1) Functions of Human Resource Management (HRM)

Definition

Human Resource Management (HRM) is the process of acquiring, developing, motivating,

and retaining employees in order to achieve organizational goals efficiently. It covers all
activities from manpower planning to employee welfare and legal compliance.

Key Functions of HRM

1. Human Resource Planning (HRP)

 Forecasting future manpower requirements.

 Matching workforce supply with demand.
 Prevents shortages or surplus of manpower.
 Example: A retail chain planning to open 10 new stores calculates staffing needs for
each location.

2. Recruitment & Selection

 Identifying, attracting, and choosing the right candidates.

 Sources: campus recruitment, online portals, internal promotions.
 Example: Hiring software engineers through LinkedIn job postings.

3. Training & Development

 Enhancing skills, knowledge, and competencies.

 Includes induction, job training, soft skills programs, leadership workshops.
 Example: Customer care executives attending communication skill workshops.

4. Performance Appraisal

 Measuring employee performance against standards.

 Feedback, promotions, increments, and corrective measures are based on appraisals.
 Example: Sales staff performance is reviewed quarterly based on sales targets.

5. Compensation & Benefits

 Designing fair salary structures, incentives, bonuses, insurance, and allowances.

 Ensures competitiveness and fairness.
 Example: Offering retention bonuses to reduce attrition in key positions.

6. Employee Welfare & Safety

 Providing health, safety, and comfort to employees.

 Includes canteens, restrooms, medical facilities, safety training.
 Example: Manufacturing companies conducting fire safety drills.
7. Industrial Relations

 Maintaining peaceful relations between management and workers/unions.

 Negotiating settlements and resolving disputes.
 Example: Preventing strikes through timely wage negotiations.

8. Legal Compliance

 Adhering to labor laws and government regulations.

 Avoids penalties and legal disputes.
 Example: Ensuring equal pay for equal work as per law.

Significance of HRM Functions

 Enhances productivity and efficiency.

 Improves employee satisfaction and loyalty.
 Builds a strong organizational culture.
 Maintains legal and ethical standards.

💡 Layman’s Example: HRM is like managing a cricket team — you select the best players,
train them, monitor their performance, reward them, keep them fit and happy, and ensure they
follow the rules of the game.
2) Evolution of HRM & Growing Importance
Stages of Evolution

1. Labor Welfare Stage (Early 1900s)

o Focus: Worker well-being, health, and safety.
o Welfare officers appointed in factories.
o Example: Providing restrooms and clean drinking water to workers.
2. Personnel Management Stage (1920s–1950s)
o Focus: Administrative tasks like hiring, record-keeping, payroll.
o Employee relations handled by personnel officers.
o Example: Maintaining attendance registers and wage sheets.
3. Human Resource Management Stage (1960s–1980s)
o Focus shifted to employee motivation, development, and integration with
organizational goals.
o Example: Introducing structured training programs and career development.
4. Strategic HRM (1990s–2010s)
o HR became a business partner in strategy formulation.
o Use of performance management systems and talent retention plans.
o Example: Linking HR goals with company expansion plans.
5. Digital HR / Modern HRM (2010s–Present)
o Technology-driven HR using AI, HRIS, analytics.
o Remote work, diversity & inclusion, and employee engagement are priorities.
o Example: Using AI tools for screening resumes

Growing Importance in Modern Organizations

 Globalization – Need to manage diverse and multicultural teams.

 Technology Adoption – Digital tools make HR more efficient and data-driven.
 Talent Shortage – Skilled workforce is in high demand.
 Employee Engagement – Focus on retaining top talent through motivation and
culture.
 Compliance – Stricter labor laws and ethical requirements.

💡 Layman’s Example: HR has evolved from a “file keeper” to a “business partner” —

earlier it was about attendance and salary, now it’s about strategy, technology, and people
development.
3) Types of HR Audits
Definition

HR Audit is a systematic review of HR policies, procedures, documentation, and systems to

ensure compliance and efficiency.

Types

1. Compliance Audit
o Ensures adherence to labor laws, safety regulations, and policies.
o Example: Checking if minimum wages are paid.
2. Best Practices Audit
o Compares HR practices with industry leaders to identify improvement areas.
o Example: Adopting flexible work hours after benchmarking with top
companies.
3. Strategic Audit
o Checks if HR strategies align with business objectives.
o Example: Evaluating if talent development supports expansion plans.
4. Function-Specific Audit
o Reviews specific HR functions like recruitment, training, or performance
management.
o Example: Assessing the effectiveness of the onboarding process.
5. Culture Audit
o Studies employee satisfaction, values, and workplace environment.
o Example: Employee surveys to measure engagement levels.

💡 Layman’s Example: HR audit is like a car service — sometimes you check legal safety,
sometimes fuel efficiency, sometimes comfort and design.
4) Major Challenges Faced by HR Managers in Today’s
Dynamic Business Environment
1. Talent Acquisition & Retention

 Shortage of skilled professionals in competitive markets.

 High employee turnover due to better offers from competitors.
 Example: IT companies struggling to retain experienced developers because of global
remote job opportunities.

2. Technological Changes

 Rapid adoption of AI, automation, and HR software.

 Need to train employees on new tools quickly.
 Example: Transitioning to cloud-based HRIS systems.

3. Remote & Hybrid Work Management

 Ensuring productivity, communication, and engagement in virtual setups.

 Managing time zones and flexible schedules.
 Example: A multinational company coordinating meetings between India and the
USA.

4. Diversity & Inclusion

 Building an inclusive culture for multicultural and multigenerational teams.

 Avoiding bias in hiring and promotions.
 Example: Creating equal opportunities for women in leadership roles.

5. Compliance with Labor Laws

 Keeping up with changing labor regulations in different countries/states.

 Example: Adhering to new maternity leave rules or minimum wage updates.

6. Employee Well-being & Mental Health

 Addressing stress, burnout, and work-life balance.

 Example: Offering wellness programs and counseling sessions.

💡 Layman’s Example: HR managers are like jugglers — they must keep many balls (laws,
technology, talent, well-being, diversity) in the air without dropping any.
5) Significance of Human Resource Management
1. Improves Productivity

 Ensures the right person is in the right job.

 Reduces wastage of skills and resources.

2. Employee Satisfaction

 Good HR practices keep employees motivated and loyal.

 Reduces turnover.

3. Strategic Advantage

 Skilled and motivated workforce becomes a competitive edge.

 Helps the company adapt to changes faster.

4. Legal Compliance

 Prevents costly penalties and disputes.

 Builds a reputation for fairness.

5. Positive Work Culture

 Encourages teamwork, trust, and innovation.

💡 Layman’s Example: HRM is like the oil in a machine — it keeps all moving parts
(employees) working smoothly together.
6) HR Policies & Significance of SOPs
HR Policies

 Definition: Guidelines and rules for managing employees fairly and consistently.
 Examples: Leave policy, code of conduct, work-from-home policy.

Significance

 Ensures fairness and equality.

 Creates clarity and avoids confusion.
 Supports legal compliance.

Standard Operating Procedures (SOPs)

 Definition: Step-by-step instructions on how to implement policies.

 Significance:
o Maintain consistency.
o Reduce errors.
o Improve efficiency.
o Easy training for new staff.

💡 Layman’s Example: Policy = "Employees must wear helmets."

SOP = Instructions on how to issue helmets, record them, and check compliance.
7) HR Responsibilities of Line Managers
1. Recruitment & Selection

 Participate in interviewing and selecting team members.

2. Training & Development

 Provide on-the-job training and mentorship.

3. Performance Appraisal

 Monitor daily work and provide performance feedback.

4. Discipline & Compliance

 Ensure employees follow rules and company standards.

5. Communication

 Act as a link between HR and employees.

6. Identifying Talent Needs

 Recommend training or promotions based on performance.

💡 Layman’s Example: In a restaurant, the head chef (line manager) trains junior chefs,
assigns tasks, ensures kitchen rules are followed, and reports to HR.
8) Role & Structure of HR Department and
Complementary Role of Line Managers
Role of HR Department

 Workforce planning.
 Recruitment & onboarding.
 Training & development.
 Compensation & benefits management.
 Legal compliance.
 Employee relations.

Structure

1. HR Director/Manager
2. Recruitment Team
3. Training & Development Team
4. Compensation & Benefits Team
5. Employee Relations & Compliance Team

Complementary Role of Line Managers

 Implement HR policies at the departmental level.

 Provide real-time feedback to HR.
 Identify and resolve team-level issues.

💡 Layman’s Example: HR is the architect who designs the building; line managers are the
site supervisors ensuring construction follows the plan.
9) Challenges of HRM
(Extended view beyond Q4)

1. Globalization

 Managing a workforce across multiple countries and cultures.

2. Technological Disruption

 Need for constant upskilling.

3. Changing Workforce Demographics

 Managing millennials, Gen Z, and senior employees together.

4. Legal & Ethical Issues

 Handling discrimination, harassment, and equal pay issues.

5. Economic Uncertainty

 Layoffs, restructuring, and budget constraints.

💡 Layman’s Example: HRM today is like steering a ship in rough waters — dealing with
storms (laws), waves (technology), and changing winds (global trends).
10) Human Resource Accounting (HRA)
Definition

The process of identifying, measuring, and reporting the value of human resources in
monetary terms.

Significance

 Recognizes employees as assets.

 Measures return on investment in training.
 Helps in budgeting for talent.
 Supports strategic HR planning.

Example

Calculating the cost of hiring, training, and retaining a top sales executive and comparing it to
the revenue they generate.

💡 Layman’s Example: Just like valuing a cricket player’s worth based on performance and
potential, HRA measures an employee’s value to the company.

11) Human Resource Information System (HRIS)

Components

1. Employee database.
2. Payroll system.
3. Recruitment module.
4. Performance management.
5. Training records.

Benefits

 Faster decision-making.
 Reduced paperwork.
 Accurate and up-to-date information.
 Supports strategic HR planning.

How HRIS Supports Strategic Decisions

 Provides analytics for workforce trends.

 Helps in succession planning.
 Predicts training needs based on performance data.

💡 Layman’s Example: HRIS is like a smartphone for HR — it stores all contacts,

schedules, and tools in one place for quick access.