UNIT 1

An Overview of Human Resource

Management
 Definition and Background
What is human resource management?
• Management can be defined as the process of reaching
organizational goals by working with and through people and
other resources.
• Management in all areas of life implies achieving goals with
effective and efficient use of organizational resources.
Organizational resources can be grouped into four major
categories:
• Human resources
• Financial resources
• Physical resources
• Information resources
Emphasizing the importance of human resources, some
prominent writers define management as the process of getting
things done with and through other people.
 HRM, can be defined as
• effective utilization of human resources to achieve both the
objectives of the organization
• HRM is concerned with the people dimension of the org
• HRM is a pervasive activity, meaning a universal activity in
any type of organization : government, business, education,
health, defense, recreation, etc.
• The HR is said to be the most important ( or critical) element
in an organization since people make the decisions concerning
all other organizational resources. Therefore, getting and
keeping good people is critical to the success of every
organization, whether profit or non-profit, public or private.
• The HR manager is primarily responsible for coordinating the
management of human resources to help the organization
achieve its goals.
 Below are the definitions of HRM
• HRM refers to the practices and policies needed to carry out
the people aspects of management job by helping people &
organization reach their goals.
• HR refers to people in an organization. People are common
element in every organization; they create the strategies and
innovations for organization.
• HRM is a modern term for what has traditionally been
referred to as personnel management.
• Edwin B. Flippo has defined HRM as Human Resource
Management is the a) planning, b) organizing, c) directing,
and d) controlling of the procurement development,
compensation, integration, maintenance and separation of
human resources to the end that individual, organizational,
and social objectives are accomplished.
 Importance of HRM

• HR can play a major role in creating and sustaining a

competitive advantage through people.
• To improve the productive contribution of people to the
organization in ways that is strategically, ethically and
socially responsible.
• HR departments exist to support managers and employees
as they pursue the organizations strategies.
• As the central sub-system, HRM interacts closely and
continuously with all other sub-systems of an organization.
The quality of people in all sub-systems depends largely
upon the policies, programs and practices of the HRM sub-
system.
• The quality of human resources determines in turn the
success of an organization.
 Significance for an Enterprise:
Human resource management can help an enterprise in
achieving its goals more efficiently and effectively in the
following ways:
• Attracting and retaining the required talent through effective
human resource planning, recruitment, selection, placement,
orientation, compensation and promotion policies.
• Developing the necessary skills and right attitudes among the
employees through training, development, performance
appraisal, etc.
• Securing willing co-operation of employees through
motivation, participation, grievance handling, etc.
• Utilizing effectively the available human resources.
• Ensuring that the enterprise will have in future a team of
competent and dedicated employees.
 Professional Significance
Effective management of human resources helps to
improve the quality of work life.
• It permits teamwork among employees by
providing a healthy, working environment.
• It contributes to professional growth in the
following ways:
• Providing maximum opportunities for personal
development of each employee.
• Maintaining healthy relationships between
individuals and different work groups.
• Allocating work properly.
 Social Significance
Sound human resource management has a great
significance for the society.
It helps to enhance the dignity of labor in the following
ways:
• Providing suitable employment that provides social
and psychological satisfaction to people.
• Maintaining a balance between the jobs available and
the jobseekers in terms of numbers, qualifications,
needs and aptitudes.
• Eliminating waste of human resources through
conservation of physical and mental health.
 National Significance
• Human resources and their management play a vital role in
the development of a nation.
• The effective exploitation and utilization of a nation’s
natural, physical and financial resources require an efficient
and committed manpower.
• There are wide differences in development between
countries with similar resources due to differences in the
quality of their people.
• Countries are underdeveloped because their people are
backward. The level of development in a country depends
primarily on the skills, attitudes and values of its human
resources.
• Effective management of human resources helps to speed
up the process of economic growth which in turn leads to
higher standards of living and fuller employment.
Evolution and Development of HRM : an overview

• HR evol.docx
 Objectives of Human Resource Management
• Effective utilization of human resources in the achievement of
organizational goals.
• Establishment and maintenance of an adequate organizational
structure and desirable working relationships among all
members of the organization.
• Securing integration of the individual and informal groups within
the organization, and thereby their commitment, involvement
and loyalty.
• Recognition and satisfaction of individual needs and group goals.
• Provision of maximum opportunities for individual development
and advancement.
• Maintenance of High morale of the employees in the
organization.
• Continuous strengthening and appreciation of human assets.
• The continuity of the organization.
 Major Human Resource Management Functions
1. Human Resource Planning: Human resource planning (HRP) is the
process of systematically reviewing human resource
requirements to ensure that the required numbers of employees,
with the required skills, are available when they are needed. HRP
is the process of matching the internal and external supply of
people with job openings anticipated in the organization over a
specified period of time.
2. Recruitment: Recruitment is the process of attracting individuals
in sufficient numbers and encouraging them to apply for jobs with
the organization. It is the process of identifying and attracting a
pool of candidates, from which some will later be selected to
receive employment offers.
3. Selection: Selection is the process of choosing from a group of
applicants the individuals best suited for a particular position.
Whereas recruitment encourages individuals to seek employment
with a firm, the purpose of the selection process is to identify and
employ the best qualified individuals for specific positions.
4. Orientation: Orientation is the formal process of familiarizing new
employees with the organization, their job, and their work unit.
Through orientation (also called socialization or induction) new
employees will acquire the knowledge, skills, and attitudes that
make them successful members of the organization.
5. Training and Development: Training and development aim to
increase employee's ability to contribute to organizational
effectiveness. Training is a process designed to maintain or improve
performance (and skills) in the present job. Development is a
program designed to develop skills necessary for future work
activities. It is designed to prepare employees for promotion.
6. Compensation Administration: Compensation administration refers
to the administration of every type of reward that individuals
receive in return for their services. In its boarder sense,
compensation represents all sorts of rewards that individuals
receive as a result of their employment.
7. Performance Evaluation: Performance evaluation is a formal system
of periodic review and evaluation of an individual's job
performance.
8. Safety and Health: Safety involves protecting employees from
injuries caused by work-related accidents. Health refers to the
employees freedom from illness and their general physical and
mental well-being. These aspects of the job are important because
employees who work in a safe environment and enjoy good health
are more likely to be productive and yield long-term benefits to the
organization.
9. Promotions, transfers, demotions and separations: Promotions,
transfers, demotions, and separations reflect an employee's value to
the organization. High performers may be promoted or transferred
to help them develop their skills, while low performers may be
demoted, transferred to less important positions, or even separated.
10. Human Resource Research: Human resource research is a
systematic gathering, recording, analyzing, and interpretation of
data for guiding human resource management decisions. Every
human resource management function needs effective research.
11. Other areas such as employee and labor relations, collective
bargaining, employee rights and discipline, and retirement are also
concerns of human resource management.
 Chapter 2
Human Resource Management
Environments
 Human Resource Management Environment

• Many interrelated environmental factors affect human resource

management.
• Such factors are part of either the organization's external
environment or its internal environment. The organization has little,
if any, control over how the external environment affects
management of its human resources. These factors impose
influences of varying degrees on the organization from outside its
boundaries. Moreover, important factors within the firm itself also
have an impact on how the organization manages its human
resources.
• The environment of an organization consists of the conditions,
circumstances, and influences that affect the organization's ability to
achieve its objectives. Every organization exists in an environment
that has both external and internal components. As such, a human
resource management program functions in a complex environment
both outside and inside the organization. Human resource managers
therefore should be aware that rapid changes are occurring within
the environment in which organizations operate.
 1. The External Environment
• The external environment is composed of two layers: the
general environment and the task environment.
• The General Environment
An organization's general environment consists of the
nonspecific dimensions and forces in its surroundings that
might affect the organization's activities. These elements are
not necessarily associated with other specific organization or
groups. Instead, they are general forces or processes that
interact with each other and also affect the organizations as a
whole.
Each embodies conditions and events that have the potential
to influence the organization and its human resource
management activities in significant ways.
• The general environment of most organizations has the
following dimensions
1. The Economic Environment: refers to the general
economic conditions and trends that may affect the
human resource management activities of an
organization. The economic variables include
unemployment, demand and supply, inflation, interest
rates, the labor market, and others.
• When, for example, unemployment is high, the organization
is able to be very selective about whom it hires. Increased
or decreased demand for a firm's products or services will
have important implications for recruitment or layoff.
Inflation has had a significant impact on human resources
program, necessitating periodic upward adjustments in
employee compensation.
2. The Technological Environment: includes advances in
sciences as well as new developments in products,
processes, equipment, machinery and other materials
that may affect an organization.
• Technological advancements have tended to reduce the number
of jobs that require little skill and to increase the number of jobs
that require considerable skill. Technological advances also have
training implication. The challenging areas in human resource
management will be training employees to stay up with rapidly
advancing technology. Because, as technological changes occur,
certain skills also are no longer required. This necessitates some
retraining of the current workforce.
3. The Socio-Cultural Environment of the general environment is
made up of the customs, values, and demographic
characteristics of the society in which the organization
functions.
• The socio-cultural dimension influences how employees feel
about an organization. Human resource management, today, has
become more complex than it was when employees were
concerned primarily with economic survival. Today, many
employees have more social concerns than mere economic
interest as early times.
4. The Political-Legal Environment: Political variables are the
factors that may influence an organizations activities as a result
of the political process or climate. The political-legal
environment is also made up of the laws and regulations
within which an organization conducts its affairs.
• Government has a significant impact on human resources
management. Each of the functions performed in the
management of human resources, from employee recruitment to
termination, is in some way affected by laws and regulations
established by the government. Human resource managers must
follow all laws and government regulations.
5. The Physical Environment: includes the climate, terrain, and
other physical characteristics of the area in which the
organization is located. The physical element can help or
hinder an organizational ability to attract and retain
employees. Housing and living costs can vary from one
location to another and can have a significant impact on the
compensation, employees will expect.
 The Task Environment
• The task environment of an organization consists of
individuals, groups, and organizations that directly affect a
particular organization but are not part of it. The task
environment refers to the specific environment of an
organization and may include (Barney, 1992):
• The Customers
• The Suppliers
• The Regulators
• The Owners
• The Competitors
• The Partners
• All these elements are much close and specific to a given
organization. Whereas the elements of the general
environment affect virtually all organizations in the society,
the elements of the task environment are pertinent (more
relevant) to a specific organization.
 2. The Internal Environment
The environment that exists within an organization is known as
the internal environment. The internal environment consists
those factors that affect an organization's human resources
from inside its boundaries.
• Mission: Mission is the organization's continuing purpose or
reason for its existence. Each management level should
operate with a clear understanding of the firm's mission. The
specific organizational mission must be regarded as a major
internal factor that affects the tasks of human resource
management.
• Policy: A policy is a predetermined guide established to
provide direction in decision making. As guides, rather than
hard and fast rules, policies are somewhat flexible, requiring
interpretation and judgment in their use. They can exert
significant influence on how human resource managers
accomplish their jobs.
• Although policies are established for marketing, production, and
finance, the largest number of policies often relate to human
resource management. Some potential policy statements that
affect human resource management are:
• To provide employees with a safe place to work
• To encourage all employees to achieve as much of their human potential
as possible
• To provide compensation that will encourage a high level productivity in
both quality and quantity.
• To ensure that current employees are considered first for any vacant
position for which they may be qualified.
• Organizational Culture: As an internal environmental factor
affecting human resource management, organizational culture
refers to the organization's social and psychological climate.
Organizational culture is defined as the system of shared values,
beliefs, and habits within an organization that interacts with the
formal structure to produce behavioral norms.
• Other factors may include: The organization's management,
employees, structure, rules and procedures etc.
 The Human Resource Management Model
there are two models of HRM the Diagnostic and the
input out model
• The Diagnostic Human Resource Management Model
includes four interrelated phases (Milkovich & Boudreau,
1991):
• Assess human resource conditions,
• Set objective based on the assessment,
• Choose a course of action from alternatives generated to
achieve objectives, and
• Evaluate the results (evaluating the results provides
feedback on the success of the actions).