Chapter-1

Human Resource Management

Introduction

Human resource is one of the most important resources of an organization. It is

one of the factors of production other than land, capital and organization. There are some
significant differences of labour as compared to other factors of production.
1. Human resources of an organization can be motivated.
2. It is the only factor of production which produces more than its input.
3. Human resources can produce synergic effect.
4. Labour is mobile.
5. It is the only resource which gains more knowledge and skilled in the long run, where
as other factors goes on depleting.

A key to a firm’s performance is its human resources (employees). Therefore, a

firm’s performance is dependent on how human resources are managed. The term human
resource refers to the sum total of all the inherent abilities, acquired knowledge, and skills
represented by the aptitudes, attitudes and talents of an organizational work force. The
management of human resources involves recruiting employees, developing their skills,
and evaluating their performance. Without effective employees, the organization
produces its goods and services inefficiently and may even place its survival at risk.
Personnel or human resource management addresses a set of functions or activities that
are designed to influence the effectiveness of an organization’s employees. These include
recruitment, staffing, training and development, integration, compensation etc. Most
managers engage in these activities daily with prospective employees and their own
subordinates.

Definitions:

 Human resource management is the performance of all managerial functions

involved in planning for, recruiting, selecting, developing, utilizing, rewarding and
maximizing the potential of human resources of an organization. – Leon C. Megginson.

 Human resource management deals with the design of formal systems in an

organization to ensure the effective and efficient use of human talent to accomplish
organizational goals. – Mathis and Jackson.

 Personnel 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. – Edwin B. Flippo.

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 So personnel management is concerned with the MANAGERIAL and OPERATIVE
functions with a view to attaining the organizational goals economically and effectively
and meeting the individual and social goals.

 Walton (1985) attempting to define HRM, stresses mutuality between employers

and employees: Mutual goals, mutual influence, mutual rewards, and mutual
responsibility. The theory is that policies of mutuality will elicit commitment which in
turn will yield both better economic performance and greater human development.

 According to French, “Personnel management is the recruitment, selection,

development, utilization of and accommodation to human resources by organizations.

 In the words of Dunn and Stephens, “Personnel management is the process of

attracting; holding and motivating people involving all managers-line and staff.

 According to Prof. Michael Jucius, personnel administration is “the field of

management which has to do with planning, organizing, directing and controlling various
operative functions of procuring, developing, maintaining and utilizing a labour force,
such that;
(a) Company objectives are achieved economically and effectively
(b) Objectives of all levels of personnel are served to the highest possible degree
(c) Objectives of the community are considered and served.

Characteristics of personnel Management

1. Personnel management is concerned with managing people at work and with their
group relationship.
2. It is concerned with employees, both as individuals and as a group and aim to
achieve the objectives personal contribution towards the goals.
3. Personnel management is concerned with helping the employees to develop their
potentialities and capacities to the maximum possible extent, so that they can derive
great satisfaction from their job.
4. Since recruitment, selection, development and utilization of and accommodation to
people are an integral part of any organized effort, personnel management is inherent
in all organizations.
5. Personnel Management is of a continuous nature. It requires a constant alertness and
awareness of human relations and their importance in every day operations.
6. Personnel management attempts at getting the willing cooperation of the people for
the attainment of the desired goals.
7. Enhancing performance of employees in achieving goals.
8. Open channels of communication.
9. Goal orientation
10. Participation.

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 Nature and Scope of HRM

The field of HR management is undergoing transition because organizations themselves

are changing. As a result the terminology in the field is in transition. The central focus for
HR management must be on contributing to organizational success. HR management is
composed of several groups of inter related activities- HR planning and analysis, staffing,
HR development, compensation and benefits, health, safety and security, employee and
labour management relations. One of the most important shifts in the emphasis of HR
management in the past few years has been the recognition of HR as a strategic business
contributor.
Importance of HR management

The importance of HR as a strategic business partner emphasizes the following areas;

1. Involvement in strategic planning
2. Decision making on mergers, acquisitions and downsizing
3. Redesigning organizations and work processes
4. Ensuring financial accountability for HR results
5. Attracting and retaining human resources
6. Developing human resource capabilities
7. Identifying and rewarding performance.

Evolution of HRM

HRM appears to have its origin in the United States in the 1950s. It did not gain wide
recognition until the beginning of 1980s, and in the UK until the mid to late 1980s. The
major reasons for its emergence are;
1. Major pressures experienced in the product markets during the recession of 1980-82.
2. In USA, trade union influence in collective employment was reaching fewer
employees.
3. US economy was being challenged by overseas competitors, mainly Japan.
4. Declining rate of innovation in American industries.
5. Adoption of management styles and concepts – employee commitment and
empowerment

HRD

HRM

Personnel Management

Welfare management

1900 1940 1980 1990

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 Roles of a personnel Manager

In the modern era, the personnel manager typically performs a variety of roles, such as
the roles of conscience, of a counselor, as a mediator, a company spokesman, a problem
solver and a change agent.
1. The conscience role is that of a humanitarian who reminds the management of its
moral and ethical obligations to its employees.
2. The personnel manager plays the role of a counselor to whom the employees
frequently go for discussing their health, mental, physical and career problems.
3. As a mediator, he plays the role of a peacemaker, offering to settle the disputes
that may arise among individuals or groups.
4. He acts as a spokesman or a representative of the company because he has a better
overall picture of the company’s operations.
5. The personnel manager also acts as a problem-solver with respect to the issues
that involve human resources management and overall long range organizational
planning.
6. He works as a change agent within the organization because he is best suited to
introduce and implement major institutional changes.

The roles of a personnel manager can also be classified as;

1. Personnel role
2. Welfare role
3. Clerical role
4. Firefighting legal role.

As a personnel role, he gives advices to management on effective use of human

resources. It is his role to plan the manpower required, recruitment and selection and
giving them training and development. His personnel role also includes assessment of
the individual and group behavior.
In the welfare role, the personnel manager undertakes organizational problems,
managing services like canteen facilities, transport facilities and providing other
amenities to the people etc. He is also engaged in giving counseling, motivation,
leadership and communication.
Sometimes, the personnel manager has to do clerical role. He has to take care of the
administration of wages and salaries, giving proper incentives to employees, maintaining
records etc.
As a firefighting legal role, the personnel manager has to settle the disputes and takes
disciplinary actions. He acts as a legal manager and as an intermediary in handling of
grievances.

Functions of personnel Management

The functions of personnel management can be discussed under two broad heads;
I. Managerial functions.
II. Operating functions (service functions)

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I. Managerial functions
1. Planning
Planning is a pre-determined course of action. Planning bridges the gap between
where we are now to where we what to go. Planning is the foundation of most
successful actions of any enterprise. For the personnel manager, planning is the
determination in advance of a personal program that will contribute to goals
established for the organization.

2. Organizing.
After a course of action has been determined, an organization must be established
to carry it out. An organization is a structure, a framework and a process by
which all the activities are grouped. The personnel manager must form an
organization by designing the structure of relationships among jobs, personnel
and physical factors.

3. Directing.
Directing or actuating or commanding the subordinate at any level is a basic
function of managerial personnel. Direction deals with issuing or execution of
orders to the employees by the top management. Direction is involved with
getting people together and asking them to work willingly and effectively for the
achievement of goals.

4. Controlling.
Controlling function is the observation of action and its comparison with plans or
standards and to correct if there is any deviation. Control is the managerial
function concerned with regulating activities in accordance with the personnel
plan.

II. Operative functions (service functions)

1. Procurement.
The first operative function of personnel management is concerned with the
obtaining of the proper kind and number of personnel necessary to accomplish
organization goals. It deals specifically with the determination of human
resources requirements and their recruitment, selection and placement.

2. Development.
The development function is concerned with the personnel development of
employees by increasing their skill through training so that job performance is
properly achieved. This is an activity of very great importance and will continue
to grow because of changes in technology, increasing complexity of managerial
task etc.

3. Compensation
This function is defined as the adequate and equitable remuneration of personnel
for their contributions to organization objectives. The basic elements of

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 compensation program are job classifications, job evaluation, wage structure,
wage systems, wage rates etc

4. Integration.
After the employee has been procured, developed and compensated monetarily,
the most important and difficult function of personnel management is to bring
about an integration of human resources in the organization. Integration is
concerned with the attempt to effect a reasonable reconciliation of individual,
societal and organizational interests. It deals with the problems related to such as
grievances, disciplinary action and labour unions, human relations, reduce
absenteeism, increase morale etc.

5. Maintenance.
The maintenance function deals with sustaining and improving the conditions that
have been established. Specific problems of maintaining the physical conditions
of employees like health and safety measures and employee service programs are
the responsibility of the personnel department.

6. Separation.
If the first function of personnel management is to secure the employee, the last
function should be the separation and return of that person to society. The
organization is responsible for meeting certain requirements of due process in
separation, as well as assuring that the returned citizen is in as good shape as
possible.

Objectives of personnel management

Ralph C. Davis has divided the objectives of personnel management into two
categories;
I. Primary objectives
II. Secondary objectives.

I. Primary objectives.
1. The goal of personnel function is the creation of a work force with the ability and
motivation to accomplish the basic organizational goals.
2. They relate to the satisfaction of the personal objectives of the members of an
organization through monetary and non-monetary devices.
3. They relate to the satisfaction of community and social objectives, such as serving
the customers honestly, providing a higher standard of living in the community,
bringing comfort and happiness to society etc.

II. Secondary objectives.

1. The economic need for or usefulness of, the goods and services required by the
society.
2. Conditions of employment for all members of an organization which provide for
satisfaction in relation to their needs, so that they may be motivated to work for
the success of the enterprise.

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 3. The effective utilization of people and materials in productive work.
4. The continuity of the enterprise.

Organization Structure of Human Resource Management

Organization is a group of people working together cooperatively under ‘authority’

toward achieving goals and objective’s. Objectives can be achieved only when the best
organization structure is introduced. Organization requires the creation of structural
relationship among different departments, human beings and other resources to achieve
the desired objectives.

There are three kinds of work which must be performed whenever an organization
comes into being,
1. Division of labour
2. Combination of labour
3. Co-ordination.
The essentials of a sound organization structure are as follows;
1. Task accomplishment or personnel satisfaction.
2. Delegation of Authority.
3. Proper span of supervision.
4. The degree of supervision
5. Communication channel should be proper.
The internal organization structure of the personnel department varies widely in
different companies, depending upon their size. Personnel departments or units may
be organized on three basis;
I. Functional basis
II. Service basis
III. Clientele basis

I. Functional basis
According to this basis, departments are grouped into different functions such as;
procurement (employment), development (training), compensation (wage and
salary administration), Integration (labour relations), maintenance (safety) and
separation (employee services, retirement). This function was evolved by
F.W.Taylor.

Personnel
Director
Planning Organization Research
Design Records

Employment Training Wage and Industrial Safety Employee

Salary Relations Service &
(Procurement) (Development) benefits
(Compensation) (Integration)(Maintenance) (Separation)

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 II. Service basis
This basis takes into consideration the service rendered or the purpose achieved.
It tries to prevent dissatisfaction through hygiene maintenance, and promotion of
satisfaction through motivators. This basis is based on Herzberg’s theory.

Personnel Director.

Hygiene-heeds Motivator needs

Programmes programmes

Employment Training pay services Industrial Education Job Motivation

Relations design
III. Clientele basis
This basis has been propounded by Soholik whose thesis is that different
requirements of different types of employees need specialization.

Personnel Director

Evaluation and Organization and

Man power planning Research

MANAGERS FOR

Scientific and Integration Women Handicapped Mgt Industrial

technical of new employees persons dvpt & Relations
personnel workers compensation

Personnel policies, procedures and programmes

A policy is a man made rule of predetermined course of action that is established
to guide the performance of work toward the organization objectives. Personnel policies
are those that individuals have developed to keep them on the track towards their
personnel objectives. Policies define an area within which a decision is to be made and
ensure that the decision will be consistent with the objective.
The policy guidelines identify the organizations intentions in recruitment,
selection, promotion, development, compensation, motivation and leading and directing
people in the working organization. Personnel polices serve as a road map for managers.
Examples: recruiting fresh graduates, encouraging employee’s suggestions for
improvement, promoting every three years, attendance, grant employees vacation etc.

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 Aims of personnel policies

1. To enable an organization to fulfill or carry out the main objectives which has
been laid down as the general employment policy.
2. To ensure that its employees are informed of these items of policy and to secure
their co-operation for their attainment.
3. To provide such conditions of employment and procedures which enable all the
employees to develop a sincere sense of unity with the enterprise and to carry out
their duties in the most willing and effective manner.
4. To provide an adequate, competent and trained personnel for all levels and types
of management.
5. To protect the common interests of all the parties and recognize the role of trade
unions in the organization.
6. To provide for a consultative participation by employees in the management of an
organization and the framing of conditions for this participation.
7. To establish the conditions for mutual confidence and avoid confusion and
misunderstanding between the management and the workers.
8. To provide security of employment to workers.
9. To provide an opportunity for growth within the organization to persons who are
willing to learn and undergo training to improve their future prospects.
10. To provide for the payment of fair and adequate wages and salary to workers so
that their co-operation can be ensured for efficient working of the organization.
11. To recognize the work and accomplishments of the employees by offering non-
monetary incentives.
12. To create a sense of responsibility, on the part of those in authority, for the claims
of employees as human beings.

Types of personnel policies

Jucius identifies two types of policies ie,

1. functional or organizational grouping of policies,
2. Centralized policies.

The functional grouping of policies is those policies which are grouped for
different categories of personnel, eg. Management concerned with functions of procuring,
developing, and utilizing man power.

The centralized policies are framed for companies with several locations. They
are formulated at the head office and apply through out the organization

Policies may also be classified as major and minor. Major policies pertain to the
overall objectives, procedures and control which affect an organization as a whole.
Minor policies, on the other hand cover relationships in a segment of an organization
with considerable emphasis on details and procedures.

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 Procedures and programmes
For the accomplishment of the objectives of personnel policies, specific
procedures and programmes are needed.

A procedure indicates how a policy is to be carried out. It tells us where an action

is to take place and at what stage. They are guides to action. They detail the exact manner
in which certain activities are accomplished. Procedures are usually set up by high level
managers and observed by first line supervisors. They enable an organization to maintain
control since they assign specific obligations to the staff for the performance of the
various tasks. Examples; selection procedure, leave processing procedure.

Programme consists of the entire broad course of action governing employees at

all levels. It is a stable plan of action that continues over an extensive period of time.
Programmes represent simple or complex activities, developed to carry out the policy.
Programmes may require appropriate action or practice at all levels of an organization.
Programs are a complex of goals, policies, procedures, rules, tasks assignments, steps to
be taken, resources to be employed etc. Examples; improve the morale of workers, hiring
and training of personnel.

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