BHRM 1101: PRINCIPLES OF HUMAN RESOURCE MANAGEMENT

Importance of HRM in an Organisation

Human Resource Management has a place of great importance. According to
Peter F. Drucker, ―The proper or improper use of the different factors of production depend on the
wishes of the human resources. Hence, besides other resources human resources need more development.
Human resources can increase cooperation but it needs proper and efficient management to guide it.
Importance of personnel management is in reality the importance of labour functions of personnel
department which are indispensable to the management activity itself. Because of the following reasons
human resource management holds a place of importance.
i. It helps management in the preparation adoption and continuing evolution of personnel
programmes and policies.
ii. It supplies skilled workers through scientific selection process.
iii. It ensures maximum benefit out of the expenditure on training and development and appreciates
the human assets.
iv. It prepares workers according to the changing needs of industry and environment.
v. It motivates workers and upgrades them so as to enable them to accomplish the organization
goals.
vi. Through innovation and experimentation in the fields of personnel, it helps in reducing casts and
helps in increasing productivity.
vii. It contributes a lot in restoring the industrial harmony and healthy employer- employee relations.
viii. It establishes mechanism for the administration of personnel services that are delegated to the
personnel department.
Thus, the role of human resource management is very important in an organization and it should not be
undermined especially in large scale enterprises. It is the key to the whole organization and related to all
other activities of the management i.e., marketing, production, finance etc.

Human Resource Management is concerned with the managing people as an organizational resources
rather than as factors of production. It involves a system to be followed in business firm to recruit, select,
hire, train and develop human assets. It is concerned with the people dimension of an organization. The
attainment of organizational objectives depends, to a great extent, on the way in which people are
recruited, developed and utilized by the management. Therefore, proper co-ordination of human efforts
and effective utilization of human and others material resources is necessary.
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HRM CHALLENGES
The most critical challenge of HR department in an organization employment-related i.e labor and skills
shortages as among the top challenges. Some of the major challenges faced by HRM are:
i. Attracting and Retaining Talent
A company's long-term success depends on its HR department's ability to find and keep top
people. Retaining staff is more important than ever. Only if a company establishes a positive
employer brand internally and externally can it keep its current workforce. High Turnover is a
major problem for HR in the orgnizations. Varied schedules, Job Shifts and low pay with lot of
work pressure are some of the major reasons of high turnover in organizations. This can only be
done if employees feel proud to work for the company. Opportunities for employees to present at
international forums, or to join academic institutions or business organizations, can be provided.
The rate at which IT companies are losing people is about twice the rate at which they are hiring,
and as a result, there is a labor shortage in the industry. The turnover problem may be largely
traced back to the exodus of workers to the United States. An IT company's software consultant
now spends an average of one year at the company. To retain employees, an organization needs
to re-evaluate the compensation pattern on a regular basis, and this will lead to an increase in
retention.

ii. Recruitment – With relatively high turnover rates, Next problem that comes with no surprise is
that of recruiting the right type of employee at the right time and at right position is a huge
challenge for the HR in organizations. Even finding candidates with the right skills to clear at
entry-level positions is a problem, thus it increases the chances of placing the right person on the
wrong job.

iii. Training- With high turnover next problem that comes for HR is training problems, as when the
rate of retention is low, management put pressure to hire new recruits on the job before even
teaching or training them how to do the job properly. Thereby putting undue pressure on new
joinee‘s and putting questions on the standards of service thereby causing undue problem on HR.

iv. Lack of Morale – In today’s competitive environment, the worker is overworked and under a lot
of stress, both mental and physical. The ability to deal with difficult conditions and maintain a
healthy body and mind is a skill that must be learned. Maintaining the morale of the employee
has become one of the major problems faced by HR. Low morale has a large impact on
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 productivity standards, which can destroy the reputation of an organizationl. The causes of low
morale can vary by business, but some of the major reasons are lack of training, unskilled
colleagues, understaffing, stress and few rewards.

v. New Organizational forms –

Today the basic challenge for HRM comes from the changing character of competitions. Now
competition is not between individual firms but between groups of firm. Most of the companies
are operating through a complex web of strategic alliances, forgings with local suppliers etc.
These relationships give birth to completely new forms of complex organizational structure, and
HRM has to cope with the need of these newly networked relations instead of more comfortable
hierarchical relationships that existed for ages in the past within the organizations.

vi. Change in Demographics of Workforce-

Nowdays changes in workforce can be easily seen for example dual career couples, working
mothers, more educated and aware workers etc. These dynamic and aware workforces have their
own needs from HRM perspective which is a true challenge to handle.

vii. Change in employee expectations-

With the changes in workforce demographics, employee expectations and attitudes have also
changed. Now the old and traditional attractions of job like job security, house, and remunerations
are not much attractive today, rather today employees are demanding empowerment and equality
with management. This is becoming a challenge for HRM to redesign the profile of workers, and
discover new methods of hiring, training, remunerating and motivating employees.

viii. Managing Workplace Diversity / Globalization –

Due to growing internationalization and globalization of business, it has impact on HRM in terms
of problems of unfamiliar laws, languages, practices, competitions, attitudes, management styles,
work ethics and more. Diversity in the workplace can be a strategic asset for an organization if it
is able to take advantage of the resulting melting pot of varied abilities. For an organization to be
successful in the global marketplace, it is imperative that it has a diverse workforce that includes
people from a variety of origins, genders, age groups, and lifestyles. More crucially, a lack of
support for diversity in the workplace might result in the loss of talented employees to their
competitors.
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 ix. Managing Cross Cultural Communication –
Individuals and groups make decisions based on their beliefs and values when they interact with
each other and the world around them. In order for cultural statements to be put into action,
company leaders must identify and broadcast the values that guide employee behavior. As
companies expand their operations outside national borders, the importance of cross-cultural
communication is growing. These cross-cultural elements, such as cultural connotations and
semantics in addition to tone and perception discrepancies can lead to communication difficulties.

x. Contribution to the success of organizations: - The biggest challenge for HR manager is to

bring coordination between employee and the management and make all employees work towards
the success of the organization in an ethical and socially responsible way. As society‘s well being
is also depended to a large extent on its organizations.

xi. Technological Advances: With the changes coming in the wake of advanced technology, new
jobs are created and many old jobs become redundant. There is a general apprehension of
immediate unemployment. In the competitive world of today, industry cannot hope to survive for
long with old technology. The problem, of unemployment resulting from modernization will be
solved by properly assessing manpower needs and training of redundant employees in alternate
skills.

xii. Changes in Political Environment: There may be greater Government‘s interference in business
to safeguard the interests of workers, consumers and the public at large. Government‘s
participation in trade, commerce and industry will also pose many challenges before
management. The Government may restrict the scope of private sector in certain areas in public
interest. It does not mean chances of co-operation between the Government and private sector are
ruled out. In fact, there will be more and more joint sector enterprises.

xiii. Changes in Legal Environment: Many changes are taking place in the legal framework within
which the industrial relations systems in the country are now functioning. It is the duty of the
human resource or personnel executive to be aware of these changes and to bring about necessary
adjustments within the organizations so that greater utilisation of human resources can be
achieved. This, indeed, is and would remain a major challenge for the personnel executive.