Human Resource Management

Lecture 1
 HRM
• Who are managers and where do they work
• Who are non-managers and what they do
• What is Organization

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Organization . It's a deliberate arrangement of people to
accomplish some specific purpose.

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 Definition of Manager
– Someone who coordinates and oversees the work
of other people so organizational goals can be
accomplished.

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• One who manages all Managers is Human
Resource Manager or Personnel Manager
• 5 Functions of Management / Management
Process
– Planning
– Organizing
– Staffing
– Leading
– Controlling

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 Functions of Managers
Staffing

• All mangers are HR Managers

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 Definition of HRM
• The process of acquiring, training, appraising,
compensating employees, and of attending to
their labour relations, health and safety, and
fairness concerns.

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Personnel aspects of Management

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Why to Study and Practice HRM by All
Managers
• Avoid Mistakes
– Hire the wrong person for the job
– Experience high turnover
– Have your people not doing their best
– Waste time with useless interviews
– Have your company taken to court because of your
discriminatory actions
– Have your company cited under federal occupational safety
laws for unsafe practices
– Have some employees think their salaries are unfair relative
to others in the organization
– Allow a lack of training to undermine your department's
effectiveness
– Commit any unfair labor practices
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• Improving Performance
– Planning
– Right person for the right Job
– Role of Manager is to get the job done through
other people and that too with efficiency and
effectiveness.
– HR is more important for SMEs/ Entrepreneurs.
 Line and Staff Authority
• Authority means to have powers to make
certain decisions, taking action and issuing
directions.
• Line Authority
• Staff Authority

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 Line Manager’s HR Duties
• Placing right persons for right jobs
• Recruitments and orientation
• Transfer postings
• Promotions
• Training evaluation and recommendations
• Pension, gratuity, GP Fund etc.
• Salary, Remuneration, health and other facilities
• Controlling labour costs
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 HR Manager’s Duties/Functions
• Line Functions
• A coordinative Function/ Functional Authority
• Staff Function

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 Summary
• HRM is function of Management
• HRM is management of structure and
employees
• Every Manager is HR Manager as well
• HR is the most crucial management in any
organization

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 HR Theories
• Organization Life Cycle Theory
– organizational development from formation,
growth, maturity, decline and death
– driving force in all these stages is the nature of
workforce
– organization cannot continue to grow or survive if
there is no organizational structure that supports
human resource creativity, innovation, teamwork
and high performance

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 Role Behaviour Theory
• Explain and predict the behavior of individuals
and teams in organizations, which, in turn, inform
managers for the purposes of decision making
• By improving work environment, stimulate new
Behaviour in employees in order to cope with
new demands
• It includes the use of rewards to induce and
promote positive work behaviour, and
punishments to control negative behaviour
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 Resource Dependency Theory
• In the wake of economic recessions in 1970s
• How organizations can best acquire financial,
technological and human resources
• More the resources, the more is competitiveness
• Scarcity of human resource also refers to the fact
that it should be acquired effectively, utilised,
developed and retained

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 Institutional Theory
• ‘institutions’ is defined as ‘collective action in control,
liberation and expansion of individual action’.
• Collective action and thinking is focused
• Control is about prohibitions of certain acts in such a
way that the control of one person or organization
leads to liberty of the others and hence better gains.
• The major role of institutions in society is to reduce
uncertainty by establishing a stable (not necessarily
efficient) structure to human interaction
• Set an appropriate institutional framework that will
bind and influence the behaviour of employees
towards an organizational commitment to excellence
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 Agency Theory
• Organizations consist of Employers and
employees and bosses and subordinates
• There may be conflicts at any level, which may
be detrimental for the organization.
• Conflict resolution techniques to be adopted
• Litigation to be avoided

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 Transaction cost theory
• Transaction cost theory is based on the economic view
of the costs of conducting business transactions.
• The thesis is that companies will grow if the costs of
exchanging resources in the company are cheaper in
comparison to competitors.
• Such costs include bureaucratic employment
structures, procedures and the enforcement of
employment contracts.
• For that matter employment relationships that may
lead to high costs of exchange, should be minimized.

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 Comparative advantage theory
• David Ricardo (1891) talked of the specialization and
division of labour among nations and firms.
• Ricardo postulated that nations should produce goods in
which they have a domestic comparative advantage over
others.
• Since then, organizations and nations have focused on
strengthening internal capacity in order to have more
advantages relative to competitors and hence to reduce
production and distribution costs per unit.
• Improving internal capacities include having the best
human resources who are best utilized to produce
cheaper and better quality goods and services

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 General systems theory
• No organization can survive without interacting with its
environment.
• Organizations get inputs from the external environment, they
are processed and the outputs are released to the external
environment, which provides feedback to the organization
• Customers give feedback by on quality, price, style and fashion.
• Therefore organizations are seen as systems with components
and parts that are related and interconnected in such a manner
that failure of a component or part leads to the failure of
another
• As a system theory it is required that besides HR, organizations
should have other departments such as accounting,
engineering, marketing etc.
• Interaction among these departments is necessary like a system
to support each other for better synergetic effect
 Human capital theory
• Human capital theory was initially well developed
by Becker (1964)
• It focuses on education and training as a source of
capital.
• It is now widely acknowledged that one of the key
explanations for the rapid development of Asian
countries in the 1970s and 80s is high investment in
human capital
• The gist is that ‘Training and development is not
cost but investment’.
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 Strategic contingency theory
• Takes into account in a complex environment wherein
companies operate.
• Managers must adopt specific strategies which will
maximize gains and minimize risks from the
environment
• In this premise, the theory contends that there is no
one best strategy for managing people in organizations.
• Overall corporate strategy and the feedback from the
environment will dictate the optimal strategies,
policies, objectives, activities and tasks in human
resource management.

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 Organizational change theory
• Organizational change is a process by which
organizations move from their present state to
some desired future state to increase their
effectiveness
• Organizations change in response to many
developments taking place in the internal and
external environment*
• These developments influence different aspects of
human resource management and in response,
organizations have to change the way
organizational structure, job design, recruitment,
utilization, development, reward and retention are
managed.
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 Organizational learning theory
• Globalization has changed knowledge monopoly.
Knowledge generated in one part of the world spreads
faster than a decade ago.
• Today, competitiveness is the ability to learn from emerging
knowledge and adapt the learning to suit the organizational
environment faster than others.
• The importance of total organizational learning has been
emphasized whereby individuals and teams muster
knowledge related to their work and the environment and
share with common vision, models and strategies for
addressing the present and future of the organization.
• Therefore, poor organizational learning leads to poor
organizational adaptation to the environment, less
competitiveness, which leads inevitably to decline and
ultimate collapse.
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Comparison b/w Theories

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 Evolution of HRM
• HRM starts where two or more persons
interact
• Well documented evolution
• Starts from European economies in 19th
Century as industrial activity flourished that
required disciplined labour force.
• Taylor 1911 and Mintsberg and Cuming 1985
• Here starts HRM with four clearly distinct
stages of evolution
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 Employee Welfare Stage
• Starts from industrial growth in the West
• Labour intensive industry and influx of labour
• Unskilled labour, lesser productivity, high
turnover etc
• Need to give attractions for motivation

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 Change from Welfare to Personnel
Administration
• Pressure to improve productivity called for the need
to recruit, select, train, keep records, appraise,
motivate, control, and improve production
• Entry level of employees need careful selection and
those in the job need better job orientation.
• The roles of welfare officers changed in nature and
scope and became more demanding in terms of
knowledge, skills and behavioral attributes, the
whole situation suggested that the title of welfare
officer was not good enough to describe what was
actually happening.

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 Personnel Management
• More focus on individuals for training,
productivity and dispute resolution
• Behavioral aspects gained more importance
• Impact of Abraham Maslow theory of
Hierarchy of Needs and power of motivation
on productivity
• Employees’ satisfaction theory of Chris Argyris
• So shift from administrators to managers
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 Functions of Personnel Management
• Establishment of the organizational structure*
• Human resourcing
• Managing performance appraisal
• Personnel training and development
• Compensation/Rewards management
• Personnel Relations

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 Change to Human Resource
Management
• 1980s – 1990s witnesses changes in economic,
political, technological and academic
environment globally. It had an impact on
management of people in organizations. Let is
see how…
Shift in global macro policy framework
– Neo liberalism professed for liberalism and advocated
for free economy with least state control.
– Thatchersim and Reaganism criticised policies of 70s
that brought economic crisis.

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• The privatization of state owned organizations,
relaxation of legislation in favor of the private
sector and the urge for profit maximization
became the new agenda
• Therefore, costs consciousness and the pressure
to justify the role of employees in developing and
sustaining organizations in the market became a
challenge.
• Failure to respond to these challenges through
proper personnel management strategies was
seen as a slippery slope towards the collapse of
companies that had long historical roots of
successful business.
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Business competition
• The 1980s and early 90s witnessed turbulent
business environment. Increased competition from
Japan, China and other international companies
with cheaper but high quality goods was a
challenge to American and European companies.
• Organizations experienced takeovers, mergers, and
business closures. These were also accompanied by
heavy losses of work, working on part time, the
need for individuals to become multi skilled, and
the contracting out of some work.
• Role of personnel specialist had to change from
reactive to proactive to match the unpredictable
environment.
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Change in customer needs and expectations
• A change in customer taste, fashion and quality
of goods to reflect their purchase power put
more pressure on the organizations to get the
best out of their production systems, processes,
and employees.
• This could only be achieved by getting the best
people from the labour market, develop, reward,
and ensure that they are committed to high
quality service to the organization.
• The role of personnel had to change from that of
a doer of personnel functions to that of partner
in providing support services to other
departments to perform personnel functions

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Technological change
• Competition was also intensified by the
organizations that could adopt and adapt flexible
specialization technologies to meet customer needs
and expectations.
• Information technology destroyed knowledge
monopoly. The power of knowledge became how
best to use it, rather than who owns it.
• The implications were that organizations had fewer,
but better trained people, flexible to cope with
rapid technological changes.
• Continuous learning and adaptation based on
teams became a natural area of focus on people
management.
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Change of philosophy of employee relations
• Role of trade unions became less emphatic
reducing collectivism to individualism.
• Employment relations became more based on
arrangements and agreements between the
employee and employer as opposed to the use
of trade unions and labour legislation.
• Employee relation officers and departments
were establishment.
 Strategic HRM
• Developments in the academia
• Based upon previous research and practice
and present business environment, it was
concluded by current academicians that the
best strategy is strategic management of HR.
• Some areas of corporate management
including the size, structure, strategy, culture,
product, and organizational life cycle were
now included in human resource management
• HR managers became part of overall business
strategy.
• More rigorous methods for employees’
performance appraisal and designing and
implementation of reward policy
• Developments in academia also professed
strategic HRM
• Two school of thoughts
 American or Harvard SOT
• 4 main building blocks in this SOT
– Stakeholders interests are most important
– Stakeholders interests need to be balanced
– The employees need to be positively influenced
– Strategic approach that includes formulation of
organizational mission, goals, objectives, strategies,
and targets needs to be adopted for managing
employees.
 UK or European SOT
• The need to marry business and human resource
strategies, that is, human resource strategies
should be developed and save business strategies.
• Strong organizational culture for employee
commitment.
• Obsession for Quality (Starts with recruitment)
• Creativity and Innovation. Employees have to be
able to come up with new ideas and put them into
practice in order to exploit business opportunities
The End
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Administrator vs. Manager

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 HR as Process
• The term Human Resource
Management (HRM) is a process that
essentially covers the fundamental
procedures, tasks, activities, and policies in an
organization that relates to its key resource–
its employees