing
concerns. Organizational survival is the prime concern. Concerns of efficiency arise only later.
Organizations face the challenge or imperative of arriving at an L.C.M. (least common
denominator) of opposing pulls or conflicting interests within as well outside to ensure and
secure compliance with exogenous directives and compatibility between internal (in-house)
and external (laws, guidelines, implementation regulations) policies. External pressures need
to be adapted to or co-opted for the sake of ‘relevance’ and ‘efficiency’ of organizational
functioning.

According to Sree Rama Rao (2010)21, HRM is process of bringing people and
organizations together so that the goals of each are met. It tries to secure the best from
people by winning their whole hearted cooperation. In short, it may be defined as the art of
procuring developing and maintaining competent workforce to achieve the goals of an
organization in an effective and efficient manner. The nature of human resource management
is as the following features:
(1) Pervasive force: HRM in pervasive in nature. It is present in all enterprises. It
permeates all levels of management in organizations
(2) Action oriented: HRM focuses attention on action, rather than on record
keeping written procedures or rules. The problems of employees at work solved through
rational policies.
(3) Individually oriented: It tries to help employees develop their potential fully. It
encourages them to give their best to the organizations. It motivates employees through a
systematic process of recruitment, selection, training and development coupled with fair
wage policies.
(4) People oriented: HRM is all about people at work both as individuals and
groups. It tries to put people on assigned jobs in order to produce good results. The resultant
gains are used to reward people and motivate them toward further improvements in
productivity.
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(5) Future oriented: Effective HRM helps an organization meet its goals in the
future by providing for competent and well motivated employees.
(6) Development oriented: HRM intends to develop the full potential of employees.
The reward structure is tuned to the needs of employees. Training is offered to sharpen and
improve their skills. Employees are rotated on various jobs so that they gain experience and
exposure. Every attempt is made to use their talents fully in the service of organizational.
(7) Integrating mechanism: HRM tries to build and maintain cardinal relations
between people working at various levels in the organization. In short it tries to integrate
human assets in the best possible manner the service of an organization.
(8) Comprehensive functions: HRM is to some extent concerned with any
organizational decision which has an impact on the workforce or the potential workforce. The
term workforce signifies people working at various levels, including workers, supervisors,
middle and top managers. It is concerned with managing people at work. It covers all types
of personnel. Personnel work may take different shapes an forms at each level in the
organizational hierarchy but the basic objective of achieving organizational effectiveness
through effective ad efficient utilization of human resources remains the same. It is basically a
method of developing potentialities of employees so that they get maximum satisfaction out of
their work and give their best efforts to the organizations
(9) Auxiliary service: HR departments exist to assist an advice the line or
operating managers to do their personnel work more effectively. HR manager is a specified
advisor. It is staff function.
(10) Inter disciplinary function: HRM is a multi disciplinary activity, utilizing
knowledge and inputs drawn from psychology, sociology, economics etc. To unravel the
mystery surrounding the human brain managers, need to understand and appreciate the
contributions of all such soft disciplines.
(11) Continuous functions: According to Terry, HRM is not a one shot deal. It
cannot be practiced only one hour each day or one day a week. It requires a constant
alertness and awareness of human relations and their importance in every day operations.
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Fadel, Khaled (2012)22 stated the nature of human resource management as
follow:
• It is pervasive in nature as it is present in all enterprises.
• Its focus is on results rather than on rules.
• It tries to help employees develop their potential fully.
• It encourages employees to give their best to the organization.
• It is all about people at work, both as individuals and groups.
• It tries to put people on assigned jobs in order to produce good results.
• It helps an organization meet its goals in the future by providing for
competent and well-motivated employees.
• It tries to build and maintain cordial relations between people working at
various levels in the organization.
• It is a multidisciplinary activity, utilizing knowledge and inputs drawn from
psychology, economics, etc.
1.5 OBJECTIVES OF HUMAN RESOURCE MANAGEMENT
The objectives of human resource management, in an organization, is to obtain
maximum individual development, desirable working relationships between employers and
employees and employees and employees, and to affect the moulding of human resources
as contrasted with physical resources. The basic objective of human resource management
is to contribute to the realization of the organizational goals. However, Scott, Clothier and
Spriegel (1961)23 stated the specific objectives of human resource management as follows :
(1) To ensure effective utilization of human resources, all other organizational
resources will be efficiently utilized by the human resources.
(2) To establish and maintain an adequate organizational structure of relationship
among all the members of an organization by dividing of organization tasks into functions,
positions and jobs, and by defining clearly the responsibility, accountability, authority for
each job and its relation with other jobs in the organization.
(3) To generate maximum development of human resources within the
organization by offering opportunities for advancement to employees through training and
education.
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(4) To ensure respect for human beings by providing various services and
welfare facilities to the personnel.
(5) To ensure reconciliation of individual/group goals with those of the
organization in such a manner that the personnel feel a sense of commitment and loyalty
towards it.
(6) To identify and satisfy the needs of individuals by offering various monetary
and non-monetary rewards.

Based on Armstrong, M. (1991)24, the objectives of human resource management

are as follow:
(1) To help the organization reach its goals.
(2) To ensure effective utilization and maximum development of human resources.
(3) To ensure respect for human beings.
(4) To identify and satisfy the needs of individuals.
(5) To ensure reconciliation of individual goals with those of the organization.
(6) To achieve and maintain high morale among employees.
(7) To provide the organization with well-trained and well-motivated employees.
(8) To increase to the fullest the employee’s job satisfaction and self-actualization.
(9) To develop and maintain a quality of work life.
(10) To be ethically and socially responsive to the needs of society.
(11) To develop overall personality of each employee in multidimensional aspect.
(12) To enhance employee’s capabilities to perform the present job.
(13) To equip the employees with precision and clarity in transaction of business.
(14) To inculcate the sense of team spirit, team work and inter-team collaboration

Objectives of Human Resource Management can be classified under four major

categories: (international Namaa Association Research & Development, 2012)25.
(1) Societal objective
The societal objectives are socially and ethically accountable for the
requirements and difficulties of society. HRM may contribute ethically and socially regarding
the needs and challenges emerging in the society. If an organization fails to use its resources
for society benefits in ethical ways it may lead to restriction by society.
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(2) Organizational objective
The main objective of HRM is to achieve organizational goals by bringing
organizations effectiveness. It is a means to the end of increasing organizational capability. It
assists the organization in attaining its primary objectives. Simply stated, the organizational
objective is at the forefront of organizational strategy, coordinating and harmonizing
organization wide efforts and stressing on the role of human resource management in
contributing towards organizational effectiveness.
Human resource management is not an end in itself.
(3) Functional objective
Functional objective of HRM deals with contributions of each department
regarding their need and effectiveness in order to attain organization goal. Functional
objectives attempt to maintain the department’s contribution at a level suitable for the
organization’s requirements. Human resources need to be adjusted to match the
organization’s demands.
(4) Personal objective
HRM also deals with personal objectives of the individuals so that personal
and organizational objectives can be met or order to achieve maximum production and attain
competitive advantage. Personal objectives help workers in attaining their personal goals, at
least insofar since these objectives boost the individual’s contribution to the organization.
Personal objectives of workers should be met if they’re to be maintained, retained and
motivated. These personal objectives are important in order to maintain, retain and to
motivate employees. If HRM has not done, employee’s dissatisfaction and poor performance
will result in attrition or low productivity.
In summary, it can be said that the basically the objectives of human resource
management are drawn from and to contribute to the accomplishment of the organizational
objectives. The objectives of human resource management 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 may be as
follows:
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(1) To create, utilize 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 programs.
(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.

From the above mentioned about objectives of human resource management, it

can be seen that the main objectives of HRM are to retain low employee turnover rate by
inspiring people to work for the company and to contribute to employee development.
To achieve these goals, human resources management trains and motivates the employees
by communicating ethical policies and socially responsible behaviour to them. In doing so, it
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plays a significant role in clarifying the organization's problems and providing solutions, while
making employees working more efficiently (Christina Pomoni, 2009)26.

On the other hand, challenges do not cease for the HRM. Modern organizations
can survive in the dynamic, competitive environment of today only if they capitalize on the full
potential of each employee. Unfortunately, many companies have not understood the
importance of the human capital in successful operations. The recruitment and selection of
the best employees is a very difficult obligation. Even companies that are voted in the top-ten
places to work at, often endure long periods of hard work to realize that human element is all
an organization should care about.

New challenges arise even now for the organization, and it is certain that new
challenges will never cease to emerge. Therefore, the use of proper human resources
techniques is a really powerful way for organizations to overcome these challenges, and to
improve not only their quantitative goals but also their organizational culture, and their
qualitative, cognitive aspects.

The main purpose of human resource management is to accomplish the

organizational goals. Therefore, the resources are mobilized to achieve such goals. Some
objectives of human resource management are as follows: (AMEA, 2012)27
(1) Effective utilization of resources: Human resource management ensures the
effective utilization of resources. HRM teaches how to utilize human and non-human
resources so that the goals can be achieved.
(2) Organizational structure: Organizational structure defines the working
relationship between employees and management. It defines and assigns the task for each
employee working in the organization. The task is to be performed within the given
constraints. It also defines positions, rights and duties, accountability and responsibility, and
other working relationships. The human resource management system provides required
information too timely and accurately. Hence, human resource management helps to maintain
organizational structure.
(3) Development of human resources: Human resource management provides
favourable environment for employees so that people working in organization can work
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creatively. This ultimately helps them to develop their creative knowledge, ability and skill. To
develop personality of employees, human resource management organizes training and
development campaigns which provide an opportunity for employees to enhance their caliber
to work.
(4) Respect for human beings: Another importance of human resource
management is to provide a respectful environment for each employee. Human resource
management provides with required means and facilitates employee along with an
appropriate respect because the dominating tendency develops that will result organizational
crisis. Hence, all of them should get proper respect at work. Human resource management
focuses on developing good working relationships among workers and managers in
organization. So, good human resource management system helps for respecting the
employees.
(5) Goal harmony: Human resource management bridges the gap between
individual goal and organizational goal-thereby resulting into a good harmony. If goal
difference occurs, the employees will not be willing to perform well. Hence, a proper match
between individual goal and organizational goal should be there in order to utilize
organizational resources effectively and efficiently.
(6) Employee satisfaction: Human resource management provides a series of
facilities and opportunities to employees for their career development. This leads to job
satisfaction and commitment. When the employees are provided with every kind of facilities
and opportunities, they will be satisfied with their work performance.
(7) Employee discipline and moral: Human resource management tries to
promote employee discipline and moral through performance based incentives. It creates a
healthy and friendly working environment through appropriate work design and assignment of
jobs.
(8) Organizational productivity: Human resource management focuses on
achieving higher production and most effective utilization of available resources. This leads to
an enhancement in organizational goals and objectives.
 20
1.6 FUNCTIONS OF HUMAN RESOURCE MANAGEMENT
The main functions of human resource management are classified into two
categories: (a) Managerial Functions and (b) Operative Functions.
(1) Managerial Functions: Following are the managerial functions of Human
Resources Management.
(a) Planning : The planning function of human resource department pertains to
the steps taken in determining in advance personnel requirements, personnel programmes,
policies etc. After determining how many and what type of people are required, a personnel
manager has to devise ways and means to motivate them.
(b) Organization : Under organization, the human resource manager has to
organize the operative functions by designing structure of relationship among jobs, personnel
and physical factors in such a way so as to have maximum contribution towards
organizational objectives.
In this way a personnel manager performs following functions : (i) preparation of
task force; (ii) allocation of work to individuals; (iii) integration of the efforts of the task force;
(d) coordination of work of individual with that of the department.
(c) Directing : Directing is concerned with initiation of organized action and
stimulating the people to work. The personnel manager directs the activities of people of the
organization to get its function performed properly. A personnel manager guides and
motivates the staff of the organization to follow the path laid down in advance.
(d) Controlling : It provides basic data for establishing standards, makes job
analysis and performance appraisal, etc. All these techniques assist in effective control of the
qualities, time and efforts of workers.

(2) Operative Functions : The following are the Operative Functions of Human
Resource Management.
(a) Procurement of Personnel : It is concerned with the obtaining of the proper
kind and number of personnel necessary to accomplish organization goals. It deals
specifically with such subjects as the determination of manpower requirements, their
recruitment, selecting, placement and orientation, etc.
 21
(b) Development of Personnel : Development has to do with the increase through
training, skill that is necessary for proper job performance. In this process various techniques
of training are used to develop the employees. Framing a sound promotion policy,
determination of the basis of promotion and making performance appraisal are the elements
of personnel development function.
(c) Compensation to Personnel : Compensation means determination of
adequate and equitable remuneration of personnel for their contribution to organization
objectives. To determine the monetary compensation for various jobs is one of the most
difficult and important function of the personnel management. A number of decisions are
taken into the function, viz., job-evaluation, remuneration, policy, inventive and premium plans,
bonus policy and co-partnership, etc. It also assists the organization for adopting the suitable
wages and salaries, policy and payment of wages and salaries in right time.
(d) Maintaining Good Industrial Relation : Human Resource Management covers
a wide field. It is intended to promote industrial peace, provide fair deal to workers and
establish industrial democracy. It the personnel manager is unable to make harmonious
relations between management and labour industrial unrest will take place and millions of
man-days will be lost. If labour management relations are not good the moral and physical
condition of the employee will suffer. Hence, the personnel manager must create harmonious
relations with the help of sufficient communication system and co-partnership.
(e) Record Keeping : In record-keeping the personnel manager collects and
maintains information concerned with the staff of the organization. It is essential for every
organization because it assists the management in decision making such as in promotions.
(f) Personnel Planning and Evaluation : Under this system different type of
activities are evaluated such as evaluation of performance, personnel policy of an
organization and its practices, personnel audit, morale, survey and performance appraisal,
etc.
 22
Ruth Mayhew. (2012)28 suggested six essential functions of human resource
management for an efficiently run of human resources department. It can provide the
organization with structure and the ability to meet business needs through managing
company's most valuable resources.
(1) Recruitment
The success of recruiters and employment specialists generally is measured
by the number of positions they fill and the time it takes to fill those positions. They advertise
job postings, source candidates, screen applicants, conduct preliminary interviews and
coordinate hiring efforts with managers responsible for making the final selection of
candidates.
(2) Safety
Workplace safety is an important factor. Employers have an obligation to
provide a safe working environment for employees. One of the main functions of HR is to
support workplace safety training and maintain federally mandated logs for workplace injury
and fatality reporting. In addition, HR safety and risk specialists often work closely with HR
benefits specialists to manage the company's workers compensation issues.
(3) Employee Relations
In a unionized work environment, the employee relations functions of HR may
be combined and handled by one specialist or be entirely separate functions managed by
two HR specialists with specific expertise in each area. Employee relations are the HR
discipline concerned with strengthening the employer-employee relationship through
measuring job satisfaction, employee engagement and resolving workplace conflict.
Employee relations functions may include developing management response to union
organizing campaigns, negotiating collective bargaining agreements and rendering
interpretations of labor union contract issues.
(4) Compensation and Benefits
Like employee relations, the compensation and benefits functions of HR often
can be handled by one HR specialist with dual expertise. On the compensation side, the HR
functions include setting compensation structures and evaluating competitive pay practices.
A comp and benefits specialist also may negotiate group health coverage rates with insurers
and coordinate activities with the retirement savings fund administrator. Payroll can be a
 23
component of the compensation and benefits section of HR; however, in many cases,
employers outsource such administrative functions as payroll.
(5) Compliance
Compliance with labor and employment laws is a critical HR function.
Noncompliance can result in workplace complaints based on unfair employment practices,
unsafe working conditions and general dissatisfaction with working conditions that can affect
productivity and ultimately, profitability.
(6) Training and Development
Employers must provide employees with the tools necessary for their success
which, in many cases, means giving new employees extensive orientation training to help
them transition into a new organizational culture. Many HR departments also provide
leadership training and professional development. Leadership training may be required of
newly hired and promoted supervisors and managers on topics such as performance
management and how to handle employee relations matters at the department level.
Professional development opportunities are for employees looking for promotional
opportunities or employees who want to achieve personal goals such as finishing a college
degree. Programmes such as tuition assistance and tuition reimbursement programs often
are within the purview of the HR training and development area.

1.7 SCOPE OF HUMAN RESOURCE MANAGEMENT

The scope of human resource management refers to all the activities that come
under the banner of Human Resource Management. Human resources are undoubtedly the
key resources in an organization, the easiest and the most difficult to manage. The objectives
of the HRM span right from the manpower needs assessment to management and retention
of the same. To this effect human resource management is responsible for effective
designing and implementation of various policies, procedures and programmes. It is all about
developing and managing knowledge, skills, creativity, aptitude and talent and using them
optimally (Management Study Guide, 2012)29.

Human resource management is not just limited to manage and optimally exploit
human intellect. It also focuses on managing physical and emotional capital of employees.
Considering the intricacies involved, the scope of HRM is widening with every passing day. It
 24
covers but is not limited to HR planning, hiring (recruitment and selection), training and
development, payroll management, rewards and recognitions, Industrial relations, grievance
handling, legal procedures etc. In other words, it can be said that it’s about developing and
managing harmonious relationships at workplace and striking a balance between
organizational goals and individual goals.

The scope of HRM can be classified into the following categories.

(1) HRM in Personnel Management: This is typically direct manpower
management that involves manpower planning, hiring (recruitment and selection), training
and development, induction and orientation, transfer, promotion, motivation, compensation,
layoff and retrenchment, employee productivity. The overall objective here is to ascertain
individual growth, development and effectiveness which indirectly contribute to organizational
development. It also includes performance appraisal, developing new skills, disbursement of
wages, incentives, allowances, traveling policies and procedures and other related courses
of actions.

(2) HRM in Employee Welfare: This particular aspect of HRM deals with working
conditions and amenities at workplace. This includes a wide array of responsibilities and
services such as safety services, health services, welfare funds, social security and medical
services. It also covers appointment of safety officers, making the environment worth working,
eliminating workplace hazards, support by top management, job safety, safeguarding
machinery, cleanliness, proper ventilation and lighting, sanitation, medical care, sickness
benefits, employment injury benefits, personal injury benefits, maternity benefits,
unemployment benefits and family benefits. It also relates to supervision, employee
counseling, establishing harmonious relationships with employees, education and training.
Employee welfare is about determining employees’ real needs and fulfilling them with active
participation of both management and employees. In addition to this, it also takes care of
canteen facilities, crèches, rest and lunch rooms, housing, transport, medical assistance,
education, health and safety, recreation facilities, etc.

(3) HRM in Industrial Relations: Since it is a highly sensitive area, it needs careful
interactions with labour or employee unions, addressing their grievances and settling the
 25
disputes effectively in order to maintain peace and harmony in the organization. It is the art
and science of understanding the employment (union-management) relations, joint
consultation, disciplinary procedures, solving problems with mutual efforts, understanding
human behaviour and maintaining work relations, collective bargaining and settlement of
disputes. The main aim is to safeguarding the interest of employees by securing the highest
level of understanding to the extent that does not leave a negative impact on organization. It
is about establishing, growing and promoting industrial democracy to safeguard the interests
of both employees and management.

The National Institute of Personnel Management (2012) 30 encapsulates the scope

of HRM in the following three aspects: -
(1) Personnel aspect: concerned with manpower planning, recruitment, selection,
placement, transfer, promotion, motivation, training and development, lay off and
retrenchment, remuneration, incentives, productivity, etc.;
(2) Welfare aspect; dealing with working conditions and provision of amenities
such as canteens, crèches, rest and lunch rooms, housing, transport, medical assistance,
education, health, safety, recreation facilities, etc.; and
(3) Industrial Relations aspect: the legal part which covers union-management
relations, joint consultation, collective bargaining, grievance redress and disciplinary
procedures, settlement of disputes, etc.

The scope of HRM is extremely wide. However, based on the books on HRM for
the sake of convenience and developing understanding, it can be divided into categories
mentioned as follow:
(1) Human resources planning : This refers to a process by which the company to
identify the number of jobs vacant, whether the company has excess staff or shortage of staff
and to deal with this excess or shortage.
(2) Job analysis design :- Another important area of Human Resource
Management is job analysis. Job analysis gives a detailed explanation about each and every
job in the company.
 26
(3) Recruitment and selection :- Based on information collected from job analysis
the company prepares advertisements and publishes them in the newspapers. This is
recruitment. A number of applications are received after the advertisement is published,
interviews are conducted and the right employee is selected thus recruitment and selection
are yet another important area of Human Resource Management.
(4) Orientation and induction :- Once the employees have been selected an
induction or orientation program is conducted. This is another important area of Human
Resource Management. The employees are informed about the background of the company,
explain about the organizational culture and values and work ethics and introduce to the
other employees.
(5) Training and development :- Every employee goes under training program
which helps him to put up a better performance on the job. Training program is also
conducted for existing staff that have a lot of experience. This is called refresher training.
Training and development is one area where the company spends a huge amount.
(6) Performance appraisal :- Once the employee has put in around 1 year of
service, performance appraisal is conducted that is the Human Resource department checks
the performance of the employee. Based on these appraisal future promotions, incentives,
increments in salary are decided.
(7) Compensation planning and remuneration :- There are various rules regarding
compensation and other benefits. It is the job of the Human Resource department to look into
remuneration and compensation planning.
(8) Motivation, welfare, health and safety :- Motivation becomes important to
sustain the number of employees in the company. It is the job of the Human Resource
department to look into the different methods of motivation. Apart from this certain health and
safety regulations have to be followed for the benefits of the employees. This is also handled
by the HR department.
(9) Industrial relations :- Another important area of Human Resource Management
is maintaining co-ordinal relations with the union members. This will help the organization to
prevent strikes lockouts and ensure smooth working in the company.
 27
In conclusion, it can be categorized the scope of HRM as follow:
(1) Personnel aspect: This is concerned with manpower planning, recruitment,
selection, placement, transfer promotion, motivation, training ad development lay off and
retrenchment remuneration incentives productivity etc.
(2) Welfare aspect: It deals with working conditions and amenities such as
canteens, crèches rest and lunch room housing transport medical assistance education ,
healthy and safety recreation facilities etc.
(3) Industrial relations aspects: This covers union management relations joint
consultation collective bargaining grievances and disciplinary procedures settlement of
disputes etc.

1.8 IMPORTANCE OF HUMAN RESOURCE MANAGEMENT

Human Resource Management has a place of great importance. According to
Peter F. Drucker (1973)31, the proper or improper use of the different factors of production
depend on the wishes of the human resources. Hence, besides other resources human
resources need more development. Human resources can increase cooperation but it needs
proper and efficient management to guide it. Importance of personnel management is in
reality the importance of employee functions of personnel department which are
indispensable to the management activity itself. Because of the following reasons human
resource management holds a place of importance.
(1) It helps management in the preparation adoption and continuing evolution of
personnel programmes and policies.
(2) It supplies skilled workers through scientific selection process.
(3) It ensures maximum benefit out of the expenditure on training and
development and appreciates the human assets.
(4) It prepares workers according to the changing needs of industry and
environment.
(5) It motivates workers and upgrades them so as to enable them to accomplish
the organization goals.
(6) Through innovation and experimentation in the fields of personnel, it helps in
reducing casts and helps in increasing productivity.
 28
(7) It contributes a lot in restoring the industrial harmony and healthy employer-
employee relations.
(8) It establishes mechanism for the administration of personnel services that are
delegated to the personnel department.
Thus, the role of human resource management is very important in an
organization and it should not be undermined especially in large scale enterprises. It is the
key to the whole organization and related to all other activities of the management i.e.,
marketing, production, finance etc. Human Resource Management is concerned with the
managing people as organizational resources rather than as factors of production. It involves
a system to be followed in business firm to recruit, select, hire, train and develop human
assets. It is concerned with the people dimension of an organization. The attainment of
organizational objectives depends, to a great extent, on the way in which people are
recruited, developed and utilized by the management. Therefore, proper co-ordination of
human efforts and effective utilization of human and others material resources is necessary.

In the argument of Akio Morita (2012)32, human resource management becomes

significant for business organization due to the following reasons.
(1) Objective : Human resource management helps a company to achieve its
objective from time to time by creating a positive attitude among workers, reducing wastage
and making maximum use of resources etc.
(2) Facilitates professional growth : Due to proper human resource policies
employees are trained well and this makes them ready for future promotions. Their talent can
be utilized not only in the company in which they are currently working but also in other
companies which the employees may join in the future.
(3) Better relations between union and management : Healthy human resource
management practices can help the organization to maintain co-ordinal relationship with the
unions. Union members start realizing that the company is also interested in the workers and
will not go against them therefore chances of going on strike are greatly reduced.
(4) Helps an individual to work in a team/group : Effective human resource
practices teach individuals team work and adjustment. The individuals are now very
comfortable while working in team thus team work improves.
 29
(5) Identifies person for the future : Since employees are constantly trained, they
are ready to meet the job requirements. The company is also able to identify potential
employees who can be promoted in the future for the top level jobs. Thus one of the
advantages of HRM is preparing people for the future.
(6) Allocating the jobs to the right person : If proper recruitment and selection
methods are followed, the company will be able to select the right people for the right job.
When this happens the number of people leaving the job will reduce as the will be satisfied
with their job leading to decrease in labour turnover.

Based on the above discussion, it can be concluded that human resource

management is important to organizations in 10 specific areas, ranging from strategic
planning to company image (Ruth Mayhew, 2012)33
(1) Strategy: HR improves the company's bottom line with its knowledge of how
human capital affects organizational success. Leaders with expertise in HR strategic
management participate in corporate decision-making that underlies current staffing
assessments and projections for future workforce needs based on business demand.
(2) Compensation: HR compensation specialists develop realistic compensation
structures that set company wages competitive with other businesses in the area, in the same
industry or companies competing for employees with similar skills. They conduct extensive
wage and salary surveys to maintain compensation costs in line with the organization's
current financial status and projected revenue.
(3) Benefits: Benefits specialists can reduce the company’s costs associated with
turnover, attrition and hiring replacement workers. They are important to the organization
because they have the skills and expertise necessary to negotiate group benefit packages
for employees, within the organization's budget and consistent with economic conditions.
They also are familiar with employee benefits most likely to attract and retain workers. This
can reduce the company’s costs associated with turnover, attrition and hiring replacement
workers
(4) Safety: Employers have an obligation to provide safe working conditions.
Workplace safety and risk management specialists from the HR area manage compliance
with Occupational Safety and Health Administration regulations through maintaining accurate
 30
work logs and records, and developing programs that reduce the number of workplace
injuries and fatalities. Workplace safety specialists also engage employees in promoting
awareness and safe handling of dangerous equipment and hazardous chemicals.
(5) Liability: HR employee relations specialists minimize the organization's
exposure and liability related to allegations of unfair employment practices. They identify,
investigate and resolve workplace issues that, left unattended, could spiral out of control and
embroil the organization in legal matters pertaining to federal and state anti-discrimination
and harassment laws.
(6) Training and development: HR training and development specialists
coordinate new employee orientation, an essential step in forging a strong employer-
employee relationship. The training and development area of HR also provides training that
supports the company's fair employment practices and employee development to prepare
aspiring leaders for supervisory and management roles.
Training and development encourages the people working in an organization, to
work according to their potential and gives them training that can help them to bring about
improvement in it. The team communicates with the staff individually from time to time and
provides all the necessary information regarding their performances and also defines their
respective roles. This is beneficial as it enables them to form an outline of their anticipated
goals in much clearer terms and thereby, helps them execute the goals with best possible
efforts.
(7) Employee satisfaction: Employee relations specialists in HR help the
organization achieve high performance, morale and satisfaction levels throughout the
workforce, by creating ways to strengthen the employer-employee relationship. They
administer employee opinion surveys, conduct focus groups and seek employee input
regarding job satisfaction and ways the employer can sustain good working relationships.
Employee satisfaction is a vital aspect of HRM because the performance of an
individual in an organization is largely driven by the work atmosphere or work culture that
prevails at the workplace. A good working condition is one of the benefits that the employees
can expect from an efficient human resource team. A safe, clean and healthy environment
 31
can bring out the best in an employee. A friendly atmosphere gives the staff members job
satisfaction as well.
(8) Recruitment: HR recruiters manage the employment process from screening
resumes to scheduling interviews to processing new employees. Typically, they determine
the most effective methods for recruiting applicants, including assessing which applicant
tracking systems are best suited for the organization's needs.
Recruitment is one of the major responsibilities of the human resource team. The
HR managers come up with plans and strategies for hiring the right kind of people. They
design the criteria which is best suited for a specific job description. Their other tasks related
to recruitment include formulating the obligations of an employee and the scope of tasks
assigned to him or her. Based on these two factors, the contract of an employee with the
company is prepared. When needed, they also provide training to the employees according
to the requirements of the organization. Thus, the staff members get the opportunity to
sharpen their existing skills or develop specialized skills which in turn, will help them to take
up some new roles.
(9) Selection: HR professionals work closely with hiring managers to effect good
hiring decisions, according to the organization's workforce needs. They provide guidance to
managers who aren't familiar with HR or standard hiring processes to ensure that the
company extends offers to suitable candidates.
(10) Compliance: HR workers ensure that the organization complies with federal
state employment laws. They complete paperwork necessary for documenting that the
company's employees are eligible to work in the organization or companies. They also
monitor compliance with applicable laws for organizations that receive federal or state
government contracts, through maintaining applicant flow logs, written affirmative action
plans and disparate impact analyses.
One can say that any organization, without a proper setup for HRM is bound to
suffer from serious problems while managing its regular activities. For this reason, today,
organizations/companies must put a lot of effort and energy into setting up a strong and
effective HRM.
 32
1.9 HUMAN RESOURCE MANAGEMENT ACTIVITIES
Human resource management is the most important asset for any organization. It
is one of the key elements of employees’ job satisfaction. It enhances the job skills which
motivate the employees and lead towards job satisfaction. Managing human resources is
very challenging as compared to managing technology or capital and for its effective
management, organization requires effective human resource management system. HRM
system should be backed up by sound HRM activities. HRM activities refer to organizational
activities directed at managing the pool of human resource and ensuring that the resources
are employed towards the fulfillment of organizational goals (Pankaj Tiwari & Karunesh
Saxena, 2012)34.

In order to achieve the above objectives, human resource management

undertakes the following activities : (Scott, Clothier, Spriegel, 1961)35.
(i) Human Resource Planning, i.e., determining the number and kinds of
personnel required to fill various positions in the organization.
(ii) Recruitment, selection and placement of personnel, i.e., employment function.
(iii) Training and development of employees for their efficient performance and
growth.
(iv) Appraisal of performance of employees and taking corrective steps such as
transfer from one job to another.
(v) Motivation of workforce by providing financial incentives and avenues of
promotion.
(vi) Remuneration of employees. The employees must be given sufficient wages
and fringe benefits to achieve higher standard of living and to motivate them to show higher
productivity.
(vii) Social security and welfare of employees.

Human Resource Management (HRM) function includes a variety of activities. The

first activity of HRM that comes into usage in a company is staffing, which comprise of the
strategic human resource planning, recruiting and selection. The importance of these tasks is
unquestionable, because success of an organization is built on its employees, their skills,
knowledge and willingness to put in high effort into the workload. The second substantial
 33
activity of HRM is training and development. Nowadays, most job positions require training,
because the existing skills and habits of new employees have to be in accordance with the
organization’s demands. Motivation is the third activity of HRM. There are several ways to
enhance employees’ motivation.

1.10 ROLE OF MOTIVATION IN HUMAN RESOURCE MANAGEMENT

Motivation is an important tool that is often under-utilized by employers in
today's workplace. Employers use motivation in the workplace to inspire employees to work,
both individually and in groups, to produce the best results for business in the most efficient
and effective manner. It was once assumed that motivation had to be generated from the
outside, but it is now understood that each individual has his own set of motivating forces. It
is the duty of the employer to carefully identify and address these motivating forces.
Therefore, the goal of every manager is to increase production and efficiency to reach
maximum results for the organization. Providing a positive motivational work environment is a
challenging managerial activity which employers must understand employees and their
professional needs.

Motivation is an important aspect of HRM. HRM is a vital aspect in functioning of

every organization. When a person is motivated to do an activity, they surely put in more effort
into the task. This is very important for an organization, because they need personnel
Who do their best and whose motivation is to reach goals that are in accordance with
those of their organization. It can be said that motivation is the only element that determines
employees’ effectiveness, but it surely plays a significant role.

There are two types of people. People who are self-motivated, which means
they do not need any outside impulses to perform an activity. Then there is the second
group of employees, which are much more common. These people perform tasks,
because there are outside incentives that motivate them. When identifying job performance,
there are mentioned two or three important factors – motivation (willingness to make an effort),
ability and sometimes work environment.
 34
When employee motivation is not satisfactory, there are ways the manager can
use to increase he employees’ performance. The things that have the power to enhance
motivation are called incentives (Pauknerová et al., 2006)36. Companies have various
possibilities how they can evoke motivation in the employees. It should be pointed out that
incentives are effective only when they are in accordance with the employees’ needs. When a
person’s main wish is to be recognized by others, money is not as a powerful incentive as a
public praise or promotion. For incentives to be a powerful motivator, they have to be in
agreement with the individual’s desires. It is generally known that the more advanced the
company, the greater the versatility of incentives used (Pauknerová et al., 2006)37. An
organization can choose between tangible financial and tangible non-financial reward
(incentives) and intangible reward.

Tangible Reward
There are two types of Tangible reward, or in other words, monetary reward –
financial and non-financial. Financial reward is given to employees for time spent on the job,
according to the position they are at, the amount of responsibility, performance and other
criteria. Stephen P. Robbins and David A. DeCenzo (2000)38 argue that financial incentives
are the most motivating if they are related to a performance and they are not the only theorists
who claim this. An employee should be able to see a clear linkage between the effort they
put into the task and the reward received. Non-financial rewards are designed to enrich the
employees’ lives. Among them it can name company cars, laptops, sport or cultural
allowances, life and disability insurance and others.

Even though money is a very useful incentive tool in improving employee

motivation, it does not work for everyone. Gizela Hagemannová (1995)39 and many other
theorists claim that tangible incentives work until an employee experience lack of money for
their standard of living. Therefore one can assume that money would be very good motivator
for ordinary workers, but would not be as powerful motivator for managers, who generally
earn enough money to cover their needs and therefore search for other specific features
company can offer them. For this purposes organizations have to look for different incentives,
which would give managers the feeling that they are valued by their organization. These are
referred to as intangible rewards.
 35
Intangible Reward
Most employees honor when their work effort is recognized by their employers,
therefore organizations should devote more time to express appreciation to their staff.
However, money is not the only way to do this. There are incentives that lack a material
factor, but still have a great power to motivate. A public praise, a promotion and a positive
evaluation are just some examples of intangible rewards. It is widely discussed which type of
incentive is the most powerful. However, one should state again that every employee has
different values and therefore what stimulates one employee does not have to have the same
effect on the other. Although there are countless ways to stimulate employees’ motivation, it is
the task of the HR manager to find the most effective one.

There are numerous motivation theories that human resource managers use in
order to encourage high work performance. The first chapter discussed about human
resource management, the third chapter will give details discussion about employee’s
motivation.


 36
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 37
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Relations. Vol.31 (2), PP: 201-210.
20. Ibid.
21. Sree Rama Rao. (2010). Nature of HRM. Cite Management Article Repository.
htt://www.citeman.com
22. Fadel, Khaled. (2012). Human Resource Management, Nature, Scope, Objectives and
Function.
htt://www.hr.com
23. Scott, WD., Clothier, R.C., & Spriegel, W.R. (1961). Personnel Management. New York:
McGraw-Hill.
24. Armstrong, M. (1991) ‘Human Resource Management: A Case of the Emperor’s New
Clothes?’, Personnel Management. Vol. 19 (8), PP: 30-35.
25. International Namaa Association Research & Development. (2012). HRM Objectives.
htt://www.namaacenter.com
26. Christina Pomoni. (2009) The Importance of Human Resources Management (HRM) in
Modern Organizations
http://www. yahoo.com
27. Account Management Economic Association (AMEA). (2012). Objectives and Importance
of Human Resource Management.
http://www. blogspot.com
28. Ruth Mayhew. (2012). Six Main Functions of a Human Resource Department.
htt://www.chron.com
29. Management Study Guide. (2012). Scope of HRM.
htt://www.managementstudyguide.com
30. National Institute of Personnel Management. (2012). Scope of HRM.
htt://www.nipm.in
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31. Drucker, Peter F. (1973) Management Task, Responsibility, and Practices. New York:
Harper & Row.
32. Akio Morita. (2012). Significance of Human Resource Management.
http://www. whatishumanresources.com
33. Ruth Mayhew. (2012). 10 Reasons HR is important to an Organization.
http://www. chron.com
34. Pankaj Tiwari & Karunesh Saxena. (2012). “Human Resource Management Practices:
A Comprehensive Review” Pakistan Business Review. January.
35. Walter Dill Scott, Robert Clarkson Clothier, William Robert Spriegel. (1961). Personal
Management: Principle, Practices and Point of View. Michigan : McGraw-Hill.
36. Pauknerová, Daniela. (2006). Psychologies. Praha : Grada Publishing.
37. Ibid.
38. Stephen P. Robbins and David A. DeCenzo. (2000). Human Resource Management :
Concepts and Applications. (6th ed.) New York: Van Hoffman Press.
39. Hagemannová Gizela. (1995). Motivation. Praha : Victoria Publishing.

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