UNIT 4 LEADERSHIP , MOTIVATION AND CONTROL

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1.0 Objectives
1.1 Introduction
1.2 Subject Description
1.2.1 Concept of Human Resource Management (HRM)
1.2.2 Functions of HRM
1.2.3 HR Manager ; Status , Activities , Role , Competencies
1.2.4 HR Policies
1.2.5 Evolution of HRM
1.2.6 HRM Vs HRD
1.2.7 Emerging Challenges of Human Resource Management
1.2.8 Human Resource Information System

1.3 Summary

1.4 Keywords
1.5 Questions for Self Study
1.6 Further Readings

1.0 Objectives

After studying this unit you will be able to :

1. Understand the basic concept of Human Resource Management

2. Explore different functions of HRM

3. Learn about HR Manager and his role in HRM

4. Know about HRD

 5. Find out various challenges before HRM and other related aspects

1.1 Introduction
Among all the resources of an organization Human resources are the most valuable
and unique . The successful management of an organization's human resources is an
exciting, dynamic and challenging task, especially at a time when the world has
become a global village and economies are in a state of flux. The scarcity of talented
resources and the growing expectations of the modern day worker have further
increased the complexity of the human resource function. Even though specific
human resource functions/activities are the responsibility of the human resource
department, the actual management of human resources is the responsibility of all the
managers in an organization. It is therefore necessary for all managers to understand
and give due importance to the different human resource policies and activities in the
organization. Human Resource Management outlines the importance of HRM and its
different functions in an organization. It examines the various HR processes that are
concerned with attracting, managing, motivating and developing employees for the
benefit of the organization

1.2.1 Human Resource Management (HRM) - Concept

We often hear the term Human Resource Management, Employee Relations and
Personnel Management used in the popular language and general terms. Whenever
we hear these terms, we starts imagining images of efficient managers busily going
about their work in offices. The fact remains that there is much more to the field of
HRM and despite popular depictions of the same, the “art and science” aspect of HRM
is indeed important. We have chosen the term “art and science” as HRM is both the
art of managing people by recourse to creative and innovative approaches and it is a
science because of the application of theories.
As outlined above, the process of defining HRM leads us to two different definitions.
The first definition of HRM is that it is the process of managing people in
organizations in a structured and thorough manner. This covers the fields of staffing
(hiring people), retention of people, pay and perks setting and management,
performance management, change management and taking care of exits from the
company to round off the activities. This is the traditional definition of HRM which
leads some experts to define it as a modern version of the Personnel Management
function that was used earlier.

The second definition of HRM encompasses the management of people in

organizations from a macro perspective i.e. managing people in the form of a
collective relationship between management and employees. This approach focuses
on the objectives and outcomes of the HRM function. What this means is that the HR
function in contemporary organizations is concerned with the notions of people
enabling, people development and a focus on making the “employment relationship”
fulfilling for both the management and employees.

These definitions emphasize the difference between Personnel Management as

defined in the second paragraph and human resource management as described in the
third paragraph. To put it in one sentence, personnel management is essentially
“workforce” centered whereas human resource management is “resource” centered.
The key difference is HRM in recent times is about fulfilling management objectives
of providing and deploying people and a greater emphasis on planning, monitoring
and control. It is a fact that to thrive in the business environment, firms need to
constantly innovate and be “ahead of the curve” in terms of business practices and
strategies. It is from this motivation to be at the top that HRM becomes a valuable
tool for management to ensure success.
Importance of HRM
One of the factors behind organizations giving a lot of attention to their people is the
nature of the firms in the current business environment. Given the fact that there has
been a steady movement towards an economy based on services, it becomes important
for firms engaged in the service sector to keep their employees motivated and
productive. Even in the manufacturing and the traditional sectors, the need to remain
competitive has meant that firms in these sectors deploy strategies that make effective
use of their resources. This changed business landscape has come about as a result of a
paradigm shift in the way businesses and firms view their employees as more than just
resources and instead adopt a “people first” approach.

Scope of Human Resource Management

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 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, we can say 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 is extensive and far-reaching. Therefore, it is very difficult to

define it concisely. However, we may classify the same under following heads:

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, 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.

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.

HRM in Industrial Relations: Since it is a highly sensitive area, it needs careful

interactions with labor or employee unions, addressing their grievances and settling
the 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 behavior 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 scope of HRM is
extremely wide, thus, cannot be written concisely. However, for the sake of
convenience and developing understanding about the subject, we divide it in three
categories mentioned above.

1.2.2 Human Resource Management (HRM) - Functions of HRM

HRM has five functional areas that include: Staffing, Human Resource Development
(HRD), Compensation and Benefits, Safety and Health, and Employee and Labor
Relations.

Human Resource Development

Human Resource Planning

Compensation & Benefits
Functions of HRM

Safety & Heath Employee & Labour Relations

Human Resource Planning (HRP)

Achieving organizational objectives requires having the proper number of employees

with the appropriate skills.  It accomplishes this objective through four tasks. The first
task is job analysis, which examines specific job functions in determining the skills, 
duties and knowledge required for each position. The second task is ensuring that the
required numbers of employees, with the appropriate skills, are available when
needed organizations engage in Human Resource Planning (HRP).  The third task is
recruitment, which is the process of attracting enough skilled people to apply for jobs
in the organization. Fourth, the last step in the staffing process, is selection. This
involves choosing the best suited individuals to fill the open positions in the firm.

Human Resource Development (HRD)

Six functions, including training, development, career planning, career development,

organization development and performance appraisal, make up Human Resource
Development (HRD).

Compensation and Benefits

Compensation includes all rewards that individuals receive as a result of their

employment. Pay is the money that a person receives for performing a job. 
Additional financial rewards other than base pay include paid vacations, sick leave,
holidays and medical insurance, and they are called benefits. Non-financial rewards
are non-monetary rewards, such as enjoyment of the work performed or a pleasant
working environment.

Safety and Health

Employees who work in a healthy and safe environment are more likely to be
productive.  Safety involves protecting employees from work-related accidents and
injuries.  Health activities seek to prevent illness and provide for general physical and
mental well being.

Employee and Labor Relations

Business firms are required by law to recognize a union and bargain with it in good
faith if the firm’s employees want the union to represent them. This is still true
despite the fact that the private-sector membership has fallen to 9 percent.

1.2.3 HR Manager

The days when the HR manager was concerned with administrative duties is over and
the current HRM practices in many industries are taken as seriously as say, the
marketing and production functions.

Status of an HR Manager :

Similar to other department managers, a human resource manager has two basic
functions:

a) Primary departmental functions

b) Managing employees.

Hence he enjoys the status of not only being a manager but also acts as a
representative of employees when he deals with top management of organization
with respect to welfare of employees. So we can say that the status of an HR Manager
is more like a linking bridge between employer and employees .

Activities of an HR Manager :
The activities carried out by HR Manager varies widely according to the needs of the
organization, the context within which they work and their own capabilities.

He Provides SERVICE

HR manager provides following services to the organization

 human resource planning

 recruitment / selection
 employee development
 reward systems
 employee relations
 health/safety management
 staff amenities
 salary administration
 personnel administration etc.

He Gives GUIDANCE

To varying degrees, HR MANAGERS provide guidance to the management, like

 recommendations on HR STRATEGIES
 culture change
 approaches to the improvements of process capability-performance
management 
 reward management
 HR policies/ procedures

He Gives ADVICE

HR managers provide advice to line managers, and management

in general

 recruitment –advertising
 selection short list
 training needs
 health/ safety 
  handling people / problems associated
 industrial relations

Role of an HR Manager

Hr Manager plays different roles.

Business Partner Role

They share responsibility with their line management for the success 
of the business and the running of the business.

Strategist Role

contribute to the long term / strategic organizational issues like

 people selection
 people requirement
 people development
 organization development
 quality of worklife

Interventionist Role

They proactively contributes to the change management, people 

management, team development, new technology introduction

Internal Consultancy Role

They acts as a management consultant on HR ISSUES working

alongside the line managers.

Monitoring Role

They monitors the implementation of HR policies / procedures.

Competencies of an HR Manager
The analysis of the activities and the roles leads us to 
the question

The suggested competencies are :

 initiative
 personal effectiveness
 human relations handling skills
 leadership skills
 professional knowledge of HR
 adding value through people development
 continuing learning
 strategic thinking capability
 influencing
 negotiating skills
 interpersonal skills
 business / culture awareness
 service delivery
 communication [ oral/ written ]
 presentation

1.2.4 Human resource policies

Human resource policies are continuing guidelines on the approach the organization intends
to adopt in managing its people. It represents specific guidelines to HR managers various
matters concerning employments. It states the intend of the organization about different
aspects of Human Resource management such as recruitment, promotion, compensation,
training, selections etc. They define the conception and value of the organization on how
people and things should be treated. Therefore, it serves as a reference point when human
resources management practices are being developed or when decisions are being made about
people. A good HR policy could provide generalized guidance on the approach adopted by the
organization, and therefore its employees, concerning various aspects of employments. A
procedure spells out precisely what action should be taken in line with the policy.
However, each company has a different set of circumstances, and so develops an individual
set of human resource policies.

Purposes

The establishment of policies can help an organization demonstrate, both internally and
externally, that it meets requirements for diversity, ethics and training as well as its
commitments in relation to regulation and corporate governance of its employees. For
example, in order to dismiss an employee in accordance with employment law requirements,
amongst other considerations, it will normally be necessary to meet provisions within
employment contracts and collective bargaining agreements.[4] The establishment of an HR
Policy which sets out obligations, standards of behavior and document disciplinary
procedures, is now the standard approach to meeting these obligations. They provide
frameworks within which consistent decisions are made and promote equity in the way in
which people are treated.

HR policies can also be very effective at supporting and building the desired organizational
culture. For example, recruitment and retention policies might outline the way the
organization values a flexible workforce, compensation policies might support this by offering
a 48/52 pay option where employees can take an extra four weeks holidays per year and
receive less pay across the year. In actuality, policies and procedures serves a number of
purposes :

Developing HR Policies

In developing HR Policies, there should be clear and consistent statements of the

organization's policies regarding to all conditions of employment and procedures for their
equal and fair implementation. In order to fulfill this objective, policies and procedures
should be:
a) Clear and specific, but provide enough flexibility to meet the changing conditions.

b) Comply with all appropriate law and regulation.

c) Agree with one another and reflect an overall true and fair view approach to all employees.

d) The HR policies are developed by making decisions and taking actions on the day-to-day
problems of the organization. The Process on developing HR policies involved the assessment
of the following factors:

e) Identify the purpose and objectives which the organization wish to attain regarding to its
Human Resources department.

f) Analysis of all the factors under which the organization's HR policy will be operating.

g) Examining the possible alternatives in each area which the HR policy statement is
necessary.

h) Implementation of the policy through the development of a procedure to support the

policy.

i) Communication of the policy and procedures adapted to the entire organization.

j) Auditing the policy so as to reveal the necessary areas requiring change.

h) Continuous revaluation and revision of policy to meet the current needs of the
organization.

Formulation

Human Resource Management consists of deliberate organizational activities designed to

improve employee productivity and administration through such means as recruitment,
compensation, performance, evaluation, training, record keeping and compliance. HR policies
should be developed for key HR management functions covering eight commonly accepted
responsibilities:

a) Compensation and Benefits.

b) Employee and Labor Relations.

c) Employment Practices & Placement.

d) Workplace Diversity.

e) Health, Safety and Security.

f) Human Resources Information Systems.

g) Human Resource Research.

h) Training and Development.

i) Types of Policies

HR policies could be classified on the basis of sources or description.

a) Originated Policies - These are the policies usually established by the senior managers in
order to guide their subordinates.

b) Implicit Policies - These are the policies which are not formally expressed, they are
inferred from the behavior of managers, which are also known as the implied policies.

c) Imposed Policies - Policies are sometimes imposed on the business by external agencies
such as government, trade associations and trade unions.

d) Appealed Policies - Appealed policies arise because the particular case is not covered by the
earlier policies. In order to know how to handle some situations, subordinates may request or
appeal for the formulation of specific policies.

e) General Policies - These policies do not related to any specific issue in particular. General
policies are formulated by the top management, this kind of policies are called 'general'
because they do not related to any specific issue in particular.
f) Specific Policies - These policies are related to specific issues like staffing, compensation,
collective bargaining etc. Specific policies must confirm to the board pattern laid down by the
general policies.

Advantages of HR policies

The following advantages could be achieved by the set up of HR policies:

It helps the managers at various levels of decision making to take decisions without the
consulting their superiors. Subordinates are more willing to accept responsibility because
policies indicate what is expected of them and they can quote a written policy to justify their
action.

It ensures long term welfare of employees and makes for good employee relationship as
favoritism and discrimination are reduced. Well-established policies ensure uniform and
consistent treatment of all employees throughout the organization.

It lays down the guidelines pursued in the organization and thereby minimizes the personal
bias of managers.

It ensure prompt action for taking decisions because the policies serve as standards to be
followed. they prevent the wastage of time and energy involved in repeated analyses for
solving problems of a similar nature.

It establishes consistency in the application of the policies over a period of time so that each
one in the organization gets a fair and just treatment. Employees know what action to expect
in circumstances covered by the policies. Policies set patterns of behavior and permit
employees to work more confidently.

Factors influencing HR policies

The following factors will influence the HR policy of an organization:

 Laws of the country

 The various laws and legislation pertaining to labour have to be taken into
consideration. Policies should be conformity with the laws of the country otherwise
they are bound to cause problems for the organization.
 Social Values and Customs
 Social Values and customs have to be respected , otherwise the employees may be
offended. Thus, the values and customs of all communities should be taken into
accounts while framing policies.
 Management Philosophy and Values
 Management Philosophy and values influence its action on matters concerning the
employees. Therefore, without a clear broad philosophy and set values, it would be
difficult for the employees to understand management.
 Financial Impact
 HR Policies cost money, which will reflect in the price of the product. Thus, the
prices set the absolute limit to organization's HR policies.

Areas where policies are commonly established

Organizations commonly have written policies in the following areas:
 Code of Conduct
 Working conditions
 Attendance
 Hours of Operations
 Termination (Voluntary and Involuntary)
 Recruitment
 Compensation
 Performance Management
 Learning and development
 Benefits and Eligibility
 Overtime
 Privacy
 Employee Information
  Bereavement Leave
 Compassionate Leave
 Vacation
 Sick Leave, Short Term Disability, Long Term Disability
 Maternity, Parental, and Adoption Leave
 Unpaid Leave
 Jury Duty
 Family Leave
 Grievance/Conflict Resolution
 Formal complaint process
 Disciplinary
 Discrimination and Harassment/Respectful Workplace
 Health and Safety
 Accident Reporting
 Workplace Violence
 Alcohol and Drug Use Policy
 Use of Company Equipment
 General policy on the review and update of organization policies

1.2.5 Evolution and Development of Human Resource Management (HRM)

The seed of HRM were sown during the industrial revolution 1850s in Western
Europe and USA. The wind gradually reached to India as well in the beginning of
twentieth century. Since then to the present era, the development of HRM may be
classified as follows:

Trade Union Movement Era:

The conditions of workers in the aftermath of factory system as an outcome of

industrial revolution were very pathetic. The First World War further worsened their
conditions. This was the period when state intervention to protect the worker s
interest was felt necessary.

The Royal Commission of Labour in India (1911) under the chairmanship of J H,

Whitley recommended the abolition of the ‘jobber’ system and the appointment of
labour officers in industrial enterprise to perform the recruitment function as well as
to settle the worker’s grievances. Also, workers started forming their associations
which was subsequently known as ‘trade unions’ to improve their lots. Trade Union
Act, 1926 was passed in India.

The basic philosophy underlying trade unionism was to safeguard the worker’s

interest and to sort out of their problems such as use of child labour, long hours of

work and poor working conditions. These unions used strikes, slowdowns walkouts

picketing, boycotts, and sabotage as weapons for the acceptance of their problems.

These activities of trade unions gave rises to personnel practices such as collective

bargaining, grievance handling system, arbitration, disciplinary practices, employee

benefit programmes, installation of rational and defensible wage structures .

Social Responsibility Era:

In the starting decade of 20th century, some factory owners/employers started

showing humanistic approach towards the workers. Robert Owen, a British

industrialist towards workers. He viewed that the principal social and economic

environments influence the physical mental and psychological development of

workers. Therefore, in order to improve the productivity, it is necessary to improve,

conditions of employees by removing them from an adverse environment or by

changing the environment with the provisions of more satisfactory living and

working conditions.
The philosophy underlying in Owen’s paternistic approach was that worker’ is just

like a child and owner is just like a father. Therefore, the owner should take care of a

worker just like a father takes care of his child. Accordingly, Owen himself

implemented this philosophy in his cotton mill at Scotland by introducing facilities

such as shower baths and toilets in the factory premises, model villages for workers,

raising minimum wage of employment of child labour to 11 years and reducing

working hours from 12 to 10 hours.

Scientific Management Era:

The concept of scientific management was introduced by Fredrick Winslow Taylor’ in

the USA early in the 20th century as an alternative to the prevailing system of

management by initiative and incentive.

Based on his shop floor job experience, Taylor developed four principles of scientific

management:

1. Development and use of scientific methods in setting work standards, determining

a fair day’s work, and best way of doing work.

2. Scientific selection and placement of workers best suited to perform the various
tasks and provision of their training and development for maximum efficiency.

3. Clear cut division of work and responsibility between management and workers.

4. Harmonious relations and close cooperation with workers to secure performance of

work in accordance with the planned jobs and tasks.

The following are the important techniques developed by him:

1. Time study to analyze and measure the time taken in doing the various elements of

a job and to standardize the operations of a job.

2. Motion study involving close observation of the movements required to perform a

job with a view to eliminate wasteful motions and decide on the best way of doing the

job.

3. Standardization of tools, equipment’s and machinery and working conditions.

4. Incentive wage plan with differential piece rate of wages for efficient and

inefficient workmen.

The main contribution of Taylor to management was it led to professionalization of

management and human engineering. However, some critics criticize his views on

the ground that its focus was more on technology and not on human factor in

industry.

Human Relations Era:

By 1920, it was felt that earlier approaches to human resource management were

incomplete as these did not recognize workers as human beings having their feelings,

attitudes and needs. It was between 1925 and 1935; many experts expressed their

opinions towards the human aspects of organisational activities.

A psychologist namely Hugo Munsterberg in his book “Psychology and Industrial

Efficiency” suggested the use of psychology in selection, placement, testing and

training of employees in an organisation. Elton Mayo and his associates conducted a

series of experiments from 1924 to 1932 at the Hawthorne plant of the Western

Electric company in the USA.

Behavioural Science Era:

We have just seen that human relations era assumes that a happy worker is a

productive worker. As a corollary to this, the behavioural science era assumes human
behavior as a means to achieve efficiency in performance. Behavioural approach to

HRM is based on the findings of intensive research carried out by behavioural

scientists belonging to the disciplines of sociology, social psychology, anthropology

and management experts.

The major contributions made by the behavioral scientists are in the areas of

motivation, leadership, communication, organisational change and development,

organisational culture, and individual and group dynamics On the whole, behavioural

science approach of HRM was concerned with the social and psychological aspects of

human behaviour in organisations.

Some of the important elements of the behavioural approach of HRM are outlined

below:

1. Individual behaviour is linked with the group behaviour. For example, a person be

inclined to resist to change has behaviour as an individual. But, he/ she will readily do

so if the group to which he/ she belongs, decides to change its behaviour.

2. Informal leadership rather than the formal leadership of manager is more effective

in influencing people to achieve standards of performance. From this viewpoint,

democratic leadership style of the manager is more acceptable to the subordinates and

hence, more effective.

3. By nature, people do not dislike work. Most people enjoy work and are motivated

by self- control and self development. In fact, job itself is a source of motivation and

satisfaction to employee.

4. Expanding subordinate influence, self- control and self- direction can improve

operating efficiency.
Systems Approach Era:

A system may be defined as a set of interdependent parts forming an organised unit or

entity. The system is defined as “an organised and complex whole: an assemblage or

combination of things or parts forming a complex unitary whole.” The parts, also

known as subsystems, interact with each other and are subject to change. These sub-

systems are inter-related and interdependent.

Any working organisation usually consists of the following three broad sub-systems:

1. Technical Sub-system, i.e., formal relationships among the members of an

organisation.

2. Social Sub- system, i.e., social satisfaction to the members through informal group

relations.

3. Power Sub-system, i.e., exercises of power or influence by individual or group.

The interaction of the various sub-system forms the total system. There is also

interaction between total system/sub-systems and environment. Environment itself

may influence or be influenced by the system or sub-system.

Contingency Approach Era:

Contingency refers to die immediate circumstances. Contingency approach believes

that there is no one way of managing that works best in all situations. According to

this approach, the best way to manage varies with the situation. Hence, this approach

is also called ‘situational approach’.

There may not be one universal way of managing in all situations. A particular

approach may yield fruitful results in one situation but may drastically fail in other
situations. Therefore, it is imperative for managers to analyse different situations and

then use the best approach best suitable in that particular situation.

In short, contingency approach of management and for that matter HRM emphasizes

on two points:

1. It focuses attention on situational factors that influence managerial decision.

2. It highlights the need for developing skills for managers in situational analysis.

HRM has a humble beginning in India in 1920s. By now, this concept has blossomed

into a matured subject and profession. Venkata Ratnam and Srivastava have outlined

the evolution and development of HRM in India as shown in Table 2.1.

Evolution and Development of HRM in India:

HRM in India: An Overview:

Now that we have delineated the evolution of the concept of HRM, we are prepared

to outline an overview of HRM in India. Like UK and USA, the evolution and

development of HRM in India was not voluntary. The aftermath of the First World
War rendered the country with difficult conditions. These manifested in various

malpractices in the recruitment of workers and payment of wages leading to trade

unionism in organisations causing colossal loss in production due to industrial

disputes.

Given such scene, government intervened under compulsions to take care of the

situation. The Royal Commission of Labour in India, in 1931, under the chairmanship

of J.H. whitley recommended the abolition of the ‘jobber’ system and the

appointment of labour officers in industrial enterprises to deal with the recruitment

of labour and to settle their grievances.

After Independence, the Factories Act, 1948 laid down qualifications and duties of

Welfare Officers and also made it mandatory for companies employing 500 or more

workers to appoint Welfare Officers with requisite qualifications and training.

In course of time, two professional bodies emerged: ‘The Indian Institute of Personnel

Management’ (IIPM), Calcutta, now Kolkata’ and the ‘National Institute of Labour

Management ‘(NILM), Bombay, now Mumbai. These two places were the premier

centres of traditional industry (jute and cotton respectively) in pre-independent India.

During the aftermath of the Second World War and Independence, worker’s needs

and expectations increased. During the 1960s, the personnel functions got expansion

beyond welfare function. Three areas were added to it: Labour Welfare, Industrial

Relations and Personnel Administration. All these three integrated into the emerging

Profession called’ personnel management’.

This was followed by the Government’s massive thrust to the development of basic

and heavy industries since the Second Five Year Plan (1956-61) and also accelerated
growth of public sector in the country. This, in turn, resulted in professional approach

toward management of organisations.

The professionalism in managing organisations became quite discernible by the 1970s.

There was a clear shift from welfare approach to efficiency one. The two professional

bodies, IIPM and NILM merged in 1980 to form the National Institute of Personnel

Management (NIPM) with Kolkata as the headquarters.

Evolving along the years, the approach has shifted to human values and productivity

through people. It is against such a shift in managing people, in the 1990s, a new

approach has emerged, i.e., human resource management (HRM). This approach

focuses more on development aspects of human resource, i.e., human resource

development (HRD).

The fact remains that the buzzword in people management in India is HRD and not

the HRM HRD, as is known, as a conscious proactive arrangement by employers that

seeks to capacitate employees to give their maximum to the organisation and to fully

use their potential to develop themselves.

HRD is only one of the functions of HRM. A survey of changed PM titles in India

would reveal that most organisations use HRD -related labels, not HRM-related.

Many organisations have no HRM policies- hard or soft- and uncritically name their

personnel department as die ‘HRM Department’.

1.2.6 HRM vs HRD

Human Resource Management (HRM) is a branch of management; that is concerned

with making best possible use of the enterprise’s human resources. On the other
end, Human Resource Development (HRD) is a wing of HRM that keeps focusing on
the development part of the organization’s manpower. There are many people, to
whom HRM and HRD convey the same meaning, but this is not true. Human
resources are an essential section of any organization, company or institute.
Recognizing this importance, separate branches geared towards the development and
the safeguarding of this sector has evolved over time. HRD and HRM are two such
subjects that cater to this growing need today.

HRD

HRD or Human Resource Development is a sort of framework that allows and aids
employees of an organization to develop their organizational and personal skills as
well as their knowledge and abilities. There are a myriad of practices and
opportunities involved in this field. Some of them can be named as performance
development and management, training, career development, mentoring, coaching,
succession planning, tuition assistance, key employee identification, etc.The main
goal of Human Resource Development is to create the most superior workforce
possible so that the organization has the means to fulfill their services towards their
clientele better. Human Resource Development can be formal or informal: formal
being tutored in a classroom or an organized effort while informal may be on the job
training by a manager.

HRM

HRM or Human Resource Management is an organizational function that has been

thus introduced with the aim of maximizing the performance of the employees. HRM
focuses on policies and systems and deals primarily in the manner in which people are
managed within organizations. HRM deals with a number of activities such as
employee training, recruitment, performance appraisals as well as duly rewarding the
employees. In doing so, HRM must also make sure that organizational practices are
kept in line with the rules and regulations of governmental laws, thereby ensuring a
balance between industrial relations as well.

At the beginning of the human resources movement in the early 20th century, HRM
was defined by duties such as benefits and payroll administration and transactional
work whereas today with globalization, HRM has come to focus upon strategic
initiatives such as talent management, succession planning, industrial and employee
relations, and inclusion and diversity.

In order to cater to the growing need of HRM, professionals, universities, higher

educational institutes all over the world have introduced various courses and degrees
that will allow individuals to gain the necessary knowledge needed for this field. In
order to be qualified for a position in HRM, one needs to possess educational
qualifications befitting their position.

Difference between HRD and HRM

HRD and HRM are both practices that deal with human resources of a company.
Usually in large organizations, there exists entire departments dedicated to HRM
where trained professionals work together solely towards the amelioration of this
aspect, dealing with both HRD and HRM functions. HRD is human resource
development. HRM is human resource management.

• HRD deals with functions such as performance development and management,

training, career development, mentoring, coaching, succession planning, tuition
assistance, key employee identification, etc. HRM deals with functions such as
employee training, recruitment, performance appraisals as well as duly rewarding the
employees.

• HRD is a part of HRM. HRM deals with all HR initiatives while HRD only deals
with the development factor.

•HRM functions are more formal than of HRD functions.

BASIS FOR
COMPARISO HRM HRD
N

Meaning Human Resource Human Resource Development

Management refers to the means a continuous development
application of principles of function that intends to improve
management to manage the the performance of people
people working in the working in the organization.
organization.

What is it? Management function. Subset of Human Resource

Management.

Function Reactive Proactive

Objective To improve the performance To develop the skills, knowledge

of the employees. and competency of employees.

Process Routine Ongoing

 BASIS FOR
COMPARISO HRM HRD
N

Dependency Independent It is a subsystem.

Concerned People only Development of the entire

with organization.

1.2.7 Challenges of Human Resource Management

Human Resource Management used to be considered as other conventional

administrative jobs. But over a period of time, it has evolved as a strategic function to
improve working environment, plan out human resources needs and strike a balance
between the organization and employers in order to increase organizational
productivity and meet organizational goals. Not to exaggerate but in today’s highly
competitive world it has gradually become one of the most important functions of an
organization.

It is really a huge challenge to understand the psychology of workforce, retain the

best talents of the industry, motivate them to perform better and handle diversity
while maintaining unity simultaneously, especially in countries like India, where it is
still evolving. Globalization has resulted in many positive developments but it has left
many concerns for HR managers.
In today’s tough world and tight job market, coordinating a multicultural or diverse
workforce is a real challenge for HR department

Human resource managers are on their toes to strike a balance between employer and
employees keeping in mind the recent trends in the market. They may find
themselves in dire consequences if they are not able to handle the human resource
challenges efficiently

Various Challenges Before HR

1. Diversity at workplace
Workplace diversity refers to the variety of differences between people in an
organization. Diversity encompasses race, gender, ethnic group, age, personality,
cognitive style, tenure, organizational function, education, background and more.
Diversity not only involves how people perceive themselves, but how they perceive
others. Those perceptions affect their interactions. For a wide assortment of
employees to function effectively as an organization, human resource professionals
need to deal effectively with issues such as communication, adaptability and change.
Diversity will increase significantly in the coming years. Successful organizations
recognize the need for immediate action and are ready and willing to spend resources
on managing diversity in the workplace now.
Diversity
Challenges of Diversity in the Workplace

Taking full advantage of the benefits of diversity in the workplace is not without its
challenges. Some of those challenges are: Race

Gender barriers need to be overcome for

Communication - Perceptual, cultural and language
Age
diversity programs to succeed. Ineffective communication of key objectives results in
confusion, lack of teamwork, and low morale. Culture

Language

Attitude

Perspective

Background
 Others

Resistance to change - There are always employees who will refuse to accept the fact
that the social and cultural makeup of their workplace is changing. The “we’ve always
done it this way” mentality silences new ideas and inhibits progress.

Implementation of diversity in the workplace policies - This can be the overriding

challenge to all diversity advocates. Armed with the results of employee assessments
and research data, they must build and implement a customized strategy to maximize
the effects of diversity in the workplace for their particular organization.

Successful Management of Diversity in the Workplace - Diversity training alone is

not sufficient for your organization’s diversity management plan. A strategy must be
created and implemented to create a culture of diversity that permeates every
department and function of the organization.

2. Employee Empowerment

Employee empowerment is the process of allowing employees to make their own

decisions and getting employees involved in helping to make decisions that affect the
entire company. The upside to empowerment is that you get an employee population
that is involved intimately in the success of the company. However, there are many
challenges associated with employee empowerment as well.

While empowering a workforce encourages employees to think on their own, it can

create chaos by developing different messages from various employees. What may
work for one employee may not be effective for another, and rather than creating a
cohesive company message, you wind up with fragments of individual messages. This
can become challenging in the area of customer service, for example, when one
representative may handle a similar situation differently from her counterpart within
the company. When two customers with the same issue get two different resolutions,
this can lead to a disconnect between the company and the customer.
Insufficient Training
When managers are taken out of the day-to-day decision-making process for
empowered employees, it becomes necessary to increase the amount of training for
employees to help strengthen each individual's skill set. A lack of training in an
empowered environment can create situations in which employees are working on
intuition rather than following company policy. As a result, customers can wind up
with incompatible solutions or insufficient information in answer to a question.

Reluctant Managers
According to employment expert Dr. Rick Johnson, writing on Evan Carmichael's
marketing website, the challenges in some empowered environments can come from
the managers. Some managers may not feel that their employees are competent
enough to handle an empowered environment, and those managers will still maintain
an employee-manager business model that can interfere with implementing the
employee empowerment model. In this situation, it helps if managers work closely
with their employees and gain the confidence in their employees necessary to allow
the empowerment model to take hold.

Breakdown of Organizational Structure

As employees gain more confidence in an empowered environment, they begin to feel
they can take on more crucial decisions. Managers need to create clear guidelines for
empowerment, or they risk the possibility that the hierarchy within the
organizational structure will break down, making it difficult for them to maintain
control over their employees.

3. Downsizing

Downsizing in any business is generally not viewed by employees or management as

a positive practice, although it can result in many positives, such as staying in
business, cost savings and business strength. Managers are loathe to be the ones to
carry out the process and typically leave this unwelcome duty to human resources
professionals. Company downsizing can cause rising stress levels and increased
workloads for HR departments. With knowledge and skill, however, HR can
successfully navigate through workforce layoffs.

More than at any other time, during periods of layoffs your HR personnel are tasked
with maintaining employee morale. As workers see others leaving the company, they
may need more attention and assurances about the security of their jobs. In
administering to departing employees, HR staff members must call on fairness and
compassion. Human resources professionals must also ensure there is equity in the
layoff selection to avoid the appearance of favoritism as some employees retain their
jobs while others do not. HR must take into consideration the percentages of those
being dismissed who are designated as part of legally protected minority groups.

Human resources management is affected to a great degree with the issue of staffing
after layoffs. When business is short staffed, management may be tempted to
overschedule employees. HR is charged with making sure there are enough
employees to cover shifts and adequately perform the tasks necessary to keep your
business running. This translates to overseeing scheduling, monitoring hours and
regulating overtime to remain in compliance with labor laws. Additionally, when
union employees remain employed, HR must maintain any job and safety restrictions
imposed by the union.

One avenue some businesses follow during the course of downsizing involves salary
freezes. HR personnel may be required to oversee and track such freezes, and
administer salary reductions. Some employees may be asked to take early retirement
as a business cost-saving measure, and human resources staff members manage these
voluntary terminations, which could involve the administration of increases in
pensions, continued health benefits and other payouts.

Employees departing as a result of layoffs may be eligible for state unemployment

benefits. Human resources staff members experience an increase in paperwork created
by maintaining accurate records supporting unemployment claims. As business levels
rise, HR is obliged to begin filling open positions by arranging for the rehire of past
employees, as well as engaging in new recruitment, interviewing and general hiring
activities.

4. Voluntary Retirement Scheme

Voluntary retirement scheme (VRS) refers to voluntary retirement scheme,

when company faces the problem of surplus labor, they have to remove the extra
workers. This needs to be done to avoid increase in cost. One of the methods used
by the companies is the methods used by companies is the VRS scheme. Under this
scheme people have put in 20 or more number of years of service are given an
option to opt for early retirement benefits and some other amount which is due to
them are paid when they leave the company. Voluntary retirement programs offer
employees an incentive to commit to employment with their employer for a
significant number of years. Voluntary retirement programs can also provide
employees with an option to retire before the minimum age of a government
pension scheme. It is an offer to certain employees as an incentive to retire. It
usually contains generous benefits and is typically targeted at employees in middle
age and/ or those who have been with a company for a considerable amount of time.

5. Managing Change
Bringing change in organizational processes and procedures, implementing it and
then managing it is one of the biggest concerns of HR managers. Business
environment is so volatile. Technology keeps changing every now and then. All
thanks to globalization. Upgrading the existing technology and training people for
them is a real headache for HR department. The success rate of technology change
depends how well HRD can handle the change and manage people issues in the
process.

Organizational change occurs when a company makes a transition from its current
state to some desired future state. Managing organizational change is the process of
planning and implementing change in organizations in such a way as to minimize
employee resistance and cost to the organization while simultaneously maximizing
the effectiveness of the change effort.

Today's business environment requires companies to undergo changes almost

constantly if they are to remain competitive. Factors such as globalization of markets
and rapidly evolving technology force businesses to respond in order to survive. Such
changes may be relatively minor—as in the case of installing a new software program
—or quite major—as in the case of refocusing an overall marketing strategy, fighting
off a hostile takeover, or transforming a company in the face of persistent foreign
competition.

Organizational change initiatives often arise out of problems faced by a company. In

some cases, however, companies change under the impetus of enlightened leaders
who first recognize and then exploit new potentials dormant in the organization or its
circumstances. Some observers, more soberly, label this a "performance gap" which
able management is inspired to close.
But organizational change is also resisted and—in the opinion of its promoters—fails.
The failure may be due to the manner in which change has been visualized,
announced, and implemented or because internal resistance to it builds. Employees,
in other words, sabotage those changes they view as antithetical to their own
interests.

6. Retaining the Talents:

Globalization has given freedom to working professionals to work anywhere in the

world. Now that they have endless lucrative opportunities to work, hiring and
retaining the best industry talent is no joke. Maintaining harmonious relations with
them, providing excellent work environment and offering more remuneration and
perks than your competitors can retain and motivate them. One of the biggest
challenge facing professionals in human resource management today is the
development of an effective HR strategy that aligns with and supports your
organization’s short- and long-term business goals. But even as high unemployment
persists, employers are still facing a shortage of candidates with the right skills and
experience to fill critical jobs. To further complicate matters, employee engagement is
at its lowest level in years, putting you at risk of losing critical talent. That’s why
retaining key employees should be a top priority for effective talent management that
supports your human resource management strategies and overall corporate
objectives. This paper discusses the Pay for Talent model, which incorporates
performance management, succession planning, and compensation management, as
well as recommendations for determining organizational readiness and implementing
a successful program that drives business results today and into the future.

7. Conflict Management
HR managers should know how to handle employee-employer and employee-
employee conflicts without hurting their feelings. Although it is almost impossible to
avoid conflicts among people still handling them tactfully can help HR managers to
resolve the issues. They should be able to listen to each party, decide and
communicate to them in a convincing manner in order to avoid future conflicts. For
the human resources professional, it is important to be able to identify conflict in the
workplace and know how to quickly and effectively resolve the underlying issues in a
positive way. Resolving conflict in a positive manner can lead to much-improved
professional and personal relationships. Mastering a few fundamental conflict
resolution skills can enable you to become a better leader, decision-maker, co-worker
and friend.

Whether dealing with a disagreement between co-workers or breaking through a

standstill in a job contract negotiation, conflict resolution is best approached through
a deliberate process that considers the different conflict resolution styles of each
participant. Done well, conflict resolution can save relationships, time and resources,
while improving productivity and helping move projects forward toward completion.

8. Managing Attrition

Attrition is one of the major challenges before HR. In today’s fast changing world ,
nothing is permanent . So are employees. But higher attrition rate makes the company
highly volatile and there are continuous chances of downfall. In recent months, there
has been a spate of news items about how attrition is taking its toll on many
organizations in Asia and especially in the IT sector in India. Whereas in the west,
because of the recession and the gloomy economic conditions, attrition is no longer
an issue and instead, layoffs are the order of the day, in relatively better performing
Asian countries, attrition has come back to haunt the companies. There are many
reasons for attrition and usually research has shown that the most cited reason is that
the employee is unable to get on with his or her manager. The adage that employees
leave managers rather than organizations is a favorite catchphrase among
management experts and organizational behavior theorists. Having said that, it must
be remembered that attrition is also because of other factors like employees being
unhappy with their salary or the raise that they get after the appraisal period. Further,
attrition can also be because employees perceive that the current organization is not
doing well and hence, they are on the lookout for better performing peers and
competitors. Apart from this, attrition is also because employees find jobs in other
companies that are more fulfilling and match their skill sets and profiles.

9. Managing Motivation level of Employees

Keeping the Employees motivated is another challenege which HR has to fught with
in regular course of action. Since motivation level of each employee is different from
other , hence it become a big challenge for Hr to manage the same.

HR professional must be proactive with all strategies and action plans in order to meet
the changing needs of the organization. They must be thorough with the basic
functions of HR including planning, organizing, leading and controlling human
resources.

Talking about the impact of layoffs on the employees who have remained in the
organization, the HR staff also has the challenging task of keeping these employees
motivated and not making them look over their shoulders periodically to check
whether they are next in line to be laid off. Indeed, this is a delicate and often-
diplomatic exercises that must be carried out with finesse in the same manner exits
are handled. The other aspect of the recessionary times is that more often than not,
companies do not hand out pay hikes and bonuses and hence, there tends to be a slack
in morale among the employees. This is another of those tasks that the HRM function
 has to manage in recessionary times. Given the fact that many companies are
struggling to stay afloat and which leads to resignations from key employees who do
not see a future for themselves in the companies, it is important to remember that the
HRM function must be bolstered rather than cut down to handle these unpleasant
tasks.

Other classification of Challenges :

1. Environmental Challenges
2. Organizational Challenges
3. Individual Challenges

Environmental Challenges:

The environmental challenges are related to the external forces that exist in the
outside environment of an organization & can influence the performance of the
management of the organization. These external forces are almost out of control of
the management of the organization. These can be regarded as threats to management
& should be handled in a proactive manner.

Following are the list of human resource management challenges that considered as
the environmental challenges.

1. Rapid Change
2. Work Force Diversity
3. Globalization
4. Legislation
5. Technology
6. Job & Family Roles
7. Lack of Skills

1. Rapid Change:
 The world is changing at a faster rate because change is constant from several
centuries. So the management of the organizations should be quickly adaptive to the
changing requirement of the environment otherwise they become obsolete from the
market. The human resource management of an organization plays a basic role in
response to the environmental change. The HR department should adopt such
policies that can avail the new opportunities of the environment & keep the
organization away from the newly emerging threats.

2. Work Force Diversity:

The changing environment provides both the opportunities & threats to the human
resource management of the organization. The HR manager should adopt such
policies that can make possible the diverse work force of employees. Although on one
hand diversity creates big problem but in the long run, the survival & performance of
the organization is flourished.

3. Globalization:
One of the serious issue that today’s organizations are facing is the issue of
globalization. The world is converting into global business and severe competition is
started between domestic & foreign companies. Such competition results in the laying
off the effective workforce of the organization. The HR department can play an
important role in keeping the culture of the organization as global & wider.

4. Legislation:
It is the old environmental challenge that is faced by organization since many
decades. There are certain labor laws that are declared by the government for the
benefits of the working employees. Some of these laws are disadvantageous to the
interests of the organizations so it is a one of the big challenges for the HRM to
implement all those labor laws within the organizations. If any of such law is violated,
serious actions are taken by the relevant government authority that may result into
serious penalty for the management of the organization.

5. Technology:
The technology is also growing with great speed especially in the field of computer &
telecommunication. New methods are emerging that quickly dominates the older
ones & makes them obsolete. Therefore the skills required by the employees also
 changes with the changing technology & this would compels the worker to advance
the skills three to four times throughout their working lives. So there comes a burden
on the HR department to constantly update the skills & expertise of their employees.

6. Job & Family Roles:

In recent years, dual-career families are increasing in which both the wife & husband
work. This creates a serious burden on the women that they have to give time to their
families also. In many organizations the policies of HR favors the employment of
more than 10 years. The working hours of the organizations are also strict and tight
for the employees. Moreover, the selection & training procedures are two tough and
time consuming so most of the talented women hesitate to join any organization
which would result in the wastage of talent and potential. Even working men also
suffer from these employment policies because they do not properly give time to their
families. So the challenges for the HRM increases with this particular issue & special
favorable working policies are needed to be employed in all organizations.

7. Lack of Skills:
The service sector development is expanding due to many reasons like change in the
tastes & preference of customers, technological change, legal change etc. All of this
affected the structure and managing style of the business organizations. The skills
required in the employment of service sector is also advancing but the graduates of
the technical colleges & universities are groomed according to the latest
requirements. Therefore most of the employees lack the standard required skills to
perform their duties and it becomes a big challenge for HRM to properly train these
new & old employees to become an efficient & effective workers.

Organizational Challenges:

The organizational challenges for the HRM are related to the factors that are located
inside the organization. Although these challenges are evolved as a byproduct of the
environmental challenges but these can be control by the management of the
organization to much extent. The proactive HR managers take notice of such
challenges in advance and take corrective measures before these would convert into
serious issues. The human resource management challenges within the organization
include competitive position & flexibility, organizational restructuring & issues of
 downsizing, the exercise of self managed teams, development of suitable
organizational culture etc.

When the workforce of an organization is effectively used in combination with other

factor of production, the opportunities of the environment are availed & the threats
are eliminated. The competitive position of the organization can be influenced by the
policies of HR in the following ways.

 Controlling Costs
 Improving Quality
 Developing Distinctive Capabilities
 Restructuring
1. Controlling Costs:
An organization can avail the competitive position by lowering its cost &
strengthening its cash flows. For this purpose, the labor cost of the organization is
minimized through effective compensation system that adopts innovative reward
strategies for good performances. In this way the favorable behaviors of the
employees are rewarded so the organization would get the ultimate advantage.
Moreover the policies of compensation should keep the labor cost under control. The
effective employees should be selected that keep with the organization for a longer
duration & proper training should also be provided to these employees. The HR
department should also restore the work of the employees along with the
improvement in the health & safety issue of working environment. All of these efforts
would limit the cost of labor.

2. Improving Quality:
The quality improvement can lead an organization towards competitive advantage.
The total quality management programs are employed that improves all the processes
within the organization which would ultimately result in the improvement of the
final product or service.

3. Developing Distinctive Capabilities:

Another method of gaining competitive advantage is to employ the people that have
distinct capabilities to develop extra ordinary competence in specific area.
 4. Restructuring:
Another technique is the restructuring of the organization in which the methods of
performing different functions are altered positively. In case of HR department, the
majority of functions are still performed within the organization.

In some organizations the major functions of HR department are now transferred to

the other parties in the shape of outsourcing, shared service center etc. The sizes of
HR department in those organizations are shrinking because most of functions are
performed by outsiders. But in most of the organizations the HR manager performs all
the relevant functions of HRM. The HR department is now involved in the mission
oriented & strategic activities.

Individual Challenges:

The decisions related to the specific individual employees are included in the
individual challenges for the HRM. The organizational issues are also affected by the
fact that how employees are treated within the organizations. The problems related to
the individual level are as follow.
Individual Challenges

 Productivity
 Empowerment
 Brain drain
 Ethics & social responsibility
 Job insecurity
 Matching people & organization

1. Productivity:
Productivity is defined as the measure of the value that an employee can add to the
final product or service of the organization. The increased output per employee is
reflected as increased productivity. Ability & motivation are two important factors
that affect the employee productivity. The ability of the employee can be improved
by the hiring & replacement along with the proper training & career development.
On the other high quality of work life serves as accelerator to the motivational factor
of the employees.

2. Empowerment:
In the modern days many organizations make changes in such a way that their
individual employees exert more control on their work as compared to their
superiors. This individual control of employees is called empowerment which helps
the employees to work with enthusiasm, commitment & learn new skills because they
are more make normal decisions about their work by themselves & hence enjoy their
work.

3. Brain Drain:
One of the challenges for HRM is the detachment of the key potential employees
from the organization which link with the competitors for higher remunerations etc.
In such cases the organization loses its intellectual property & in many situations the
leaving employees at the higher levels also take with them the potential lower level
employees. This brain drainage is becoming serious issue in the high-Tec companies.

1.2.8 Human Resources Information System (HRIS),

HRIS refers to the systems and processes at the intersection between human resource
management  and information technology. It merges HRM as a discipline and, in
particular, its basic HR activities and processes with the information technology field,
whereas the programming of data processing systems evolved into standardized
routines and packages of enterprise resource planning (ERP) software. On the whole,
these ERP systems have their origin from software that integrates information from
different applications into one universal database. The linkage of its financial and
human resource modules through one database is the most important distinction to
the individually- and proprietarily-developed predecessors, which makes this
software application both rigid and flexible.

A Human Capital Management Solution, Human Resources Management System

(HRMS), or Human Resources Information System (HRIS), as it is commonly called, is
the crossing of HR systems and processes with information technology. Human
Resource Information Systems provide a means of acquiring, storing, analysing and
distributing information to various stakeholders. [2] HRIS enable improvement in
traditional processes and enhance strategic decision making. [2] The wave of
technological advancement has revolutionized each and every space of life today, and
HR in its entirety was not left untouched. Early systems were narrow in scope,
typically focused on a single task, such as improving the payroll process or tracking
employees' work hours. Today's systems cover the full spectrum of tasks associated
with Human Resources departments, including tracking & improving process
efficiency, managing organizational hierarchy, and simplifying financial transactions
of all types. In short, as the role of Human Resources departments expanded in
complexity, HR technology systems evolved to fit these needs.

The function of human resources (HR) departments is administrative and common to

all organizations. Organizations may have formalized selection, evaluation, and
payroll processes. Management of "human capital" progressed to an imperative and
complex process. The HR function consists of tracking existing employee data which
traditionally includes personal histories, skills, capabilities, accomplishments and
salary. To reduce the manual workload of these administrative activities,
organizations began to electronically automate many of these processes by
introducing specialized human resource management systems. HR executives rely on
internal or external IT professionals to develop and maintain an integrated HRMS.
Before client–server architectures evolved in the late 1980s, many HR automation
processes were relegated to mainframe computers that could handle large amounts of
data transactions. In consequence of the high capital investment necessary to buy or
program proprietary software, these internally developed HRMS were limited to
organizations that possessed a large amount of capital. The advent of client–
server, application service provider, and software as a service(SaaS) or human
resource management systems enabled higher administrative control of such systems.
Currently human resource management systems encompass:
 1. retaining

2. hiring

3. administration

4. managing

5. HR planning

6. Recruiting/Learning management

7. Performance record

8. Employee self-service

9. Scheduling

10.Absence management

11. Analytics

12.Employee Re-assign module

13. Grievance handling by following precedents

The payroll module automates the pay process by gathering data on employee time

and attendance, calculating various deductions and taxes, and generating periodic pay
cheques and employee tax reports. Data is generally fed from the human resources
and time keeping modules to calculate automatic deposit and manual cheque writing
capabilities. This module can encompass all employee-related transactions as well as
integrate with existing financial management systems.

The time and attendance module gathers standardized time and work related efforts.
The most advanced modules provide broad flexibility in data collection methods,
labor distribution capabilities and data analysis features. Cost analysis and efficiency
metrics are the primary functions.

The benefits administration module provides a system for organizations to administer

and track employee participation in benefits programs. These typically encompass
insurance, compensation, profit sharing and retirement.
The HR management module is a component covering many other HR aspects from
application to retirement. The system records basic demographic and address data,
selection, training and development, capabilities and skills management,
compensation planning records and other related activities. Leading edge systems
provide the ability to "read" applications and enter relevant data to applicable
database fields, notify employers and provide position management and position
control. Human resource management function involves the recruitment, placement,
evaluation, compensation and development of the employees of an organization.
Initially, businesses used computer-based information systems to:

 produce pay checks and payroll reports;

 maintain personnel records;

 pursue talent management.

Online recruiting has become one of the primary methods employed by HR

departments to garner potential candidates for available positions within an
organization. Talent management systems typically encompass:

 analyzing personnel usage within an organization;

 identifying potential applicants;

 recruiting through company-facing listings;

 recruiting through online recruiting sites or publications that market to both

recruiters and applicants.

The significant cost incurred in maintaining an organized recruitment effort, cross-

posting within and across general or industry-specific job boards and maintaining a
competitive exposure of availabilities has given rise to the development of a
dedicated applicant tracking system, or 'ATS', module.
The training module provides a system for organizations to administer and track
employee training and development efforts. The system, normally called a "learning
management system" (LMS) if a standalone product, allows HR to track education,
qualifications and skills of the employees, as well as outlining what training courses,
books, CDs, web based learning or materials are available to develop which skills.
Courses can then be offered in date specific sessions, with delegates and training
resources being mapped and managed within the same system. Sophisticated LMS's
allow managers to approve training, budgets and calendars alongside performance
management and appraisal metrics.

The employee self-service module allows employees to query HR related data and

perform some HR transactions over the system. Employees may query their
attendance record from the system without asking the information from HR
personnel. The module also lets supervisors approve O.T. requests from their
subordinates through the system without overloading the task on HR department.

Many organizations have gone beyond the traditional functions and developed
human resource management information systems, which support recruitment,
selection, hiring, job placement, performance appraisals, employee benefit analysis,
health, safety and security, while others integrate an outsourced applicant tracking
system that encompasses a subset of the above.

The Analytics module enables organizations to extend the value of an HRMS

implementation by extracting HR related data for use with other business intelligence
platforms. For example, organizations combine HR metrics with other business data
to identify trends and anomalies in headcount in order to better predict the impact of
employee turnover on future output.

There are now many types of Human Resources Management System

(HRMS) or Human Resources Information System (HRIS) some of which are typically
local-machine based software packages the other main type is an online cloud-based
system which can be accessed via a web browser.

The Staff Training Module enables organizations the ability to enter, track and

manage employee and staff training. Each type of activity can be recorded together
with the additional data. The performance of each employee or staff member is then
stored and can be accessed via the Analytics module.

Employee Re-Assign module is a recent additional functionality of HRMS. This

module has the functions of Transfer, Promotion, Pay revision, Re-designation,
Deputation, Confirmation, Pay mode change and Letter Formats

1.3 Summary

It is clear from the above paragraphs that HRM denotes a shift in focus and strategy
and is in tune with the needs of the modern organization. HRM concentrates on the
planning, monitoring and control aspects of resources whereas Personnel
Management was largely about mediating between the management and employees.
Many experts view Personnel Management as being workforce centered whereas
HRM is resource centered. In conclusion, the differences between these two terms
have to be viewed through the prism of people management through the times and in
context of the industry that is being studied.

1.4 Key Words

Personnel Management : It is most effective use of people to achieve organizational

and individual goals. It helps in managing people to work so that give their best to
organization
Employee counseling : It is a process by which employees are given advice in solving
work related as well as personnel problems.
Competency : Ability of a person to perform any task successfully exceptionally well
and increase the stock of targeted resources within the firm.
Core competency : Activities that the firm performs especially well when compared
to its competitors and through which the firm adds value to its goods and services
over a long period of time
Personnel policies : A set of proposals and actions that acts as a references point for
managers in their dealing with employees.

1.5 Questions for Self Study

How can we deal with Workforce Diversity?

What are various challenges before HR manager?

1.6 Further Readings

C Gupta, Human Resource management, Sultan Chand & sons, New Delhi
VSP Rao, Human Resource management, 2nd Edition, Excel Books, New Delhi