Unit 1:

Introduction to
Human Resource
Management
(HRM)
HRM and HRD, Context and
issues in HRM
 Important Terms

Organization: A Manager: Someone who

is responsible for Management
group consisting of process: The five
people with formally accomplishing the
organization’s goals, and basic functions are
assigned roles who planning, organizing,
work together to who does so by
managing the efforts of staffing, leading, and
achieve the controlling.
organization’s goals. the organization’s
people.

Human Resource (HR) refers to all the people who work in an organization called
personnel.
 Planning. Establishing goals and standards; developing rules
and procedures; developing plans and forecasts

Organizing. Giving each subordinate a specific task;

establishing departments; delegating authority to subordinates;
establishing channels of authority and communication;
coordinating the work of subordinates

Staffing. Determining what type of people should be hired;

Manageme recruiting prospective employees; selecting employees; setting
performance standards; compensating employees; evaluating
nt Process performance; counseling employees; training and developing
employees

Leading. Getting others to get the job done; maintaining

morale; motivating subordinates

Controlling. Setting standards such as sales quotas, quality

standards, or production levels; checking to see how actual
performance compares with these standards; taking corrective
action as needed
Why name Human Resource
Management?
• Human: refer to the skilled workforce in the organisation.
• Resource: refer to limited availability or scarce.
• Management: refer to maximise or proper utilisation and make
best use of limited and a scarce resource.

• According to Edwin B. Flippo, “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 societal objectives are
accomplished.”
• The Indian Institute of Personnel Management defines HRM
as, “Human resource management is a responsibility of all those
who manage people as well as being a description of the work of
those who are employed as specialists. It is that part of
management which is concerned with people at work and with their
relationships within an enterprise. It applies not only to industry
and commerce but to all fields of employment.”
• Milkovich and Boudreau view HRM as, “A series of integrated
decisions that form the employment relationship; their quality
contributes to the ability of the organizations and the employees to
 Setting general and specific management policy for organisational
relationships, and establishing and maintaining a suitable organisation
for leadership and co-operation.

Collective bargaining, contract negotiation, contract administration and

According to grievance handling.

Dale Yoder, Staffing the organisation, finding, getting and holding prescribed types
the scope of and number of workers.

human Aiding in the self-development of employees at all levels providing

resource opportunities for personal development and growth as well as for
acquiring requisite skill and experience.
management
consists of Developing and maintaining motivation for workers by providing
incentives.
the following
functions: Reviewing and auditing manpower management in the organisation.

Industrial relations research - carrying out studies designed to explain

employee behavior and thereby effecting improvement in manpower
management.
 The Indian Institute of Personnel Management has described
the scope of human resource management into the following aspects:

The Labour or Personnel Aspect: It is concerned with manpower planning,

recruitment, selection, placement, induction, transfer, promotion, demotion,
termination, training and development, layoff and retrenchment, wage and
salary administration (remuneration), incentives, productivity, etc.

The Welfare Aspect: This aspect is concerned with working conditions and
amenities such as canteens, creches, rest rooms, lunch rooms, housing,
transport, education, medical help, health and safety, washing facilities,
recreation and cultural facilities, etc.

The Industrial Relations Aspect: This is concerned with the company’s

relations with the employees. It includes union-management relations, joint
consultation, negotiating, collective bargaining, grievance handling, disciplinary
actions, settlement of industrial disputes, etc.
Objectives
of HRM
 • The societal objectives are socially and ethically
responsible for the needs and challenges of
society. While doing so, they have to minimize
the negative impact of such demands upon the
organisation.

• The failure of organisations to use their resources

Societal for society’s benefit in ethical ways may lead to
Objectives restrictions.

• For example, the society may limit human

resource decisions to laws that enforce reservation
in hiring and laws that address discrimination,
safety or other such areas of societal concern.
 • The organisational objectives recognise
the role of human resource
management in bringing about
organisational effectiveness.

• Human resource management is not an

Organisation end in itself; it is only a means to assist
al Objectives the organisation with its primary
objectives.

• Simply stated the human resource

department exists to serve the rest of the
organisation.
 • Functional objectives try to maintain the
department’s contribution at a level
appropriate to the organisation’s needs.

Functional • Human resources are to be adjusted to

Objectives suit the organisation’s demands.

• The department’s level of service must be

tailored to fit the organisation it serves.
 • Personal objectives assist employees in
achieving their personal goals, at
least in so far as these goals enhance the
individual’s contribution to the
organisation.

Personal • Personal objectives of employees must be

Objectives met if they are to be maintained, retained
and motivated.

• Otherwise, employee performance and

satisfaction may decline giving rise to
employee turnover.
1. Managerial Functions

1.1 Planning:

To get things done through the subordinates, a manager must plan

ahead. Planning is necessary to determine the goals of the
organisation and lay down policies and procedures to reach the
goals. For a human resource manager, planning means the
determination of personnel programs that will contribute to the
goals of the enterprise, i.e., anticipating vacancies, planning job
requirements, job descriptions and determination of the sources of
recruitment.
• The process of personnel planning
involves three essential steps.

i) A supply and demand forecast for

each job category is made. This step
requires knowledge to both labour market
conditions and the strategic posture and
goals of the organisation.

ii) Net shortage and excess of

personnel by job category are projected
for a specific time horizon.

iii) Plans are developed to eliminate

the forecast shortages and excess of
particular categories of human resources.
1.2. Organizing: Once the human
resource manager has established
objectives and developed plans and
programs to reach them, he must
design and develop organisation
structure to carry out the various
operations.

The organisation structure basically

includes the following:
i) Grouping of personnel activity
logically into functions or positions;
ii) Assignment of different
functions to different individuals;
iii) Delegation of authority
according to the tasks assigned and
responsibilities involved;
iv) Co-ordination of activities of
1.3. Directing: The plans are to be put into
effect by people. But how smoothly the plans
are implemented depends on the motivation of
people. The direction function of the personnel
manager involves encouraging people to work
willingly and effectively for the goals of the
enterprise.
In other words, the direction function is meant
to guide and motivate the people to accomplish
the personnel programs. The personnel
manager can motivate the employees in an
organisation through career planning, salary
administration, ensuring employee morale,
developing cordial relationships, and provision
of safety requirements and the welfare of
employees.
The motivational function poses a great
challenge for any manager. The personnel
manager must have the ability to identify the
needs of employees and the means and
methods of satisfying those needs. Motivation is
a continuous process as new needs and
expectations emerge among employees when
old ones are satisfied.
1.4. Controlling: Controlling is
concerned with the regulation of activities
in accordance with the plans, which in
turn have been formulated on the basis of
the objectives of the organisation. Thus,
controlling completes the cycle and leads
back to planning. It involves the
observation and comparison of results
with the standards and correction of
deviations that may occur.

Controlling helps the personnel manager

to evaluate the performance of the
personnel department in terms of various
operative functions. It involves
performance appraisal, critical
examination of personnel records and
statistics and personnel audit.
2. Operative Functions

2.1. Employment: The first operative function of the human resource

of personnel department is the employment of proper kind and number
of persons necessary to achieve the objectives of the organisation. This
involves recruitment, selection, placement, etc. of the personnel. Before
these processes are performed, it is better to determine the manpower
requirements both in terms of number and quality of the personnel.

Recruitment and selection cover the sources of supply of labour and the
devices designed to select the right type of people for various jobs.
Induction and placement of personnel for their better performance also
come under the employment or procurement function.
2.2. Development: Training and development of
personnel is a follow up of the employment
function. It is a duty of management to train each
employee property to develop technical skills for
the job for which he has been employed and also
to develop him for the higher jobs in the
organisation. Proper development of personnel is
necessary to increase their skills in doing their
jobs and in satisfying their growth need.

For this purpose, the personnel departments will

device appropriate training programs. There are
several on- the-job and off-the-job methods
available for training purposes. A good training
program should include a mixture of both types of
methods. It is important to point out that
personnel department arranges for training not
only of new employees but also of old employees
to update their knowledge in the use of latest
techniques.
2.3. Compensation: This function is
concerned with the determination of
adequate and equitable remuneration of
the employees in the organisation of their
contribution to the organisational goals.
The personnel can be compensated both
in terms of monetary as well as non-
monetary rewards.

Factors that must be borne in mind while

fixing the remuneration of personnel are
their basic needs, requirements of jobs,
legal provisions regarding minimum
wages, the capacity of the organisation to
pay, wage level afforded by competitors
etc. For fixing the wage levels, the
personnel department can make use of
certain techniques like job evaluation and
2.4. Maintenance (Working Conditions
and Welfare): Merely appointment and
training of people is not sufficient; they
must be provided with good working
conditions so that they may like their work
and workplace and maintain their
efficiency. Working conditions certainly
influence the motivation and morale of the
employees. These include measures taken
for health, safety, and comfort of the
workforce.

The personnel department also provides

for various welfare services which relate to
the physical and social well-being of the
employees. These may include provision of
cafeteria, rest rooms, counseling, group
insurance, education for children of
2.5. Motivation: Employees work
in the organisation for the
satisfaction of their needs. In many
of the cases, it is found that they do
not contribute towards the
organisational goals as much as
they can. This happens because
employees are not adequately
motivated.

The human resource manager helps

the various departmental managers
to design a system of financial and
non-financial rewards to motivate
the employees.
2.6. Personnel Records: The
human resource or personnel
department maintains the records
of the employees working in the
enterprise. It keeps full records of
their training, achievements,
transfer, promotion, etc.

It also preserves many other

records relating to the behaviour of
personnel like absenteeism and
labour turnover and the personnel
programs and policies of the
organisation.
2.7. Industrial Relations: These days, the
responsibility of maintaining good industrial
relations is mainly discharged by the human
resource manager. The human resource
manager can help in collective bargaining, joint
consultation and settlement of disputes if the
need arises. This is because he has full
information relating to personnel and has the
working knowledge of various labour
enactments.

The human resource manager can do a great

deal in maintaining industrial peace in the
organisation as he is deeply associated with
various committees on discipline, labour welfare,
safety, grievance, etc. He helps in laying down
the grievance procedure to redress the
grievances of the employees. He also gives
authentic information to the trade union leaders
and conveys their views on various labour
problems to the top management.
2.8. Separation: Since the first
function of human resource
management is to procure the
employees, it is logical that the last
should be the separation and return
of that person to society. Most
people do not die on the job.

The organisation is responsible for

meeting certain requirements of due
process in separation, as well as
assuring that the returned person is
in as good shape as possible. The
personnel manager has to ensure
the release of retirement benefits to
3. Advisory Functions

3.1. Advised to Top Management: Personnel manager advises

the top management in formulation and evaluation of personnel
programs, policies and procedures. He also gives advice for
achieving and maintaining good human relations and high
employee morale.

3.2. Advised to Departmental Heads: Personnel manager

offers advice to the heads of various departments on matters such
as manpower planning, job analysis and design, recruitment and
selection, placement, training, performance appraisal, etc.
 The Human Resource Department (HRD)
• In larger firms, the human resource department provides such specialized assistance.
 HRM Challenges/ Issues

1. Globalization Globalization is the process of internationalization of markets,

politics and legal systems called global economy at a political and economic
level. It means that world trade and financial markets are becoming more
integrated. Growing internationalization of business has its impact on HRM in
terms of problems of competitions, attitudes, management styles, work
ethics, unfamiliar laws, languages, practices etc. HR managers have a
challenge to deal with more heterogeneous functions.
2. Workforce diversity Workforce diversity include age, ethnicity, ancestry,
gender, physical abilities/qualities, race, sexual orientation, educational
background, geographic location, income, marital status, military experience,
religious beliefs, parental status, and work experience.
With the mixture of talents of diverse cultural backgrounds, genders, ages
and lifestyles, an organization can respond to business opportunities more
rapidly and creatively in the global environment which must be one of the
important organizational goals to be attained. If the organizational environment
does not support diversity, organisations have risk of losing talent to its
3. Technological advances There is a challenging task of adapting
rapid technological changes which influence the nature of work and
generate obsolescence. Advanced technology has tended to reduce the
number of jobs that require little skill and to increase the number of jobs
that require considerable skill.
New technology creates unemployment which leads to shortage of
skilled manpower. Thus, technological change brings difficulties and
challenges in organization.

4. Changes in political and legal environment Many changes in

political and legal environment lead to creating new laws, and
organisations needs to follow all these laws while doing business.
It is the responsibility of Human Resource manager to anticipate the
changes and prepare organization to face them without any breakdown
in its normal functioning.
5. Changes in the Economic Environment Changes in economic
environment impact a number of factors on production like scarcity of
raw materials and other inputs (including power and electricity),
encouragement of the culture of consumerism, increasing consumer
awareness, demand for quality products, increasing trend of inflation,
and decrease in the purchasing power of rupee.
With these spiralling effects, HR Manager has to deal with ever
increasing aspirations of workers for higher wages and other material
benefits and mounting costs on the employee welfare and other
benefits. In an inflationary economy, the resources tend to become
scarce and the costs of men, machine and materials multiply.
6. Training and development With the advent of new products and
technologies, organisations require employees who are more skilled and
knowledgeable. On the other hand, with the need to cut training costs,
training itself often suffers. Yet employee’s “skill development needs”
still to be addressed. Many companies are meeting this challenge by
providing eLearning opportunities and on the job training that allow
employees to receive the training they need without the expenses
associated with travel, on-site trainers and hours away from their jobs.
Toyota HRM challenges

• https://www.youtube.com/watch?v=1KGDxRLES2A