CHAPTER ONE

OVERVIEW OF HUMAN RESOURCE MANAGEMENT

Introduction
Whatever means are used to ensure the creation and delivery of services and goods in modern
economies, the role of individuals and groups as employees and the ability of management to
effectively deploy such a resource is vital to the interests of both employee and organization
alike. For this and other reasons, this chapter introduces our learners with basic concepts of
human resources and human resources management. The chapter starts with definition
management and human resources management and then continues discussing the
importance and objectives, nature and challenges, role and scope of human resources
management. The historical development and scopes of human resources management are
also presented briefly in the chapter.

After you have read this chapter, you should be able to:
 Define management and human resources management.
 Explain the importance and objectives of Human Resources Management for an
organization
 Briefly discuss the historical development of human resources management as a
practice.
 Identify the scope of HRM and state its scope
 Discuss the challenges and nature of human resources management
 Explain different approaches of organization of human resource management's
department

1.1 Meaning of Human Resource Management

Dear learner, before discussing what human resource management is all about; first let us
remind you to define "management". This is because human resource management is part and
parcel of the broad field of study and practice of management. Management has been defined
as the process of achieving organizational objectives with and through the effort of
organizational members and other resources. Therefore, management assumes that:
 An organization is a human association for realizing organizational goals.
 The effectiveness and efficiency of an organization largely depends on the performance of
the people.
 Managerial activities involve human effort and capabilities. It is often said that managers
are not paid for what they do but for what other people do.
These facts, about the 'people side' of an organization, highlight the importance of human
resource in achieving organizational goals. It is human resource that makes use of all other
resources-such as finance, material, information, and time towards goal accomplishment. For
example, however complicated an airplane may be, unless the people with the required skills
and knowledge provide the necessary information to fly, it cannot be operated effectively. This,
therefore, means that people are vital resource to any organization for it is with and through
them that organizational goals are realized. Managing human resources is one of the key
elements in the coordination and management of organization’s work.

Dear readers, so far, we have been discussing the role of people in the achievement of
organizational performance. It is worth now to define human resource management.

 HRM is that part of management concerned with people at work and with their
relationships within an enterprise. It is to bring together and develop into an effective
organization the men and women who make up an enterprise and, having regard for the
well-being of the individual and of working groups, to enable them to make their best
contribution to its success.
 HRM refers to the concept or techniques needed to carry out the people or personnel
aspects of a management position including recruiting, screening, training, rewarding, and
appraising.
 Human resource management is the process of accomplishing organizational objectives by
acquiring, retaining, terminating, developing and properly using the human resources in
an organization.
 HRM is the planning, organizing, directing, and controlling of the procurement,
development, compensation, integration, maintenance, and separation of human
resources to the end that individual, organizational, and societal objectives are
accomplished.

When the definitions are broken down to its specific components, we find the basic
management functions when applied to managing human resources.

Planning: Establishing goals and standards, developing rules and procedure, developing plans
and forecasting – predicting or projecting some future occurrence.
 Determining, in advance, a personnel / HR program that will contribute to the goals of an
enterprise. This may include planning human resource requirement in the organization
and making the necessary preparation to fulfill those requirements (procurement,
recruitment, etc.), planning training programs to enhance HR skill in the required areas,
etc…)
  Besides planning human resource management functions, the HRM department is
responsible to participate in setting up organizational goals/objectives at the various
levels of the organization.

Organizing: Giving each subordinates a specific task; establishing departments; delegating

authority to subordinates; establishing channels of authority and communication; coordinating
the work of subordinates.
 In addition, due to its specialization in the management of human resources and increasing
expertise, other parts of the organization may require their advice in the general structuring
and organizing of the enterprise.

Directing: Getting others to get the job done; maintaining morale; motivating subordinates.

Controlling: Setting standards of performance, checking to see how actual performance

compares with these standards; taking corrective action as needed.

Procurement: Concerned with obtaining proper kind and number of human resources
necessary to accomplish organizational goals.

It specifically deals with determination of HR requirement, recruitment, selection, and

placement. This process is highly dependent on the job design (the kind of job performed),
internal and external factors, etc.

Development: It is the increase of skill, through training and development programs, needed
for proper job performance.

This function is essential as nature of jobs change through time due to technological
advancements, realignment of jobs, and other complexities that come along with expansion of
a business. E.g. Businesses that started small need training to equip their staff with the
necessary skill and knowledge required to deal with a wider and bigger organizational activities.

Development: It is the increase of skill, through training and development programs, needed
for proper job performance.

It could be made in the form of money - salary, bonus, or fringe benefits such as medical
insurance, transportation or housing allowance, dependency allowance, stock options, etc.
Integration: It is concerned with the attempt to effect a reasonable reconciliation of individual,
societal, and organizational interest.

With the employees procured, developed, and reasonably compensated, integration is the
most difficult and frustrating challenges to managers. It rests upon the foundation of a belief
that significant overlapping of interests does exist in our society. It is often the case that there is
a difference in what employees, management, and or society expect from each other.
Consequently, it becomes a very challenging task to deal with employees’ feelings and attitudes
in conjunction with principles and policies of an organization. Thus, HRM is responsible in
identifying areas of discontent from employees and try to consider them when developing
personnel policies and procedures, develop a system where employees could air their
grievances, and also a system where by an organization can take disciplinary action on those
employees who do not go by the established policies.
 HRP

Job Analysis
Procurement Transfer

Staffing: Promotion
Recruitment
Selection Orientation
Placement

Training &
Development

Performance Appraisal

Maintenance Compensation & Reward

Protection (Safety &

Health Management)

Resignation

Separation Discharge

Retirement

Lay-off

Figure 1-1: Key Processes and Systems of Human Resource Management

Maintenance: It is concerned with the perpetuation of the state where by interest of

individuals, organizations and the society is reconciled. It is going to be a continuous effort that
involves the active involvement of the HRM in ensuring that changes that may affect the
reasonably good working environment and make the necessary corrective measures.

Separation: It refers to the process involved in HRM when an employee is separated from an
organization. Depending on the reason why an employee separates from an organization, HRM
will take the necessary action to ensure that such employees pass through required processes
as specified by the policies and procedures of the organization. Some of these reasons include
retirement, layoffs, out-placement, discharge, etc.
1.2 Importance and Objectives of Human Resource Management
Dear reader, can you identify organizational level contributions of HRM? Some of them are:
1. Development and Growth of the Organization
HRM paves way for development and growth in the organization. But how? Can you come out
with some answers? By improving the individual capabilities, acquiring necessary cooperation
and developing teamwork HRM makes sure that the organization develops and grows well.
Goals of the organization are met by HRM by effective motivation and excellent utilization of
employees.
2. Creation of healthy culture in the Organization
HRM creates and maintains excellent culture in the organization and it makes people develop
and grow.
3. Maintenance of Human Resources
The development, care of Human Resources is done by the HRM.
4. The concept of Human being a very crucial and vital factor of production, HRM is gaining
more and more importance day by day. It also has important implication in societal
development also.

Objectives of Human Resources Management

a) To help an organization reach its goals.
b) To employ the skills and abilities of the workforce efficiently. The primary purpose of HRM
is to make people’s strengths productive and to benefit customers, stock-holders, and
employees.
c) To provide the organization with well-trained and well-motivated employees. This implies
that an HRM should create an environment in which motivated people can flourish.
d) To increase to the fullest, the employee’s job satisfaction and self-actualization. It tries to
stimulate every employee to realize his potential. Most employees regard their jobs as
their identity.
e) To develop and maintain a quality of work life (QWL) which makes employment in the
organization a desirable personal and social situation. It involves several aspects of a job
experience. It may include:
f) Management and supervisory style
g) Freedom and autonomy to make decisions on the job.
h) Satisfactory physical surroundings, job safety, satisfactory working hours.
i) Meaningful tasks
j) To communicate personnel policies to all employees. It is the responsibility of HRM to
communicate managerial decisions to employees and also get feedback from employees
to identify areas that may require improvement.
k) To help maintain ethical policies and behavior.
 l) To manage change to the mutual advantage of individuals, groups, the organization and
the society. There has been several trends and changes that forced HRM change its
policies or add new policies to accommodate the emergence of new lifestyles and
demands of employees. New trends and changes in areas:
 Telecommuting
 Paternity Leave
 Quality of Work Life (QWL) Programs
 Spouse-relocation assistance
 Benefit cost sharing plans
 Union- Management negotiations, etc.

1.3 The Nature and Challenges of HRM

HRM is one of the most complex and challenging field of management. A human
resource manager is responsible for fulfilling the requirement of the firm for an effective
workforce and also be greatly concerned with the expectation of both employees and
society at large.

The role of the personnel manager has thus changed through time. At first, the dominant role
was to satisfy top management in processing and maintaining a workforce that would be
instrumental to organizational productivity. As knowledge expanded in executing this role, the
manager began to understand the necessity for ascertaining and accommodating to the needs
of the employees who constituted that work force. Trying to satisfy employees’ needs as
individuals and as a group poses a great deal of challenge to the HRM as their needs and
interests are seldom the same. Although vast majority of people work to support themselves
and their families, some work for various reasons such as:
 To keep busy and feel useful
 To create and achieve something
 To gain recognition and achieve status (ambitious to gain power and prestige)
 To test and stretch their capabilities

Thus, among other things, human resource management faces several challenges. The
following are some of the factors contributing to the challenges of HRM.
a) Multifarious (diverse) needs of employees as individuals, as groups and also the
organization.
b) The rise of modern labor union.
 c) The increasing level of educational level of societal members. Such workforce seems to
have higher expectations about the work they are willing to perform, the degree of
autonomy they expect in making decision, and sharing financial gains achieved by the
organization.
d) The increasing size and complexity of the organizations.
e) Changes in the demographics of the workforce. Composition of the workforce in terms of
sex (more women in the workforce), age (younger and educated workforce), ethnic
groups (more and more minorities), religion, whether or not the work force constitutes
dual-career families or single-parent families, etc.
f) Increasing government regulation involving employment relation. Example. Equal
employment opportunity.
g) Technological advancement such as office automation (computers, word processing, and
management information systems) will change the work environment by decreasing
labor-intensive jobs and clerical functions. On the other hand, it increases technical,
managerial, and professional functions. One other significant technological advancement
is in telecommunicating where by communication within organizational units has become
so easy that it is now very common for employees to work from work.

1.4 The Role of HRM

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.
Now a day, HRM has a great deal of contribution in strategic decision making involving the HR
perspective. They play a major role in strategic decision-making.

Employees do have direct relationship with their line managers and thus their day-to-day
activities, needs and aspirations are left to their immediate superiors. However, the HRM
should develop HR policies and programs to be implemented by the line manager and function
as a catalyst and energizer of the relationship between the employees and the line managers.

For example, a line manager may seek an able person for a vacant position in his/her
department. This information (with all the requirements including qualifications, years of
experience, etc.) will be communicated to the human resource manager who takes the
responsibility of placing an ad and start the recruitment process based on the specified
requirements and arrange an interview or any other selection mechanism. Usually, an
interview, as a selection mechanism, is done in the presence of the hiring department to ensure
that potential candidates are asked appropriate and job related questions during the interview.
Once the selection is done, HRM will proceed with the placement process including orientation
of the new employee. Again, both HRM and the hiring manager do orientation. Usually, the
kind of orientation provided by the hiring department is job specific and will not cover other
parts of human resource related policies in the organization. This task of familiarizing new
employees with company policy and other aspects are covered by HRM. (Processing the hiring
process, documentation, providing company ID, orientation kit or package containing company
policy, etc.)

Everything that is done by the HRM is done with a support from the other line departments and
what HRM does supports the line managers in effectively executing their tasks.

Basically, the HRM performs three major roles/ functions:

A. A Service Function: According to the needs of the other departments, the HRM is
required to render coordinating services such as
 Posting job advertisement
 Organizing Training Courses
 Keeping personnel records
 Operating wage/salary systems
 Looking after the firm’s health and safety arrangements at work, etc.

B. Control Function:
 Analyzing key operational indices in personnel field like labor turnover, wage costs,
absenteeism, etc.
 Monitoring labor performance (compiling & reporting performance appraisal results of
employees)
 Recommending appropriate remedial action to line managers.
Example: identifying training needs, change of work methods, improved work
environments, etc.

C. Advisory Function: Offers expert advice on personnel policies and procedures such as:
 Which employees are ready for promotion (as per the policy of the organization, eg.
Based on number of years of service, etc.)
 Who should attend certain training course?
 How a grievance procedure should be operated?
 Interpretation of contracts of employment, health and safety regulation, etc.
 Ensuring equal employment opportunity etc.
Because of the diverse activities performed by the HRM and the fact that both external and
internal factors affect its movement, the human resource manager is required to have general
knowledge of what goes on inside or outside the organization.

1.5 Historical Development of Human Resources Management

Management activities have a history as long as that of people working in a cooperative
manner. The following figure illustrates the various roots of HRM as a continuum.

Roots of Human Resource Management

Industrial Scientific Human Organizational

Revolution Management Relations Development
Movement Moveme Movement
nt

Human behavior Organization Culture

Movement Movement

Figure 1-2: Roots of Human Resource Management

The development of human resource management can be traced back to the industrial revolution
that occurred in Europe at the end of the 18th century. Below, we briefly discuss the roots of HRM
that made a significant contribution to modern management theories and their reflections on
the management of people in organizations as summarized by Agrawal (2000).

A. Industrial Revolution: Industrial Revolution substituted machine power for human work.
Factory system emerged where workers were concentrated in large numbers. Workers
organized themselves into trade unions to achieve better conditions of employment.
 Labor laws were enacted to protect the interests of workers. Collective bargaining
between labor and management was used to settle industrial disputes.
 Robert Owen reduced working hours and built houses and schools for workers.
B. Scientific Management Movement: Scientific Management Movement aimed at improving
worker efficiency through proper selection, training and compensation. It advocated the
following personnel management tools:

 One best method of doing each job; time, motion, and fatigue studies to design jobs
and set performance standards; scientific selection of workers.
 Specialization through division of work to achieve efficiency.
 Education and development of workers; properly trained and developed workers
produced best.
 Incentive system to "earn more by performing more"; properly paid workers.
 Management-labor harmony to increase productivity

The scientific management movement as can be seen above focuses on task, technology and
methods, as being the key factors in leading to improve efficiency, giving no attention to the
human element in production. The human resources in organizations were regarded as a factor
of production, individuals that can only be motivated by economic gain. Thus, this approach to
management failed to consider employees' psychological, emotional, attitudinal, and other
needs, which greatly affect organizational productivity.

C. Human Relations Movement: This movement emphasized "human element" in personnel

management. It can be regarded as the foundation of human resource management. It
advocated the following personnel management aspects:

 Need for improved communication among managers and employees.

 Participative management and team work
 Employee-centered personnel management
 Importance of social setting and group dynamics in employee productivity
 Importance of non-financial rewards for employee motivation

Hawthorne's studies serve as the beginning of Human relations movement. They revealed that
fellowship and self-respect influence worker behavior and informal groups influence
productivity.

D. Organizational Development (OD) Movement: OD aims to improve the effectiveness with

which an organization functions and responds to changes. It takes a systems approach to
manage planned change. OD programs focus on behavioral interventions. OD aspects that
are relevant to HRM are:
  Coordination and integration in a systems perspective.
 Team building to foster team spirit, cooperation and commitment.
 Training and development programs to improve knowledge, skills, and attitudes.
 Managing planned change.
 Managing conflicts.
 Quality of work life programs
 Collaborative management consisting of power sharing with employees (participatory
decision making)

OD creates an organizational environment, which is conducive to cooperation and teamwork. It

brings about a change in attitudes, values and behavioral patterns of individuals.

E. Organization Culture Movement: Organization culture, which is also known as corporate

culture, represents the personality of an organization. It encompasses shared norms and
values that guide employee behavior in organizations. It emphasizes mutuality of interest
between management and employees.

Some important aspects of organization culture relevant to HRM roots are:

 Mutuality of interests: common interest of management and employees in
corporate excellence.
 People focus in management decision-making: wide range of "people programs".
 Cultural factors that affect organizational effectiveness: they suggest the practice
and ways of doing things.
 Tolerance for risk and conflict.
 Member identity with organization as a whole
 Group emphasis: organization of activities around groups.
 Reward system: performance- based reward.

1.1 Scope of HRM

The scope of human resource management is indeed vast. All major functions in the working life
of a worker, from the time of his or her entry into an organization until he or she leaves, come
under the purview of HRM. Specifically, the functions are job analysis and design, human
resource planning (HRP), recruitment and selection, orientation and placement, training and
development, performance appraisal, employee remuneration, motivation and communication,
welfare, safety and health, and the like.
In order to realize HRM objectives, organizations must perform the above listed functions. HRM
functions are a set of activities directed towards the effective and efficient utilization of HR in the
pursuit of organizational objectives. In the subsequent pages in both modules, all these functions
are explained in a greater detail.

Timeout: discus the historical development of HRM and features of each stage.

1.6 Organization of the Human Resource Management Department

Organization of human resource department is dependent on the nature of an organization,
which might change its structure through time. Accordingly, the emphasis given to the human
resource department may also vary. One major factor affecting the organization of the human
resource department is the size of an organization.
 HRM in a Small Business
In such organizations, the same functions of HR are needed but at smaller scale. For instance,
an owner-manager most of the time performs the necessary HR functions (outsourcing some
of these activities). In other situations, small business human resource departments are
staffed with one individual, and possibly a full-time secretary. Accordingly, such individuals
are forced, by design, to be HRM generalists who are required to properly perform the basic
functions of human resources and achieve the same goals that a larger department achieves.
The main difference is that they are doing the work themselves without benefit of a
specialized staff. In such situations, there is a tendency to use outside consultants to assist
in HRM activities. For instance, benefit administration may be beyond the capacity of small
businessperson. In that case, benefit administration may need to be contracted out.

 HRM in Large Organization

As an organization grows in size and complexity the HRM department will be undertaking
specialized HR functions under separate departments/units. These departments normally
involve distinct areas in human resources such as employment, training and development,
compensation/benefit administration, and employee relations. These departments are
usually staffed with HR specialists who have enough knowledge and expertise in the
respective areas. Managers of these departments have specific accountabilities and report,
oftentimes, to the vice president of human resources.

Another trend in HRM is in outsourcing some of the work HRM professionals once handled.
For example, private staffing agencies may perform the recruiting and selection activities,
several consulting firms providing training programs, and yet another financial organization
handling the majority of a company’s benefits administration. However, it is still essential for
 managers and employees to understand the basic HRM issues and activities in their
organization.

Table 1-1: selected activities illustrating division of personnel/HRM responsibility between line and staff

DEPARTMENT SUPERVISORS' (LINE) PERSONNEL/HR SPECIALISTS' (STAFF)

Recruitment ACTIVITIES ACTIVITIES
and Selection
 Assist job analyst by listing the specific  Write job description and job
duties and responsibilities of the job in specification based on input form
question. department supervisor.
 Explain to personnel/HR future staffing  Develop personnel plans showing
needs and the sorts of people needed promotable employees.
to be hired.  Develop sources of qualified applicants
 Describe "human requirements" of the job and engage in recruiting activities aimed
so personnel/HR can develop appropriate at developing a pool of qualified
selection tests, applicants.
 Interview candidate and make final  Conduct initial screening interviews of
selection decisions job candidates and refer feasible
candidates to department supervisor.
Orient employees with details regarding the Prepare training materials and orientation
Training and company and the job and instruct and train documents and outlines
Development new employees. Advise CEO regarding development plan for
Evaluate and recommend managers for managers based on CEO' s stated vision of
developmental activities firm's future needs.
Provide the leadership and empowerment that Serve as resource for providing information
builds effective work teams. regarding how to institute and operate
Use the firm's appraisal forms to appraise quality improvement programs and team
employee performance. building efforts.
Assess subordinates' career progress and Develop performance appraisal tools and
advise them regarding their career possibilities maintain records of appraisals.
Develop career-planning promotion from
within procedures, career advisement
tools, and records for monitoring
employees' career progress.
 Assist personnel/HR by providing  Conduct job evaluation procedures
Compensation information regarding the nature and aimed at determining relative worth of
relative worth of each job, to serve as the each job in the firm.
basis for compensation decisions.  Conduct salary surveys to determine
how other firms are paying the same or
similar positions.
  Appraise employee's performance for the  Serve as a resource in advising line
purpose of awarding raises and merit management regarding financial
increases. incentives, alternatives, and pay plan
 Make the decisions regarding the nature alternatives.
and amounts of incentives to be paid to  Develop, in consultation with line
subordinates. management, the firm's benefits and
 Decide on the package of benefits and services packages including health care
services the firm is to pay. options and pensions
 Monitor the firm's unemployment tax
rate and workers' compensation
performance and advise line
management regarding the steps
needed to reduce both costs

 Establish the day-to-day climate of mutual  Diagnose underlying causes of labor

Labor respect and trust needed to maintain healthy discontent with an eye toward
Relations labor-management relations. anticipating the sorts of morale and
 Consistently apply the terms of the labor other problems that may lead to
agreement. unionization efforts
 Ensure that the firm's grievance process is  Conduct the research needed to
functioning in a manner consistent with the prepare for negotiations regarding the
labor agreement and make final decisions on labor contract, in particular researching
grievances after investigating same. matters such as cost of union demands,
 Work with personnel/HR in negotiating the popularity of various union terms, and
collective bargaining agreement. what comparable firms are doing.
 Train line managers regarding the
interpretation of contract terms and the
legal pitfalls to be avoided during the
union organizing effort.
 Advise managers regarding how to
handle grievances and assist all parties
in reaching agreements regarding
grievances.
 Maintain contacts with union officials.

 Keep the lines of communication open  Advise line management regarding the
Employee between employees and managers so that communication techniques that can be
Security and employees are continually kept abreast of used to encourage both upward and
Safety important company matters and that downward communication.
employees have a variety of vehicles they can
 use to express concerns and gripes up the  Develop a guaranteed fair treatment
chain of command. process and train line managers in its
 Make sure that employees are guaranteed use.
fair treatment as it relates to discipline,  Analyze jobs to develop safe practice
dismissals, and job security rules and to advise on design of safety
 Continually direct employees in the apparatus such as machinery guards.
consistent application of safe work habits  Promptly investigate accidents, analyze
 Recognize and reward employees for safe causes. Make recommendations for
behavior at work accident prevention and submit
 Prepare accident reports promptly and necessary forms to Occupational safety
accurately. and Health Administration.
 Develop a strategic, long-term plan for the  Study workers' compensation law and
firm in order to provide guidance for work with insurance carrier and if
departments (including personnel/HR) necessary attorneys to manage workers'
regarding the types and numbers of compensations cases.
employees to hire, the appropriateness of
various types of compensation plans, and so
on.