Introduction: Human Resource Management

Module : 1; AN INTRODUCTION TO HUMAN RESOURCE MANAGEMENT

1. Learning Outcome
2. Meaning of HRM
3. Scope of HRM
4. Objectives of HRM
5. Distinction between HRM and Personnel
Management
6. Significance of HRM
7. Strategic role of HRM
8. Summary

1. Module 1: AN INTRODUCTION TO HUMAN RESOURCE MANAGEMENT

2. Learning Outcomes:
After studying this module, you shall be able to
 Know the meaning of Human Resource Management
 Understand the scope of Human Resource Management
 Comprehend the objectives of Human Resource Management
 To know the strategic role of Human Resource management
 Understand the significance of Human Resource Management
 Become aware of the distinction between Personnel Management and HRM
 Learn the Strategic role of HRM

3. Introduction
Human resources management is thought of the philosophy, policies, procedures, and
practices related to the management of people within an organization. In recent years,
increased attention has been devoted to how human resources are managed in
organizations. This increased attention comes from the realization that an organization’s
employees make able an organization to accomplish its goals. The management of
human resources is critical to an organization’s success. Organizations frequently aspire
to be “world-class” or ranking among the foremost in the world. In the context of HRM,
an HR group with a vision shared among its components and how best to serve them
indicates world class. A service orientation and an inclination to be in association with
constituents characterize the excellence in HRM.

4. Concept of HRM
Human Resource Management has been defined from different perspectives. We will
discuss the definitions of Human Resource Management from three perspectives:
Process-systems view, People Perspective and Management Perspective.

4.1 Process-systems view

French presents a process-systems view of human resources management.
According to the process-systems view, human resource management is the
planning involving a system, development and control of a network of interconnected
processes influencing and entailing all members of an organization. These
processes consist of human resources planning, job design and work process,
staffing, training and development, appraisal and review of performance,
compensation and reward, protection of employees and representation, and
organization improvement. To effectively manage these processes, the planning,
growing in skills and implementation of human resources systems takes place
through the joint attempt of all managers and human resource experts- and often all
employees-in an organization. The purpose of the systems is to achieve
organization-wide goals and contribute to organizational effectiveness and
productivity.

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4.2 People Dimension

Robbins considers human resource management from the “people” variable in
management. ‘Since people cause every organization to exist, acquiring their
services, causing their skills to grow, encouraging them to high levels of
performance, and assuring that they maintain their commitment to the organization
are necessary for the achievement of organizational objectives.” This applies to all
types of organizations whether government, business, education, health, recreation
or social action. Acquiring and maintaining good personnel become critical to the
success of every type of organizations, whether profit or nonprofit, public or private.
The efficiency and effectiveness of an organization will depend upon the ability of an
organization to acquire, develop, motivate and maintain outstanding persons. The
ineffective or inefficient organizations encounter the hazards of stagnating or leaving
the business. Survival of an organization needs competent managers and workers
coordinating their efforts toward an ultimate goal.

4.3 Management Perspectives

Dessler defined human resource management in terms practices and policies
needed to carry out the people or personnel aspects of management job. These
include: performing job analyses, preparing plans for labor requirement and
recruiting and selecting job candidates, providing orientation and training new
employees, managing compensation, providing incentives and benefits, appraisal of
performance, training and developing and creating employee commitment Thus, the
distinctive features of human resource management are:

1. Human resources are the only assets appreciate over a period while physical
resources just depreciate with time.
2. Human resources alone can produce an output larger than the sum of inputs due to
the creative skills of human.
3. The real worth of a physical asset depends upon the quality and caliber of the
people working with it.
4. The flexibility of an organization relies more on people than any technical issues.

5. Scope of Human Resource Management

The scope of Human Resource Management covers a wide range of issues and is
exhaustive. The knowledge of what HRM means and how it works is necessary for
anyone employed in an organization. HR issues become significant wherever there
is a group of workers. All managers perform the function of staffing as a managerial
function directly or indirectly through the HR department. Thus, all managers
perform the functions of HR managers since they take part in HR activities of
recruitment, selection, training, induction, compensating and motivating the
employees. They also get involved in industrial relations activities. Thus, every
manager needs to know the scope and application of the personnel policies of their

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organization to ensure that their personnel actions are in tune with the broad
policies of the organization.
The understanding of the basics of HRM is crucial even to non-managerial
employees who may be interested to know the effect of personnel policies of their
organization on their own career growth and career development, compensation
and training and development. In this way, the personnel aspects of management
deal with the entire organization.
The American Society for Training and Development developed a model of HRM
which integrates the nine sub-systems of human resource management including
training and development, organization development, designing jobs, planning for
human resource planning, selection and staffing, personnel research and
information system, compensation and benefits, employee assistance and labor
relations. These nine areas have been termed as spokes of the wheel shown in
Fig.1. Each of these areas helps to make human resource outputs successful: (1)
Quality of work life (2) productivity and (3) readiness for change. Every manager
must remember these three basic objectives at the time of managing the human
resources.
Quality of work life (QWL) implies a work environment where an employee’s
activities become more important. It involves implementing policies and procedures
including autonomy, recognition, belong, development and external rewards that
make the work more rewarding for the employee.
Productivity is related to the volume of product or service an organization produces.

(Source: American Society for Training and Development, Models for Excellence, 1983,
p.23)

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6. OBJECTIVES OF HUMAN RESOURCE MANAGEMENT

The American Management Association asserts the objectives of human resource
management in the words,’ The aim of a business organization is the production of
goods and services with the motive to earn profit to fulfill economic needs in such a
way as to give satisfactory returns to economic and social suppliers both, owners
and members of the organization, under prevailing conditions which provide the
maximum conservation of human resources over a continuing period’.
National Institute of Personnel Management states the objectives of HRM as,
’Personnel management seeks to bring together and develop in an effective
organization the men and women who make up an enterprise, enabling each to
make his or her own best contribution to the success as an person and as a
member of a working group. It seeks to provide fair terms and conditions of
employment.
The common objectives of human resource management encompass the
procurement and development of competent people, achieving desirable working
environment and effective utilization of people to help in the attainment of
organizational objectives. However, the objectives having special application to
human resource management may include the following:

i. To assist the organization in achieving its goals by acquiring and maintaining

competent and motivated employees.
ii. To utilize the knowledge, skills and talents of employees efficiently and
effectively.
iii. To acquire and maintain cordial human relations within the organization.
iv. To ensure respect and dignity for human being and the well-being of each
individual.
v. To stimulate each person to contribute his maximum for the effective
functioning of the organization.
vi. To ensure fulfillment of various individual needs by providing adequate wages,
fringe benefits, incentives and measures of social security.
vii. To integrate the objectives of individuals with the objectives of the
organization.
viii. To develop and maintain quality of work life in the organization.
ix. To ensure ethical personnel policies in the organization.

7. Distinction between HRM and Personnel Management

The two terms ‘Human Resource Management’ and ‘Personnel Management
(HRM) are used interchangeably in practice. However, the terms differed in several
respects.
Personnel departments were once known division providing “Health and Happiness”
to employees. The persons designated to occupy with personnel issues were often
persons in later part of their services. The personnel department was considered as
a place where less-performing employees could be assigned with minimal loss to
the organization’s continuing operations. People in the personnel department were
thought as those assigned the responsibility for planning company picnics, vacation
tours, and retirement celebrations. As an activity Personnel management, was seen
as a necessary, but insignificant part of the organization.
As the field of management matured, greater stress was being placed on the
workers. Recognition to performance of workers for the work they had done well
could exercise influence on their productivity. Workers were becoming more
demanding in their jobs; and society by enacting laws and legislation was making
new demands on employees.

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Events necessitated rectification in personnel practices. Organizations had to hire

the best-qualified candidates needed to be trained to function effectively within the
organization. The organization was bound to give a means of continuing the
personal development of each employee. Practices were required to assure that the
employees continued their productive affiliation with the organization. Work
conditions had built such that the work environment encouraged workers to remain
with the organization and at the same time attracted new aspirants to the
organization. These activities brought to the conclusion that human resources of an
organization must be management effectively.
The following are the major areas of difference between ‘personnel management’
and ‘human resource management:
i. Personnel management is a functional area of management while human
resource management is a philosophy, the state of an attitude, an approach
to the work, a policy for performance and a practice of rules and regulations.
ii. Personnel management is confined to procurement and training of personnel,
HRM is integrated with the corporate management.
iii. Personnel management is related to managing personnel, human resource
management represents the humanization of management.
iv. Personnel management is mainly the concern of personnel manager, HRM is
the concern of all managers in the organization.
v. Personnel management is mainly involved in the formulation and
administration of personnel policies and programs, HRM is concerned with
the accomplishment goals and objectives of the organization.
vi. HRM focuses on motivation, morale-boosting and job satisfaction, while
personnel management emphasizes on recruitment, selection and
performance appraisal of personnel.
vii. Personnel management is concerned with the orderly way of administration,
HRM is more interested in working with people, team-building and team-work.

Personnel Management vs. Human Resource Management

Dimension Personnel Management Human Resource

Management
1.Philosophy Employees are for rules Rules and
and regulations regulations are for
the employees.
2. Nature Restricted to procurement
and training of personnel Integrated with the
corporate
3.Communication Slow management

4. Decision-making Slow Fast

5. Approach Task oriented Fast

6. Job Design Division of Labor People oriented

7. Role of Transactional Team-work

Management
Transformational

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8. Strategic Role of Human Resource Management

Personnel’s long history as advisory function has not brought it good reputation.
Some people are of the opinion that HR is strictly operational and that HR activities
are not strategic at all. A more sophisticated opinion of HR is that its role is primarily
to match the company’s strategy with HR plans. HR’s strategic role is to adjust
individual HR practices to match special purpose corporate and competitive
strategies and the human resource management system must be tailored to the
demands of business strategy. From another angle, HR management is an equal
partner in the strategic planning process. HR management’s role is not just to suit
its activities to the requirements of business strategy, nor, certainly, just to carry out
operational day-to-day activities like assuring that employees are compensated.
Instead, the need to forge a company’s work force into a competitive advantage
implies that human resource management must be equally associated in both the
formulation and implementation of the company’s corporate and competitive
strategies.

8.1 HR’s Role in Strategy Formulation

Formulating a company’s corporate strategy requires identifying, analyzing and
balancing two sets of forces: the opportunities and threats for the company in
the external environment and the company’s strengths and weaknesses. HRM
can play a role in environmental scanning – in identifying and analyzing external
opportunities and threats that may be crucial to the company’s success.
Similarly, HRM is in a unique position to supply competitive intelligence that may
be useful in the strategic planning process. This may consist of details
concerning advanced incentive plans being used by competitors, opinion survey
of employees eliciting information about customer complaints, and information
about pending legislation. HR also participates in the strategy formulation by
supplying information regarding the company’s strengths and weaknesses. For
example, IBM’s decision to acquire Lotus was perhaps prompted partially by
IBM’s inference that its own human resources were not sufficient to make the
firm able to reposition itself as an industry leader in networking systems.
The strengths and weaknesses of a company’s human resources can have a
determining effect on the viability of the firm’s strategic options. In such a
situation, a company may prefer to build its new strategy around an HR-based
competitive advantage. For example accounting and consulting firm Arthur
Andersen developed unique human resource capabilities in training.

8.2 HR’s Role in Strategy Implementation

HR can also play a pivotal role in the successful execution or implementation of
a company’s strategies. For example, Federal Express’s competitive strategy is
to differentiate itself by offering superior service to its customers and guaranteed
on time deliveries. Since basically the same technologies are available to UPS,
DHL, and Fed Ex’s other competitors, it’s Fed Ex’s work force that necessarily
provides Fed Ex with an important competitive advantage. This puts a premium
on the firm’s HR processes and on the firm’s capability to generate commitment,
customer-orientation and competence among the workforce. HR management
also supports strategic implementation in the implementation of most firms’
restructuring performance linked payment strategies, through outsourcing
employees, reducing costs on health care and on employees retraining. And in
an increasingly competitive global marketplace, instituting HR practices that
create employee commitment and help improve a firm’s responsiveness.

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9. Significance of Human Resource Management

There may be a question as to why human resource management is studied. One
will recognize that staffing the organization, designing jobs and teams, developing
skills among employees, identifying approaches for improving their performance,
and recognizing and rewarding employees are relevant to line managers as to HR
managers.
To get work with people effectively, managers have to understand human behavior,
and knowledgeable various systems and practices available to assist us build a
skilled and motivated work force. At the same time, managers have to be aware of
economic, technological, social, and legal issues that either facilitate or hinder
efforts to achieve organizational objectives.
While people have always been central to organizations, now they have assumed
even more crucial role in creating a firm’s competitive advantage. Particularly in
knowledge-based industries success increasingly depends on “people-embodied
know-how”. This consist the knowledge, skills, and abilities people of an
organization possess. Management experts now realize that a firm’s success
depends on establishing a set of core competencies. Core competencies are an
integrated knowledge set within an organization that differentiates it from its
competitors and deliver value to customers. For example, McDonalds has
developed core competencies in management efficiency and training. Core
competencies tend to be limited in number, but they provide a platform for long-term
technology innovation, product development, and service delivery.

Summary

 Human resources management is the planning and control of a complex of fundamental

organizational processes influencing and involving all members of the organization
including human resources planning, job and work design, job analysis, staffing, training
and developing, appraisal and review of employees’ performance, compensation and
reward, employee protection and representation, and organization improvement. To
further control and refine these processes, systems are continuously planned, developed
and implemented frequently with the help of non-management employees.
 The scope of human resource management covers a wide range of issues and is
exhaustive.
 The general objectives of HRM include the procurement and development of competent
people, achieving desirable working environment and effective utilization of people to
assist for the achievement of organizational objectives.
 Human resource management and the personnel management differ in terms of their
philosophy, nature, decision-making, approach, job design and role of management.
 The human resource management plays a crucial role in the formulation and
implementation of strategy in an organization.

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