1-1 EXCEL

BOOKS
Chapter

THE STRATEGIC ROLE OF

HUMAN RESOURCES
MANAGEMENT
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ANNOTATED OUTLINE

Introduction
Organisations have to provide a healthy work climate in order to get
the best out of people. To utilise the capabilities of people fully, you
need competent leadership willing to recognise, reward and nurture
talent at all levels. This is where human resource managers play a
critical role by bridging gaps between employee expectations and
organisational requirements by adopting appropriate human resource
strategies and practices. HRM, in short, is the art of procuring,
developing and maintaining competent workforce to achieve the
goals of an organisation in an effective and efficient manner.

The Strategic Role Of Human Resources Management

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Human Resource Management:
Features
Pervasive force
Action oriented
Individually oriented
People oriented
Future oriented
Development oriented
Integrating mechanism
Comprehensive function
Auxiliary service
Inter-disciplinary function
Continuous function

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Important terms
Clearing the Fog
Human resource: Knowledge, skill sets, expertise of employees, the
adaptability, commitment and loyalty of employees.
Skills: The individual abilities of human beings to perform a piece of work.
Resource: The stock of assets and skills that belong to a firm at a point of
time.
Capability: The ability of a bundle of resources to perform an activity; a way of
combining assets, people and processes to transform inputs into outputs.
Core competencies: Activities that the firm performs especially well when
compared to its competitors and through which the firm adds value to its goods
and services over a long period of time.
Competitive advantage: It comes from a firm's ability to perform activities
more distinctively and more effectively than rivals. To attain competitive
advantage, firms need to add value to customers and offer a product or
service that cannot be easily imitated or copied by rivals (Uniqueness).
Value: Sum total of benefits received and costs paid by the customer in a given
situation.

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Scope of HRM

HRM mainly covers three broad areas

Personnel aspect
Welfare aspect
Industrial relations aspect

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Objectives of HRM
HRM aims at achieving organisational goals, meet the expectations
of employees; develop the knowledge, skills and abilities of
employees; improve the quality of working life and manage human
resources in an ethical and socially responsible manner.

Importance of HRM
From an organisational standpoint, good HR practices help in
attracting and retaining talent, train people for challenging roles,
develop their skills and competencies, increase productivity and
profits and enhance standard of living

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Importance of HRM

attract and retain talent

train people for challenging roles
develop skills and competencies
promote team spirit
Good HR Practices help
develop loyalty and commitment
increase productivity and profits
improve job satisfaction
enhance standard of living
generate employment opportunities

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HRM as a central subsystem in an

organisation

Product
Subsystem

HR Subsystem
Procurement
Finance Training Marketing
Subsystem Compensation Subsystem
Appraisal
Rewards

Technical
Subsystem

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Functions of HRM
P/HRM

Managerial Operative Functions

functions:
Procurement Development: Motivation and Maintenance: Emerging
– Planning Integration:
Compensation: Issues:
Job Analysis Training Grievances
Job design Health Personnel
HR planning Executive records
Work scheduling Discipline
– Organising Recruitment development
Safety Personnel
Motivation Teams and
Selection Career teamwork audit
planning Job evaluation Personnel
Placement Welfare Collective
Succession Performance and research
– Directing bargaining
Induction potential HR
appraisal Social security Participation accounting
Internal planning
mobility Compensation Empowerment HRIS
– Controlling Human administration
resources Trade unions Job stress
development Incentives
benefits and Employers’ Mentoring
strategies
services associations International
HRM
Industrial
relations

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EVOLUTION OF HRM
The field of HRM evolved both in India and elsewhere over a
number of years to present level of sophistication and use of
proactive methods

 The industrial revolution

 Scientific management
 Trade unionism
 Human relations movement
 Human resources approach

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Evolution of the Personnel Function

Concept What is it all about?

The Commodity Labour was regarded as a commodity to be bought and sold.

concept Wages were based on demand and supply. Government did
very little to protect workers.

The Factor of Labour is like any other factor of production, viz, money,
Production concept materials, land, etc. Workers are like machine tools.

The Goodwill concept Welfare measures like safety, first aid, lunch room, rest room
will have a positive impact on workers’ productivity

The Paternalistic Management must assume a fatherly and protective attitude

concept/ Paternalism towards employees. Paternalism does not mean merely
providing benefits but it means satisfying various needs of the
employees as parents meet the requirements of the children.

Cont…

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Evolution of the Personnel Function

The Humanitarian To improve productivity, physical, social and psychological
concept needs of workers must be met. As Mayo and others stated,
money is less a factor in determining output, than group
standards, group incentives and security. The organisation is a
social system that has both economic and social dimensions.

The Human Resource Employees are the most valuable assets of an organisation.
concept There should be a conscious effort to realise organisational goals
by satisfying needs and aspirations of employees.

The Emerging concept Employees should be accepted as partners in the progress of a

company. They should have a feeling that the organisation is
their own. To this end, managers must offer better quality of
working life and offer opportunities to people to exploit their
potential fully. The focus should be on Human Resource
Development.

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Shifts in HR management in India

Traditional HR practice Emerging HR practice

 Administrative role  Strategic role

 Reactive  Proactive

 Separate, isolated from  Key part of organisational

company mission mission

 Production focus  Service focus

 Functional organisation  Process-based organisation

 Individuals encouraged,  Cross-functional eams,

singled out for praise, teamwork most important

rewards
 People as expenses  People as key
investments/assets

The Strategic Role Of Human Resources Management

 Personnel Management Vs HRM
Points PM HRM
Philosophy Employees made Rules & Reg. are
for rules & Reg. made for Emp.
Nature Procurement & Integration with
training of personnel Corporate mgt
Communication Slow & downward Fast & both
downward & upward
Decision slow fast
-making
Approach Work-oriented People-oriented
Job-Design Revision of labour team-work
Trust- level low high
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HRM in the new millennium

Current thinking in HRM strongly supports the view that when

opportunities for growth and enhancement of skills are available in an
organisation, people will be stimulated to give their best, leading to
greater job satisfaction and organisational effectiveness. To this end,
therefore, HR managers in the new millennium are expected to
successfully evolve an appropriate corporate culture, take a strategic
approach to the acquisition, motivation and development of human
resources and introduce programmes that reflect and support the
core values of the organisation and its people.     

    Size of work force

Demands for better pay, benefits, working conditions

Cont…

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HRM in the new millennium

Composition of workforce
Equal pay for equal work
Breaking down of glass ceiling
Constitutional protection to minority groups
Importance to factors such as age, sex, religion, region, caste especially while
dealing with multifarious, heterogeneous, culturally diverse work groups

 Employee expectations
Better educated, more knowledgeable, emotionally strong and demanding
workforce
Demand for educated, trained, experienced and knowledgeable workers growing
Understand individual differences and develop appropriate policies to meet their
growing expectations.

Cont…

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HRM in the new millennium

 Changes in technology
Modernisation, computerisation, sophistication increasing by the day
Knowledge and skills need to be refined constantly
Training, retraining and mid-career counselling important
Equip employees so as to cope with dramatic challenges brought forward by rapid
advances in science and technology
  Life style changes
 Environmental challenges
 Personnel function in future
Job redesign
Career opportunities
Productivity
Recruitment and selection
Training and development
Rewards
Safety and welfare        Cont…

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HRM in the new millennium

 Changes in 21st century affecting HRM

HR as a springboard for success
Talent hunting, developing and retraining
Lean and mean organisations
Labour relations
Health and benefit programmes

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HRM Strategies for New Millennium
 Human Capital:Acc. To sumantra ghoshal of
london business school, HC consists of 3
Parts:
1) Intellectual capital: stock of knowledge, skills
and expertise.
2) Social Capital: structure, quality and flexibility
of human Relationship both inside & outside
the company
3) Emotional capital: Individual need self-
cofidence, courage, to convert their knowledge
and relationships into effective action.
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HRM Strategies for New Millennium

EMOTIONAL QUOTIENT

Emotional Quotient states that a manager’s effectiveness in a corporation

depends more on his emotional intelligence which means his ability to
manage his emotions in he workplace and calmly deal with stressful
corporate situations than on his IQ or Technical Skills.

Three elements:

Self-Awareness

Social Skills

Social Awareness
HRM Strategies for New Millennium
MENTORING:
It is the process whereby a senior manager acts
as friend-philosopher and guide to new recruit
through his teachings, coaching, counselling.
Consists of following steps:
 Initiation
 Progression
 Assimilation
 Integration
HRM Strategies for New Millennium
4. 360 degree Appraisal technique:
Process whereby evaluation of manager is done
by everyone above, alongside and below him.
Each manager is assessed by minimum of 15
colleagues-2 bosses,4 peers,6 subordinates.
Four Components:
Self Appraisal
Superior’s Appraisal
Subordinate’s Appraisal
Peer Appraisal
HRM Strategies for New Millennium
5. Employee stock Option plan
Employees are offered the company’s shares
at a concessional price. When the market price
of shares increases the employees earns
considerable capital gains.
HRM Strategies for New Millennium
6. Total Quality Management:
Means continous process of improvement main
objective is to delight the customers, involves
study and understanding of changing
customers needs & taking steps to satisfy
these needs in a better way.
Features:
Customer satisfaction
Internal customers
Continous process
Team work
HRM Strategies for New Millennium
Quality Circle:
Small group of employees from the same work
area which meet regularly to identify, analyse
& solve quality and work- related problems
HRM Strategies for New Millennium
Kaizen:
Means continous improvement so as to
generate value for customers. It stresses upon
process oriented thinking.
Steps:
1. Seiri (straighten up)

2. Seiton (put things in order)

3. Seiso (clean up)

4. Seiketsu(Personal cleanliness)

5. Shitsuke (Discipline)
HRM Strategies for New Millennium
Flexitime: A plan whereby employees build their
workday around a core of midday hours say
11am to 2pm.

Six Sigma:business management strategy

developed by Motorola, USA in 1981. it seeks
to improve the quality of processes output by
identifying & removing the causes of defects
(errors).
HRM Strategies for New Millennium
Follows two project methodologies:
1) DMAIC(for existing Pdts):- D(Define the
problem), M(measure key aspects),A(analyse
the data to find cause & effect relationship),
I(improve the current process),C (control future
process).
2) DMADV(for new Pdts):-Define, measure,
analyse, design, verify.