HUMAN RESOURCE MANAGEMENT

MBA SEMESTER - II
1
 Suggested Text Books:
1. Human Resource Management, Dr. S.S. Khanka, Sultan Chanda , Delhi
2. Human Resource Management, Deepak Bhattacharya, Sage Publishing
Ltd.
3. Human Resource Management, Arun Monppa , Tata McGraw Hill
Publishing Company
4. Human Resource Management, Mirza & Zaiyaddin
5. Human Resource Management, Dr. P.C.Pardeshi , Niramli Publication
6. Human Resource Management, R.S.Dwiwedi , Vikas Publishing House.
7. Human Resource Management, C.B.Mamoria , Himalaya Publishing House
8. Human Resource Management, Gary Dessler Dorling Kindersley Pvt Ltd.
9. Human Resource Management: Text and Cases, K Aswathappa , Tata
McGraw Hill Publishing Company.
10. Performance Appraisal and Management, Himalaya Publishing House.
 
 
 
 Suggested Reference Books:
1.Human Resource   Management in
Organizations, Izabela Robinson, Jaico
Publishing House.

2.Armstrong’s Essential Human Resource

Management Practice - A guide to people
management, Michael Armstrong, Koganpage.
 
3.Applied Psychology in Human Resource
Management, Cascio & Aguins, PHI.
 UNIT 1
• Concept and Challenges –
• Introduction
• Objectives
• Scope
• Nature
• Features of HRM
• Role of HRM
• Importance of HRM
• Policies and Practices of HRM
• Functions of HRM
• Challenges of HRM
• Introduction to SHRM: Define SHRM, importance and nature
• HRM Models: Harvard Model
• SHRM “matching model”
 INTRODUCTION
An organization is made up of four resources,
– Men
– Material
– Money
– Machinery.
•First one is living one, i.e, human
•other three are non-living i.e, non-human.
•human/people that make use of non-human resources.
•Hence, people are the most significant resources in an organisation.
•L.F. Urwick had remarked that “ business houses are made or broken
in the long-run not by markets or capital, patents, or equipments , but
by men”.
•According to Peter F. Drucker, “ man, of all the resources available to
man, can grow and develop.”
 INTRODUCTION
 Human resources are heterogeneous in the sense that they differ in
– personality
– perception,
– emotions
– values
– attitudes
– motives
– modes of thoughts.

 Their behavior to stimuli is often inconsistent (conflicting / incompatible)

and unpredictable ( impulsive / erratic ).
 While other resources depreciate (downgrade / devalue), human
resources appreciate ( realize / value ) with the passage of time.
 Better educated, more skilled, better aware of their interest and rights
are also some distinguishing features of modern human resources.
 These make it difficult for managers to use human resources always in an
effective and efficient manner.
 INTRODUCTION
 Given the highly competitive and complex business environment,
attracting and retaining ( preserve / maintain ) qualified and
competent employees have become a real challenge of the day for
the managers.
 The ‘rule of thumb’ has become obsolete and redundant.
 The need of the new perspective is to have right people for right
jobs.
 This mantra offers organizations an edge (upper hand/ authority /
control) , which management experts term as ‘competitive
advantage’ (a condition or circumstance that puts a company in a
favorable or superior business position) or ‘core competency’
 (defining characteristics that make a business or an individual
stand out from the competition ) to survive and thrive in the
competitive business environment.
 The same gives genesis (origin /birth /creation) to the concept of
HRM in business organizations.
 DEFINITIONS OF HUMAN RESOURCE
• Michael J. Jucius has defined human resources as “a whole
consisting of inter-related, inter-dependent and interacting
physiological, psychological, sociological and ethical
components”.

• According to Leon C. Megginson “From the national point

of view, human resources are knowledge, skills, creative
abilities talents, and attitudes obtained in the population;
whereas from the view-point of the individual enterprise,
they represent the total of the inherent (in-built / natural )
abilities, acquired knowledge and skills as exemplified
(demonstrated, showed ) in the talents and aptitude of its
employees”.
 DEFINITIONS OF HUMAN RESOURCE
Sumantra Ghosal considers human resources as human capital. He
classifies human capital into three categories-
– intellectual capital
– social capital
– emotional capital
Intellectual capital consists of
– specialized (Expertise / Focused ) knowledge
– Tacit (implicit / unstated ) knowledge and skills
– Cognitive (intellectual / rational )complexity
– learning capacity (capability / ability).
Social capital is made up of network of
– Relationships (Associations / Connections )
– Sociability (Friendliness / Openness )
– Trustworthiness (Dependability / Reliability ).
 DEFINITIONS OF HUMAN RESOURCE
 Emotional capital consists of
– Self-confidence
– Ambition
– Courage
– Risk-bearing ability
– Resilience (flexibility/ spirit )

• Human resources refer to the Qualitative and Quantitative

aspects of employees working in an organisation.
DEFINITIONS OF HUMAN RESOURCE MANAGEMENT

• According to Flippo, “Personnel management,

or say, human resource management is the
planning, organizing, directing and controlling of
the procurement, development, compensation,
integration, maintenance, and separation of
human resources to the end that individual,
organizational and social objectives are
accomplished”.
DEFINITIONS OF HUMAN RESOURCE MANAGEMENT
“According to Flippo, HRM is
– Planning (scheduling / designing),
– Organizing (shaping / consolidating),
– Directing (leading / guiding) and
– Controlling (monitoring / governing)
of the
– Procurement (attaining / obtaining),
– Development (progress / expansion),
– Compensation (payment / reimbursement),
– Integration, (incorporation / assimilation
– Maintenance upkeep / look after), and
– Separation (departure / parting) of
human resources to the end that individual, organizational and
societal objectives are accomplished.”
 DEFINITIONS OF HUMAN RESOURCE MANAGEMENT
• The National Institute of Personnel
Management (NIPM) of India has defined
human resource/personnel management as “
that part of management which is concerned
with people at work and with their relationship
within an enterprise. Its aim is to bring together
and develop into an effective organisation of
the men and women who make up an
enterprise and having regard for the well-being
of the individuals and of working groups, to
enable them to make their best contribution to
its success”.
DEFINITIONS OF HUMAN RESOURCE MANAGEMENT

• According to Decenzo and Robbins, “HRM is

concerned with the people dimension in
management. Since every organization is made
up of people, acquiring their services,
developing their skills, motivating them to
higher levels of performance and ensuring that
they continue to maintain their commitment to
the organization are essential to achieving
organizational objectives.
DEFINITIONS OF HUMAN RESOURCE MANAGEMENT
Thus, HRM can be defined as
– a process of procuring, developing and maintaining
competent human resources in the organisation so
that the goals of an organisation are achieved in an
effective and efficient manner.
– an art of managing people at work in such a manner
that they give their best to the organisation.
– a process of making the efficient and effective use of
human resources so that the set goals are achieved.
– the process of attracting, developing and maintaining
a talented and energetic workforce to support
organisational mission, objectives and strategies.
 Difference between PM & HRM
Dimension Personnel Management Human Resources
Management
1. Employment Contract Careful definition of written contracts Aim to go beyond contract

2. Rules Importance of guiding clear rules Can do outlook (a person's point

of view) , irritability with rule
3. Behaviour referent Norms/customs/practices Values/mission

4. Managerial task Monitoring (observe and check the Nurturing (help or encourage
progress or quality) the development )
5. Management Role Transactional (relating to the Transformational leadership
conducting of business) (relating to or involving
transformation )
6. Communication Indirect Direct

7. Conflict handling Reach temporary peace Manage climate & culture

8. T&D Controlled access to courses Learning organization

9. Focus of attention Personnel procedures Wide ranging cultural, structural

for interventions & personnel strategies

16
10. Shared interests Interests of the organization are Mutuality of interests
 NATURE OF HRM
• Pervasive (it is present in all enterprises / universal )
force (dynamism / potency)
• Action (accomplishment / execution) oriented
• Individually (independent) oriented
• People oriented (focused on / concerned with)
• Future (prospect) oriented
• Development (progress / growth) oriented
• Integrating (incorporating) mechanism
• Comprehensive (wide ranging / complete ) function
(role / purpose)
• Auxiliary (backup / supportive) service (provision)
• Interdisciplinary (relating to more than one branch of
knowledge ) function
• Continuous (endless / uninterrupted) function
 Objectives of HRM
 Societal (Communal / Common ) Objectives
To be ethically & socially responsible to the needs of the
society while minimizing the negative impact of such
demands upon the organization
 Organizational (Administrative / Structural ) Objectives
To recognize the role of HRM in bringing about
organizational effectiveness
 Functional ( Practical / Serviceable )Objectives
To maintain the department’s contribution at a level
appropriate to the organization’s needs
 Personal (Individual / Subjective ) Objectives
To assist employees in achieving their personal goals in a
manner that their personal goals enhance the individual’s
contribution to the organization
 HRM Objectives & Supportive Functions

 Societal objectives
– Legal Compliance
– Benefits
– Union Management Relations

 Organizational objectives
– HRP
– Employee Relations
– Selection
– T&D
– Appraisal
– Placement
– Assessment
HRM Objectives & Supportive Functions
 Functional objectives
– Appraisal
– Placement
– Assessment

 Personal objectives
– T&D
– Appraisal
– Placement
– Compensation
 OBJECTIVES OF HRM
P. Subbarao, in his Essentials of Human Resource Management and Industrial
Relations, discussed about HRM objectives as —

1. To create and utilize an able and motivated workforce, to

accomplish the organizational goals
2. To maintain sound organizational structure and desirable
working relationships among all the members.
3. To coordinate individual and group goals with organizational
goals.
4. To attain an effective utilization of human resources in the
achievement of organizational goals.
5. To identify and satisfy individual and group needs
6. To maintain high employee morale and sound human
relations
7. To provide an opportunity for expression and voice in
management
8. To provide fair, acceptable and efficient leadership.
9. To provide facilities and conditions of work and creation of
favorable atmosphere.
 SCOPE OF HRM
Labor or Personnel Aspect
– Manpower Planning ( Scheduling or preparation of the
number of people working or available for work or service)
– Recruitment (Staffing / Enlistment )

– Selection (Range / Choice )

– Placement (Appointment / Employment )

– Transfer (Relocation / Transferal )

– Training (Preparation / Teaching ) & Development

(Enlargement / Growth )
 Labour or Personnel Aspect
– Remuneration (Compensation / Payment )

– Incentives (a payment or concession to stimulate greater output or

investment )
– Promotion (Upgrade / Advancement )

– Lay-off (denial of employment to the employees for reasons

beyond the control of employer. Breakdown of machinery,
seasonal fluctuations in demand, shortage of power, raw
materials, etc ) & Retrenchment (permanent termination of an
employee’s services for economic reasons like surplus staff, poor
demand for products, general economic slowdown )
– Productivity (Efficiency / Output )
 Welfare Aspect
Working Conditions & Amenities such as
– Canteens
– Crèche's
– Rest & Lunch rooms
– Housing
– Medical assistance
– Transport
– Education
– Health and Safety
– Recreation facilities etc.
 Industrial Relation Aspect
– Union-Management Relations

– Joint Consultation

– Negotiation

– Grievance handling

– Collective Bargaining

– Settlement of disputes etc.

 FUNCTIONS OF HRM
Managerial Functions –

• Planning – plan and research about wage

trends, labour markets etc.
• Organizing – manpower and resources

• Staffing – recruitment and selection

• Directing – issuance of orders and instructions

to follow plan of action
• Controlling – to regulate the activities
 Operational Functions –
• Procurement–Planning,Recruitment& Selection,
Placement & Induction
• Development– Training & Development, Career
Planning, Counseling
• Compensation– Wage & Salary Administration,
Incentives, Benefits
• Integration– Employment relations, Grievance,
Discipline, Trade Unions, Participation, Collective
Bargaining
• Maintenance– Health, Safety, Welfare, Social
Security
• Separation– caused by Resignations,
Retirement, Death, Medical Reasons etc.
 Why study HRM?
• Taking a look at people is a rewarding experience

• People possess skills, abilities and aptitudes that offer

competitive advantage to any firm
• No computer can substitute human brain, no machines
can run without human intervention & no organization
can exist if it cannot serve people’s needs.
• HRM is a study about the people in the organization -
how they are hired, trained, compensated, motivated &
maintained.
 HRM Policies
• Policy: Is the list of rules, or framework, that govern the process. 
• Procedure/Practices: Is a series of steps to achieve a consistent
result (output).
• A policy is a plan of action. A policy is a formal statement of a principle
or rule that members of an organisation must follow. Each policy
addresses an issue important to the organisation's mission or
operations.
• Human resource policies are the formal rules and guidelines that
businesses put in place to hire, train, assess, and reward the members
of their workforce.
• HR policies must be linked to and support the mission, vision, values,
strategy, or goals of an organisation.
• For example, if the knowledge sharing and organisational learning
aspects of a mission statement are to succeed then they should be
evident in criteria used to select staff, in performance evaluation and
the practices associated with providing incentives and rewards.
• Such HR policies and practices become an integral part of
organisational culture.
 WHY POLICIES ARE IMPORTANT ?
• Communicate values and expectations for how things
are done at your organisation
• Keep the organisation in compliance with legislation
and provide protection against employment claims
• Document and implement best practices appropriate
to the organisation
• Support consistent treatment of staff, fairness and
transparency
• Help management to make decisions that are
consistent, uniform and predictable
• Protect individuals and the organisation from the
pressures of expediency 30
 HRM Policies
Types of HR Policies –

• Originated Policies – made by Top Management

• Appealed Policies – made on request to handle certain

situation, or if certain aspects are missing in the main policy.

• Imposed Policies – imposed by Government & Legal

authorities.

• General Policies – do not relate any issue, may represent the

priority of Top Management (WPM).

• Specific Policy – related to specific issues like Recruitment,

Transfer, Promotion etc.
 HRM Practices
HRM Functions HRM Practices

Selection Structured interviews and personality tests

to match the right person into the right job
Training Designing orientation and training
workshops for new employees, job
redesign and leadership to encourage
informal learning and change
Rewards Management Pay systems, bonuses & benefit packages
to maximize individual performance
Appraisal Interview appraisal, pay policy, training
policy, disciplinary policy
Employment relations Handling individual and group grievances,
communication of policies, negotiating with
unions
 Areas where policies are commonly established:
• Organizations commonly have written policies in the following areas:
• Code of Conduct
• Confidentiality
• Conflict of Interest
• Working Conditions
• Attendance
• Hours of Operations
• Termination (Voluntary and Involuntary)
• Recruitment
• Compensation
•  Performance Management
•  Learning and Development
•  Benefits and Eligibility
•  Overtime
•  Privacy
•  Employee Information
•  Bereavement Leave
•  Compassionate Leave
•  Vacation
•  Sick Leave, Short-term Disability, Long-term Disability
•  Maternity, Parental, and Adoption Leave
•  Unpaid Leave
•  Jury Duty
•  Family Leave
•  Grievance/Conflict Resolution
•  Formal Complaint Process
•  Disciplinary
•  Discrimination and Harassment/Respectful Workplace
•  Health and Safety
•  Accident Reporting
•  Workplace Violence
•  Alcohol and Drug Use Policy
•  Use of Company Equipment
•  General policy on the Review and Update of Organisation Policies
• HR policies may be defined as guidelines, procedures, codes and regulations adopted by
• management to guide workplace activities within acceptable limits, which are communicated through
• a summarised statement called policy statement and implemented through instructions referred
• to as policy directives.
UNIQUE HR NPRACTICES REGARDING RECRUITMENT AT TATA STEEL GROUP

A Fortune 500 company, the Tata Steel Group is the world’s second most geographically
diversified steel producer, employing around 80,000 people across five continents in
nearly 50 countries. The Group’s vision is to be the world’s steel industry benchmark in
‘Value Creation’ and ‘Corporate Citizenship’ through the excellence of its people, its
innovative approach and overall conduct.

Unique HR practices regarding recruitment

Tata Steel has always endeavored (strived / attempted) to offer some of the best HR
practices, and the recruitment process is no exception.

Opportunities for employee wards — domain wise written test, assessment center,
personal interview.
Tata Steel also select talent through Lateral Recruitment process which involves
interview by HR, subject matter expert and personal interviews.
Group Migration Policy for the employees, which enables the group employees to
explore opportunities to work at Tata Steel from other group companies.
Tata Steel provide career opportunities for down the line people and internal job
postings ensuring that the best talent pool deserves the right opportunity in bringing the
best practices in the company.
Campus Selection — B-schools, T-Schools — written test, psychometric test, personal
interview. Shadow recruitment (observing a professional to gain a better
understanding of the role ) for niche (a comfortable or suitable position in 34 life or
employment ) senior talent.
 According to (Yeung and Berman, 1997) HR
practices play three major roles
i) Building critical (acute) organisational capabilities

(ii) Enhancing employee satisfaction

(iii) Improving customer and shareholder satisfaction

Good HR practices enhance internal capabilities of an organisation to deal with

current or future challenges to be faced by an organisation.

Good Human Resource practices also promote the well-being of the

employees of the organisation.

The commitment and motivation built through good Human Resource practices
can lead to hard work and can have a very good influence on the organisation.
Can create a sustainable (justifiable / viable) and lasting capability of the
organisation to manage itself internally and face external challenges. 35
 DEFINITIONS OF HRM PRACTICES
 Schuler and Jackson (1987) defined HRM
practices as a system that attracts, develops,
motivates, and retains employees to ensure the
effective implementation and the survival of the
organisation and its members.

 Besides, HRM practices are also

conceptualised as a set of internally consistent
policies and practices designed and
implemented to ensure that a firm’s human
capital contribute to the achievement of its
business objectives (Delery & Doty, 1996).
 DEFINITIONS
 Minbaeva (2005) viewed HRM practices as a set
of practices used by organisation to manage
human resource through facilitating the
development of competencies that are firm-
specific, produce complex social relation and
generate organisation knowledge to sustain
competitive advantage.

 HRM practices relate to specific practices, formal

policies, and philosophies that are designed to
attract, develop, motivate, and retain employees
who ensure the effective functioning and survival
of the organisation.
 HR Practices include:
 HR Planning
 Recruitment and Selection
 Induction (the action or process of inducting someone to a post
or organization)
 Training and Development
 Performance Appraisal
 Career Planning
 Fringe (Unconventional) Benefits
 Reward and Recognition
 Welfare Activities as per Statutory Requirement
 Safety, Health and Environment Policy
 Suggestions Scheme
 Promotion and Transfers
 Exit Policy
 HRM MODELS
 The defining features of HRM is popularly known as
models.
 These models provide analytical framework for
studying HRM.
 They provide characterization of HRM that establishes
variables and relationship to be researched.
 Four most common models are :

– The Fombrun Model

– The Harvard Model

– The Guest model

39
– The Warwik Model
 CHARACTERISTICS OF HRM MODELS
 They provide an analytical (logical/methodical)
framework for studying HRM for example, situational
factors, stakeholders, strategic (intentional/calculated)
choice levels, competence (proficiency/fitness) etc.
 They validate (authenticate/certify) certain HRM
practices and provide distinctiveness (uniqueness /
particularity) to HRM practices.
 They provide a characterization of HRM that
establishes variables and relationship to be
researched.
 They help to discover and understand the world for
explaining the nature and significance of key HR
practices.
 The Fombrun Model
• This is the model of HRM which emphasizes four
functions of management and their
interrelatedness Selection, Appraisal,
Development and Rewards.
• This model is simple and can serve as a heuristic
(enabling someone to discover or learn something
for themselves.) framework for explaining the
nature and significance of HR activities.
• This is the model incomplete as it focuses on only
four functions of HRM and ignore all other
environmental and contingency (unforeseen
event/emergency) factors.
42
 The Harvard Model
• This model consists six critical components of
HRM namely

– Stakeholders interests

– Situational factors

– HRM policy choices

– HR outcomes

– Long term consequences

– Feedback loop through. 43

44
 The Guest Model
• This model was developed by David Guest in
1997.

• Emphasizes on the assumption that HR

manager has specific strategies to begin with,
which demand certain practices and when
executed will result in outcomes.

• These outcomes include behavioral

performance related and financial rewards.
45
 The Guest Model
Emphasizes the logical sequence of six
components :
– HR strategy

– HR practices

– HR outcomes

– Behavioral outcomes

– Performance results
46
– Financial consequences
47
48
 The Warwick Model
 This model was developed by two researchers, Hendry
and Pettigrew of University of Warwick.
 Centers around five elements:

– Outer context [macro (very large scale)

environmental forces]
– Inner context [firm specific or micro (small-scale
interactions) environmental forces]
– Business strategy (plan/scheme) content

– HRM context (perspective / framework )

– HRM content (satisfaction / at ease)

 Strength- it identifies and classifies
important environment influences on HRM
 Takes cognizance (knowledge or
awareness) of
– business strategy and HR practices
– The external and internal content
– In which these activities take place
– Process by which such changes take
place. 50
51
52
 CHALLENGES OF HRM
• Vision penetration

• Internal environment

• Change in industrial relations

• Building organizational capabilities

• Job design and organizational structure

• Increasing size of workforce

53
 CHALLENGES OF HRM
i. Vision Penetration:
– Evolving the right vision is an entrepreneurial or top
management function
– utility increases immensely if it percolates, understood and
accepted down the line.
– Vision not only provides the fuel and direction to business
strategy
– Helps managers evaluate management practices and make
decisions.
– Penetration of vision is vital as well as integral part of staff
management in future.
 CHALLENGES OF HRM
ii. Internal environment:
Important dimension of managing managerial personnel.
– Creating an environment, which is

– responsive to external changes

– providing satisfaction to the members of the

organization
– sustaining it through culture

– useful traditions, practices, and even systems 55

 CHALLENGES OF HRM
iii. Change in industrial relations:
– The practice of IR has undergone sea
change.
– The notion that workers must be disciplined
at the manager‘s will have to be buried.
– Development of workers may need simpler
and appropriate inputs.
– Both the workers and managers must be
managed and developed by the same set of
assumptions and HRM philosophy of the
company.
 CHALLENGES OF HRM
iv. Building organizational capabilities:
– The paradigm of managing managers would include

– not only assisting them to acquire new skills and

knowledge
– to evaluate environmental changes

– to evolve business strategies

– to live in a psychological state of readiness

– to continually change.
 CHALLENGES OF HRM
v. Job design and organizational structure:

 In designing organizations, acceptance of foreign concepts and

fads like quality circles, TQM, etc.

 Instead of these, organizational structure and design will

primarily be based on
– task approach, i.e. understanding of the intricacies
(details/ in’s and out’s) of technology, jobs and functions to
be performed to achieve organizational tasks

– people approach, which takes cognizance of their

strengths, idiosyncrasy ( peculiarity / habit), aspirations and
58
relationships at work.
 CHALLENGES OF HRM
vi. Increasing size of workforce:

– The organizations are ever increasing in size and

complexity, multiplying the number of people
working therein.
– The management of an increased workforce poses
serious problems and challenges especially since
the workers are becoming more conscious of their
rights.
 CONTEMPORARY (MODERN) ISSUES WITH HRM
 GLOBALIZATION: refers to the tendency of firms to
extend their sales, ownership and manufacturing to
new markets abroad.
 TECHNOLOGICAL ADVANCEMENT: many of the
improvements that make firms world class involve
technology.
 THE NATURE OF WORK: technology is also
changing the nature of the work. Even factory jobs
are more technologically demanding.
 WORKFORCE DEMOGRAPHICS: the workforce is
becoming more diverse as women, minority groups
members and older workers enter the workforce.
60
Strategic Human Resource Management (SHRM)
 The meaning of strategy is ‘the art and science of directing military
forces’.
 In Oxford Dictionary, strategy means ‘generalship’.
 Thus, strategy is associated with the long-term decisions taken at the
top of the enterprise.
 It envisages (foresees / predicts) thinking ahead to survive and grow
in a highly competitive environment.
 Strategy is concerned with determining which option will provide
maximum benefits.
 According to Jauch and Glueck.“Strategy is a unified (integrated),
comprehensive (wide-ranging) and integrated (incorporated) plan that
relates the strategic advantages of the firm to the challenges of the
environment.
 It is designed to ensure that the basic objectives of the enterprise
(venture) are achieved through proper execution by the organization.”
 SHRM
 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; 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 (fulfillment) or compensation.
 Strategic HRM utilizes the talent and opportunity within the human resources
department to make other departments stronger and more effective.
 Strategic human resource management can be defined as the linking of human
resources with strategic goals and objectives in order to improve business
performance and develop organizational culture that foster (promote) innovation,
flexibility and competitive advantage.
 In an organization SHRM means accepting and involving the HR function as a
strategic partner in the formulation and implementation of the company's strategies
through HR activities such as recruiting, selecting, training and rewarding personnel.
 SHRM
 Is a combination of Strategy and Human Resource
Management (HRM).
 It is an organization's strategy to achieve its objectives
through its people.
 It stems out from the organization's belief in its people
and recognition that human resources are key assets.
 Strategic Human Resource Management is aligning
HR strategies with business strategies.
 According to Prof Gary Dessler “Strategic Human
Resource Management means formulating and
executing HR systems i.e., policies and activities that
produce employee competencies and behaviors the
organization needs so as to achieve its strategic aims”.
 SHRM
 Strategic human resource management means
formulating and executing HR systems ,HR policies and
activities that produce the employee competencies and
behaviors the company needs to achieve its strategic
aims.
 Pattern of HR related decision strategies adopted over a
period of time and its linkages with the corporate
strategies to be able to achieve the distinctive
competitive advantage.
 A company’s plan for how it will match its internal
strength and weakness with external opportunities and
threats in order to maintain a competitive advantage.
 A pattern of top management decision for fulfilling the
goal and objectives of the organization and achieve
competitive advantage.
 SCOPE OF SHRM
1. Allows identification, prioritization and exploitation of
opportunities.
2. Provides an objective view of management problems.
3. Represents a framework for improved co-ordination and
control of activities.
4. Minimizes the effects of adverse conditions and
changes.
5. Allows major decisions to better support established
objectives.
6. Allows more effective allocation of time and resources
to identified opportunities.
7. Allows fewer resources and lesser time to be devoted to
correcting erroneous (flawed) or adhoc decisions.
 SCOPE OF SHRM
8. Creates a framework for internal communication among
personnel.
9. Helps to integrate the behaviors of individuals into a total
effort.
10. Provides a basis for the clarification of individual
responsibilities.
11. Gives encouragement to forward thinking.
12. Provides a co-operative, integrated and enthusiastic
approach to tackling problems and opportunities.
13. Encourages a favorable attitude towards change.
14. Gives a degree of discipline and formality to the
management of a business.
66
 SHRM
Strategic HRM, therefore, is concerned with the
following:
1. Analyze the opportunities and threats existing in the
external environment.
2. Formulate strategies that will match the organization's
(internal) strengths and weaknesses with
environmental (external) threats and opportunities.
3.In other words, make a SWOT analysis of
organization.
4. Implement the strategies so formulated.
5.Evaluate and control activities to ensure that
organization's objectives are duly achieved. 67
68
 NATURE OF SHRM
1) Long-term Focus: As business strategies have a long-term orientation,
therefore, focus of SHRM is also long-term probably more than one
year.

2) Associated with Goal-Setting: SHRM is highly related with setting of

objectives, formulation of policy and allocation of resources and it is
carried out at all levels of top management.

3) Interrelated with Business Strategies: There is an interrelation

between business strategies and SHRM. E.g. it gives significant inputs
when business strategy is formulated, and human resource strategies
(like recruitment, staffing, training and performance appraisal).

4) Fosters Corporate Excellence Skills: SHRM considers employees as

the strategic potential of the organization and on that basis makes effort
to differentiate the organization from its competitors present in the
markets. It also promotes learning of modern skills.
 OBJECTIVES OF SHRM
1)To develop Strategic Competencies: to make sure that the company has
needed standards and competent and highly motivated employees for
achieving sustainable competitive advantage.

2)To give Sense of Direction: It guides the organization in the right direction
so that the business requirements of the organization and the individual
as well as the cooperative requirements of its employees are met by
creation and attainment of consistent and reasonable HR policies and
programmes.

3)To achieve Integration: Target of SHRM is to give a united framework, so

that the organized HR system works synergistically in accordance with the
organizational strategic objectives.

4)To formulate Business Strategy: by focusing on the measures through

which the organization can use the power of its human resources for
70
the
increasing benefits.
Key Features of Strategic Human Resource Management:
a) There is an explicit linkage between HR policy and practices and overall
organizational strategic aims and the organizational environment.
b) There is some organizing schema linking individual HR interventions so that they are
mutually supportive.
c) Much of the responsibility for the management of human resources is devolved
down the line.

71
 IMPORTANCE OF SHRM:
a) Helps firm in achieving cost-effective
engagement of Labour
b) Enables firm to meet changing needs
c) Provides clear-cut goals, direction, and future
focus
d) Helps Organization in Planning and Executing
Organizational Changes
e) Ensures Optimum Utilization of Organizational
Resources
f) Develops, Manages and Sustains Skills and
Knowledge
 PROCESS OF SHRM
• making plans indicating where the organization
wants to move or place itself in a period of time (for
instance, ‘Our company should be number one
in terms of market share within five years’ is an
objective, quantifying in numbers in terms of
volumes as per the highest market share and
devising means to achieve the same is a plan).
• identifying people or start recruitment,
• developing HR systems based on employment
policy and
• making HR strategies as per organization's
strategies . 73
 Mission
INTERNAL EXTERNAL
ANALYSIS ANALYSIS
Goals
Strategy formulation

HR Needs

Strategy implementation

HR Capabilities
HR
Practices
HR Outcomes
Strategy evaluation

Firm’s Outcome
 BENEFITS OF SHRM
1) Identifying and analyzing external opportunities and threats that
may be crucial to the company's success.
2) Provides a clear business strategy and vision for the future.
3) To supply competitive intelligence that may be useful in the
strategic planning process.
4) To recruit, retain and motivate people.
5) To develop and retain of highly competent people.
6) To ensure that people development issues are addressed
systematically.
7) To supply information regarding the company's internal
strengths and weaknesses.
8) To meet the expectations of the customers effectively.
9) To ensure high productivity.
10) To ensure business surplus thorough competency.
76
77
 APPROACHES TO SHRM
1) Resource Based Approach
– Creating Knowledge capital
– Developing people to have competitive
2) Strategic Fit Approach
– HR strategy in line with Business strategy
3) High Performance Management Approach
– Redefining HR strategies and functions to get highest
performance in terms of productivity and quality
4) High Commitment Management Approach
– Mutual commitment
– Clear cut career paths for employees
– Involving employees in every aspect
5) High Involvement Management Approach
– Employees are equal stake holders
– Regular dialogue among management, managers and teams.
I STRATEGY FORMULATION
STAGE
Linkage between strategic planning and
• HRM:
Administrative linkage •Two-way linkage

Strategic Strategic
planning planning

HRM
HRM
• One-way linkage •Integrative linkage
Strategic Strategic
planning planning

HRM HRM
 LEVELS OF LINKAGES
• In administrative linkage, the department simply engages in
administrative work unrelated to the company's core business
needs.
• In one-way linkage, the firm's strategic business planning
function develops the strategic plan and then informs the HRM
function of the plan.
• In two-way linkage, HRM executives then analyze the human
resource implications of the various strategies, presenting the
results of this analysis
• The Integrative linkage is based on continuing interaction. The
HRM function is built right into the strategy formulation and
implementation processes.
• In the higher level linkage such as two-way linkage and
integrative linkage are characterized by a close relationship
between HRM and business strategies.  80
I. LINKAGE MODELS
 MATCHING MODEL
• The model stated that the HR system and
the organization structure should be
managed in a way that is congruent
(matching) with the organizational
strategy.

• The model is used to facilitate the

achievement of the objectives of the
organization in terms of efficiency in
productivity and profits.
82
MATCHING MODEL
 CONTROL BASED MODEL
 When organizations hire people, they have only a potential or
capacity to work. To ensure that each worker exercises his or
her full capacity, managers must organize the tasks, space,
movement and time within which workers operate.

 Workers’ own counter-management behaviour then causes

managers to control and discipline the interior of the
organization.

 This can be explained by the following three methods:

 Individual Control
 Bureaucratic Control (relating to a system of government in
which most of the important decisions are taken by state
officials rather than by elected representatives.)
 Technological Control
 Resource Based Model
 The sum of people’s knowledge and expertise, and social relationships, has the
potential to create competitive advantage.
 Resources Tangible (real)
Non-tangible (not having physical presence)
Threshold resources -  resources needed to meet the customer's minimum
requirements.
Threshold competency - usually knowledge or basic skills
Same as Different from
competitor competitor

resource Threshold Unique

(Resources Resource

Threshold Distinctive
competency
competency Competency
 BARNEY’S MODEL
Barney argues that four characteristics of resources
and capabilities –
• Value
• Rarity (the state or quality of being rare)
• Inimitability (not able to be imitated)
• non-substitutability (department's function
cannot be performed by other readily available
resources)
are important in sustaining competitive advantage.
Resources which have value are rare, which cannot
be initiated or substituted, will be helpful in shaping
the HR strategies which inturn will give the
organisation competitive advantage.
 BAMBERGER’S MODEL
 Acquisition and development are concerned with the extent to which
the HR strategy develops internal human capital as opposed to the
external recruitment of human capital

 Locus of control (a particular position or place where something

occurs or is situated.) is concerned with the degree to which HR
strategy focuses on monitoring employees’ compliance with process-
based standards.
outcome COMMITMENT COLLABORATION

Workforce locus
of control
PATERNALISTIC TRADITIONAL

process

internal external
Acquisition of employees
II. Strategy Implementation Stage
Internal analysis(3 c’s) based on
•Culture
•Competencies (the ability to do something successfully or
efficiently.)
•Composition

HR architecture
high
CONSULTING CORE
WORKFORCE WORKFORCE
UNIQUNE
RESOURCES
ANCILLIARY COMPULSARY
WORKFORCE WORKFORCE

low high
VALUE
 III. Strategic Evaluation Stage
HR scorecard

It measures the effectiveness of HR activities.

Steps involved

1. Formulating the business strategy

2. Consulting with the value chain of the organisation
3. Laying out the strategy map
4. Identifying the organisational outcomes to be achieved
5. Strategically fit HR functions
6. Deciding the metrics (a system or standard of measurement )
for measuring the impact of the required behaviour and
capabilities
7. Strategic comparison with the strategic objectives met.
 Company practicing SHRM
FedEx,oneof thetop transportation companies of
the world has been practicing Strategic Human
Resource Management over years.
It has also gained a competitive edge over the
other firms.
 LIMITATIONS AND BARRIERS TO SHRM
 Difficulty of attaining and to have continued commitment by all
stakeholders over a long period of time.
 Focus on short term performance in deciding compensation ignoring
long term potential.
 Fears for training employees as organization’s feel trained employees
will look for better opportunities.
 Conflicts between departments.
 Fear of senior management that subordinates would become a threat to
their positions.
 Limited availability of time and money.
 Presence of strong trade union.
 Employees ‘fear of unknown’.
 Resistance to change.
 Lack of strategic perspective on HR, as HR is treated as a purely
administrative function.
 Lack of vision and technical knowledge of HR department. 91
 UNIT 1- LONG ANSWER QUESTIONS
Q1) Define Human Resource Management and explain the
functions of Human Resource Management.
Q2) Define Strategic Human Resource Management and
enumerate the barriers to strategic Human Resource
Management.
Q3) Explain various Policies and Practices of HRM.
Q4) What do you mean by geometry of HR ?
Q5) Explain various SHRM models.
Q6) What are the challenges of HRM in present scenario of
competitive market?
Q7) Explain in brief about the Models of HRM.