Why do we call it as Human Resource
Management?
Human: refers to the skilled workforce in an organization, Knowledge,
skill set, expertise of employees, adaptability, commitment and loyalty of
employees.
Resource: refers to limited availability or scarce. The stock of assets and
skills that belong to a firm at a point of time
Management: refers how to optimize and make best use of such limited
or scarce resource so as to meet the organization goals and objectives.
Therefore, human resource management is meant for proper utilisation of available
skilled workforce
make efficient use of existing human resource in the organisation.
Today many experts claim that machines and technology are replacing human resource and
minimizing their role or effort. However, machines and technology are built by the humans
only and they need to be operated or at least monitored by humans and this is the reason why
companies are always in hunt for talented, skilled and qualified professionals for continuous
development of the organization.
Therefore humans are crucial assets for any organisation, although today many
tasks have been handing over to the artificial intelligence but they lack judgement
skills which cannot be matched with human mind.
Human Resource
Management Definitions by Authors
Many great scholars had defined human resource management in different ways and
with different words, but the core meaning of the human resource management
deals with how to manage people or employees in the organisation.
Edwin Flippo defines- Human Resource Management as “planning, organizing,
directing, controlling of procurement, development, compensation, integration ,
maintenance and separation of human resources to the end that individual,
organizational and social objectives are achieved.”
The National Institute of Personal Management (NIPM) of India has defined
human resources – personal management as “that part of management which is
concerned with people at work and with their relationship within an enterprise. Its aim
is to bring together and develop into an effective organization of the men and women
who make up enterprise and having regard for the well – being of the individuals and
of working groups, to enable them to make their best contribution to its success”.
According to Decenzo and Robbins, “Human Resource Management is
concerned with the people dimension” in management. Since every organization is
made up of people, acquiring their services, developing their skills, motivating them
to higher levels of performance and ensuring that they continue to maintain their
commitment to the organization is essential to achieve organsational objectives. This
is true, regardless of the type of organization – government, business, education,
health or social action”.
Thus HRM can be defined as a process of procuring, developing, and maintain competent human
resources in the organisation so that the goal of an organisation are achieved in an effective and
efficient manner. In short, HRM is an art of managing people at work in such a manner that they give
their best to the organisation
Objectives:
The primary objective of HRM is to ensure the availability of right
people for right jobs so as the organisational goals are achieved
effectively.
This primary objective can further be divided into the
following sub-objectives:
1. To help the organisation to attain its goals effectively and
efficiently by providing competent and motivated employees.
2. To utilize the available human resources effectively.
3. To increase to the fullest the employee’s job satisfaction and self-
actualisation.
4. To develop and maintain the quality of work life (QWL) which
makes employment in the organisation a desirable personal and
social situation.
5. To help maintain ethical policies and behaviour inside and
outside the organisation.
6. To establish and maintain cordial relations between employees
and management.
7. To reconcile individual/group goals with organisational goals.
Werther and Davis have classified the objectives of HRM into four
categories as shown in table 1.2.
Table 1.2: HRM Objectives and Functions:
Scope:
The scope of HRM is, indeed, very vast and wide. It includes all
activities starting from manpower planning till employee leaves the
organisation. Accordingly, the scope of HRM consists of acquisition,
development, maintenance/retention, and control of human
resources in the organisation (see figure 1.1). The same forms the
subject matter of HRM.
The National Institute of personnel Management, Calcutta
has specified the scope of HRM as follows:
1. The Labour or Personnel Aspect:
This is concerned with manpower planning, recruitment, selection,
placement, transfer, promotion, training and development, lay-off
and retrenchment, remuneration, incentives, productivity, etc.
2. Welfare Aspect:
It deals with working conditions, and amenities such as canteen,
creches, rest and lunch rooms, housing, transport, medical
assistance, education, health and safety, recreation facilities, etc.
3. Industrial Relations Aspects:
This covers union-management relations, joint consultation,
collective bargaining, grievance and disciplinary actions, settlement
of disputes, etc.
FUNCTIONS OF HRM
(1) Managerial Functions:
Planning Planning is a predetermined course of actions. It is a
process of determining the organisational goals and formulation of
policies and programmes for achieving them. Thus planning is
future oriented concerned with clearly charting out the desired
direction of business activities in future. Forecasting is one of the
important elements in the planning process. Other functions of
managers depend on planning function.
Organising:
Organising is a process by which the structure and allocation of jobs
are determined. Thus organising involves giving each subordinate a
specific task establishing departments, delegating authority to
subordinates, establishing channels of authority and
communication, coordinating the work of subordinates, and so on.
Staffing:
is a process by which managers select, train, promote and retire
their subordinates This involves deciding what type of people
should be hired, recruiting prospective employees, selecting
employees, setting performance standard, compensating
employees, evaluating performance, counseling employees, training
and developing employees.
Directing/Leading:
Directing is the process of activating group efforts to achieve the
desired goals. It includes activities like getting subordinates to get
the job done, maintaining morale motivating subordinates etc. for
achieving the goals of the organisation.
Controlling:
It is the process of setting standards for performance, checking to
see how actual performance compares with these set standards, and
taking corrective actions as needed.
(2) Operative Functions:
The operative, also called, service functions are those which are
relevant to specific department. These functions vary from
department to department depending on the nature of the
department Viewed from this standpoint, the operative functions of
HRM relate to ensuring right people for right jobs at right times.
These functions include procurement, development, compensation,
and maintenance functions of HRM.
A brief description of these follows:
Procurement:
It involves procuring the right kind of people in appropriate number
to be placed in the organisation. It consists of activities such as
manpower planning, recruitment, selection placement and
induction or orientation of new employees.
Development:
This function involves activities meant to improve the knowledge,
skills aptitudes and values of employees so as to enable them to
perform their jobs in a better manner in future. These functions
may comprise training to employees, executive training to develop
managers, organisation development to strike a better fit between
organisational climate/culture and employees.
Compensation:
Compensation function involves determination of wages and
salaries matching with contribution made by employees to
organisational goals. In other words, this function ensures equitable
and fair remuneration for employees in the organisation. It consists
of activities such as job evaluation, wage and salary administration,
bonus, incentives, etc.
Maintenance:
It is concerned with protecting and promoting employees while at
work. For this purpose virus benefits such as housing, medical,
educational, transport facilities, etc. are provided to the employees.
Several social security measures such as provident fund, pension,
gratuity, group insurance, etc. are also arranged.
It is important to note that the managerial and operative functions
of HRM are performed in conjunction with each other in an
organisation, be large or small organisations. Having discussed the
scope and functions of HRM,
HR PRACTICE IN INDIA:
• HR began to play a significant role with
the early enactment of these
employment-related laws:
• The Workers’ Compensation Act of
1923 ensured that employers
compensate employees for work-
related injuries.
• The Trade Union Act of 1926 gave
formal recognition to trade unions.
• The Industrial Disputes Act of 1947
led to the increased role of industrial
relations (employees were
distinguished by the work they did
such as permanent, temporary,
trainee etc.).
• The Factories Act of 1948 regulated
the work environment in factories to
ensure the safety of employees.
• The Employees Provident Funds and
Miscellaneous Provisions Act of1952
required employers to provide
contributions for retirement.
• The Minimum Wage Act of 1948
established minimum wages that vary
from state to state.
• The Payment of Bonus Act 1965
provides for a minimum bonus of 8.33
percent of salary, even if the
organization is not making any profit.
• The Persons with Disabilities Act
(PWD) of 1995 was landmark
legislation for disabled people in
India.
EVOLUTION OF HRM
Trade Union Movement Era:
Shortly after the emergence of factory system, workers started to
organize themselves based on their common interests to form
workers’ associations which were subsequently known as trade
unions. The basic objectives of these associations were to safeguard
interest of their members and to sort out their problems which
arose primarily because of employment of child labour, long hours
of work, and poor working conditions.
Later, other aspects of work such as economic problems and wages,
employee benefits and services, etc. also became issues. These trade
unions started such weapons as strikes, slowdowns, walkouts,
boycotts, etc., for the acceptance of their demands.
These activities of the trade unions forced owners and managers to
adopt employee grievance handling systems, arbitration as a means
of resolving conflicts between owners/managers and workers,
disciplinary practice, expansion of employee benefit programmes,
holiday and vacation time, clear definition of job duties, job rights
through seniority, and installation of rational and defensible wage
structures.
2. Social Responsibility Era:
In the first decade of 20th century, some factory owners started
adopting a more humanistic and paternalistic approach towards
workers. Paternalistic approach to labour management is based on
the philosophy that labour is just like a child and owner is just like a
father and the owner should take care of his labour just like a father
takes care of his children.
Those industrialists who adopted paternalistic approach offered a
number of concessions and facilities to labour force like reduced
number of work hours, improved facilities at workplace, etc. All
these practices led to the development of social welfare aspect of
labour management.
Many critics to paternalistic approach viewed that this approach
was adopted to overcome the problems posed by labour union
movement as plenty of trade unions emerged which frequently
interrupted work performance. Employers observed that workers
were going out of their control and to overcome this problem, they
implemented welfare scheme. Thus, this was a compulsion rather
than a philosophy.
3. Scientific Management Era:
Around the beginning of 20th century, Taylor started to find out
‘one best way of doing thing’ based on time and motion studies. On
the basis of his experiments, he was able to increase workers’
productivity considerably and wrote many papers based on these
experiments and a book on scientific management.
The main principles of scientific management are:
(i) Replacing rule of thumb with science, (ii) harmony, not
conflict, (iii) cooperation, not individualism, and (iv)
development of each and every person. Scientific
management techniques relevant to management of
workers are- functional foremanship, standardization
and simplification of work, and differential piece wage
system.
4. Human Relations Era:
Around 1920s, management researchers gave a close look at the
human factor at work and the variables that affected people’s
behaviour. Before that, Hugo Munsterberg wrote a book on
‘Psychology and Industrial Efficiency’ which suggested the use of
psychology in the field of personnel testing, interviewing, attitude
measurement, learning, etc.
This brief period was termed as ‘Industrial Psychology Era’. In 1924,
a group of professors from Harvard Business School, USA, began an
enquiry into the human aspects of work and working conditions at
Hawthorne plant of Western Electric Company, Chicago.
They conducted researches from 1924 to 1932 and arrived at the
conclusions that productivity of workers depended on- (i) social
factors at the workplace, (ii) group formation and group influence,
(iii) nature of leadership and supervision, and (iv) communication.
They concluded that in order to have better productivity,
management should take care of human relations besides the
physical conditions at the workplace. Consequently, the concepts of
social system, informal organization, group influence, and non-
logical behaviour entered the field of management of personnel.
5. Behavioural Science Era:
In contrast to human relations which assume that happy workers
are productive workers, the behavioural scientists have been goal
and efficiency- oriented and consider understanding of human
behaviour to be the major means to that end. They have tried
several sophisticated research methods to understand the nature of
work and the people in the work environment.
The contribution of behavioural scientists to management practices
consists primarily of producing new insights rather than new
techniques. It has developed or expanded a useful way of thinking
about the role of the manager, the nature of organizations, and the
behaviour of individuals within organizations. As against human
relations model, they have given the concept of human resource
model.
Major conclusions of the contributions made by
behaviouralists are as follows:
i. People do not dislike work. If they have been helped to establish
objectives, they will want to achieve them. In fact, job itself is a
source of motivation and satisfaction to employees.
ii. Most people can exercise a great deal of self-direction and self-
control and generate more creativity than required in their current
job. Therefore, their untapped potential remains unutilized.
iii. Managers’ basic job is to use untapped human potential in the
organization.
iv. Manager should create a healthy environment wherein all
persons can contribute to the best of their capacity. The
environment should provide a healthy, safe, comfortable, and
convenient place to work.
v. Managers should provide opportunity for self-direction by their
subordinates and they must be encouraged to participate fully in all
important matters.
vi. Operating efficiency can be improved by expanding subordinate
influence, self- direction, and self-control.
vii. Work satisfaction may improve as a ‘by-product’ of subordinates
making full use of their potential.
Behavioural science era led to the development of two-way
communication, participation of employees in decision making,
joint goal-setting, group dynamics, management development, and
management of change in the organization. These contributions of
behavioural science era are backbone of behavioural approach of
human resource management even in the present context.
6. Systems and Contingency Approach Era:
Systems and contingency approach has attracted maximum
attention of thinkers in management in the present era. It is an
integrated approach which considers management of human
resources in its totality based on empirical data. The basic idea of
this approach is that analysis of any object must rely on a method of
analysis involving simultaneous variations of mutually-dependent
variables. This happens when systems approach is applied in
managing human resources.
7. Human Resource Management Era:
When the factory system was applied in production, large number
of workers started working together. A need was felt that there
should be someone who should take care of recruiting, developing,
and looking after welfare of these workers. For this purpose,
industrial relations department came into existence in most of the
large organizations which was concerned mostly with workers.
However, as the time passed and the complexity of managing
human resources in large business organizations increased, the
scope of industrial relations department was extended to cover
supervisory staff and subsequently managerial personnel. Industrial
relations department was named as personnel department.
With the increasing competition for market share, competition for
resources including human talents, and increased knowledge in the
field of managing human resources, people were not treated merely
as physiological beings but socio-psychological beings as a prime
source of organizational effectiveness and large organizations
changed the nomenclature of their personnel department to human
resource ‘department to reflect the contemporary view.
Even the American Society for Personnel Administration, the
largest professional association in the field of human resource
management, changed its name to the Society for Human Resource
Management in 1990. At the academic level, similar pattern was
followed and the title of personnel management course was changed
to human resource management. Since then, the expression is
gradually replacing the hackneyed term ‘personnel management’.
Comparison Chart
BASIS FOR
PERSONNEL MANAGEMENT HUMAN RESOURCE MANAGEMENT
COMPARISON
The branch of management that focuses
The aspect of management that is
on the most effective use of the
concerned with the work force and
Meaning manpower of an entity, to achieve the
their relationship with the entity is
organizational goals is known as Human
known as Personnel Management.
Resource Management.
Approach Traditional Modern
Treatment of
Machines or Tools Asset
manpower
Type of function Routine function Strategic function
Basis of Pay Job Evaluation Performance Evaluation
Management Role Transactional Transformational
Communication Indirect Direct
Labor
Collective Bargaining Contracts Individual Contracts
Management
Initiatives Piecemeal Integrated
Management
Procedure Business needs
Actions
Decision Making Slow Fast
Job Design Division of Labor Groups/Teams
Primarily on mundane activities
Treat manpower of the organization as
like employee hiring,
Focus valued assets, to be valued, used and
remunerating, training, and
preserved.
harmony.
8) Which function of the
management process includes
selecting employees, setting
performance
standards, and compensating
employees?
A) organizing
B) planning
C) motivating
D) staffing
8) Which function of the
management process includes
selecting employees, setting
performance
standards, and compensating
employees?
A) organizing
B) planning
C) motivating
D) staffing
8) Which function of the
management process includes
selecting employees, setting
performance
standards, and compensating
employees?
A) organizing
B) planning
C) motivating
D) staffing
8) Which function of the
management process includes
selecting employees, setting
performance
standards, and compensating
employees?
A) organizing
B) planning
C) motivating
D) staffing
8) Which function of the
management process includes
selecting employees, setting
performance
standards, and compensating
employees?
A) organizing
B) planning
C) motivating
D) staffing
Answer: D
Explanatio
