UNIT-I:

INTRODUCTION TO HUMAN RESOURCES MANAGEMENT AND

ENVIRONMENT
INTRODUCTION TO HRM:

Human Resource Management (HRM) is a relatively new approach to managing people in

any organisation. People are considered the key resource in this approach. it is concerned
with the people dimension in management of an organisation. Since an organisation is a body
of people, their acquisition, development of skills, motivation for higher levels of
attainments, as well as ensuring maintenance of their level of commitment are all significant
activities.
 Human Resource Management is a process, which consists of four main activities,
namely, acquisition, development, motivation, as well as maintenance of human
resources.
 Human Resource Management is responsible for maintaining good human relations in the
organisation. It is also concerned with development of individuals and achieving
integration of goals of the organisation and those of the individuals.
 French Wendell, defines ―Human resource management as the recruitment, selection,
development, utilisation, compensation and motivation of Human resources by the
organisation.
 According to Edwin B. Flippo ―Human resource management is the planning,
organising, directing and controlling of the procurement, development, resources to the
end that individual and societal objectives are accomplished. This definition reveals that
human resource (HR) management is that aspect of management, which deals with the
planning, organising, directing and controlling the personnel functions of the enterprise.
 According to C.D.Risher and L.F.S Schoenfeldt – Human Resource Management
involves all management decisions and practices that directly affect or influence the
people, or human resources, who work for the organisation.

NATURE OF HRM:
 The nature of HRM is to reflect a new philosophy, a new outlook, approach which views
organisations man power as its resources and assets and not a liabilities. Therefore,
Human Resource is considered as very important resource to develop on organisation.

1
 Ofcourse , the other organisational resources like Material, money , machinery , land ,
technology etc., may contribute for the growth but experience now stresses that HRM is
the key factor in organisational growth.
 The attitudes, values, approaches of the individual are also equally important for the
smooth of the organisation, where these are covered under HRM.
 Today, we speak about computer skill, its application in business. But HR is an
absolutely necessary resource in an organisation.
 HRM looks into the individual needs and motivates them to work.
 Human element in the organisation is cared much. Recognition of HR in the enterprise
has way for effective management of the organisation.

CHARACTERISTICS/SCOPE OF HRM:

1) Human Resource Planning: HRP estimates the manpower demand and manpower
supply of the organisation. It compares the manpower demand and manpower supply. If
there is manpower surplus then it gives voluntary retirement, lay-off, etc. to some
employees. If there is manpower shortage then it hires employees from outside, gives
promotion to employees, etc.
2) Job Analysis (Job Description and Job Specification):It is the process of studying and
collecting information relating to the operations and responsibilities of a specific job. The
immediate products of this analysis are job description and job specification.
3) Recruitment and Selection: Recruitment is the process of stimulating the candidates to
apply for jobs. Selection is a process of identifying the most eligible candidate for a
particular job.
4) Orientation and Placement: HRM also performs the placement function. Placement is
done after selection of employees. It means to put the right man in the right place of
work. Proper placement gives job satisfaction to the employees, and it increases their
efficiency.
5) Training and Development: HRM also provides training and development to the
employees. Training means to increase the knowledge and skills of the employee for
doing a particular job. Training given to managers is called development. So, training is
given to employees while development is given to managers.
6) Performance Appraisal and Job Evaluation: HRM also conducts a performance
appraisal. Performance appraisal is a systematic evaluation of the employees'

2
 performance at work. It informs the employees about their strengths and weakness. It also
advises them about how to increase their strengths and remove their weaknesses.
7) Employee and Executive Remuneration: Employees must be rewarded and recognised
for their performance. HRM makes proper compensation packages for the employees.
These packages motivate the employees and increase their morale. Rewards are given to
individuals, and teams. The rewards may be in the form of higher pay, bonus, other
monetary incentives, and non-monetary incentives such as a certificate of appreciation,
etc.
8) Motivation and Communication: Motivation is the process of channelling a person’s
inner drives towards accomplishing the goals of an organisation. Communication is the
process of transmission of ideas, information , orders or instructions to the recipient so
that there is an understanding between the sender and the receiver.
9) Welfare , Safety and Health Measures: HRM provides employee's welfare. Welfare
measures include paid holidays, medical insurance, canteen facilities, recreation facilities,
rest room, transport facilities, etc. Proper and timely welfare facilities motivate the
employees to work hard in the organisation. That is, protecting and promoting the health
and safety of the employees. HRM introduces health and safety measures. It also provides
other benefits such as medical aid, provident fund, pension, gratuity, maternity benefits,
accident compensation, etc., to the employees.
10) Better Industrial Relations (IR):HRM is also includes industrial relations. It includes
union management relations, joint consultations, negotiating, collective bargaining,
grievance handling, disciplinary actions, settlement of industrial disputes, etc.

3
OBJECTIVES OF HRM:

1) To help the organisation to attain its goals effectively and efficiently by providing
competent and motivated employees.
2) To utilize the available human resources effectively.
3) To increase to the fullest the employee’s job satisfaction and self-actualisation.
4) To develop and maintain the quality of work life (QWL) which makes employment in
the organisation a desirable personal and social situation.
5) To help maintain ethical policies and behaviour inside and outside the organisation.
6) To establish and maintain cordial relations between employees and management.
7) To reconcile individual/group goals with organisational goals.

Werther and Davis have classified the objectives of HRM into four categories:

IMPORTANCE OF HRM:

 Human Resource Management has a place of great importance. According to Peter F.

Drucker, ―The proper or improper use of the different factors of production depend
on the wishes of the human resources. Hence, besides other resources human
resources need more development. Human resources can increase cooperation but it
needs proper and efficient management to guide it.
 The role of human resource management is very important in an organisation and it
should not be undermined especially in large scale enterprises. It is the key to the
whole organisation and related to all other activities of the management i.e.,
marketing, production, finance etc.

4
 1) It helps management in the preparation adoption and continuing evolution of personnel
programmes and policies.
2) It supplies skilled workers through scientific selection process.
3) It ensures maximum benefit out of the expenditure on training and development and
appreciates the human assets.
4) It prepares workers according to the changing needs of industry and environment.
5) It motivates workers and upgrades them so as to enable them to accomplish the
organisation goals.
6) Through innovation and experimentation in the fields of personnel, it helps in reducing
casts and helps in increasing productivity.
7) It contributes a lot in restoring the industrial harmony and healthy employer-employee
relations.
8) It establishes mechanism for the administration of personnel services that are delegated
to the personnel department.

FUNCTIONS OF HRM:
The main functions of human resource management are classified into two categories:

(a) Managerial Functions and (b) Operative Functions

very very Important questions ****

5
(A) MANAGERIAL FUNCTIONS:

Following are the managerial functions of Human Resources Management.

1) Planning: The planning function of human resource department pertains to the steps
taken in determining in advance personnel requirements, personnel programmes, policies
etc. After determining how many and what type of people are required, a personnel
manager has to devise ways and means to motivate them.
2) Organisation: Under organisation, the human resource manager has to organise the
operative functions by designing structure of relationship among jobs, personnel and
physical factors in such a way so as to have maximum contribution towards
organisational objectives. In this way a personnel manager performs following functions:
(a) preparation of task force;
(b) allocation of work to individuals;
(c) integration of the efforts of the task force;
(d) coordination of work of individual with that of the department.
3) Directing: Directing is concerned with initiation of organised action and stimulating the
people to work. The personnel manager directs the activities of people of the
organisation to get its function performed properly. A personnel manager guides and
motivates the staff of the organisation to follow the path laid down in advance.
4) Controlling: It provides basic data for establishing standards, makes job analysis and
performance appraisal, etc. All these techniques assist in effective control of the
qualities, time and efforts of workers.

(B) OPERATIVE FUNCTIONS:

The following are the Operative Functions of Human Resource Management

1) Procurement of Personnel: It is concerned with the obtaining of the proper kind and
number of personnel necessary to accomplish organisation goals. It deals specifically
with such subjects as the determination of manpower requirements, their recruitment,
selecting, placement and orientation, etc.
2) Development of Personnel: Development has to do with the increase through training,
skill that is necessary for proper job performance. In this process various techniques of
training are used to develop the employees. Framing a sound promotion policy,
determination of the basis of promotion and making performance appraisal are the
elements of personnel development function.

6
 3) Compensation to Personnel: Compensation means determination of adequate and
equitable remuneration of personnel for their contribution to organisation objectives. To
determine the monetary compensation for various jobs is one of the most difficult and
important function of the personnel management. A number of decisions are taken into
the function, viz., job-evaluation, remuneration, policy, inventive and premium plans,
bonus policy and co-partnership, etc. It also assists the organisation for adopting the
suitable wages and salaries, policy and payment of wages and salaries in right time.
4) Maintaining Good Industrial Relation: Human Resource Management covers a wide
field. It is intended to reduce strifies, promote industrial peace, provide fair deal to
workers and establish industrial democracy. It the personnel manager is unable to make
harmonious relations between management and labour industrial unrest will take place
and millions of man-days will be lost. If labour management relations are not good the
moral and physical condition of the employee will suffer, and it will be a loss to an
organisation vis-a-visa nation. Hence, the personnel manager must create harmonious
relations with the help of sufficient communication system and co-partnership.
5) Record Keeping: In record-keeping the personnel manager collects and maintains
information concerned with the staff of the organisation. It is essential for every
organisation because it assists the management in decision making such as in
promotions.
6) Personnel Planning and Evaluation: Under this system different type of activities are
evaluated such as evaluation of performance, personnel policy of an organisation and its
practices, personnel audit, morale, survey and performance appraisal, etc.

PERSONNEL MANAGEMENT:

 Personnel Management can be defined as process of obtaining, utilizing and

maintaining a satisfied workforce. It is a significant part of management, which is
concerned with employees at work and with their relationship within the organization.
 The success of an organization depends on the capacities and capabilities of its
personnel. Unless, it devotes enough resource on development of its resource, it
would not get required output from its personnel.

Definition:

7
According to Flippo -Personnel management is the planning, organizing, compensation,
integration and maintenance of people for the purpose of contributing to organizational,
individual and societal goals.

According to Brech-Personnel management is that part which is primarily concerned with

human resource of organization.

Nature of Personnel Management:

1) Personnel management includes the function of employment, development and

compensation. These functions are performed by the personnel management in
consultation with other departments.
2) Personnel management is an extension to general management. It is concerned with
promoting and stimulating competent workforce to make their dedicated and best
possible contribution to the organization.
3) Personnel management advises and assist the line managers in personnel matters. Thus
working as a staff department of an organisation.
4) It is based on human orientation. It tries to help the workers to develop their potential to
full extent for the organisation.
5) It also motivates the employees through it’s effective incentive plans so that the
employees provide best possible co-operation.

Role of Personnel Manager:

Personnel manager is the head of personnel department. He performs both managerial and
operative functions of management. His role can be summarized as:

a) Providing assistance to top management: The top management are the people who
decide and frame the primary policies of the concern. All kinds of policies related to
personnel or workforce can be framed out effectively by the personnel manager.
b) Advising the line manager as a staff specialist: Personnel manager acts like a staff
advisor and assists the line managers in dealing with various personnel matters.
c) Counseling: As a counselor, personnel manager attends problems and grievances of
employees and guides them. He tries to solve them in best of his capacity.
d) Acting as a mediator: He is acting as a link between management and workers.
e) Acting as a spokesman: Since he is in direct contact with the employees, he is
required to act as representative of organisation in committees appointed by
government. He represents company in training programmes.

8
PERSONNEL MANAGEMENT vs HUMAN RESOURCE MANAGEMENT:

The main difference between Personnel Management and Human Resource Management lies
in their scope and orientation. While the scope of personnel management is limited and has
an inverted approach, wherein workers are viewed as tool. Here the behavior of the worker
can be manipulated as per the core competencies of the organization and are replaced when
they are worn-out.

Basis of Comparison Personnel Management Human Resource

Management
1) Meaning The aspect of management The branch of management
that is concerned with the that focuses on the most
work force and their effective use of the
relationship with the entity is manpower of an entity, to
known as Personnel achieve the organizational
Management. goals is known as Human
Resource Management.
2) Approach Traditional Modern

3) Treatment of Manpower Machines or Tools Assets

4) Type of Function Routine Strategic

5) Basis of Pay Job Evaluation Performance Evaluation

6) Management Role Transactional Transformational

7) Communication Indirect Direct

8) Labour Management Collective Bargaining Individual contracts

Contracts
9) Management Actions Procedure Business needs

10) Decision making Slow Fast

11) Job design Division of labour Team work

12) Focus Primarily on mundane Treat manpower of the

activities like employee organization as valued assets,
hiring, remunerating, training, to be valued, used and
and harmony. preserved.
13) Key relation Labour management Customers

9
STRATERGIC MANAGEMENT APPROACH:

 Strategic human resource management is the practice of attracting, developing,

rewarding, and retaining employees for the benefit of both the employees as
individuals and the organization as a whole.
 HR departments that practice strategic human resource management do not work
independently within a silo; they interact with other departments within an
organization in order to understand their goals and then create strategies that align
with those objectives, as well as those of the organization.
 As a result, the goals of a human resource department reflect and support the goals of
the rest of the organization.
 Strategic HRM is seen as a partner in organizational success, as opposed to a
necessity for legal compliance or compensation. Strategic HRM utilizes the talent and
opportunity within the human resources department to make other departments
stronger and more effective.
 Strategic HRM is formulating and executing HR system that produce the employee
competencies and behaviours the company needs to achieve its strategic goals.
 Taking a strategic HRM approach means:
 Making HRM a top priority
 Integrating HRM with company’s strategy, mission and goals.

STRATEGIC APPROACH TO HUMAN RESOURCES MANAGEMENT

 Strategic approach to human resource management is one of the emerging trends in

human management. The approach has been adopted by many organizations because
of its business approach to management of human resources.
 It was established to meet the shortcoming of traditional human resources
management. In modern organizations and workplaces, human resource management
is affected by many factors.
 These internal and external factors must be identified and considered for effective
management. Human resources management is influenced by several factors such
change in technology, the law within which it operates, social and cultural values, and
economic environment of its operations.

10
  It is also influenced by inner factors such as the objectives of the organization, the
construction of the organization and culture. These factors influence the objectives of
an organization’s human resource management.
 The call for a strategic approach to human resource management is invertible in the
current turbulent economic conditions. Human resources managers are under
steady pressure to guarantee that the productivity of employees is increased.
 In order to meet the changing needs in human resource managements, a strategic
approach is essential. Effective human resource managements are based on four
aspects
 Human resource involves line mangers and it relies upon a set of supports to shape
the employment. Strategic approach to human resources approaches human resources
from a holistic angle.
 Strategic management offers a full scope of an organization’s activities that include its
objectives and boundaries. It matches the activities of an organization to the
environment in which it’s operates. It also ensures that internal structures, practices
and procedures enable the organization to achieve its objectives.
 It also involves matching the activities of an organization to it’s resources ability,
evaluating the degree to which adequate resources can be offered to take benefit of
openings or to avoid threats in organization’s environment.
 Strategic management involves identification of organization’s objectives and
strategies and giving attention to the resources needed for strategies to succeed.
 The process of strategic management involves five basic steps.
 The first step involves identification of the goals of the organization/the mission of
the organization. Then, the internal environment and external environment are
analyzed.
 The managers are then expected to choose the strategy that best suits his or her
company.
 The four steps in strategic management are the formulation of organization strategies
and functional strategies and goals. Any successive strategy must have an effective
monitoring and evaluation of the strategy that the company has adopted.

Implications of strategic human resources management on the organization:

11
  Strategic human resource management is basically concerned with its ability to add
value to the organization and accordingly has to focus on what human resources
management c contributes to the business instead of the activities it does.
 Strategic approach to human resources management centres on understanding,
forecasting, directing, development and alignment of human behaviours and resources
in an organization, which demands commitment from staffs, self-control, an elevated
level of confidence, professionalism and continuous education to improve their
working abilities.
 The contribution of human resources focuses on the outcomes of human resources
management. There are three identified areas in which strategic human resources has
been identified to add value to an organization.
 These areas are strategic domain, human resources service domain and administration
domain.
 Strategic human resource management aims at ensuring that an organization has the
capacity for change, listening and responding to human resources and to provide them
with the necessary resources to perform.

THE ROLE OF GLOBALIZATION IN HR POLICY AND PRACTICE:

Globalization is a term in business that refers to the integration of an organization's

operations, processes and strategies into diverse cultures, products, services and ideas.
Because of its emphasis on diversity, globalization also has a deep impact on the way
companies manage their employees.

Understanding the effects of globalization on human resources can help managers to better
equip their organizations for the increasingly global business environment.

The Global Human Resource Information System consists of a number of component systems
that are

1) Interdependent: The various components may be broadly classified into the

following three main sub-systems: Data Warehousing, Data Analytics, and
Information Delivery. These tools and systemic processes are critical to formulate
questions or hypothesis, to design data and analytical models, to compute and
communicate results to appropriate users, and then for the users to draw business
insight from the results to shape business decisions and, ultimately, improve
performance.
2) Diversity Recruitment: With the rise of globalization, companies of all sizes are now
interacting with customers and stakeholders from diverse cultures, languages and

12
 social backgrounds. In response, many human resources managers seek to hire
employees from equally diverse backgrounds. Companies engaging in this diversity
recruitment recognize the value of having people on staff that their customers can
relate to, and they know that having a team of diverse people contributes to the range
of ideas and influences within the organization.
3) Push for Professional Development: A further effect of globalization on HR
management is a push for professional development. Professional development is
concerned with providing employees opportunities to achieve their career-related
goals. Some organizations provide resources for their employees to earn a university
degree, others send their employees to conferences or networking events and training
days. Professional development is important to globalization because it creates a win-
win situation.
4) Greater Emphasis on Training: Similar to professional development, a greater
emphasis on training has resulted because of globalization in human resources
management. Training, however, tends to be focused on the needs and professional
competencies of groups of employees within the organization. The company might,
for instance, host language classes to give its call center staff an edge in telephone
sales. It might also teach its employees how to use a new global software platform.
This emphasis on training seeks to give the company a competitive edge in the global
marketplace by honing the employees' diversity emphasis.
5) Management of Laws Across Jurisdictions: A final effect of globalization on
human resources management is the need for businesses to understand and apply the
laws of many different jurisdictions to the particular business.
 The federal government sets out a number of tax and labor laws that
businesses operating in the United States must comply with, but there may
also be local and regional laws that apply to companies that operate in
different states or different countries.
 Selling products in Europe, for example, might mean that a company has to
impose a Value-Added Tax on its goods. Hiring employees at branch locations
in different locations might change the requirements on minimum wage, tax
allowances or working hours. Understanding these laws is vitally essential to
the organization because any breach of them will have a serious impact not
only on the business's financial well-being but also on its reputation.

13
HUMAN RESOURCES ENVIRONMENT
 The human resources of an organization consist of all people who perform its
activities. In a sense, all decisions that affect the workforce concern the organization's
HRM function. Human resource management concerns the personnel policies and
managerial practices and systems that influence the workforce
 Environment of HRM refers to the aggregate of conditions, events and influences that
surround and affect it.
 Several factors in the business environment (increased competition, corporate
downsizing and rapid technological advances)
 In the social environment (changing values regarding work/non-work life balance and
changing workforce demographics) have brought about a new employment
relationship.
 The transformation of the economy from primarily manufacturing economy to a
primarily service economy has increased the importance of knowledge in job
performance.
 A new class of highly skilled knowledge workers has emerged High demand for
knowledge workers has created war for talent among organizations.
 Organizations have to develop new strategies to attract, retain, motivate and develop
employees

Internal Environment:

These are the forces internal to an organisation. Internal forces have profound influence on
HR functions. The internal environment of HRM consists of unions, organizational culture
and conflict, professional bodies, organisational objectives, polices, etc. A brief mention of
these follows.

1) Unions: Trade unions are formed to safeguard the interest of its members/workers. HR
activities like recruitment, selection, training, compensation, industrial relations and
separations are carried out in consultation with trade union leaders.

14
2) Organisational Culture and Conflict: As individuals have personality, organizations
have cultures. Each organisation has its own culture that distinguishes one organisation
from another. Culture may be understood as sharing of some core values or beliefs by
the members of the organisation “Value for time” are the culture of Reliance Industries
Limited. The culture of Tata conglomerate is “get the best people and set them free”. HR
practices need to be implemented that best fit the organisation’s culture. There is often
conflict between organizational culture and employee’s attitude. Conflict usually
surfaces because of dualities such as personal goal vs. organisational goal, discipline vs.
autonomy, rights vs. duties, etc. Such conflicts have their bearings on HR activities in an
organisation.
3) Professional Bodies: Like other professional bodies, the NIPM as the HR professional
body regulates the functions of HR practitioners in India. For this the NIPM in of ethics
which the HR practitioners are expected to declare their allegiance to the code. Thus,
professional bodies also influence HR functions of an organization.

External Environment:

External environment includes forces like economic, political, technological, demographic

etc. these exert considerable influence on HRM. Each of these external forces is examined
here.

1) Economic: Economic forces include growth rate and strategy, industrial production,
national and per capita incomes, money and capital markets, competitions, industrial
labour and globalisation. All these forces have significant influence on wage and salary
levels. Growing unemployment and reservation in employment also affect the choice for
recruitment and selection of employees in organisations.
2) Political: Political environment covers the impact of political institutions on HRM
practices. For example, democratic political system increases the expectations of
workers for their well being.

The total political environment is composed of three institutions:

a) Legislature: This is called Parliament at the central level and Assembly at the state level
A plethora of labour laws are enacted by the legislature to regulate working conditions
and employment relations.
b) Executive: It is the Government that implements the law. In other words, the legislature
decides and the executive acts.

15
c) Judiciary: It ensures that both the legislature and the executive work within the confines
of the constitution and also in the overall interest of the people. These affect, in one way
or the other, all HR activities from planning to placement to training to retention and
maintenance.
3) Technological: Technology is a systematic application of organised knowledge to
practical tasks.

Technological advances affect the HR functions in more than one way:

 First; technology makes the job more intellectual or upgraded.

 Second, it renders workers dislocated if they do not equip themselves to the job.
 Third, job becomes challenging for the employees who cope with the requirements of
technology
 Fourth, technology reduces human interaction at the work place.
 Finally job-holders become highly professionalized and knowledgeable in the job they
perform.
4) Demographic: Demographic variables include sex, age, literacy, mobility, etc. Modem
work force is characterized by literate, women and scheduled caste and scheduled tides
workers. Now, workers are called knowledge workers’ and the organisations wherein
they work are called ‘knowledge organisations’.

As such, the traditional line of distinction between manual and non-manual workers is getting
blurred. Employees are demanding parity in remuneration and responsibility among various
categories and levels of employees.

16