Unit: 8 (Part I)

Human Resource Management

Concept
The management of human resources is a very important and challenging job because not two
persons are similar human resources are the people who make-up the workforce of an organisation whereas
management is the process of dealing with or controlling things or people.
Human Resource Management (HRM) is a relatively new approach to managing people in any
organisation so that they help the organisation to gain the competitive advantages. It is concerned with the
people dimension in management of an organisation. People are considered the key resources of the
organisation who mobilize all other resources for the accomplishment of the pre-determined objectives.
DeCenzo and Robbins, “Human Resource Management is a process consisting of the acquisition,
development, motivation and maintenance of human resources.”
The first objectives of HRM is to attain maximum individual development. Second, get desirable
working relationship between employees and employers. Third, effective development of human resources
as contrasted with physical and other resources.

Characteristics of HRM
The characteristics of HRM are given below. To understand the fundamental concept of HRM, a few basic
facts and characteristics are given below:
1. Managing people at work: Human Resources Management covers all level of staffs including blue-
collared employees, craftsman, labours, foreman, and operatives and white-collared employees
(professional and technical workers, managers, proprietor). People should be managed at workplace
so that organisation can get better results.
2. Concerned with developing the employees: It’s another features is to develop employees and
capacities to the maximum possible extent so that they made try towards better job satisfaction.
HRM is not only to use human resources rather it also aim to develop them.
3. Essential in all organisations: Since, recruitment, selection, development and utilisation of people
are an integral part of any organized effort. So, HRM is inheritant in all organisations. It is equally
useful and effective in all types of organisations.
4. Continuous in nature: HRM is a continuous process which cannot be practise only one hour each day
or one day of week. The activities related to the HRM are continuously performed in the organization
till the existence of it.
5. Tool for human benefit: Another important features of HRM is it is also the tool for human benefit.
HRM attains all getting the willing co-operations of people for the attainment of desired goals. It
offers benefits for both organisation and staffs.
6. Strategy focus: HRM is considered a strategic partner for organisational change and development. It
helps to mobilize human resources efficiently and effectively in the organization in order to achieve
desired goals/results.
7. Social and Dynamic process: HRM is an organization consist of people which are managed by the HR
managers. They interact with each other which leads to the development of the social relations and
dynamism in the workplaces. The principle and practices of HRM shouldn’t be strategic rather they
should be flexible according to the changes in environment.
8. Involvement of line managers: HRM is not only the responsibility of HRM staffs but it is also the
responsibility of the line managers working in that particular organisation. Like, managers also play
an important role in HR policies and practices.
9. An important competent if management
10. System focus
Objectives/Importance of HRM
HRM objectives are broadly classified into four categories:
1. Organisational Objectives
HRM’s main objective is to accomplish organisational goals. HRM leads the organisation to achieve
the organisational objectives like to earn profit, growth, expansion, survival, diversification, etc. HRM
achieve organisational goals through the proper utilisation and development of human resources.
2. Fundamental Objectives
HRM also performs many functions for other departments directly or indirectly. Functional objectives
try to maintain department the contribution at a level appropriate to the organisation needs. HR
manager have to oversay whether the functions are performed or human resources are adjusted to
suit the organisation demands or not.
3. Social Objectives
HRM should follow the rules and laws, legal restriction imposed by society. It is the responsibility of
Human Resource to ensure that legal, ethical and social environmental issues are suitably deal with
the failure of organisation to use their resources for society benefits in ethical ways may lead to the
restrictions.
4. Personal Objectives
HRM has to assist employees in achieving their personal goals such as higher wages and salaries, job
satisfaction, better working conditions, etc. Personal objectives of employees must be meet if they
are maintained, retained and motivated otherwise employees performance and satisfaction may
decline and employee turnover may increase.

Functions/Components of HRM
External Influences

Acquisition Development Motivation Maintenance

 HR planning  Employee  Job design  Safety and Health

 Recruiting training  Performance  Employee/Labour
(internal  Management evaluation relation
and development  Rewards
external)  Career  Job evaluation
 Employees development  Compensations/B
socialization enefits
 Selection  Discipline

HRM consists of four functions which are discussed below:

1. Acquisition Function
This is the first function of HRM which begins with HRP (Human Resource Planning). First of all,
managers need to know what types of employees they are going to hire and how they are going to
get there. HRP includes the estimating of demand and supplies of manpower. This function includes
recruitment/recruiting (internal and external), selection, placement and employed socialization.
Acquisition Functions affects other three components.
 2. Development Function
This is important second component of HRM which is composed of-
 Employee training: This focuses/emphasizes on skills development and the changing attitude
among workers.
 Management development: This focuses on occurring knowledge and the enhancement of
managers conceptual abilities.
 Career development: It focuses towards continued affects to match long-term individual and
organisational needs
3. Motivational Function
Motivational function is the 3rd component of HRM which is also called utilisation function. As the
employees are accursed trained, the next duty of managers is to mobilize or motivate the existing
human resources. Managers must have to bring different motivational techniques as per the
requirement. This function consists of rewards, benefits, performance, evaluation, job design,
recognition, etc.
4. Maintenance Function
This is the final component of HRM which is concerned with providing proper working condition
(physical and physiological). Good working condition leads employees towards greater commitment
in the organisation. It’s major elements are safety and health employees and labour relations, etc.

HRM System
A system of inter-related parts acting together to accomplish organisational goal. HRM system consists of
following components which are explained below:
External Environment Factors
Physical environment economic development socio-cultural environment, political/legal environment,
technological environment, labour market environment, trade union environment, global business
environment.
Threats and Opportunities

3. Inputs 2. Processing 1. Output

 Objectives/Strategy of the  Acquisition  Quality work life
organisation  Development  Productivity
 Plans, Policies and Procedures  Motivation  Readiness for change
 Organisational Structure  Maintenance
 Communication and Decision Making
 Environment and Social Obligations

 Inputs of HRM System

The inputs of HRM system includes those components which are necessary to achieve the
organisational goals. The major inputs are:
i. Objectives and Strategy of the organisation
Every organization have certain goals. The reason for existence of organisation is to attain
goals. Strategies are developed to achieve the stated goals. They provide a means for
achieving desired results.
ii. Plans, Policy and Procedures
The input of the HRM System are plans, policies and procedures of the organisation. HR
department sets it’s organisational plans contains targets of the overall organisation.
iii. Organisation Structure
Organisation structure concern with authority-responsibility relationship, division of
work, departmentalisation as per the requirement organising and ordination.
 Organisation structure which is one important HRM system input which helps the
organisation in accomplishing the goals.
iv. Communication and Decision Making
As we know that communication and decision making are the integral part of organisation.
They are essential for the effectiveness. All HR functions demand communication and
decision making.

v. Environmental and Social Obligations

In today’s business organization more emphasis has given towards public on the issue of
environment and social responsibility. They work on input factors which contributes
towards higher outcomes. No organisation can accomplish the goals without maintaining
social obligation and environment in which they exists.
 Outputs of HRM System
The output components of HRM system are also called dependent variables. They are the in
results of the HRM system which an organisation wants to achieve. The major outputs of HRM
system are:
i. Productivity
ii. Quality of work life
iii. Readiness for change
Feedback of HRM System
The feedback of HRM system majors output of HRM process and feed into the system. Feedback of HRM
system helps to correct deviation and achieve the desired results.

Human Resource Outcomes

HR outcomes/outputs are discussed below:
a. Quality of Work Life (QWL)
Quality of work life refers to the favourableness and unfavourableness of a job environment for
people. The basic purpose of QWL is to develop work environments that are excellent fir people.
Good facilities, good relationship and good working environment are the quality of work life. QWL
also involves autonomy, recognition, belongingness, progress and external rewards.
b. Productivity
Productivity is the ratio of input and output. In other words, an efficient relationship between
input and output is produced and success. It is also related with efficiency and effectiveness and
performance of HR. Factors that affect are internal and external factors.
i. External factors: External factors includes availability of fund, energy and water.
ii. Internal factors: They includes capital investment innovation organisation structure,
culture, HR practice, learning and development and motivation.
c. Readiness to Change
Change is an auto ratio or organisation environment structure, technology or people. Change or
die is the present day reality. Human Resources should be competitive and able to adjust in the
changing environment. Organisation change can be costly and difficult to the employees. So, they
resist change no matter how much it is beneficial. People resist change because of their habit,
challenge in the job security, economic factors, fear of unknown and others to make the change
effective in an organisation. HR needs to use the following practices:
i. Education and Communication
ii. Participation and Involvement
iii. Facility and Support
iv. Agreement with employees
v. Manipulation and Co-operations, and
vi. Coercion
Challenges of HRM (contemporary HR issues and problems)
Following are the new challenges that HRM is facing everyday:
i. Outsourcing HR Activities
Outsourcing us the process by which organisation transfer some parts of job to another organisation.
Nowadays, outsourcing HR activities has been gradually increasing to gain competitive advantages
through cost reduction and improving quality. It is the process of hiring of specialized expertise.
Activities that commonly outsourced include employee hiring, training and development, payroll
preparation and so on. Factors responsible for outsourcing are downsizing, rapid growth or decline
of business, globalization competition, etc. Negative sides due to our sourcing on HR departments is
growing gradually. It is said that if outsourcing is carried a firm can do without HR department.
Therefore, there is a big challenge in front of HR managers to clarify that HR department is also
important as other departments in the organization.
ii. Balancing work life and family life
Today’s work life balance has been becoming major challenges to both HR managers and employees
in an organisation. Work life and family life cannot be separated. Therefore, it is becoming a major
challenge to the managers. The number of common employees is increasing in the organization
throughout the world every year. This issue becomes more serious when both husband and wife are
employed. Therefore, HR managers need to introduce flexible work hours, job counselling, child
caring at work place, functioning programs, flexible leave policies, etc. To reduce stress, anxiety and
depression among employees. It results to more job satisfaction and productive employees.
iii. Making HR activities ethical
Another major problem facing by today’s HR managers is making ethical behaviour in the work place.
Making HR activities ethical creates pressure to the HR department. This is the role of HR managers
to built/create an ethical environment in organisation which is highly important. First, of all they
should themselves show as an example for ethical behaviour or unfortunately, HR managers are
blamed for accepting bribe and involved in unethical practices. Therefore, HR managers should show
ethical behaviour and provide ethical knowledge to the employees in the organization.
iv. Change in employee’s expectation
Employees expectations are changing day by day through which HR managers have to confront these
challenges due to change in workforce, demographic, employees expectations and attitudes have
shifted. Yesterday’s motivation tools like attractive salaries and benefits, job security and other
facilities do not attract and motivated today’s talented employees. Their expectations has been
gradually increasing everyday. They demand teamwork, autonomy, empowerment, ethical
behaviour, equity, etc. Therefore, to face those contradictory challenges, HR managers must redefine
and must know the expectations of the employees.
v. Problems created by BPO (Business Process Outsourcing)
Today’s being organization have been implementing business process outsourcing (BPO). Many
companies are concentrating in their scarce resources. Outsourcing helps to reduce unwanted
business activities which can optimize resources, cost advantage and save time. BPO helps to
maximize quality and gain cost advantage. But it is not a free dinner. Therefore, HR managers need
to play a payroll in the development execution business strategy of a BPO.
vi. Partnership relationship with Unions
This is another major problem facing by modern HR managers. It is an unfair practice from employees
side to dominate the administration if labour unions. Other management actions found to be unfair
are bribing employees, moving a business to avoid unionisation, etc. In general, manager’s attitude
towards union is negative but management should maintain good relationship with unionisation
because it offers several benefits to the organisation. HR managers need to realize that unions are
unavoidable part of organisation. Therefore, HR managers have to play a vital role to maintain good
relationship with unions which can bring synergy effect – a wind-win situation.
vii. Corporate Reorganization
The term corporate reorganization can be used to mean a variety of transaction of typically referred
to transaction involving the transfer whole business or shares between entities to form a new single
entity. Reorganization of big business in the form of mergers, acquisitions, takeovers, divestitures,
etc. Has posed a greater challenge for HR managers/management these days. It has become very
difficult for HR managers because reorganization will have impact on both organisation and
employees due to reorganization employees may face problems of experiencing anxiety, uncertainty,
about their job in a new organisation fear of loss of jobs, new roles and assignment, changes in salary
and benefits and changes in power and status, etc. Therefore, HR managers/management should be
effective to get the success from mergers or acquisition of an entities.