Chapter One – Human Resource Management

Chapter One
Human Resource Management Overview
1.1. Definition and Background
1.1.1 Background
Human beings are social beings and hardly ever live and work in isolation. We always plan,
develop and manage our relations both consciously and unconsciously. The relations are the
outcome of our actions and depend to a great extent upon our ability to manage our actions.
From childhood each and every individual acquire knowledge and experience on understanding
others and how to behave in each and every situation in life. Later we carry forward this learning
and understanding in carrying and managing relations at our workplace. The whole context of
Human Resource Management revolves around this core matter of managing relations at work
place.

The term "human resource management" has been commonly used for about the last ten to
fifteen years. Prior to that, the field was generally known as "personnel administration." The
name change is not merely cosmetics.

Since mid 1980’s Human Resource Management (HRM) has gained acceptance in both academic
and commercial circle. HRM is a multidisciplinary organizational function that draws theories and
ideas from various fields such as management, psychology, sociology and economics.
There is no best way to manage people and no manager has formulated how people can be
managed effectively, because people are complex beings with complex needs. Effective HRM
depends very much on the causes and conditions that an organizational setting would provide.
Any Organization has three basic components, People, Purpose, and Structure.
In 1994, a noted leader in the human resources (HR) field made the following observation:
Yesterday, the company with the access most to the capital or the latest technology had the best
competitive advantage;
Today, companies that offer products with the highest quality are the ones with a leg up on the
competition; But the only thing that will uphold a company’s advantage tomorrow is the caliber
of people in the organization.

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That predicted future is today’s reality. Most managers in public- and private sector firms of all
sizes would agree that people truly are the organization’s most important asset. Having
competent staff on the payroll does not guarantee that a firm’s human resources will be a source
of competitive advantage.
However, in order to remain competitive, to grow, and diversify an organization must ensure that
its employees are qualified, placed in appropriate positions, properly trained, managed
effectively, and committed to the firm’s success. The goal of HRM is to maximize employees’
contributions in order to achieve optimal productivity and effectiveness, while simultaneously
attaining individual objectives (such as having a challenging job and obtaining recognition), and
societal objectives (such as legal compliance and demonstrating social responsibility).
1.1.2 Definitions of HRM
➢ Human resources management (HRM) is a management function concerned with hiring,
motivating and maintaining people in an organization. It focuses on people in organizations.
➢ HRM is designing management systems to ensure that human talent is used effectively and
efficiently to accomplish organizational goals.
➢ HRM is the personnel function which is concerned with procurement, development,
compensation, integration and maintenance of the personnel of an organization for the
purpose of contributing towards the accomplishments of the organization’s objectives.
Therefore, personnel management is the planning, organizing, directing, and controlling of
the performance of those operative functions (Edward B. Philippo).
➢ “HRM is concerned with the most effective use of people to achieve organizational and
individual goals. It is the way of managing people at work, so that they give their best to the
organization”. Invancevich and Glueck,
➢ HRM is the policies and practices involved in carrying out the “people” or human resource
aspects of a management position, including recruiting, screening, training, rewarding, and
appraising comprises of HRM. Dessler (2008)
Generally, HRM refers to the management of people in organizations. It comprises of the
activities, policies, and practices involved in obtaining, developing, utilizing, evaluating,
maintaining, and retaining the appropriate number and skill mix of employees to accomplish the
organization’s objectives. The goal of HRM is to maximize employees’ contributions in order to

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achieve optimal productivity and effectiveness, while simultaneously attaining individual

objectives (such as having a challenging job and obtaining recognition), and societal objectives
(such as legal compliance and demonstrating social responsibility).
1.2 Importance of Human Resource Management
HRM has an important role to play in equipping organizations to meet the challenges of an
expanding and increasingly competitive sector. Increase in staff numbers, contractual
diversification and changes in demographic profile which compel the HR managers to reconfigure
the role and significance of human resources management. The functions are responsive to
current staffing needs, but can be proactive in reshaping organizational objectives. All the
functions of HRM are correlated with the core objectives of HRM. For example, personal
objectives are sought to be realized through functions like remuneration, assessment etc.
1. Strategic HR Management: As a part of maintaining organizational competitiveness, strategic
planning for HR effectiveness can be increased through the use of HR metrics and HR
technology. Human resource planning (HRP) function determine the number and type of
employees needed to accomplish organizational goals. HRP includes creating venture teams
with a balanced skill-mix, recruiting the right people, and voluntary team assignment. This
function analyzes and determines personnel needs in order to create effective innovation
teams. The basic HRP strategy is staffing and employee development.
2. Equal Employment Opportunity: Compliance with equal employment opportunity (EEO) laws
and regulations affects all other HR activities.
3. Staffing: The aim of staffing is to provide a sufficient supply of qualified individuals to fill jobs
in an organization. Job analysis, recruitment and selection are the main functions under
staffing. Workers job design and job analysis laid the foundation for staffing by identifying
what diverse people do in their jobs and how they are affected by them. Job analysis is the
process of describing the nature of a job and specifying the human requirements such as
knowledge, skills, and experience needed to perform the job. The end result of job analysis is
job description. Job description spells out work duties and activities of employees. Through
HR planning, managers anticipate the future supply of and demand for employees and the
nature of workforce issues, including the retention of employees. So HRP precedes the actual
selection of people for organization.

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4. Talent Management and Development: Beginning with the orientation of new employees,
talent management and development includes different types of training. Orientation is the
first step towards helping a new employee to adjust himself to the new job and the employer.
It is a method to acquaint new employees with particular aspects of their new job, including
pay and benefit programmes, working hours and company rules and expectations. Training
and Development programs provide useful means of assuring that the employees are capable
of performing their jobs at acceptable levels and also more than that. All the organizations
provide training for new and in experienced employee. In addition, organization often
provide both on the job and off the job training programmes for those employees whose jobs
are undergoing change. Likewise, HR development and succession planning of employees and
managers is necessary to prepare for future challenges. Career planning has developed as
result of the desire of many employees to grow in their jobs and to advance in their career.
Career planning activities include assessing an individual employee’s potential for growth and
advancement in the organization. Performance appraisal includes encouraging risk taking,
demanding innovation, generating or adopting new tasks, peer evaluation, frequent
evaluations, and auditing innovation processes.
5. Total Rewards: Compensation in the form of pay, incentives and benefits are the rewards
given to the employees for performing organizational work. Compensation management is
the method for determining how much employees should be paid for performing certain jobs.
Compensation affects staffing in that people are generally attracted to organizations offering
a higher level of pay in exchange for the work performed. To be competitive, employers
develop and refine their basic compensation systems and may use variable pay programs
such as incentive rewards, promotion from within the team, recognition rewards, balancing
team and individual rewards etc. This function uses rewards to motivate personnel to achieve
an organization’s goals of productivity, innovation and profitability. Compensation is also
related to employee development in that it provides an important incentive in motivating
employees to higher levels of job performance to higher paying jobs in the organization.
Benefits are another form of compensation to employees other than direct pay for the work
performed. Benefits include both legally required items and those offered at employer’s

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discretion. Benefits are primarily related to the area of employee maintenance as they
provide for many basic employee needs.
6. Risk Management and Worker Protection: HRM addresses various workplace risks to ensure
protection of workers by meeting legal requirements and being more responsive to concerns
for workplace health and safety along with disaster and recovery planning.
7. Employee and Labor Relations: The relationship between managers and their employees
must be handled legally and effectively. Employer and employee rights must be addressed. It
is important to develop, communicate, and update HR policies and procedures so that
managers and employees alike know what is expected. In some organizations,
union/management relations must be addressed as well. The term labor relation refers to
the interaction with employees who are represented by a trade union. Unions are
organization of employees who join together to obtain more voice in decisions affecting
wages, benefits, working conditions and other aspects of employment. With regard to labor
relations the major function of HR personnel includes negotiating with the unions regarding
wages, service conditions and resolving disputes and grievances.
HRM is a management function that helps manager’s to recruit, select, train and develop
members for an organization. HRM is concerned with people’s dimension in organizations.
The following constitute the core of HRM
1. HRM Involves the Application of Management Functions and Principles. The functions and
principles are applied to acquiring, developing, maintaining and providing remuneration to
employees in organization.
2. Decision Relating to Employees must be integrated. Decisions on different aspects of
employees must be consistent with other human resource (HR) decisions.
3. Decisions Made Influence the Effectiveness of an Organization. Effectiveness of an
organization will result in betterment of services to customers in the form of high-quality
products supplied at reasonable costs.
4. HRM Functions are not confined to Business Establishments Only but applicable to non-
business organizations such as education, health care, recreation and like.

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1.3 Evolution and Development of Human Resource Management

The following stages explain the process involved for reaching to the current HRM stage:
1. Labor Welfare Stage:
Formal beginnings of HRM may have emerged from industrial disputes and conflicts. An
enquiry on determining reasons for industrial disputes and conflicts gave light to several
problems related to living and working conditions of employees across industries. This
enquiry highlighted limitations of businesses that perceived human resources as machines
for obtaining increased productivity and more profits at lower costs.
Workers worked long hours in strenuous working conditions that led to the formation of
trade unions. These trade unions focused on protecting and promoting workers’ interests
but faced resistance from the management of businesses thus leading to industrial disputes
and conflicts.
2. Personnel Management Stage:
When labor welfare issues were provided legal assurances, organizations began focusing on
behavior of employees at all levels at an individual, group and overall organizational basis.
A “Personnel” was appointed to manage the employee-employer relationship by managing
issues related to human resource planning, recruitment and selection, training and
development, performance and potential appraisal, promotions, transfers, quality of
working life, compensation, compliances to labor laws and legislations.
3. HRM Stage:
HRM is a mix of labor welfare and personnel management. HRM aims at maximizing
employee performance in accordance to the objectives set by an organization. HRM is a
result of increasing organizational size, changing social and cultural norms, easy access to
information (via technology) and globalization. Accordingly, it attempts to build worker-
employees relationship more humanely through motivation, training and development,
retention, worker protection, etc.
Also, under HRM, HR managers need to obtain and incorporate knowledge about possible
changes that may affect the overall organization. HR managers thus attempt to execute
relevant strategies to ensure smooth transition of changes without disturbing inter-
relationships and avoiding disputes/conflicts within an organization.

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Difference between personnel management and HRM

Some experts assert that there is no difference between human resources and personnel
management. They state that the two terms can be used interchangeably, with no difference in
meaning. In fact, the terms are often used interchangeably in help-wanted ads and job
descriptions.

For those who recognize a difference between personnel management and human resources,
the difference can be described as philosophical. The table below shortly compares PM with HRM
as follows.

Subject Personnel management HRM

Nature More administrative Managing a workforce as one of the
primary resources
Scope Less than HRM Much broader
Time and planning Short-term, reactive, ad Long-term, proactive, strategic,
hoc, marginal integrated
Psychological contact Compliance Commitment
Control system External Self-control
Employee relations Pluralist, collective, low Unitarist, individual, high trust
trust
Structures and Bureaucratic/mechanistic, Organic, devoted, flexible
systems centralized, formal
Roles Specialist/professional Largely integrated into line management
Evaluation criteria Cost minimization Maximum utilization(human asset
accounting)
1.4 Human Resource management objectives
The primary objective of HRM is to ensure the availability of competent and willing workforce to
an organization. The specific objectives include the following:
1. Human capital: assisting the organization in obtaining the right number and types of
employees to fulfill its strategic and operational goals

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2. Developing organizational climate: helping to create a climate in which employees are

encouraged to develop and utilize their skills to the fullest and to employ the skills and
abilities of the workforce efficiently
3. Helping to maintain performance standards and increase productivity through effective job
design; providing adequate orientation, training and development; providing performance-
related feedback; and ensuring effective two-way communication.
4. Helping to establish and maintain a harmonious employer/employee relationship
5. Helping to create and maintain a safe and healthy work environment
6. Developing programs to meet the economic, psychological, and social needs of the
employees and helping the organization to retain the productive employees
7. Ensuring that the organization is in compliance with provincial/territorial and federal laws
affecting the workplace (such as human rights, employment equity, occupational health and
safety, employment standards, and labour relations legislation). To help the organization to
reach its goals
8. To provide organization with well-trained and well-motivated employees
9. To increase the employee’s satisfaction and self-actualization
10. To develop and maintain the quality of work life
11. To communicate HR policies to all employees.
12. To help maintain ethical polices and behavior.

The above stated HRM objectives can be summarized under four specific objectives: societal,
organizational, and functional and personnel.
1. Societal Objectives: seek to ensure that the organization becomes socially responsible to the
needs and challenges of the society while minimizing the negative impact of such demands
upon the organization. The failure of the organizations to use their resources for the society’s
benefit in ethical ways may lead to restriction.
2. Organizational Objectives: it recognizes the role of HRM in bringing about organizational
effectiveness. It makes sure that HRM is not a standalone department, but rather a means to
assist the organization with its primary objectives. The HR department exists to serve the rest
of the organization.

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3. Functional Objectives: is to maintain the department’s contribution at a level appropriate to

the organization’s needs. Human resources are to be adjusted to suit the organization’s
demands. The department’s value should not become too expensive at the cost of the
organization it serves.
4. Personnel Objectives: it is to assist employees in achieving their personal goals, at least as
far as these goals enhance the individual’s contribution to the organization. Personal
objectives of employees must be met if they are to be maintained, retained and motivated.
Otherwise, employee performance and satisfaction may decline giving rise to employee
turnover.
1.5. The Role of HRM

The role of HRM is to plan, develop and administer policies and programs designed to make
optimum use of an organizations human resources. It is that part of management which is
concerned with the people at work and with their relationship within enterprises. Its objectives
are:

(a) effective utilization of human resources, (b) desirable working relationships among all
members of the organizations, and (c) maximum individual development. Human resources
function as primarily administrative and professional. HR staff focused on administering
benefits and other payroll and operational functions and didn’t think of themselves as
playing a part in the firm’s overall strategy.

HR professionals have an all-encompassing role. They are required to have a thorough

knowledge of the organization and its intricacies and complexities. The ultimate goal of every
HR person should be to develop a linkage between the employee and organization because
employee’s commitment to the organization is crucial.

The primary responsibilities of Human Resource managers are:

• To develop a thorough knowledge of corporate culture, plans and policies.

• To act as an internal change agent and consultant
• To initiate change and act as an expert and facilitator

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• To actively involved in company’s strategy formulation

• To keep communication line open between the HRD function and individuals and groups
both within and outside the organization
• To identify and evolve HRD strategies in consonance with overall business strategy.
• To facilitate the development of various organizational teams and their working
relationship with other teams and individuals.
• To try and relate people and work so that the organization objectives are achieved
efficiently and effectively.
• To diagnose problems and determine appropriate solution particularly in the human
resource areas.
• To provide co-ordination and support services for the delivery of HRD programs and
services
• To evaluate the impact of an HRD intervention or to conduct research so as to identify,
develop or test how HRD In general has improved individual and organizational
performance.

According to Dave Ulrich HR play’s four key roles.

1. Strategic Partner Role-turning strategy into results by building organizations that

create value;
2. Change Agent Role- making change happen, and in particular, help it happen fast
3. Employees Champion Role—managing the talent or the intellectual capital within a
firm
4. Administrative Role—trying to get things to happen better, faster and cheaper.

1.6. Human Resource Management Models

HRM models are the human resources management features that provide a framework for the
analysis of the management system. They make it easy to establish variables and relationships
upon which the effectiveness and significance of key HR practices are based. There are four HRM
models proposed by different scholars and experts to describe the HR management practice.
These are: (I) The Fombrun, (II) The Michigan/Matching (III)Harvard, and (IV) The Guest Model.

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I. Fombrun Model of HRM

• Being the first model (dates back to 1984), this emphasizes just four functions and their
interrelatedness.
• The four functions are selection, appraisal, development, and rewards. These four
constituent components of human resource management and are expected to contribute
to organizational effectiveness.
• The Fombrun model is incomplete as it focuses on only four functions of HRM and ignores
all environmental and contingency factors that impact HR functions.

II. The Michigan/Matching Model

• It Emphasizes more on “tight fit” between the HR strategy and the business strategy.
• Business strategy is the main focus.
• Human resources are taken like any other resource which must be fully utilized together
with the other resources to achieve organizational objectives.
• This model emphasizes more on the hard side of HRM.
• HR systems and the organization structure should be managed in a way that is congruent
with organizational strategy

III. The Harvard model

• It acknowledges the existence of multiple stakeholders within the organization.
a. shareholders
b. management
c. employees,
d. government and
e. the community at large
• Interest of the various groups must be fused and factored in the creation of HRM
strategies and ultimately the creation of business strategies.
• This model emphasizes more on the human/soft side of HRM.
• Emphasizes the importance of employees like any other stakeholder in influencing
organizational outcomes.

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The following are characteristics of HRM in Harvard Framework;

• Line managers accept more responsibility for ensuring the alignment of competitive
strategy and HRM policy
• HRM has the mission of setting policies that govern how HR activities are developed and
implemented in ways that make them more mutually reinforcing
• HRM is the concern of management in general rather than the HRM function in particular.

IV. The Guest Model

o This model is a fusion of hard and a soft approach of HRM.
o Guest proposes 4 crucial components that underpin organizational effectiveness.
1. Strategic Integration
This is the ability of organizations to maintain a fit between the HRM strategy and the business
strategy.
In other words, there must be congruence between business strategy and the HR strategy for the
organization to achieve its goals.
2. Flexibility
the ability of the organization and its people to adapt to the changing business and work
environment.

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3. High Commitment
attitudinal commitment- which is reflected through a strong identification with the organization.
behavioral commitment- the ability to go an extra mile, and
4. Quality
Quality is based on the assumption that provision of high quality goods and services results from
a quality way of managing people.

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