BUS 2C 13 HUMAN RESOURCES MANAGEMENT

Module I
Introduction to Human Resource Management— Importance--

scope and objectives of HRM. Evolution of the concept of HRM-

Approaches to HRM- Personnel management Vs Human

Resource Management-HRM and competitive advantage-

Traditional Vs Strategic human resource management— HRM

and HRD-- Growth of HRM in India.

 Introduction to Human Resource Management

Human Resource : “People who work in an organsiation”

“Take our twenty best people away, and I will tell you that Microsoft would become an
unimportant company” - Bill Gates, CEO of Microsoft in Fortune, November 25th 1996

Each business and organization works with several factors of production i.e. men,
machine, material, finances etc. Among these is men who can help provide a competitive
advantage to the organization by offering skills, capabilities, systems, culture, speed,
innovativeness etc.

Meaning of Human Resource

It is the sum total or aggregate of inherent abilities, acquired
knowledge and skills represented by the talents and aptitudes of
the person employed in the organization.
▪Human resource management is an extension of its parent discipline Personnel
management.
▪ Human Resource Management refers to managing the Organization’s workforce
in an effective and efficient manner.

▪ It aims at procuring, developing and maintaining the Human Resource to

achieve Organization goals keeping in mind the satisfaction of each individual.

Definition :

HRM is a process of bringing people and organisations together so that

the goals of each one are met, effectively and efficiently.

HRM can be defined as managing (Planning, organsing, directing and

controlling) the functions of employing, developing and compensating the
human resources resulting in the creation and development of human relations
with a view to contribute proportionately (due to them) to the organizational,
individual and social goals.
⮚The purpose of HRM is to ensure that the employees of an organization are used in
such a way that the employer obtains the greatest possible benefit from their abilities
and the employees obtain both material and psychological rewards from their work
(Graham, 1978).

⮚HRM is a distinctive approach to employment management which seeks to achieve

competitive advantage through the strategic deployment of a highly committed and
capable workforce, using an array of cultural, structural and personnel techniques.
(Storey,1995).

⮚HRM is a managerial perspective which argues the need to establish an integrated

series of personnel policies to support organizational strategy. (Buchanan and
Huczynski, 2004).
 Scope of HRM
The scope of HRM is very wide:

Personnel aspect-This is concerned with manpower

planning, recruitment, selection, placement, transfer,
promotion, training and development, layoff and
retrenchment, remuneration, incentives, productivity etc.

Welfare aspect- It deals with working conditions

and amenities such as canteens, crèches, rest and
lunch rooms, housing, transport, medical assistance,
education, health and safety, recreation facilities, etc.

Industrial relations aspect-This covers union-

management relations, joint consultation, collective
bargaining, grievance and disciplinary procedures,
settlement of disputes, etc.
 Importance of HRM
Importance of human resources can be discussed at four levels:
1. Corporate 2.Professional 3. Social 4.National

HRM can help an enterprise in the following ways:

 Attracting talent through effective HRP
 Developing necessary skills & attitude with training
 Securing cooperation through motivation
 Retaining talent through the right policies
 Ensuring a team of competent & dedicated employees
HRM helps improve quality of work life and contributes to growth in the following ways:
 Opportunities for personal development
 Motivating work environment
 Proper allocation of work
 Healthy relationships between individuals & groups
 Promoting team-work & team spirit
 Encourage to work with diligence & commitment
Society benefits from good HRM in many ways:
 Good employment opportunities
 Development of human capital
 Generation of income & consumption
 Better lifestyles
 Lead to productivity gain to society
 Enables managers to reduce cost & save scarce resources

National level
 Drivers of development of a country
 Deliver economic growth
Human Resource Management: Objectives
• To help the organization reach its goals.
• To ensure effective utilization and maximum development of human resources.
• To ensure respect for human beings. To identify and satisfy the needs of
individuals.
• To ensure reconciliation of individual goals with those of the organization.
• To achieve and maintain high morale among employees.
• To provide the organization with well-trained and well-motivated employees.
• To increase to the fullest the employee's job satisfaction and self-actualization.
• To develop and maintain a quality of work life.
• To be ethically and socially responsive to the needs of society.
• To develop overall personality of each employee in its multidimensional
aspect.
Role of Human Resource Manager

1. Policy initiation
2. Advisory Role
3. Linking Pin role
4. Representative role
5. Decision making role
6. Mediator role
7. Leadership role
8. Welfare role
9. Research role
10.Savior role
Qualities of a Personnel / Human Resource Manager

1. Physical
2. Mental
3. Moral
4. Educational
5. Technical
6. Experience
 Evolution of the concept of HRM

1. The commodity Concept

2. The Factor of production Concept

3. The Goodwill Concept

4. The Paternalistic Concept

5. The Humanitarian Concept

6. The Behavioural Human Resource Concept

7. The Emerging Concept

 Evolution of the concept of HRM
HRM Concept What is it all about?

⮚Labour was regarded as a commodity to be bought

The Commodity and sold.
concept ⮚Wages are based on demand and supply.
⮚Govt. did very little to protect workers.

⮚Labour is like any other factor of production.

The factor of
production concept ⮚Workers are like machine tools

⮚Welfare measures like safety, first aid, lunch room,

The Goodwill
concept rest room will have a positive impact on worker’s
productivity

⮚Management must assume a fatherly and protective

The paternalistic
concept attitude, not merely providing benefits.
 HRM Concept all What is it all about?

⮚Org. is a social system that has both economic and

social dimensions.
The ⮚As Mayo stated money is less a factor in determining
Humanitarian the output.
Concept
⮚Needs of workers must be met to improve productivity

⮚Employees are most valuable asset

The Human
resource concept ⮚There should be conscious effort to realise
organizational goals by satisfying employee goals.

⮚Employees should be accepted as partners in the

The Emerging progress of a company.
concept ⮚Need to create a sense of ownership, offer better
QWL and opportunities to exploit their potential fully.
⮚Focus on HRD
Truck system (Truck Shop) of payment by order of Robert Owen
and Benj Woolfield
 Evolution of HRM & Growth of HRM in India

❖Its origin is dated back to 1800 BC., when minimum wage rate and incentive
wage plans were included in the Babylonian code of Hammurabi.

❖The world’s first management book, titled “Artasastra” written by Kautilya, in 400
BC, codified many aspects of human resource practices in ancient India.

Indian Context :

❖HRM in India could be traced back to the period after 1920, ie., after WW-I when
women being recruited in large numbers to fill the gaps left by men going to fight,
which in turn meant reaching agreement with trade unions (often after bitter disputes)
about dilution – accepting unskilled women’s into craftsmen's jobs and changing
manning levels , emphasizes was on worker welfare.

❖1926 : Enactment of Trade Union Act gave formal recognition to workers’ unions.
❖In 1931, the royal commission on labor suggested the appointment of labor officer
to protect workers interests . ie., Government intervening to protect the interest of
workers through the appointment of labour welfare officers

After Second world war,

❖During 1947 enactment of the Industrial Disputes Act 1947, extends to the whole
of India and regulates Indian labour law. The main and ultimate objective of this act is
"Maintenance of Peaceful work culture in the Industry in India"

❖1948 : Enactment of Factories Act , which made appointment of labour welfare

officers compulsory. Also laid down the duties and qualifications of Labour welfare
officers.
❖After independence, in 1950s, two professional bodies emerged: the Indian Institute
of Personnel Management (IIPM), a counterpart of the Institute of Personnel
Management in the United Kingdom, was formed at Calcutta and the National
Institute of Labour Management (NILM) at Bombay.
❖In 1970s, the thrust of personnel function shifted towards greater organisational
'efficiency', and by 1980s it began to use and focus on terms and issues such as HRM
and HRD.
❖The two professional bodies i. e. IIPM and NILM merged in 1980 to form the
National Institute of Personnel Management (NIPM) at Bombay
❖In 1985, organization shifted towards making HR Department separately. HRD and
personnel function were clubbed together.
❖In early 1990s :
HRM was seen as strategy, motivation and stress were considered to bring change in
HRM and focus on organization objectives
❖In the mid of 1990s, sub specialization like Industrial Relations, Training &
Development, Information system was developed.
❖During 1990’s American Society of Personnel Management renamed itself as “The
Society of Human Resource Management.” (https://www.shrm.org/)

❖Later to 1990’s: HRM is not selective management any more. It became the part of
Corporate Strategy formulation and strategy implementation team
 APPROACHES TO HRM
Five different perspectives of human resource management (HRM) include the
1. Normative perspective, 2. Critical perspective, 3. Behavioral perspective,
4. Systems perspective, and 5. Agency or transaction cost perspective.
The Normative Perspective

The normative perspective of human resource management bases itself on the concepts
of “hard HRM" and “soft HRM," on which the foundations of human resource
management rest.
This concept traces its origins to the Harvard model that links workforce management to
organizational strategy.

Hard HRM stresses the linkage of functional areas such as manpower planning, job
analysis, recruitment, compensation and benefits, performance evaluations, contract
negotiations, and labor legislations to corporate strategy.
This enforces organization interests over the employees' conflicting ambitions and
interests.
It views the workforce as passive resources that the organization can use and dispose
at will.

Soft HRM is synonymous with the Michigan model of human resources and is the
bedrock of the modern approach to strategic human resource management

This model considers human capital as “assets" rather than “resources" and lays stress
on organizational development, conflict management, leadership development,
organizational culture, and relationship building as a means of increasing trust and
ensuring performance through collaboration.

This approach works under the assumption that what is good for the organization is
also good for the employee.
 The Critical Perspective:

The critical perspective of human resource management is a reaction against the

normative perception. This highlights some inherent contradictions within the
normative perspective.

This perspective espouses a gap between rhetoric, as organizations claim to follow soft

HRM policies when they actually enforce hard HRM. A study by Hope-Hailey et al.

(1997) finds that while most organizations claim employees to be their most important

assets and make many commitments for their welfare and development, in reality

employers enforce a hard HRM-based strategic control, and the interests of the

organization always take priority over the individual employee.

Behavioral Perspective

It has its roots in the contingency theory that considers employee behavior as the
mediator between strategy and organizational performance.

This theory holds that the purpose of human resource intervention is to control
employee attitudes and behaviors to suit the various strategies adopted to attain the
desired performance. This perspective thus bases itself on the role behavior of
employees instead of their skills, knowledge, and abilities.

For instance, an organization aiming to innovate will require a workforce that

demonstrates a high degree of innovative behavior such as long-term focus,
cooperation, concern for quality, creativity, propensity for risk taking, and
similar qualities. The role of human resource management in such a context is
to inculcate and reinforce such behavioral patterns in the workforce.
Systems Perspective

The systems perspective describes an organization in terms of input, throughput, and

output, with all these systems involved in transactions with a surrounding environment.
The organized activities of employees constitute the input, the transformation of energies
within the system at throughput, and the resulting product or service the output. A
negative feedback loop provides communications on discrepancies.

The role of human resource management in the systems perspective is

1. Competence management to ensure that the workforce has the required competencies
such as skills and ability to provide the input needed by the organization.
2. Behavior management through performance evaluation, pay systems, and other
methods to ensure job satisfaction, so that employees work according to the
organizational strategy, ultimately boosting productivity.
3. Setting up mechanisms to buffer the technological core from the environment in
closed systems.
4. Facilitating interactions with the environment in open systems.
Agency or Transaction Cost Perspective

It holds the view that the strong natural inclination of people working in groups is to
reduce their performance and rely on the efforts of others in the group. When one
person delegates responsibility to another person, conflicts of interests invariably arise.

The major role of human resource management in such a context is to promote

alternative ways of controlling behavior to reduce the effects of such conflicts and
minimize the cost to the organization.

The two major approaches include:

1. Monitoring employee behavior and preventing shrink of work by establishing

effective control systems and improving productivity.
2. Providing employees with incentives such as rewards, motivation, and job
satisfaction to increase their individual performance.
 HR and Competitive Advantage

Competitive advantage

Competitive Advantage is the ability of a firm to win consistently over the long-term
in a competitive situation.
Competitive advantage occurs when the firm does something that others cannot do or
does it better than others.
–Any factors that allow an organization to differentiate its product or service from those
of its competitors to increase market share.
Eg., Dell has a competitive edge over its rivals, arising out of its exceptional ability to
create a direct selling e-commerce channel that is highly responsive to customers.

–Superior human resources are an important source of competitive advantage . Human

resource professionals have, agreed now that the key to a firm’s success depends on a set
of core competencies – in the form of employee skills, knowledge, experience and the
ability to use these to the advantage of the firm when required – that separate the firm
from its rivals and deliver value to customers.
Organsiations can achieve a sustained competitive advantage through
people if they meet the following conditions:

1. Superiority

2. Inimitability

3. Durability

4. Non-Substitutability

5. Appropriability
 Strategic Human Resource Management

There is increasing research evidence indicating that employees are more

productive if
1. They are loyal to the company, informed about its mission, strategic and current levels
of success.

2. Involved in teams which collectively decide how things are to be done and

3. Are trusted to take the right decisions rather than be controlled at every stage by
managers above them.

A good team of competent and committed workforce will deliver the

goals if they are involved in all important activities and are encouraged to
develop goals that they are supposed to achieve. In recent years, a new line of
thinking has emerged to support this view known as Strategic Human resource
Management (SHRM)
SHRM –The linking of HRM with strategic goals and
objectives in order to improve business performance and
develop organizational cultures that foster innovation and
flexibility.

“Involves development of consistent, aligned collection of practices, programs, &

policies to facilitate achievement of strategic objectives”

–Formulating and executing HR systems—HR policies and activities—that produce

the employee competencies and behaviors the company needs to achieve its
strategic aims.
Linking Corporate and HR Strategies
 HR’s Strategy formulation Role

HR helps top management formulate strategy in a variety of ways by.

–Supplying competitive intelligence that may be useful in the strategic

planning process.

–Supplying information regarding the company’s internal human strengths

and weaknesses. Provide alternative insights.

–Build a persuasive case that shows how—in specific and measurable terms
—the firm’s HR activities can and do contribute to creating value for the
company.
 Translating Strategy into
HR Policy and Practice

Basic Model of How to Align HR

Strategy and Actions with
Business Strategy
 Traditional HRM Vs Strategic HRM
Basis Traditional HR Strategic HR
Responsibility of HR Staff specialists Line Managers

Focus Employee relations Partnerships with internal and

external customers
Role of HR Transactional, Change Transformational, change
follower, and respondent leader and initiator
Initiatives Slow , reactive, fragmented Fast, proactive, integrated

Time Horizon Short-term Short, medium, long (as

necessary)
Control Bureaucratic – roles, policies, Organic – flexible, whatever
procedures is necessary to succeed

Job design Tight division of labour, Broader, flexible, cross-

independence, specialisation training, teams

Accountability Cost center Investment center

 Human Resource Development
HRD concept was first introduced by Leonard Nadler in 1969 in a conference in US.
According to Leonard Nadler, "Human resource development is a series of organised
activities, conducted within a specialised time and designed to produce behavioural
changes."

According to M.M. Khan, "Human resource development is the process of increasing

knowledge, capabilities and positive work attitudes of all people working at all levels
in a business undertaking.”
⚫ Human Resource Development (HRD) is the framework for helping employees to develop
their personal and organizational skills, knowledge, and abilities.
⚫ Human Resource Development includes such opportunities as employee training, employee
career development, performance management and development, coaching,
mentoring, succession planning, key employee identification, tuition assistance, and
organization development.
⚫ The focus of all aspects of Human Resource Development is on developing the
most superior workforce so that the organization and individual employees can
accomplish their work goals in service to customers.

⚫ Organizations have many opportunities for human resources or employee

development, both within and outside of the workplace.

⚫ Human Resource Development can be formal such as in classroom training, a

college course, or an organizational planned change effort. Or, Human Resource
Development can be informal as in employee coaching by a manager. Healthy
organizations believe in Human Resource Development and cover all of these
bases.
 Comparison of HRM and HRD

HRM HRD

Definition: Definition:
HRM is a process of managing human HRD is a series of organised activities
talents to achieve organsiation’s conducted within a specified time and
objectives. designed to produce behavioural change
process

1. Recruitment and Selection 1. Training and development

2. Compensation and benefits 2. Performance appraisals management
3. Labour and Industrial relations 3. Career planning and development
4. Safety and health management 4. Change Management
activities.
 Difference between HRM and HRD

1. The human resource management is mainly maintenance

oriented whereas human resource development is development
oriented.
2. Organsiation structure in case of human resources management
is independent whereas human resource development creates a
structure, which is inter-dependent and inter-related.
3. Human resource management mainly aims to improve the
efficiency of the employees whereas aims at the development
of the employees as well as organisation as a whole.
3. Responsibility of human resource management is given to
the personnel/human resource management department and
specifically to personnel manager whereas responsibility of
HRD is given to all managers at various levels of the
organisation.

4. HRM motivates the employees by giving them monetary

incentives or rewards whereas human resource development
stresses on motivating people by satisfying higher-order
needs.