HUMAN RESOURCE MANAGEMENT

INDIAN INSTITUTE OF FOREIGN TRADE

NEW DELHI

DR. POOJA LAKHANPAL

pooja@iift.edu
 INTRODUCTION TO
HUMAN RESOURCE MANAGEMENT
 OBJECTIVES

1. Explain what human resource management is and how it

relates to the management process.
2. Give examples of how all managers can use human resource
management concepts and techniques.
3. Understand HR’s role in formulating and executing company
strategy.
4. Understand why metrics and measurement are crucial to
today’s HR managers.
5. Explain what a strategy-oriented human resource management
system is and why it is important.
6. Explain the HR Scorecard approach to creating human resource
management systems.
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Human Resources (HR)

The people an organization employs to carry

out various jobs, tasks, and functions in
exchange for wages, salaries, and other
rewards.
 The Management Process
Planning

Controlling Organizing

Leading Staffing

1–5
 What Is Human Resource
Management (HRM) ?
The comprehensive set of managerial
activities and tasks concerned with
developing and maintaining a qualified
workforce—human resources—in ways
that contribute to organizational
effectiveness.
Fig. 1.1 Basic Functions of Human Resource Management
 Basic HR Concepts
• The bottom line of managing:
Getting results
• HR creates value by engaging
in activities that produce the
employee behaviors that the
company needs to achieve
its strategic goals.

1–8
Fig 1.2 Goals of Human Resource Management
 Line and Staff Aspects of HRM
• Line manager
– A manager who is authorized to direct the work of
subordinates and is responsible for accomplishing
the organization’s tasks.
• Staff manager
– A manager who assists and advises line managers.

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 Line Managers’ HRM Responsibilities
1. Placing the right person on the right job
2. Starting new employees in the organization (orientation)
3. Training employees for jobs that are new to them
4. Improving the job performance of each person
5. Gaining creative cooperation and developing smooth working
relationships
6. Interpreting the firm’s policies and procedures
7. Controlling labor costs
8. Developing the abilities of each person
9. Creating and maintaining department morale
10. Protecting employees’ health and physical condition

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Human Resource Managers’ Duties
Line Function
Coordinative Function
Line Authority
Functional Authority
Implied Authority

Functions of
HR Managers

Staff Functions
Staff Authority
Innovator
Employee Advocacy

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 FIGURE 1–1
HR Organization Chart
for a Large Organization

Source: www.hr.wayne.edu/orgcharts.php. Accessed May 6, 2007.

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 FIGURE 1–2 HR Organizational Chart (Small Company)

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 The Changing Environment of
Human Resource Management

Globalization Trends

Technological Trends
Changes and Trends in
Human Resource
Management
Trends in the Nature of Work

Workforce Demographic Trends

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 The Changing Role of
Human Resource Management
Strategic Human
Resource Management

Creating High-
Managing with the HR New Responsibilities
Performance Work
Scorecard Process for HR Managers Systems

Measuring the HRM

Team’s Performance

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 High-Performance Work System
Practices
• Employment security
• Selective hiring
• Extensive training
• Self-managed teams/decentralized decision making
• Reduced status distinctions
• Information sharing
• Contingent (pay-for-performance) rewards
• Transformational leadership
• Measurement of management practices
• Emphasis on high-quality work

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 Benefits of a High-Performance
Work System (HPWS)
• Generate more job applicants
• Screen candidates more effectively
• Provide more and better training
• Link pay more explicitly to performance
• Provide a safer work environment
• Produce more qualified applicants per position
• Hiring based on validated selection tests
• Provide more hours of training for new employees
• Conduct more performance appraisals
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 The Human Resource Manager’s
Proficiencies
• New Proficiencies
– HR proficiencies
– Business proficiencies
– Leadership proficiencies
– Learning proficiencies

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 FIGURE 1–8 Effects CFOs Believe Human Capital Has on Business Outcomes

Source: Steven H. Bates, “Business Partners,” HR Magazine, September 2003, p. 49.

Reproduced with permission of the Society for Human Resource Management via
Copyright Clearance Center.
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 The Human Resource Manager’s
Proficiencies (continued)
• Managing within the Law
– Equal employment laws (US)
– Industrial Disputes Act of 1947
– Occupational safety and health laws
– Other labor laws

• Managing Ethics
– Ethical lapses
– Sarbanes-Oxley in 2003
– Securities and Exchange Board of India (SEBI)
– Ministry of Corporate Affairs (MCA)

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 Basic Themes
• HRM is the responsibility of every manager.
• HR managers must defend their plans and contributions in
measurable terms.
• All personnel actions and decisions have strategic
implications.
• All managers rely on information technology.
• Virtually every personnel decision has legal implications.

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 Human Resource Management

Evolution and Challenges Faced in India

 HRM in India
In the 1970s and 1980s typical HRM functions in organization
included:
• Personnel and administration
• Industrial relations
• Labor welfare
Up to the mid-80s human resource management in Indian
organizations grew through various phases under the influence of
the following factors:
• A philanthropic viewpoint about doing good for workers
• A legislative framework
• Government policies
• Trade unions
• Emerging trends/concepts in management
• Changes in the economy
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 Management Challenges for Indian
CEOs
A study among Indian CEOs identified the following
challenges:
– Creating a high-performance culture
– Retaining talent
– Recruiting
– Moving from a patriarchic and hierarchical
management style to a more team-based, informal
organizational culture
– Linking training with performance
– Compensating knowledge workers
– Building interpersonal relationships/managing
conflict
– Going global
Source: Aneeta Madhok, “Similar Challenges” cited by Robert
J. Grossman in “HR’s Rising Star in India,” available at
1–25 http://www.shrm.org/india.
The Strategic Management Process
• Strategic Management
– The process of identifying and executing the
organization’s mission by matching its capabilities
with the demands of its environment.
• Strategy
– A chosen course of action.
• Strategic Plan
– How an organization intends to balance its
internal strengths and weaknesses with its
external opportunities and threats to maintain a
3–26 competitive advantage over the long-term.
 Business Vision and Mission
• Vision
– A general statement of an organization’s intended
direction that evokes emotional feelings in
organization members.
• Mission
– Spells out who the company is, what it does, and
where it’s headed.

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 FIGURE 3–5 The Strategic Management Process

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 FIGURE 3–7 A SWOT Chart

Strengths Weaknesses

Example: Market leadership Example: Large inventories

Opportunities Threats

Example: New overseas markets Example: Market saturation

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 Types of Strategies
Corporate-Level
Strategies

Vertical Geographic
Diversification Consolidation
Integration Expansion
Strategy Strategy
Strategy Strategy

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 Types of Strategies (continued)
Business-Level/
Competitive
Strategies

Cost Leadership Differentiation Focus/Niche

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 Achieving Strategic Fit

The “Fit” Point of View (Porter) consists of the

idea that each department’s strategy needs to
fit the parent business’s competitive aims.

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 Strategic Human Resource
Management
• Strategic Human Resource Management
– The linking of HRM with strategic goals and
objectives in order to improve business
performance and develop organizational cultures
that foster innovation and flexibility.
• Involves formulating and executing HR systems—HR
policies and activities—that produce the employee
competencies and behaviors that the company needs
to achieve its strategic aims.

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 FIGURE 3–6 Linking Company-Wide and HR Strategies

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 Creating the Strategic Human
Resource
Management System
Components of a
Strategic HRM System

Human Resource Employee

Human Resource
Policies and Behaviors and
Professionals
Practices Competencies

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 FIGURE 3–12 Three Important Strategic HR Tools

Source: Adapted from Brian Becker et al., The HR Scorecard: Linking People,
Strategy, and Performance (Boston: Harvard Business School Press, 2001), p. 12.
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 Measuring HR’s Contribution
• The HR Scorecard
– Shows the quantitative standards,
or “metrics” the firm uses to
measure HR activities.
– Measures the employee
behaviors resulting from these
activities.
– Measures the strategically
relevant organizational outcomes
of those employee behaviors.
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 Creating an HR Scorecard
The 10-Step HR Scorecard Process

Identify required HR policies

1 Define the business strategy 6
and activities

Choose HR Scorecard
2 Outline value chain activities 7
measures
Summarize Scorecard
3 Outline a strategy map 8 measures on digital dashboard
and monitor, predict, and
Identify strategically required evaluate
4
outcomes
Identify required workforce
5
competencies and behaviors

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 Five Sample HR Metrics

HR Metric* How to Calculate It

Absence rate # of days absent in month

× 100
Average # of employees during month × # of workdays

Cost per hire Advertising + agency fees + employee referrals + travel cost of
applicants and staff + relocation costs + recruiter pay and benefits
Number of hires

HR expense HR expense
factor
Total operating expense

Time to fill Total days elapsed to fill job requisitions

Number hired

Turnover rate Number of separations during month

× 100
Average number of employees during month
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