Chapter One

The Nature of HRM

 Outline
 Definition of HRM
 Nature, Functions and Scope of HRM
• Objectives of HRM
 Difference Between Personnel Management &
HRM
 HR as core competency and Human Capital
 HRM History: Evolution and Development of HRM
 Current Trends shaping HRM
Definition of Human Resources
Management (HRM)
 Concept of management
Use of resources (efficiently and effectively) to achieve
goals of organizations
 What are the resources?
 Material resources,financial resources, human resources,
time, processes and methods.

It is doing things with and through people

Functional aspects of management

Materials management, financial management, operations
management, procurement management, human resources
management..
 Cont’d
 HRM could be defined in many ways:
 HRM defined:
It is branch of management which deals with the human
resources of an organization.

 It is designing management systems to ensure that human

talent is used effectively and efficiently to accomplish
organizational goals

 “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
 Cont’d
 Human resource management is defined as a strategic and
coherent approach to the management of an organization’s
most valued assets – the people working there,
• Who individually and collectively contribute to the achievement of
its objectives.

 Boxall et al (2007) describe HRM as ‘the management of

work and people towards desired ends’.

 HRM is a series of integrated decisions that govern employer-

employee relations.
 Continued
 HRM deals with the human element in the organization(people as
individual and groups), about their
 recruitment, selection, assignment, motivation, empowerment, compensation,
utilization, training and development, promotion, and retirement.

 Human Resource Management is the process of planning, organizing,

directing and controlling of :-
 the acquisition, utilization and maintenance (preservation) of human (people)
resource in organizations in order to achieve objectives.

 According to Dessler (2008), 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.
 Continued
 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 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).
Continued
• HRM is combination three concepts:
• Human - people (i.e. employees and managers)
• Resource - assets/costs for organizations
• Management - co-ordination and control to achieve set of goals
• Importance of HR
• People is the key factor of production.
• Productivity is the key to measure a nation’s economic growth
potential, and labor quality is the key to improving productivity.

• Competition today is the competition for talents.

 HRM- Nature, Scope and Functions
 Nature of HRM
 Inherent Part of Management: It is inherent in the process of management
performed by all the managers throughout the organization.

 Pervasive Function: It is performed by all managers at various levels in the

organization; not left to someone else.

 Basic to all Functional Areas : permeates all the functional area of management
such as production, financial, and marketing management.

 People Centered: It is concerned with all categories of personnel from top to the
bottom of the organization.

 Continuous Process: It must be performed continuously.

 Based on Human Relations: HRM is concerned with the motivation of human
resources in the organization.
 Scope of HRM
 The scope of HRM is indeed vast.
• All major activities in the working life of a worker –
• from the time of his or her entry into an organization until he or
she leaves the organizations comes under the purview of HRM.

 The major HRM activities include

• HR planning, job analysis, job design, employee hiring, employee and
executive remuneration, employee motivation, employee maintenance,
industrial relations and prospects of HRM.

 According to the study of the American Society for Training

and Development (ASTD), the nine broad areas of activities
of HRM identified including:-
 Continued
 a) Human Resource Planning: The objective of HR Planning is
to ensure that the organization has the right types of persons at the
right time at the right place.

• It prepares human resources inventory with a view to assess present

and future needs, availability and possible shortages in human
resource.
• Thereupon, HR Planning forecast demand and supplies and identify
sources of selection.

• HR Planning develops strategies both long-term and short-term, to

meet the man-power requirement.
 Continued
 b) Design of Organization and Job: This is the task of laying
down organization structure, authority, relationship and
responsibilities.

• This will also mean definition of work contents for each position
in the organization.
• This is done by “job description”.
• Another important step is “Job specification”.
• Job specification identifies the attributes of persons who will
be most suitable for each job which is defined by job
description.
 Continued
c) Selection and Staffing:
This is the process of recruitment and selection of staff.
This involves matching people and their expectations with which the
job specifications and career path available within the organization.

d) Training and Development:

This involves an organized attempt to find out training needs of the
individuals to meet
the knowledge and skill which is needed not only to perform
current job but also to fulfill the future needs of the organization.
 Continued
 e) Organizational Development:
• This is an important aspect whereby “Synergetic effect” is generated in an
organization
• i.e. healthy interpersonal and inter-group relationship within the
organization.

 f) Compensation and Benefits:

• This is the area of wages and salaries administration where wages and
compensations are fixed scientifically to meet fairness and equity criteria.

• In addition, labor welfare measures are involved which include

benefits and services.
 Continued
g) Employee Assistance:
Each employee is unique in character, personality, expectation and
temperament.
By and large each one of them faces problems everyday. Some are
personal some are official.
In their case he or she remains worried. Such worries must be removed
to make him or her more productive and happy.

h) Union- Labour Relations:

Healthy Industrial and Labour relations are very important for
enhancing peace and productivity in an organization. This is one of the
areas of HRM.
Continued
• i) HR Research and Information System:

• Advancement of technology of product and production methods

have created working environment which are much different from
the past.

• Globalization of economy has increased competition many fold.

• Thus, continuous research in HR areas is an unavoidable
requirement.
 Objectives of HRM
 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.

 Includes
• Respect for human rights and legal compliance
• Ensure ethical and social responsibility
• Promote decent work, equal employment opportunity and overall
wellbeing.
• The failure of the organizations to use their resources for the society’s
benefit in ethical ways may lead to restriction.
 Continued
2) Organizational Objectives: it recognizes the role of HRM in bringing
about organizational effectiveness.

Includes:
• help achieve organizational goals
• help maximize productivity and profitability
• provide the organization with well-trained and well-motivated
employees
• Reconciliation of organizational, individual and societal needs and
goals

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.
 Continued
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.
 Continued
 4) Personal 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.
 Includes
• enhance employee's capabilities to perform the present job
• identify and satisfy the needs of individuals
• increase employee's job satisfaction and motivation
• maintain work-life balance
 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.
 HRM: Importance

 With good human resource management employee objectives, organizational

objectives and societies objectives will be met
• Employee enjoy their work
• Employees have a sense of accomplishment in and through their
work
• Employees have a high sense of belonging to their organization and
work place
• Employees feel that they are respected as individuals and their
contributions are recognized and valued
• Employees have a feeling to enhance their competence and perform
more challenging and satisfying task
• Organizational needs are fulfilled because satisfied employees
contribute to the at most of their abilities
• Society will develop and industrial piece are maintained
 PERSONNEL MANAGEMENT Vs HRM

Personnel Management Human Resource Management

1. management of people employed in the management of employee’s skills,

organization knowledge, abilities, talents, aptitudes, and
creative abilities, etc. based on the
requirement of an organization.
2. Employees are mostly treated as an treated not only as economic man but also
economic man as his service is as social and psychological man. Thus, the
exchanged for wage or salary. complete man is changed under this
approach.
3. Employee is used as commodity or tool or Employee is treated as resource. Thus
equipment which can be purchased and resources are utilized effectively from time
used for the organizational benefit. to time.
4. Employees are treated as cost center and Employees are treated as profit center and,
therefore, management controls the cost therefore, invest capital for HRD and future
of an employee. utility
 PERSONNEL MANAGEMENT Vs HRM
Personnel Management Human Resource Management

5. Employees are used mostly for the Employees are used for the multiple mutual
organizational benefit. It considers benefits of the organizations, employees and
organizational objectives their family members.
6. Personnel function is as only auxiliary. It It is a strategic management function. It
is a routine, maintenance-oriented follows systematic strategy.
administrative function. It was never
treated as part of the strategic
management of business.
7. Its function is mainly reactive and Its function is proactive function. It is not
responds to the demands of an only concerned with the present
organization whenever they arise. organizational needs but anticipates future
needs of employees.
8. It emphasizes on economic rewards and It emphasizes on the satisfaction of higher
traditional job design, like job needs for motivating people, such as
specification, for motivating people for autonomous work groups, challenging jobs
better performance. etc.
 HR as Core Competency and Human Capital
 Human Capital
An organization’s employees, described in terms of their
training, experience, judgment, intelligence, relationships, and
insight

The knowledge, skills, and capabilities of individuals that

have economic value to an organization.

• Valuable because capital:-

• Is based on company-specific skills.
• Is gained through long-term experience.
• Can be expanded through development.
 HR as Core Competency and Human Capital

 Core Competencies
Integrated knowledge sets within an organization that
distinguish it from its competitors and deliver value to
customers.

 Sustained
competitive advantage through people is achieved if
these human resources:
Have value.
Are rare and unavailable to competitors.
Are difficult to imitate.
Are organized for synergy
 HRM History: Evolution & Development
• The origins of managing people can be traced back to the
existence of man as a social animal. HRM as a practice is
as old as the human society itself.
• Think of the Egyptian pyramid, the Wall of China, the Obelisk of
Axum and the church of Lalibela

• The most documented beginnings were as a result of the

Industrial Revolution, where the mass production of goods
had significant implications for the ‘employees’ operating
this machinery.
 Evolution of HRM
Human
Capital
Human Management
Resource
Management
Employment regards them as assets
Management and emphasizes
that competitive
Labor
advantage is achieved
Management -Human is treated as
by strategic investments
a precious resource of
the business in those assets
-Systematic labor
-Human resource through employee
management
management is engagement and retention,
-Manual management -Standardized labor
become a profit and others
-Employee works as Employment system
center instead of cost -Human capital
slave -High performance
center. management was
-Low performance -Employee works
enhanced to business
-Low proactive like a machine
management
-Low morale
Trends Shaping Human Resource Management-
Developments & Challenges in HRM
Developments Challenges
Innovations (shift from ‘hand –to- work’ to - Attracting and managing talents
‘knowledge/technology-to-work’, computerized - Supporting HR with state of the art technologies
information system) - Give awards to innovators
Demographic changes (increased education, - Managing the demographic composition of HR
youthful but less experienced labor, workforce size)
Workforce diversity (race, color, experience, - Equal employment opportunity
lifestyles, gender) - Minority rights
- Managing discrimination
- Use advantage of diversity
Globalization (professional mobility, competition, - managing diversified teams, professionals, skills
diversity) - Cross cultural and global leadership
Internet and world wide web (access to - Utilizing the Internet for the benefit of the
information, time management, peoples behavior) organization
- Linkedin, researchgate, facebook…
Value change (organizational values, societal - Organizational culture, climate and values
values, individual values) - Gender equality/women in workplace
- Manager-employee relations
Diseases and pandemics - Health, safety and social security

Changes in political and legal environments - Track and cope up with these changes
• Thank you!