Unit-5

Human Resource Management (HRM)

Human Resource Management (HRM) is the strategic approach to managing an organization's

most valuable assets—its employees. HRM involves recruiting, hiring, training, developing, and
managing employees to maximize their performance and contribute to organizational success. It
encompasses a wide range of functions and responsibilities aimed at ensuring that an
organization effectively utilizes its human capital.

Nature of HRM

1. Strategic and Comprehensive Approach:

o HRM is integral to the overall strategic planning and management of an
organization. It aligns human resource policies and practices with the strategic
goals of the organization.
2. People-Oriented:
o HRM focuses on the development, motivation, and well-being of employees. It
emphasizes the importance of fostering a positive work environment and culture.
3. Continuous Process:
o HRM is an ongoing process that includes recruitment, training, performance
evaluation, employee development, and retention strategies.
4. Multidisciplinary:
o HRM draws from various disciplines, including psychology, sociology, law,
economics, and management, to manage people effectively.
5. Development-Oriented:
o HRM emphasizes employee development through training, career planning, and
performance management to enhance skills and capabilities.

Scope of HRM

1. Human Resource Planning (HRP):

o Assessing current and future human resource needs to ensure the organization has
the right number and types of employees to achieve its goals.
2. Recruitment and Selection:
o Attracting, screening, and selecting qualified candidates for employment. This
includes job postings, interviews, and assessments.
3. Training and Development:
o Providing employees with the necessary skills and knowledge to perform their
jobs effectively and preparing them for future roles and responsibilities.
4. Performance Management:
o Evaluating and managing employee performance through regular reviews,
feedback, and performance appraisal systems.
5. Compensation and Benefits:
 o Designing and administering pay structures, incentives, and benefits to attract and
retain employees.
6. Employee Relations:
o Managing relationships between the organization and its employees, including
handling grievances, disputes, and ensuring compliance with labor laws.
7. Health and Safety:
o Ensuring a safe and healthy work environment by implementing safety standards,
conducting training, and addressing workplace hazards.
8. Legal Compliance:
o Ensuring that the organization complies with all relevant employment laws and
regulations.
9. Diversity and Inclusion:
o Promoting diversity and creating an inclusive work environment where all
employees feel valued and respected.

Functions of HRM

1. Job Analysis and Design:

o Identifying job requirements and designing roles to meet organizational needs.
2. Recruitment and Selection:
o Attracting and hiring the right talent.
3. Training and Development:
o Enhancing employees' skills and knowledge.
4. Performance Appraisal:
o Assessing and improving employee performance.
5. Compensation Management:
o Developing pay structures and benefits programs.
6. Employee Welfare:
o Ensuring employees' well-being and satisfaction.
7. Labor Relations:
o Managing relationships with unions and resolving labor disputes.
8. Strategic HRM:
o Aligning HR strategies with organizational goals.

Importance of HRM

1. Enhancing Productivity:
o Effective HRM practices lead to motivated and skilled employees, which in turn
boosts productivity.
2. Employee Satisfaction:
o Proper HRM ensures that employees are satisfied with their jobs, reducing
turnover rates.
3. Organizational Culture:
o HRM helps in building and maintaining a positive organizational culture and
work environment.
4. Legal Compliance:
 o HRM ensures compliance with labor laws and regulations, avoiding legal issues
and penalties.
5. Talent Management:
o HRM plays a critical role in attracting, developing, and retaining top talent.
6. Conflict Resolution:
o HRM addresses and resolves workplace conflicts, promoting harmony and
collaboration.

Conclusion

Human Resource Management is a vital function in any organization, responsible for managing
the workforce and ensuring that the organization achieves its strategic objectives. By focusing on
the recruitment, development, and well-being of employees, HRM contributes significantly to
organizational success and employee satisfaction. Effective HRM practices create a positive
work environment, enhance productivity, and ensure legal compliance, making it an essential
component of any successful business.

Manpower Planning

Manpower planning, also known as human resource planning (HRP), is the process of ensuring
that an organization has the right number of people, with the right skills, in the right places, at
the right times, to achieve its objectives. It involves forecasting future human resource needs,
analyzing current workforce capabilities, and developing strategies to meet future requirements.

Objectives of Manpower Planning

1. Ensure Adequate Staffing:

o Ensure the organization has enough employees to meet its operational needs and
achieve its goals.
2. Optimize Utilization:
o Align employee skills and abilities with job roles to maximize productivity and
efficiency.
3. Forecast Future Needs:
o Anticipate future manpower requirements based on organizational growth,
changes, and external factors.
4. Minimize Labor Costs:
o Avoid overstaffing or understaffing, which can lead to inefficiencies and
increased costs.
5. Develop Talent:
o Identify and prepare future leaders and key talent through training and
development.
6. Support Strategic Goals:
o Align workforce planning with the organization's strategic objectives and business
plans.
Steps in Manpower Planning

1. Analyze Current Workforce:

o Assess the current number, skills, and performance levels of employees. This
involves creating a detailed inventory of existing human resources.
2. Forecast Future Manpower Needs:
o Predict future staffing requirements based on business goals, growth projections,
and external factors (e.g., market trends, technological changes).
3. Identify Gaps:
o Compare current workforce capabilities with future needs to identify gaps in
numbers, skills, or experience.
4. Develop Strategies:
o Formulate plans to address identified gaps. This may include recruitment,
training, redeployment, or outsourcing.
5. Implement Plans:
o Execute the strategies developed, such as hiring new employees, developing
training programs, or restructuring teams.
6. Monitor and Review:
o Continuously monitor the effectiveness of the manpower plan and make
adjustments as needed based on changes in the business environment or
organizational needs.

Techniques for Manpower Planning

1. Workforce Forecasting:
o Quantitative Methods: Use statistical tools and data analysis to project future
staffing needs (e.g., trend analysis, regression analysis).
o Qualitative Methods: Use expert judgment and managerial insights to predict
future needs (e.g., Delphi method, scenario planning).
2. Job Analysis:
o Conduct detailed analysis of job roles to understand required skills, qualifications,
and responsibilities.
3. Succession Planning:
o Identify and develop internal candidates to fill key positions in the future,
ensuring continuity and leadership development.
4. Skills Inventory:
o Maintain a record of employee skills, qualifications, and career aspirations to
better match them with job requirements.
5. Human Resource Information System (HRIS):
o Use HRIS tools to gather and analyze data related to workforce planning, such as
employee performance, turnover rates, and recruitment metrics.

Challenges in Manpower Planning

1. Unpredictable External Factors:

 o Economic downturns, technological changes, and market shifts can impact
workforce needs and availability.
2. Skill Shortages:
o Difficulty in finding qualified candidates for specialized roles.
3. Employee Turnover:
o High turnover rates can disrupt planning and require constant adjustment of
workforce strategies.
4. Changing Business Strategies:
o Shifts in business strategy may require rapid changes in workforce planning and
deployment.
5. Globalization:
o Managing a global workforce and addressing cross-cultural issues can complicate
manpower planning.

Benefits of Effective Manpower Planning

1. Improved Productivity:
o Ensures that the right people are in the right roles, leading to increased efficiency
and productivity.
2. Cost Management:
o Helps in managing labor costs by avoiding overstaffing and understaffing.
3. Enhanced Employee Satisfaction:
o Aligns employee roles with their skills and career aspirations, leading to greater
job satisfaction and retention.
4. Strategic Alignment:
o Ensures that workforce planning supports and aligns with the organization's
strategic goals and objectives.
5. Risk Management:
o Reduces the risk of disruptions caused by sudden changes in workforce
requirements or availability.

Conclusion

Manpower planning is a crucial aspect of human resource management that ensures an

organization has the right talent to achieve its goals. By systematically analyzing current and
future workforce needs, identifying gaps, and developing appropriate strategies, organizations
can optimize their human resources and enhance overall effectiveness. Effective manpower
planning contributes to better productivity, cost management, and alignment with strategic
objectives, ultimately supporting the long-term success of the organization.
Performance Appraisal:

The term “performance appraisal” refers to the regular review of an employee’s job performance
and overall contribution to a company. Also known as an annual review, employee appraisal,
performance review, or evaluation, a performance appraisal evaluates an employee’s skills,
achievements, and growth, or lack thereof.

• A performance appraisal is a regular review of an employee’s job performance and

contribution to a company.
• Companies use performance appraisals to determine which employees have contributed
the most to the company’s growth, to review their progress, and to reward high-
achieving workers.

Performance appraisal methods in HRM

There are multiple performance appraisal methods used by an organization to rate and measure
the performance of its employees and set the future goals for them. Current employees’
performance, as well as benefits and cost used on the employees. There are two broad categories
of Performance Appraisal Methods.
• Traditional Methods
• Modern Methods

Traditional methods of performance appraisal:

Traditional methods are an old way of performance measuring methods. These are based on
personal qualities like knowledge, capacity, judgment, initiative, attitude, loyalty, leadership,
judgment etc.
• Unstructured Method of Appraisal
• Straight Ranking Method
• Paired Comparison Method
• Man to Man Comparison Method
• Grading Method
• Graphic Rating Scale
• Forced Choice Method
 • Check List
• Free Essay Method
• Critical Incidents Method
• Field Review Method

Modern methods of performance appraisal:

Modern Methods employ the use of technology and are an advanced way of measuring the
performance by improving the old and traditional methods. Below we have a list of modern
methods and few of them we will elaborate in this article.
• Target Setting Approach of Management by Objectives
• Behaviourally Anchored Rating Scales (BARS)
• 360 Degree Feedback
• Assessment Centre Method
• Psychological Appraisals
• Human-Resource Accounting Method
• General Performance Appraisal
• Technological Performance Appraisal
• Sales Performance Appraisal
• Critical Incident Method of Performance Appraisal
• Confidential Report System
• Checklist Method
• Field Review Method

Management by Objectives (MBO)

Management by Objectives is a process of identification of an individual’s employee
performance review examples by assigning them a specific task, through which we can assess an
employee’s performance but the task which is assigned to an employee should be measurable,
realistic and achievable. This method is commonly used in well reputed organizations to measure
the individual’s performance, however, this method is effective and less costly in contrast to
other methods. It also provides accurate analysis of an individual’s outputs.
Behaviourally Anchored Rating Scale (BARS)
Behaviorally Anchored Rating Scale method is a new technique to measure an individual’s
performance. This method is a more expensive method from the aforementioned ones, however,
provides guaranteed results. By using BARS, we get the result of employees’ behaviors by
scaling them explaining an individual trait. On the basis of an individual’s behavior, we rate their
behavior as good, average, or poor. This method provides constant results of an employee
behavior and helps managers to compensate employees, or assign duties in future.

360 Degree Feedback

This is the most used method in organizations to evaluate employees’ performance review
examples. This method is a bit time-taking because we use a lot of scale to measure an
individual’s performance within the organization. In this method we collect the information
through feedback from the people who interact with that employee. We get the information from
them by rating the services provided by the employees and get a statement which defines an
employee’s performance and input provided to the organization. This method is a worthy tool to
get realistic information. If an employee serves best to an individual he will obviously get a good
rating and positive word of mouth. It also includes taking statements from the employees
themselves regarding their performance. We take feedback reviews from the manager under
whom they are working, and combining all this information helps the organization to get
unbiased and accurate information to improve and guide the employees regarding their
performance.

Assessment Centre Method

The assessment centre method helps employees to get transparent information of how they are
being observed by the people. This method helps the organization to monitor and assess the
current performance as well as forecast the performance of the employees.
In the Assessment Centre Method, an organization sets up a social simulation in which
employees are asked to take part. This method is costly and time taking due to which it is slightly
difficult to apply in the organizations.

Psychological Appraisals
Psychological appraisals are the technique to get the information of an employee’s covered
potential. This method is used to forecast an employee’s future performance rather than previous
workout employee performance review examples. This method is used to get the information
of seven major elements of an employee’s performance such as interpersonal skills, cognitive
abilities, intellectual traits, leadership skills, personality traits and emotional quotient.
Specialists and qualified psychologists discuss various topics with the employee to ensure their
effectiveness in certain situations. This process is not used commonly because of its slow
processing, also, results are all based on the psychologist’s way of questioning, discussing, and
measuring.

Human-Resource (Cost) Accounting Method

Human-Resource Accounting method analyses an employee’s overall types of performance
appraisal through the financial advantages he/she attains from the firm. In this process we
compare the performance of an employee with the advantages he/she gets from the company.
Different factors taken as a measuring tool such as quality, overhead cost and interpersonal
relationships.

Critical Incident Method of Performance Job Appraisal

This performance job appraisal method is a unique way of evaluating an employee’s
performance. According to this, a manager logs details of critical incidents that an employee is
involved in, or performs. A critical incident does not necessarily have negative happenings
where the employee’s behavior or performance job appraisal process is below the expectation,
but could involve positive incidents as well. For instance, on a random day, a manager might
notice exceptional behavior or performance job appraisal process of an employee where the
employee is working with dedication or might reflect their problem-solving ability. In that case,
the manager would write down the details of that incident in a journal and provide recollection of
that incident during the performance appraisal process.
Despite its novel attribute, this method is sparsely used. The reason being is that it is host to a
bunch of demerits and limitations. As an example, let’s consider that an employee provides
consistent output which the firm requires, however, he/she does not exhibit any critical event. In
this case, the manager’s observation would be biased as he would not jot it down. Another
drawback of this method is that such events are not witnessed regularly. Also, there is no specific
definition of ‘critical incident’, it totally depends upon the manager’s perception or firm’s
policies.

Confidential Report System

This is one of the traditional methods of performance appraisal, however, it’s not usually
practiced in private firms. Mostly, public organizations or secret agencies employ this technique
in their appraisal process. As suggested by name, Confidential Report System involves handing
over the employee’s appraisal to senior level management in sealed envelopes. These envelopes
include their performance detail in a certain time frame. The height of confidentiality is that even
the employee who is subject to the assessment is not allowed free access to the particular
envelope. Only the authorized appraisal writer and senior management is allowed access to it.
Even though this method allows managers to be objective and candid about their employees,
still, it is host to some limitations. Since employees do not have access to their performance
information, it gets difficult for them to take corrective measures and improve their performance.
Confidential Report System ensures that employees do not see their rating or predict their future
incremental growth changes. Due to the secretive nature of this method, it is not most likely that
this technique would increase employee productivity.

Checklist Method
The checklist method is one of the most widely used performance appraisal technique. The
reason is its convenience, objectivity, and time-saving process. According to this method,
managers are provided with a standard checklist or questionnaire to fill in. Generally, this
checklist includes multiple choice questions, or require answers in the form of ‘yes’ or ‘no’. it
could also include particular statements and the manager would be required to answer it in the
form of extent to which they agree or disagree with it.
On the other side of the coin, this method has its own limitations. Its biggest drawback is that its
not subjective enough to be efficiently applicable in corporate organizations. In such setups,
every employee has different roles and performance expectations which the standard
questionnaire might not cover in detail. Employees might get dissatisfied that their role attributes
are not highlighted up to par, or managers might complain that the standard checklist lacks
subjective questions about employee role and expected performance outcome.

Field Review Method

This is an unconventional appraisal method used in critical situations. Human resources
department might get informed or have significant doubt that the manager’s observation is biased
(positively or negatively). In this case, they take the matter into their own hands and undergo
Field Review Method to make an accurate assessment. The managers’ decision is not completely
denied; however, it is given less weightage in the assessment process. The assessment might
involve calling the employee for an interview, with predetermined questions, with the help of
which his/her performance and abilities are assessed. As a result, the employee is given a
specific rating by the human resources team.
Field Review Method has insignificant applicability because most managers consider this as
interference of the human resources department in their team and processes. Also, it can not be
frequently employed as it’s a time-taking process.

Unstructured Method of Appraisal

This is the straightforward approach to evaluating employee performance. When using this
approach, the appraiser must freely convey his thoughts and feelings regarding the worker being
evaluated. In other cases, the rater must elaborate on the employee’s skills, talents, attitude,
aptitude, and other personal aspects.

Check List
Performance evaluation with a checklist is a common and straightforward approach. Human
Resources compiles a checklist and sends it to the management as part of the more conventional
approach to performance evaluation. The manager may be asked a series of questions on the
checklist. Each question will need a simple “YES” or “NO” response. The manager evaluates the
employee and the inquiry, then provides a response.
State Ranking Method
This approach of assessing employee performance is both basic and dated. Under this
framework, the worker and his output are seen as a single unit. The appraiser scores all of the
workers based on their overall performance on the project. Each item is ranked from best to
worst. Aside from being extremely subjective, this approach to determining an employee’s true
value also lacks any kind of objectivity.

Paired Comparison Method

This method is a refined approach to ranking and will be superior to traditional techniques. In
this system, all of the workers in a company are compared against one another simultaneously.
Assuming there are five workers A, B, C, D, and E, the superior performer will be determined by
comparing A’s and B’s results.

Man to Man Comparison Method

The United States Army utilised this strategy throughout World War One. Under this strategy,
we pick and choose which criteria to consider. Qualities like leadership and initiative are among
the determining variables. Each component is given a rating on a scale that the appraiser creates.
Key men are compared to personnel based on a single criterion at a time. The name “factor
comparison technique” describes this approach as well.

Grading Method
In this method of gauging employee performance review examples, criteria for evaluating their
performance are established in advance and given clear definitions. Employees’ knowledge,
judgement, analytical ability, leadership characteristics, self-expression, etc. are some of the
factors used to determine their final marks.

Graphic Rating Scale

This method of gauging performance is among the most common in use today. Employees are
evaluated based on their demonstrated abilities and expertise in certain areas relating to their
position. Two major categories emerge: individual traits and collective efforts.

Forced Choice Method

During WWII, this approach was designed to assess the effectiveness of American armed forces
troops. Evaluators have a propensity to provide vague ratings like “high,” “moderate,” or “poor”
in order to avoid the weight of the obligation resting on their shoulders. For this strategy to work,
evaluation of performance must be less emotional and more objective.

Free Essay Method

In this strategy, numbers are not used in any way. Employees will get a subjective evaluation.
Writer gives his honest opinion on the workers’ work. He details the workers’ abilities, expertise,
interpersonal skills, temperament, requirements for future growth, quality and cost control
concerns, and more.

Critical Incidents Method

When using this approach, a worker’s performance is graded in accordance with a number of
critical occurrences that occur in the course of their employment. The employee’s actions on the
job are emphasised. His actions are monitored to see whether he complains about the job, pushes
back, works well with others, offers suggestions for how things may be done better, etc.
When using this approach, a worker’s performance is graded in accordance with a number of
critical occurrences that occur in the course of their employment. The employee’s actions on the
job are emphasised. His actions are monitored to see whether he complains about the job, pushes
back, works well with others, offers suggestions for how things may be done better, etc.

Field Review Method

Under this procedure, a professional conducts an interview with a supervisor. The evaluator has
prepared questions that he will ask the supervisor, and he will have learned these questions by
heart. A supervisor’s assessment of an employee should include comments on that person’s
strengths and areas for improvement, as well as any notable achievements or readiness to work
with others.
Behaviorally Anchored Rating Scale :
A behaviorally anchored rating scale is a tool for measuring employee performance by
measuring them based on predefined behavioral patterns. The process typically uses a vertical
scale with ratings ranging from five to nine that represent various degrees of performance, from
poor to very good. Managers who use it first identify all tasks that an employee must perform
and then create the rating scale by adding specific behaviors to all grades from five to nine.The
behaviorally anchored rating scale can measure individual employee behavior, as each specified
behavior on the scale is relevant to a specific role within the organization. For this reason, the
behavior that the manager chooses usually needs to be as specific as possible for each position.
Some of the most common uses of behaviorally anchored rating scales are:
• Talent acquisition: Recruiters who know exactly what behaviors they're looking for in
candidates for specific roles usually have better chances of selecting the most qualified
ones.
• Employee development: Managers can use the behaviorally anchored rating scale to set
specific behavioral targets for their employees.
• Performance management: Using predefined behavioral patterns for employee
performance evaluation is usually the most common use of behaviorally anchored rating
scales.
• Growth planning: Managers can also use behavioral patterns to provide a direction for
growth for their employees.
• Succession management: Knowing the specific ideal behavior for each role can make it
easier to identify current employees that can be potential successors for higher roles.
• Company culture: Company stakeholders can aim to improve company culture by
identifying desirable and undesirable behaviors.