CHAPTER 1

INTRODUCTION TO HRM
 Chapter Outline
A Definition of Human Resource Management

Human Resource Management Functions

Current and Future Challenges to Human

Resource Management
 Organization as Input-Output system

Acquiring
inputs from Conversion
Exporting to
environment Process Outputs
Environment

Using financial
resources by By human By human
human resources resources resources
 Definition
Human Resource Management (HRM)
involves all management decisions and
practices that directly affect the people
who work for the organization

It is that phase of management which

deals with the effective control & use of
manpower as distinguished from other
sources of power
 Definition of HRM:-
Dale Yoder The Management of human
resources is viewed as a system in which
participants seek to attain both individual and
group goals.

Flippo HRM is the Planning, organizing,

directing and controlling of the procurement,
development ,compensation, integration,
maintenance and reproduction of human resources
to the end that individual, organizational and
societal objectives are accomplished.
 Concepts of HRM:-
Employment
Selection and training
Employee services
Wages
Industrial relations
Health and safety &
Education
 Scope of HRM
The scope of HRM is very wide.
The Indian Institute of Personnel Management has
specified the scope of HRM as follows:

Welfare
Personnel
Aspect
Aspect
Industrial
Relations
Aspect
History of HRM
 Scientific Management Approach
F.W. Taylor Father of scientific mgt.

Focused on study of motions required for

each job

Concept of economic man e/e are

motivated by financial incentives
 Human Relations Approach
Elton Mayo Hawthorne Studies

Emphasizing on work conditions & group

relationships

This approach has failed to recognize

other factors which affects on work

1950-1960 began to outdated

 Human Resource Approach
E/e are resources i.e. assets of the
organization

Policies, programs should help e/e

Creation of e/e friendly work

environment
 HUMAN RESOURCE APPROACH
Employee
Motivation

Employee
Employee Rewards HR Performance

Organizational
Performance
 Evolution of HRM
1917-18: 1st formal personnel department created to deal with
tight labor market, high turnover, waste and inefficiency,
widespread strikes, union growth, government intervention,
takeovers

1920s: HR used to win worker cooperation, through ensuring

job security, benefits, etc.

1930-50s: Human Relations recognizes that there are

psychological and social influences to worker satisfaction,
cooperation, performance; first focus on groups (not teams).
 Evolution of HRM (contd)
1960s: Work design, rather than communication and cooperation
in groups, is the key to increasing worker motivation. Small
work group design leads to greater employee effort, group
work provides opportunities for self-actualization; work is
more interesting and fulfilling.

1970s: Quality of Work Life (QWL): emphasis on the value of

human resources. PM becomes HR.

1990s-Present: TQM, reengineering, globalization, strategic HR,

new technologies, diversity, contingency models, holistic
approaches to HR. HRM models include high involvement,
high commitment, high performance work system,
innovative work practices. HR becomes HRM.
 Comparison on HRM and Personnel
Management
There have been several approaches on the concepts of
relationship between HRM and Personnel management:
Comparison includes studying Similarity and
Differences.

Armstrong suggests common features of

Personnel management and Human Resource
Management:
1. Strategies of both stem from the business strategy.

2. Both these recognize that line managers are

responsible for managing people. And the line
managers are enabled by the advice and support of the
personnel department to carry out their
responsibilities.
3. The value of personnel management and those of soft
version of human resource management are identical
vis--vis respect for individual, integration of individual
needs and organizational goals, and development of
people to accomplish competence to facilitate individual
and organizational interests.

4. Both attach importance to the function of matching

people to ever-changing business requirements.

5. Both use the same range of selection, competence

analysis, performance management, training,
management development and reward management
techniques.

6. The soft version of human resource management and

personnel management stresses the process of
communication and participates within the employee
relations analysis.
 Differences between Personnel
Management and HRM
1. Personnel Management is a routine, maintenance-
oriented administrative function; human resource
management places emphasis on a continuous
development of people at work.
2. Personnel Management function is mainly reactive and
responds to the demands of an organization whenever
they arise, while HRM is proactive function (more future
oriented)

3. Personnel Management is seen as independent function

and sub-functions without giving due-regard to
organizational strategies and processes. HRM is viewed
as sub-system of the organization as it takes into
account its linkages and interfaces with all other parts of
the organization.
4. Personnel Management has a narrow focus it mainly works
on improving the efficiency of personnel in isolation without
emphasizing the relevance of efficiency in the organizational
context, while HRM undertakes a systems view which
attempts to create a proper organizational culture.
5. Personnel management emphasizes on economic rewards
and traditional job design for better performances, while HRM
emphasizes on the satisfaction of higher needs for motivating
people, such as autonomous work groups, challenging jobs,
creativity.

6. Personnel Management considers job satisfaction and

higher moral as a cause of improved performance, while HRM
works on the premise that better performance itself is a
source of satisfaction and high morale.
 Features of Human Resource
Management
A process
Pervasive force
Action Oriented
Individually Oriented
People Oriented
Development Oriented
Integrating Mechanism
Comprehensive Function
Inter-disciplinary Function
Continuous Function
Functions of HRM

1. Managerial Functions
2. Operative functions
Managerial Functions

Planning
Organizing
Staffing
Directing
Controlling
 Operative Functions
1. Employment
Job Analysis
Human Resource Planning
Recruitment
Selection
Placement
Induction
 Operative Functions contd
2. Human Resource Development
Performance Appraisal
Training
Management Development
Career Planning & development
 Operative Functions contd
3. Compensation
Job Evaluation
Wage & Salary Administration
Incentives
Bonus
Fringe Benefits
 Operative Functions contd
4. Employee Relations
Increasing e/e productivity
Motivate e/es
Team Building
Enhancing QWL
 HR Policies & Procedures
HR policies set of guidelines that
determine the way in which e/e are to be
treated in the organization

HR procedures help the mgt in

implementing the HR policies i.e. specific
applications or actions.
 HR Policies
After the establishment of objectives of Human
Resource Management, HR policies are to be
formulated.
Definition:-
A policy is a plan of action.
Brewster and Richbell defined HR policies as a
set of proposals and actions that act as a
reference point for managers in their dealings with
employees.
-They constitute guides to action.
-They furnish the general standards or bases on
which decisions are based.
-Their genesis lies in an organizations values,
philosophy, concepts and principles
 Advantages of HR Policies
Policies are useful instructional devices, that offer
various advantages to HR working at various levels.

Delegation
Uniformity
Better Control
Standards of efficiency
Confidence
Speedy Decisions
Coordinating Devices
 Obstacles in Administrating HR
Policies:-
1. Managers are reluctant to follow
guidelines as it curtails their freedom.
2. Conflict between implied and
expressed policy.
3. Not easy to Communicate.
4. Makes managers rigid.
 Characteristics of sound HR
Policy.
While developing a HR Policy, management
must pay attention to:-
Relation of policies with objectives
Easy to understand
Precise
Stable as well as flexible
Based on facts
Appropriate number
Just, fair and equitable
Reasonable
Based on Reviews.
 Coverage of HR Policies:-
a) Social responsibility
Equity
Quality of Work Life

b) Employment Practices
c) Promotion Policies
d) Development Policies
e) Relations Policies
 Sources of content for formulating
policies
Past experiences of the organization.
Existing practices and experiences in other
organizations
Attitudes and philosophies of management
Knowledge and experience gained by all
line managers and personnel managers in
handling personnel issues.
Organizational policies.
 Aims of HRM
1. Organizational effectiveness (HRM makes a significant impact
on firm performance)
2. Human capital management (HC is the prime asset the aim is
to develop the inherent capacities of people)
3. Knowledge management (support the development of firm-
specific knowledge)
4. Reward management (enhance motivation, job engagement)
5. Employee relations (harmonious relationship between partners)
6. Meeting diverse needs (stakeholders, workforce)
7. Bridging the gap between rhetoric and reality (HRM is to
bridge the gap and to ensure that aspirations are translated to
effective action
 Hard and Soft HRM
Hard (instrumental) HRM approach:
Employees are viewed as a passive factor of production, an
expense
Employees can be easily replaced and seen as disposable.
Strategic, quantitative aspects of managing HRM as an
economic factor

Soft (humanistic) HRM approach:

Stresses active employee participation
Gains employee commitment, adaptability and contribution of
their competences to achievement of organizational goals
Employees are valued as assets
Emphasizing communication, motivation and leadership
The link between HRM and firm performance
 Emerging Role of HRM

Value of Human Resources

Human Resources a competitive

advantage

Human resources accounting

 Role of HR Executives

Service provider
Executive
Facilitator
Consultant
Auditor
 Role of HR Practitioner
The HR department generally acts in an advisory capacity; it
provides information, offer suggestions, counsels and assists all
the line managers in the organization.
Various roles:-
Advisory Role
The Conscience Role
Counsellors Role
Mediators Role
Representative Role
Clerical Role
Fire-Fighting / Legal Role
Welfare Role
Problem solver
Change agent
Decision Maker
Executive
 Career in HRM

Types of HRM Jobs

Generalist
Human Resource Assistant or Specialist
Employment, Recruiting and Placement
Interviewer, EEO Specialist or College Recruiter
Training and Development
Trainer, Orientation Specialist
Compensation and Benefits
Salary Administrator, Compensation Analyst, and Benefits
Administrator
 Types of HRM Jobs
Employee and Labor Relations
Labor Relations Specialist, Plant Personnel
Assistant, Employee Relations Specialist
Health, Safety and Security
Safety specialist, Security Specialist, Employee
Assistance Program Counselor, Medical
Program Administrator
Human Resource Information Managers
 Types of HRM
Organizations

Small and Large Businesses

(85% currently work in private sector)
Employment Agencies/Search Firms
Government Agencies
Labor Unions
Schools, Colleges and Universities
Consulting Firms
 Companies Who Have Recruited
HRM

ABB Information Control Corp.

Andersen Consulting Limited Distribution Services
Cardinal Health Marathon Ashland Petroleum
Dupont Menasha
Exxon-Mobil Owens Corning
Ford Raytheon
General Electric SubmitOrder.com
Honeywell Worthington Industries
IBM
International Paper
 Further Education

Undergraduate Degrees
Behavioral Sciences, General Business, Business & Labor Law
Masters Degrees
Human Resource Management, Labor Relations, Organizational
Behavior/Development
A Masters degree is preferred in todays competitive market
Human Resource Certification Institute (HRCI)
PHR (Professional in Human Resources)
SPHR (Senior Professional in Human Resources) based on
experience, exam, and course requirements
 HRM Salaries

Starting salaries tend to vary with the

type of employer
Employers involved in manufacturing
and heavy industry offer higher starting
salaries than the service organization
Strategic Human Resource
Management
 Strategy
Unified course of action to achieve the goal

Unified, comprehensive & integrated plan designed

to ensure that the basic objectives of the enterprise
are achieved

The pattern of decisions or actions is aimed at

achieving the goals & objectives of the company
 HRM and Corporate Objectives

HRM is being used to develop competitive advantage

and, therefore, its role in strategic management has
been well recognized. Strategic management is the
continuous process of relating the organization with its
environment by suitable course of action involving
strategy formulation and its implementation.

Strategy is course of action through which the

organization relates itself with the environment so as
to achieve its objectives.
 Strategic Management
A continuous, iterative, cross functional process
aimed at keeping an organization as a whole
appropriately matched to its environment
Strategic Mgt Process
 Strategic HRM

Is the optimum utilization of human

resources to achieve the set goals &
objectives in the business
environment
 Environmental
opportunities Activating
and threats strategy
Choice of
Structural
strategy implementation
Behavioral
Corporate implementation
mission Functional
and Strategic Strategy
implementation
objectives Alternatives Implementation

Corporate Personal Values and Role of HRM

strengths aspirations of Acquiring,
and strategists Developing,
weaknesses Integrating, and
Retaining right
personnel

Role of HRM in corporate strategic management

process 50
Strategic Decisions and Their Implications for
Human Resource Management
Strategic Decisions and Their Implications for
Human Resource Management (contd)
 Role of HRM in Strategic Management
HR mgr supplies competitive intelligence in
strategy formulation
1. Encouragement of pro-active rather than reactive
behavior
2. Explicit communication of goals
3. Stimulation of critical thinking
4. Productivity, quality & service - HR based strategy
5. Proficient strategic mgt
 Tomorrows HR Today - Future
In terms of meeting the challenges
Increased competition better quality goods &
services
Increased use of IT
Availability of qty of knowledge
Change of structure

How to face?
Job redesigning
Flexible wk hrs
 HRM - Environment
All those forces which have their bearing on the functioning
of the HR dept.

1. External Forces 2. Internal Forces

Political-Legal (legislature, Strategy, Task &
executive, judiciary)
leadership
Economic
Suppliers
Unions
Competitors Org culture & conflict
Customers
Industrial Labour Diversity
Technological
Cultural forces
 HRM & Its Environment
Factors Affecting Global HR Management

Political Economic

Legal Cultural
 HRM in changing environment
The job of an HR manager is to balance the
demands and expectations of the external
groups with the internal needs and achieve the
assigned tasks in an efficient ways.
So the HRM practices in an organization are
influenced by two broad categories of factors
Environmental factors and Organizational
factors.
I) Environmental factors:-
Economic Environment
Legal Environment
Technological Environment
Socio-cultural Environment
Economic Environment
Population v/s workforce
Workforce market conditions
National Income
Inflationary pressures

Legal Environment
Political Stability
Technological Environment
Reengineering work processes
Flexible Manufacturing Systems

Socio-Cultural Environment
Slashing of jobs
Trade Unions
Work force diversity
Top Challenges for Organizations and the HR Profession
 Human Resource Management: A Career
Challenge for the Twenty-First Century

The Value-Added Paradigm Includes:

Understanding Why Things Work
Mastering HR Competencies
Extending Boundaries
Measuring the Impact of HR Practices
Challenges to HR Professionals
Worker Productivity

Quality Improvement

The changing attitudes of workforce

equal opportunity in ICICI bank
 Challenges to HR Professionals
contd
The impact of the government

Quality of work life

Technology & training

Current and Future Challenges to
Human Resource Management
Corporate Reorganizations
Global Competition
International Joint Ventures (IJVs)
Increasing Diversity in Workplace
Employee Expectations
Organizations as Vehicles for Reaching
Societal Goals
Code of Ethics for HR Professionals