CHAPTER I

INTRODUCTION TO HUMAN RESOURCE MANAGEMENT

 OBJECTIVES:

After studying this chapter, you would be able to:

1) Know the basic concepts of human resource management (HRM)

2) Acquainted with the major human resource management functions.
3) Understand personnel issues under different schools of thoughts
4) Analyze the context (the environment) within which human resource
management functions.

 WHAT IS HUMAN RESOURCE MANAGEMENT?

Before giving an answer to this question, it would be better to define

"management" it self. The reason to this is that human resource management
belongs to the broader field of study and practice known as management.

M anagement can be defined as the process of reaching organizational goals by

working with and through people and other resources. Management in all areas
of life implies achieving goals with effective and efficient use of organizational
resources.
Organizational resources can be grouped into four major categories:
 Human resources
 Financial resources
 Physical resources
 Information resources
Human resources are among the fundamental resources available to any
organization. Emphasizing the importance of human resources, some prominent
writers define management as the process of getting things done with and
through other people.

Human resource management (HRM) is thus a part of the field of management.

HRM, can be defined as the utilization of human resources to achieve
organizational objectives. It can broadly be seen as that function of all
organizations which provides for effective utilization of human resources to
achieve both the objectives of the organization on one hand and the satisfaction
and development of employees on the other hand (Glueck, 1992).
In defining and studying human resources management some points need to be
emphasized:

 Human resources management is concerned with the people dimension of

the organizational management.

1
  Human resource management is a pervasive activity, meaning a universal
activity in any type of organization: government, business, education,
health, defense, recreation, etc.
 The human resource is said to be the most important ( or critical) element
in an organization since people make the decisions concerning all other
organizational resources. Therefore, getting and keeping good people is
critical to the success of every organization, whether profit or non-profit,
public or private.

In an organization, managers at all levels must concern themselves with human

resource management at least to some extent. Basically, it has been said,
managers get things done through the efforts of others, which basically requires
effective human resource management (Monday & Noe, 1990).

A human resource manager is an individual who normally acts in an advisory,

or "staff", capacity, working with other managers to help them deal with human
resource matters. The human resource manager is primarily responsible for
coordinating the management of human resources to help the organization
achieve its goals.

Some writers in the field and other management people may use such names as
"personnel", "personnel management", "manpower management", and "employee
relations" to say the same thing: human resource management.

 MAJOR HRM FUNCTIONS AND OBJECTIVES

o OBJECTIVES

The primary objectives of HRM is to ensure the availability of a competent and

willing workforce to an organization. Beyoned this, there are other objectives,
too. Specifically, HRM objectives are four fold – societal, organizational,
functional and personal.
 Societal Objectives : To be ethically responsible to the needs and
challenges of the society while minimizing the negative impact of such
demands upon the organization.
 Organizational Objectives: to recognize the role of HRM in bringing
about organizational effeteness. HRM is not an end itself. It is only a means
to assist organization with its primary objectives.
 Functional Objectives: to maintain the department’s contribution at a
level appropriate to the organization’s needs.
 Personnel objectives: to assist employees in achieving their personal
goals, at least insofar as these goals enhance the individual’s contribution
to the organization.


2
 o FUNCTIONS
Human resource management functions are the set of activities performed in
utilizing human resources for better achievement of organizational objectives.
Following are the major elements (Mondy & Noe, 1990):

1. Human Resource Planning

Human resource planning (HRP) is the process of systematically reviewing
human resource requirements to ensure that the required numbers of
employees, with the required skills, are available when they are needed.
HRP is the process of matching the internal and external supply of people
with job openings anticipated in the organization over a specified period of
time.

2. Recruitment
Recruitment is the process of attracting individuals in sufficient numbers
and encouraging them to apply for jobs with the organization. It is the
process of identifying and attracting a pool of candidates, from which some
will later be selected to receive employment offers.

3. Selection
Selection is the process of choosing from a group of applicants the
individuals best suited for a particular position. Whereas recruitment
encourages individuals to seek employment with a firm, the purpose of the
selection process is to identify and employ the best qualified individuals
for specific positions.

4. Orientation
Orientation is the formal process of familiarizing new employees with the
organization, their job, and their work unit. Through orientation (also
called socialization or induction) new employees will acquire the
knowledge, skills, and attitudes that make them successful members of
the organization.

5. Training and Development

Training and development aim to increase employee's ability to contribute
to organizational effectiveness. Training is a process designed to maintain
or improve performance (and skills) in the present job. Development is a
programme designed to develop skills necessary for future work activities.
It is designed to prepare employees for promotion.

6. Compensation Administration
Compensation administration refers to the administration of every type of
reward that individuals receive in return for their services. In its boarder
sense, compensation represents all sorts of rewards that individuals
receive as a result of their employment.

3
 7. Performance Evaluation
Performance evaluation is a formal system of periodic review and
evaluation of an individual's job performance.

8. Safety and Health

Safety involves protecting employees from injuries caused by work-
related accidents. Health refers to the employees freedom from illness
and their general physical and mental well-being. These aspects of the
job are important because employees who work in a safe environment
and enjoy good health are more likely to be productive and yield long -
term benefits to the organization.

9. Promotions, transfers, demotions and separations

Promotions, transfers, demotions, and separations reflect an employee's
value to the organization. High performers may be promoted or
transferred to help them develop their skills, while low performers may
be demoted, transferred to less important positions, or even separated.

10. Human Resource Research

Human resource research is a systematic gathering, recording, analyzing,
and interpretation of data for guiding human resource management
decisions. Every human resource management function needs effective
research.

11. Other areas such as employee and labour relations, collective bargaining,
employee rights and discipline, and retirement are also concerns of
human resource management.

 HISTORICAL DEVELOPMENT: AN OVERVIEW

Personnel, according to some writers, at least in a primitive form, have existed

since the dawn of group effort. Certain personnel functions, even though
informal in nature, were performed whenever people came together for a
common purpose. During the course of this century, however, the processes of
managing people have become more formalized and specialized, and a growing
body of knowledge has been accumulated by practitioners and scholars.

For many decades such responsibilities as selection, training and compensation

were considered basic functions constituting the area traditionally referred to
as personnel. These functions were performed without much regard for how
they related to each other. From this narrow view the world has seen the
emergence of what is now known as human resources management.

4
Human resources management (HRM), as it is currently perceived, therefore,
represents the extension rather than the rejection of the traditional
requirements for managing personnel effectively.

Understanding Personnel Issues Under Different Schools of

Thoughts: Scientific Management And Human Relations School

1. Scientific Management
Scientific management is one of the classical schools of thoughts in
management. This approach was initially formulated with the aim of increasing
productivity and makes the work easier by scientifically studying work methods
and establishing standards.

Frederick W. Taylor played the dominant role in formulating this theory and he
is usually named as the father of scientific management. Scientific management,
sometimes called Taylorism, has a strong industrial engineering flavor. Taylor
himself was a mechanical engineer whose primary aim was maximizing profits
and minimizing costs of production. The guiding principle of this school was
"getting the most out of workers".

Taylor disliked wastage and inefficiency. During his time, in some working areas,
employees tended to work at a slower pace. And this tendency, according to him,
was a cause for less productivity and efficiency. Managers were unaware of this
practice because they had never analyzed the jobs closely enough to determine
how much the employees should be producing.

Frederick Taylor based his management system on production-line time studies.

Instead of relaying on traditional work methods, he analyzed and timed each
element of workers' movements on a series of jobs. Once Taylor has designed the
job, he thereby established how many workers should be able to do with the
equipment and materials at hand. Next, he implemented a piece -rate pay
system. Instead of paying all employees the same wage, he began increasing the
pay of each worker who met and exceeded the target level of output set for his
job.

Taylor encouraged employers to pay more productive workers at a higher rate

than others. To realize this he developed a differential rate system, which
involves the compensation of higher wages to more efficient workers (Stoner &
Freeman, 1992).

Frederick Taylor rested his philosophy on some basic principles (Stoner &
Freeman, 1992):
1. The development of a true science of management, so that the best
method for performing each task could be determined.

5
 2. The scientific selection of workers, so that each worker would be given
responsibility for the task for which he best suited.
3. The scientific training (education) of the worker.
4. Intimate, friendly cooperation between management and labour.
5. A division of responsibility between management and labour.

Frederick Taylor saw scientific management as benefiting both management and

the worker equally: management could achieve more work in a given amount of
time; the worker could produce more and hence earn more-with little or no
additional effort. Taylor strongly believed that employees could be motivated by
economic rewards, provided those rewards were related to individual
performance.

Scientific management, according to Rue and Byars (1992), was a complete

mental revolution for both management and employees toward their respective
duties and toward each other. It was, at that time, a new philosophy and attitude
toward the use of human effort. It emphasized maximum output with minimum
effort through the elimination of waste and inefficiency at the operative level.

Scientific management basically had a focus on such areas as:

 techniques of production
 the most efficient method
 rigid rules of performance
 using the shortest time possible
 workers productivity /efficiency
 minimum cost of production hence maximum profit
 highly refined tools and materials
 training and closer supervision, etc.

Scientific management, because of its fundamental ideas, has been subject to

strong critics. This school of thought was and still is considered to be limited by
its basic assumptions, particularly, about human beings.
During the time of Taylor, the popular model of human behavior held that people
were rational and motivated primarily to satisfy their economic and physical
needs. Employees were considered as an extension of machine, as a factor of
production, and as an economic unit. Thus, employees, according to Taylor, could
be motivated solely by economic rewards or material gain.

Nevertheless, the Taylor's model of motivation overlooked the human desire for
job satisfaction and the social needs of workers as a group, failing to consider
the tensions created when these needs are frustrated. Furthermore, the
emphasis on productivity and profitability led some managers to exploit both
workers and customers of the organization. As a result more workers started to
join labour unions to challenge the behavior of management.

6
 2.The Human Relations Movement
The human relations movement, as the name implies is said to stress the human
element in the work place. This movement was started as a reaction against the
doctrines and practices of scientific management. According to the beliefs of this
theory, labor is not a commodity to be bought and sold. Workers must be
considered in the context of the groups of which they are a part (Griffith, 1979).

The human relation was interdisciplinary in nature. It was founded on new

knowledge's developed in the areas of psychology, group dynamics, sociology,
political science, and labor economics.

The human relations movement basically grew from the Howthrone Experiments
conducted by a scholar known as Elton Mayo. After extensive studies, Elton
Mayo argued that workers respond primarily to other social context of the work
place, and his conclusions include:
 Work is a group activity
 the need for recognition, security, and a sense of belonging is more important
in determining workers' morale and productivity than the physical conditions
under which he works.
 The worker is a person whose attitudes and effectiveness are conditioned by
social demands from both inside and outside the work place.
 Informal groups within the work place exercise strong social controls over the
work habits and attitudes of the individual worker.

The proponents of scientific management are criticized to look on the employee

as an economic unit, a factor of production, and an extension of a machine who
is motivated only by a desire for material gain. The human relationists, on the
other hand, considered the worker as a complete human being with attitudes and
needs which profoundly affected his work. It follows then that organizations
must provide for the satisfaction of all human needs to obtain the most from
their employees.

Scientific management did not consider the existence of informal relationship as

it exists side by side with the formal one. As recognized by the human
relationists, informal organizations exist and play important part in the life of the
worker. Informal organizations consist of social relationships among employees.

Informal organization is voluntary in origin, its purpose is not clear, it has no

hierarchy of positions and it ceases to exist when its members left. Many workers
get their satisfaction in the informal groups where they are treated as
individuals, not as a part of a machine in the plant. The friendliness and
recognition of their co-workers compensate for their impersonal treatment by the
large and complex formal organization.

In these informal and shifting groupings, leaders arise. They are not elected or
appointed, they have no legal standing, but they assume leadership roles on the

7
basis of their colleagues' esteem, and together they constitute the informal
authority structure.

The attitude of an employee's primary group, as voiced by the group leader, may
determine whether an official directive will be supported or subverted, whether
employees will cooperate with administrators, or whether work norms will be
raised or lowered. The group can influence a member to interpret rules narrowly
or broadly, to slow down to speed up, to comply or resist.

After several studies and investigations Elton Mayo and his associates tried to
show that workers primarily respond to group, not as individuals. It follows,
then, that administrators should not deal with workers as individual units,
isolated from those they work with, but as members of work groups subject to
group pressure.

The human relations movement also emphasizes that:

 Communication is the life blood of an organization. Therefore, unlike the
thinking of the classical school, information must flow freely, up, down, and
horizontally through established net works of the formal organization and
non-official networks of the informal organization,
 Participative decision making has strong motivating force. Participation in
decision making increases members' level of satisfaction, their enthusiasm
for their organization and their positive attitude towards their organization
and their superiors.

1. THE ENVIRONMENT OF HUMAN RESOURCE MANAGEMENT

Many interrelated environmental factors affect human resource management.

Such factors are part of either the organization's external environment or its
internal environment. The organization has little, if any, control over how the
external environment affects management of its human resources. These factors
impose influences of varying degrees on the organization from outside its
boundaries. Moreover, important factors within the firm itself also have an
impact on how the organization manages its human resources.

The environment of an organization consists of the conditions, circumstances,

and influences that affect the organization's ability to achieve its objectives.
Every organization exists in an environment that has both external and internal
components. As such, a human resource management programme functions in
a complex environment both outside and inside the organization. Human
resource managers therefore should be aware that rapid changes are occurring
within the environment in which organizations operate.

 The External Environment

According to Griffin (1990), the external environment consists of e verything
outside an organization that might affect it. However, the boundary that

8
separates the organization from the external environment is not always clear and
precise. The external environment has a significant impact on human resource
management policies and practices. It helps to determine the values, attitudes,
and behavior that employees bring to their jobs.

The external environment is composed of two layers: the general environment

and the task environment.

 The General Environment

An organization's general environment consists of the nonspecific dimensions and
forces in its surroundings that might affect the organization's activities. These
elements are not necessarily associated with other specific organization or
groups. Instead, they are general forces or processes that interact with each
other and also affect the organizations as a whole. Each embodies conditions
and events that have the potential to influence the organization and its human
resource management activities in significant ways. The general environment of
most organizations has the following dimensions:

1) The Economic Environment

The economic environment refers to the general economic conditions and trends
that may affect the human resource management activities of an organization.
The economic variables include unemployment, demand and supply, inflation,
interest rates, the labour market, and others.

When, for example, unemployment is high, the organization is able to be very

selective about whom it hires. Increased or decreased demand for a firm's
products or services will have important implications for recruitment or layoff.
Inflation has had a significant impact on human resources programme,
necessitating periodic upward adjustments in employee compensation.

2) The Technological Environment

The technological environment includes advances in sciences as well as new
developments in products, processes, equipment, machinery and other materials
that may affect an organization.

Technological advancements have tended to reduce the number of jobs that

require little skill and to increase the number of jobs that require considerable
skill. Technological advances also have training implication. The challenging
areas in human resource management will be training employees to stay up with
rapidly advancing technology. Because, as technological changes occur, certain
skills also are no longer required. This necessitates some retraining of the
current workforce.

9
 3) The Socio-Cultural Environment
The socio-cultural dimension of the general environment is made up of the
customs, values, and demographic characteristics of the society in which the
organization functions.

The socio-cultural dimension influences how employees feel about an

organization. Human resource management, today, has become more complex
than it was when employees were concerned primarily with economic survival.
Today, many employees have more social concerns than mere economic interest
as early times.

4) The Political-Legal Environment

Political variables are the factors that may influence an organizations activities
as a result of the political process or climate. The political-legal environment is
also made up of the laws and regulations within which an organization conducts
its affairs.

Government has a significant impact on human resources management. Each

of the functions performed in the management of human resources, from
employee recruitment to termination, is in some way affected by laws and
regulations established by the government. Human re source managers must
follow all laws and government regulations.

5) The Physical Environment

The physical environment includes the climate, terrain, and other physical
characteristics of the area in which the organization is located. The physical
element can help or hinder an organizational ability to attract and retain
employees. Housing and living costs can vary from one location to another and
can have a significant impact on the compensation, employees will expect.

 The Task Environment

The task environment of an organization consists of individuals, groups, and

organizations that directly affect a particular organization but are not part of it.
The task environment refers to the specific environment of an organization and
may include (Barney, 1992):
 The customer  The Competitor
 T he supplier  The Partner
 The Regulators  The Owners

All these elements are much close and specific to a given organization. Whereas
the elements of the general environment affect virtually all organizations in the
society, the elements of the task environment are pertinent (more relevant) to a
specific organization.

10
  The Internal Environment

The environment that exists within an organization is known as the internal

environment. The internal environment consists those factors that affect an
organization's human resources from inside its boundaries. The internal
environment of an organization includes (Mondy & Noe, 1990):

 Mission
Mission is the organization's continuing purpose or reason for its existence.
Each management level should operate with a clear understanding of the firm's
mission. The specific organizational mission must be regarded as a major
internal factor that affects the tasks of human resource management.

 Policy
A policy is a predetermined guide established to provide direction in decision
making. As guides, rather than hard and fast rules, policie s are somewhat
flexible, requiring interpretation and judgment in their use. They can exert
significant influence on how human resource managers accomplish their jobs.

Although policies are established for marketing, production, and finance, the
largest number of policies often relate to human resource management. Some
potential policy statements that affect human resource management are:
- To provide employees with a safe place to work
- To encourage all employees to achieve as much of their human potential as
possible
- To provide compensation that will encourage a high level productivity in both
quality and quantity.
- To ensure that current employees are considered first for any vacant position
for which they may be qualified.

 Organizational Culture

As an internal environmental factor affecting human resource management,

organizational culture refers to the organization's social and psychological
climate. Organizational culture is defined as the system of shared values, beliefs,
and habits within an organization that interacts with the formal structure to
produce behavioral norms.

Other factors include:

 The organization's management

 The organization's employees
 The organization's structure
 The organization's rules and procedures etc.

11
12