Human Resource Management
Human Resource Management
In every organization, there are several resources which affect the organizational performance. Also, the organization is to manage normally four types of assets namely (i) physical assets such as buildings, land, and plant and equipment, etc., (ii) financial assets such as cash, funds, loans, financial resources, shares, and financial securities etc., (iii) intangible assets such as specialized research capabilities, patents, information systems, designs, and operating processes etc., and (iv) human assets such as individuals with knowledge, education, skills, training and proficiency, talents, capabilities, experience, professional expertise, and relationships etc. The first three are frequently being referred as physical resources.
‘People are the most valuable asset for the organization’ is a phrase which no member of any senior management team disagrees with. Yet, the reality for several organizations is that their people remain (i) under-valued, (ii) under-trained, (iii) under-utilized, (iv) poorly motivated, and (v) perform well below their true capability.Every organization is essentially a combination of physical resources and human resource. Physical resources are pre-arranged by the organization for the production. Human resource, on the other hand, refer to the knowledge, education, skills, training and proficiency of the employees of the organization. All organizational resources are important for achieving the objectives of the organization. In fact, the effectiveness of the organization lies in the judicious blending of these two types of resources to achieve optimum competency.
The effective utilization of human resource is a complex task. It needs greater foresight and strategic consideration on the part of the management. For example, attracting the most qualified employees, matching them to the jobs for which they are best suited and retaining them within the organization are significant for the success of the organization. But this calls for closer coordination and better understanding between the management and the employees. However, several organizations are too large to permit close contact between the management and the employees. This is where human resource managers act as a crucial link between the management and the employees. The distinct features of human resource are described below.
Human resource is the only asset which appreciates over a period while physical resources just depreciate with years. Further, human resource alone can produce an output which is higher than the input. This is possible because of the creative skills of human beings. Creative thinking is the process of predicting, envisioning, and then inventing an idea, concept, or insight along innovative and alternative lines. People in the organization are the only basis for such creativity and there is no obvious limit to their imagination.
Organizations need human resource of different types to operate all physical assets. Hence, it provides utility value to each of the physical assets. In fact, the real worth of a physical asset depends on the quality and calibre of the people working with it. An incompetent work=force spoils the physical assets available to it.
There is a growing realization that the flexibility of an organization depends more on people than on any technical factors. Modern equipment ensures quality and cost competitiveness but the operational flexibility, which is core to product modification and innovation, is provided only by the employees. This is so, since humans alone can grasp the situation adequately and respond suitably.
When the term ‘human resource management’ (HRM) first became popular, there was criticism of it since it referred to people as resource, as if it was any other factor of production to be leveraged into economic value. However, Boxall and Purcell regard this as a mis-understanding of the term. They suggest that it is not the people who are referred to as ‘human resource’, rather their knowledge, skills, and energies which they use in their daily roles are human resource. On the contrary, people are independent agents who possess human resource, which are the talents they can deploy and develop at work and which they take with them when they leave the organization.
Several people in different organizations do not like how their HRM departments operate. Some argue that HRM is at best a necessary evil, at worst a bureaucratic force which routinely enforces unnecessary detailed rules, resists creativity, and impedes needed changes. HRM is necessary of course, especially because of the large number of statutory regulations enacted over the past few decades.
HRM has also been widely criticised for reasons beyond its terminology. The main reservations are summed up by Armstrong and Taylor as ‘HRM promises more than it delivers and its morality is suspect’. In respect of the first point, HRM has been variously (and inconsistently) described as overly prescriptive, uncertain and imprecise, and simplistic. In respect of the second point, it has been claimed that human resource over-emphasizes organizational needs and that it is manipulative in seeking to shape human behaviour at work.
However, much of the criticism has subsided. According to Armstrong, this is since ‘HRM is no longer governed by the original philosophy, if it ever was’. As per Storey, ‘HRM in its generic, broad and popular sense simply refers to the system of people management’ which pertains in an organization. Elsewhere Armstrong comments, ‘HRM is here to stay, even if it is applied diversely or only used as a label to describe traditional personnel management practices. HRM has largely become something that organizations do rather than an aspiration or a philosophy, and the term is normally in use as a way of describing the process of managing people’.
The capabilities of managers are tested the way they determine managing of the human assets. Human resource is heterogeneous. It consists of several different individuals, each of whom has a unique personality, a combination of different emotional responses to different stimuli and different values, attitudes, motives, and modes of thought. In the present-day scenario, employees themselves, determine what they contribute. If they are motivated, they work for the organization more efficiently and effectively.
Further, human beings behave in widely different and complicated ways. Their reactions to promises, praise, or criticism, for example, can be quite different. It is very difficult to predict their behaviour especially in an organization where they work in-groups. Their behaviour is neither consistent nor readily predictable. Also, the present-day employees are better educated, possess higher skills, have more sophisticated technology available for their use, and enjoy higher standards of living than previous generations.
Hence, it is to be recognized by the manager that individuals, not organizations, create excellence. Recognizing the importance of the human element in the production process, PF Drucker had remarked that ‘man, of all the resources available to man, can grow and develop’. The issue of establishing the right climate to maximize employee motivation and commitment is still with the management.
Several organizations truly bring human resource into the realm of organizational strategy. HRM is a special part of the organization, which means viewing the people and their talents as an opportunity for creating greater organizational competitive advantages. But in several organizations, this opportunity is seen by the management and employees as wasted, and that is why, HRM is not highly respected in such organizations. Clearly, HRM needs to change even more to overcome this image.
The rate of change being faced by the organizations has never been greater and organizations are to absorb and manage change at a much faster rate than in the past. In order to implement a successful organizational strategy to face this challenge, organizations, large or small, are to ensure that they have the right people capable of delivering the strategy.
The market place for talented and skilled people is competitive and expensive. Taking on a new employee can be disruptive to the existing employees. Also, it takes time to develop ‘cultural awareness’, product / process / organization knowledge and experience for the new employees.
Since organizations vary in size, aims, functions, complexity, construction, the physical nature of their product, and appeal as managements, so do the contributions of HRM. But, in the majority of the organizations, the ultimate aim of HRM is to ‘ensure that at all times the organization is correctly staffed by the right number of people with the skills relevant to the organizational needs’, i.e., neither over-staffed nor under-staffed in total or in respect of any one discipline or work-grade.
Human resource is the most important asset of an organization. Appropriate and skilled human resource is necessary for ensuring the production of high-quality products and for implementing more efficient and effective production processes based on new technologies. Pro-active human resource management is necessary for achieving this change and to allow the organization to meet the challenges today and in future.
Evolution and development of HRM – Before 1900, improving the working life of individuals was a major concern of reformers. Some employees attempted to start unions or strike for improved conditions. However, organized employee management as a specialized function in organizations began its formal emergence shortly before 1900.
Before that time, most hiring, firing, training, and pay-adjustment decisions were made by individual supervisors. Also, the scientific management studies conducted by Frederick W. Taylor and others, beginning in 1885, helped management identify ways to make work more efficient and less fatiguing, hence increasing worker productivity.
As organizations grew larger, several managerial functions such as purchasing and personnel began to be performed by specialists. The growth of organizations also led to the establishment of the first personnel departments around 1910. Work by individuals such as Frank and Lillian Gilbreth dealt with task design and efficiency. The Hawthorne studies, conducted by Elton Mayo in the mid-1920s, revealed the impact of work-groups on individual employees. Ultimately, these studies led to the development and use of employee counselling and testing in industry.
In the 1930s, the passage of several major statutory regulations led to the growth of employee unions. The importance of collective bargaining and union / management relations following the rise of the employee unions to power in the 1940s and 1950s expanded the responsibilities of the personnel area in several organizations, especially those in manufacturing, utilities, and transportation sectors. Such work as keeping pay-roll and retirement records, arranging share-holder visits, managing relations, and organizing organizational picnics was frequently the major role of personnel departments. The role of the human resource department in the organization as an employee function to support operational (line) departments expanded during this period, and line / employee issues grew to influence human resource departments in the following decades.
Increased statutory requirements and constraints arising from the social legislation of the 1960s and 1970s forced dramatic changes in the human resource departments of the majority of the organizations. Human resource departments had to become much more professional and more concerned about the legal ramifications of policies and practices. Also, organizations took a new look at employee involvement and quality of work as a result of concerns about the impact of automation and job design on the employee productivity.
During the 1980s, the strategic role of HRM became necessary as organizations reduced employees, closed plants, or restructured. Out-placing employees and retaining the rest became prime concerns of human resource departments. Containing the costs of health-care benefits also grew in importance. During the 1990s, organizational restructuring continued. A study of human resource executives involved in re-engineering the HRM in their organizations found that the traditional human resource function began shifting its emphases.
HRM is pro-active rather than reactive, i.e., always looking forward to what needs to be done and then doing it, rather than waiting to be told what to do about recruiting, paying, or training people, or dealing with employee relations issues as they arise. The techniques for the application of HRM include several familiar functions of personnel managers, such as man-power planning, selection, performance appraisal, salary administration, training, and management development. Management development programmes are special programmes designed to improve communication systems, involvement, commitment, and productivity. As Fig 1 indicates, the human resource managers of the future are required to be more strategic and pro-active.
Fig 2 Shifts in HRM
HRM is a production model approach to personnel management. The HRM model is characterized as being employee-oriented with an emphasis on the maximization of individual skills and motivation through consultation with the workforce so as to produce high levels of commitment to the organizational strategic goals. It is a resource to be used to its fullest capacity. It is an asset to be invested in.
HRM is concerned with both the structure of work in the organization and with all the related employment practices which are needed to carry out the work. HRM is not simply about human resource or ‘people practices’, it is about the management of work and people in the organization. Managing people includes both individual and collective dimensions. The traditional personnel management is non-strategic, separate from the organizational operations, reactive, short-term, and constrained by a limited definition of its role as dealing with mostly unionized and low-level employees. The major attention of traditional personnel function is on personnel administration or management while the major attention of HRM is on developing people and their competencies. If personnel management is curative, HRM is preventive. The key distinguishing feature of HRM is its evolving strategic role. The management of human resource is more of an art than a science. However, in practice, it is an ‘art’ full of pitfalls, judgment calls, and learning from past mistakes.
Changing demographics and increasing shortages of employees with the needed capabilities have grown in importance. Related to the demographic shifts, HRM has to address the issues and implications of work-force diversity. Both the outsourcing of human resource activities and the computerization of the administrative aspects of human resource activities, even in small organizations, have received attention as well. Finally, growth in issues involving employee rights is affecting how the human resource activities are managed.
The future is going to see the inter-related phenomena emerging, posing challenges to the corporate world and culminating in Olympian competition. These inter-related phenomena include (i) border-less world, (ii) diversity, and (iii) knowledge power.
The cross-cultural, cross-border mingling has resulted in the creation of a new class of people (global citizens) with global attitudes, tastes, and networks. Since it unleashes multiple variables, the borderless world precludes immense complexity in the environment, in inter-organizational relationships, in modes of conducting business and in socio-cultural diversity.
One of the important duties of the modern human resource managers is to get things done through people. They have to bring employees into contact with the organization in such a way that the objectives of both the organization and the employees are achieved. They are to be interested in the people, the work, and the achievement of assigned objectives. To be effective, they are to balance their concerns for people and work. In other words, they are to know how to utilize human as well as non-human resources while translating goals into action.
HRM emerged as a concept in the 1980s. The term HRM has largely taken over from that of personnel management, which took over from previous terminology including labour management and welfare management. In the 1980s, against a backdrop of economic recession and increased pressures on the organizations because of globalization and the accelerated pace of change brought about by technological developments, a number of scholars began to think about people in organizations from a different perspective. A combination of this thinking evolved into what became known as HRM. Rebranding personnel management quickly became popular, but several organizations had little awareness of the theory behind the concept.
The differences between personnel management and human resource management appear to be substantial but they can be seen as a matter of emphasis and approach rather than one of substance. As Hendry and Pettigrew put it, HRM can be perceived as a ‘perspective on personnel management and not personnel management itself’.
People who make up the human resource of the organization are unique and they can make or break the organization, depending upon their level of commitment, contribution, and cooperation. Hence, it is relevant to know the intricacies of the term HRM.
HRM is a process of bringing people and organization together so that the goals of each are met. It is that part of the management process which is concerned with the management of human resource in the organization. It tries to secure the best from people by winning their whole-hearted cooperation. In short, it can be considered as the art of procuring, developing, and maintaining competent employees to achieve the goals of the organization in an effective and efficient manner.
HRM, in the sense of getting things done through people, is a necessary part of the responsibilities of every manager, but several organizations find it advantageous to establish a specialist division to provide an expert service department dedicated to ensuring efficient functioning of human resource in the organization.
The economic, technical, and social changes in society pose challenges and possibilities for the organization. There is accelerated development of the technology, and the market has become much more global. There is no evidence that these developments and changes are not going to continue in future. Hence, organizations need to be active in developing their ways of production to take advantage of new technologies. The demand for products and services is also changing, and the customers are asking for better quality products timely.
The modernization of the production and services is not only of organizational and technical nature but relies also on the development of human resource and the skills and attitudes of the employees at all levels. HRM and training are crucial for the modernization of the organizations, where the man-power costs constitute a substantial percent of the total cost.
The development of human resource and change management is part of and has to go along with the modernization of the production and services, since it cannot be implemented afterwards. In order to successfully implement the changes, which the organizations are confronted with, it is important that human resource not only adapts passively but actively, and participates and contributes to the process of modernization. In several organizations, this calls for a change, where HRM needs to have an active role in the corporate strategy and planning.
The development of technologies and communication facilities has sprung up and are reforming the Land-scape in which products are being produced. The challenge for the organizational management is to take advantage of these changes and be sufficiently flexible and agile to provide products as per future needs of the customers at acceptable cost. This underlines the need to develop a culture of change within the organization, encouraging innovation in terms of sources, processes, and products and the need to change the way that the organization and its employees carry out the work. It also recognizes that this is to be reflected in changing human resource profiles and reallocation of resources.
Organizations are met with a number of challenges which directly or indirectly affect the role and priorities of HRM. The challenges which an organization is going to face in the coming years include (i) meeting future customer demands of products and services, (ii) responding to increasing competition from competitors, (iii) budget restrictions and the need to develop more efficient organization of work processes, (iv) modernization of production and services, (v) transition from production to knowledge working, and (v) attracting the right employees from job market.
In simple sense, HRM means employing people, developing them, utilizing, maintaining and compensating their services in tune with the job and organizational requirements with a view to contribute to the goals of the organization, individual employee, and the society. Different people have defined HRM with varying degrees of complexity. Some of the definitions of HRM are given below.
HRM can be defined as ‘the field of management which has to do with planning, organizing, directing and controlling the functions of procuring, developing, maintaining and utilizing a work-force, such that the (i) objectives for which the organization is established are attained economically and effectively, (ii) objectives of all levels of personnel are served to the highest possible degree, and (iii) objectives of society are duly considered and served’.
‘HRM is concerned with the most effective use of people to achieve organizational and individual goals. It is a way of managing people at work, so that they give their best to the organization.’ (Ivancevich and Glueck)
‘Human resource management is a strategic, integrated and coherent approach to the employment, development and well-being of the people working in organizations’. (Armstrong)
‘Human resource management is the process through which management builds the work-force and tries to create the human performances that the organisation needs’. (Boxall and Purcell)
Human resource is ‘a whole consisting of inter-related, inter-dependent and interacting physiological, psychological, sociological and ethical components’. (Michael J. Jucius)
‘From the national point of view, human resources are knowledge, skills and attitude obtained in the population; while for individual enterprises, they represent the total of the abilities, knowledge and skills of its employees’ (Leon C. Megginson)
‘The process of analysing and managing an organization’s human resource needs to ensure satisfaction of its strategic objectives’. (Hellriegel, Jackson, Slocum and Staude)
‘The policies and practices involved in carrying out the “people” or human resources aspects of a management position, including recruitment, screening, training and appraising’ (Dessler, 2007).
‘Personnel management, or say human resource 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 social objectives are accomplished’. (Edwin B. Flippo)
‘Personnel management is that part of management (which is) concerned with people at work and with their relationships within an enterprise. Its aim is to bring together and develop into an effective organization the men and women who make up an enterprise and, having regard for the well-being of the individual and of working groups, to enable them to make their best contribution to its success’. (Institute of Personnel Management, IPM)
‘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 are essential to achieving organizational objectives. This is true, regardless of the type of organization—government, business, education, health, recreation, or social action’. (David A. Decenzo and Stephen P. Robbins)
‘Human resource management is a series of integrated decisions that form the employment relationship; their quality contributes to the ability of the organizations and the employees to achieve their objectives’ (George T. Milkovich and John W. Boudreau)
All the definitions of HRM point to some of its key characteristics which are given below.
Diversity of HRM – It is difficult to identify universal characteristics of HRM. Several models exist and practices vary across organizations, frequently corresponding to the conceptual version of HRM in only a few respects.
Strategic nature of HRM – Perhaps the most significant feature of HRM is the importance attached to strategic integration. This needs that human resource planning is to be normally consistent with the organization planning.
Commitment-orientated nature of HRM – The notions of mutuality and high commitment under-pin HRM. If all involved in the organization perceive themselves to be engaged in a mutual endeavour, they are likely to be more committed and hence to perform at a higher level.
People and their talents regarded as ‘human capital’ – One of the original foundations of HRM is the notion that people and their collective skills, abilities, and experiences endeavour are to be regarded as a valuable asset and source of competitive advantage rather than a cost.
Unitarist rather than pluralist, individualist rather than collective in its approach to employee relations -The theory of HRM contends that employees share the same interests as the management and also emphasises the importance of the relationship between the organization and the individual employee rather than any group or representative body.
HRM as a management-driven activity – Notwithstanding the increase in the number of human resource managers and the size of human resource departments, HRM is described as ‘a central, senior management-driven, strategic activity which is developed, owned, and delivered by management as a whole to promote the interests of their organization’. In the early days of HRM, it was described as the rediscovery of management prerogative and it was said that ‘HRM is too important to be left to the personnel managers’. More recently, there has been considerable emphasis on the role of line managers in delivering on the objectives of HRM.
An emphasis on the needs of the organization and business goals and values – The concept of HRM has been largely based on a management and organizational orientated philosophy. While the interests of the employees of the organization are recognized, they are subordinated to those of the organization. However, in this area the theory of HRM is evolving. While clearly human resource needs to support the achievement of organization objectives, there is a growing body of opinion that there needs to be more to HRM than that. In particular, human resource needs to have regard for the interests of all stake-holders and the values and standards which the society expects to be upheld in the work-place.
The Harvard school has suggested that HRM had two characteristic features namely (i) line managers accept more responsibility for ensuring the alignment of competitive strategy and personnel policies, and (ii) personnel has the mission of setting policies which govern how personnel activities are developed and implemented in ways which make them more mutually reinforcing. The Harvard framework for HRM is shown in Fig 2.
Fig 2 The Harvard framework for HRM
The different features of HRM include (i) it is pervasive in nature as it is present in all organizations, (iii) its focus is on results rather than on rules, (iv) it tries to help employees develop their potential fully, (v) it encourages employees to give their best to the organization, (vi) it is all about people at work, both as individuals and as groups, (vii) it tries to put people on assigned jobs in order to produce good results, (viii) it helps an organization meet its goals in the future by providing for competent and well-motivated employees, (ix) it tries to build and maintain cordial relations between people working at different levels in the organization, and (ix) it is a multi-disciplinary activity, utilizing knowledge and inputs drawn from psychology, and economics etc.
Scope of HRM – The scope of HRM includes (i) the personnel aspect, (ii) the welfare aspect, and (iii) the employee relations aspect. These three aspects are explained below.
The personnel aspect is concerned with man-power planning, recruitment, selection, placement, transfer, appraisal, promotion, education, training and development, lay-off and retrenchment, remuneration, incentives, and productivity etc.
As the welfare aspect is concerned, it deals with working conditions and amenities such as canteens, creches, rest and lunch rooms, housing, transport, medical assistance, education, health and safety, and recreation facilities etc.
The employee relations aspect covers employee-management relations, union-management relations, joint consultation, collective bargaining, grievance and disciplinary procedures, and settlement of disputes etc.
The prime objectives of HRM include (i) to help the organization reach its goals, (ii) to ensure effective utilization and maximum development of human resources, (iii) to ensure respect for human beings, (iv) to identify and satisfy the needs of individuals, (v) to ensure reconciliation of individual goals with those of the organization. (vi) to achieve and maintain high morale among employees, (vii) to provide the organization with well-trained and well-motivated employees, (viii) to increase to the fullest, the employee job satisfaction and self-actualization, (ix) to develop and maintain a quality of work-life, (x) to be ethically and socially responsive to the needs of the society, (xi) to develop overall personality of each employee in its multi-dimensional aspect, (xii) to improve employee capabilities for performing the present job, (xiii) to equip the employees with precision and clarity in transaction, and (xiv) to inculcate the sense of team spirit, team work, and inter-team collaboration. These objectives can be defined under four heads as given below and shown in Fig 3.
Fig 3 Objectives of HRM
Societal objectives – The societal objectives are socially and ethically responsible for the needs and challenges of society. While doing so, they have to minimize the negative impact of such demands upon the organization. The failure of organizations to use their resources for the benefit of the society in ethical ways can lead to restrictions.
Organizational objectives – The organizational objectives recognize the role of HRM in bringing about organizational effectiveness. HRM is not an end in itself. It is only a means to assist the organization with its primary objectives. Simply stated HRM exists to serve the rest of the organization.
Functional objectives – Functional objectives try to maintain the department’s contribution at a level appropriate to the organizational needs. Human resource is required to be adjusted to suit the organizational demands. The department level of service is to be tailored to fit the organization it serves.
Personal objectives – Personal objectives assist employees in achieving their personal goals, at least insofar as these goals improve the individual’s contribution to the organization. Personal objectives of employees are to be met if they are to be maintained, retained, and motivated. Otherwise, employee performance and satisfaction can decline giving rise to employee turnover.
Functions of HRM – The different functions of HRM are given below. Fig 4 shows HRM model showing its various functions.
Fig 4 HRM model showing various functions
Manpower planning – The basic human resource planning strategy includes staffing and employee development. The consequences of not under-manning are severe and costly. Under-manning results into several losses consisting of economies of scale and specialization, orders, customers and profits. On the other hand, over-manning is wasteful and expensive, if sustained, and it is costly to eliminate because of statutory regulations in respect of redundancy payments, consultation, and minimum periods of notice, etc. In fact, over-manning reduces the competitive efficiency of the organization. Planning employee levels needs that an assessment of present and future needs of the organization be compared with present resources and future predicted resources. Appropriate steps then be planned to bring demand and supply into balance. Under this function, the number and type of employees needed to accomplish organizational goals are determined. Research is an important part of this function since planning needs the collection and analysis of information in order to forecast availability of human resources and to predict the future requirement.
Human resource policies and procedures – Human resource policy can be defined as a set of rules which define the manner in which the organization deals with a human resource or personnel-related matter. A human resource policy is to reflect good practice, be written down, be communicated across the organization, and is to adapt to changing circumstances. The major steps involved in human resource policy are (i) identification of the need for a policy, (iii) collection of information, (iv) policy drafting and review, (v) management support, (vi) communication of the policy, and (vii) implementation of the policy. Formulation of human resource policy and procedures is a very important function of HRM. The policy and procedures are necessary so that the employees get fair treatment. Normally the policy and procedures are published in a consolidated form as HRM manual.
Communication – HRM facilitates communication between management and the employees. It ensures that the communication lines are always opened so that employees remain motivated all the times to give their best. It also facilitates external communication so that the organization has a positive image with its stake-holders.
Job analysis – It is the process of describing the nature of a job (qualification, skills and experience etc.) and specifying the human requirements to perform it. The product of the process of job analysis process is the job description which spells out work duties and activities of the employees. Job descriptions are vital source of information since job content has a hign influence on human resource programmes and practices.
Staffing – It includes the selection and the recruitment of the human resource for the organization. Human resource planning precedes the actual selection of people for positions in the organization. As per this function HRM ensures the selection and recruitment of those persons who meet the needs of the job as well as the organization as determined by the job description.
Orientation – It is the first step towards helping a new employee to adjust himself to the new job as well as to the organization. It is a method to acquaint a new employee with particular aspects of his new job, including pay and other benefits, working hours, and the rules and expectations of the organization from him.
Education, training, and development – In general, education is ‘mind preparation’ and is carried out remote from the actual work area. The function of training and development is to provide the employees skills and knowledge to perform the jobs effectively. Training is the systematic development of the attitude, knowledge, and skill pattern needed by a person to perform a given task or job adequately. The development is ‘the growth of the individual in terms of ability, understanding, and awareness’. Within the organization all three are necessary. Under this function, training programmes are also organized for experienced employees whose jobs are undergoing change. Management development programmes are also arranged for preparing employees for higher level responsibilities within the organization.
Employee evaluation – The organization is required to constantly take stock of its work-force and to assess its performance in existing jobs. Under this function, employee performance is monitored to ensure that it is at acceptable levels. Human resource professionals are normally responsible for developing and administering performance appraisal systems, although the actual appraisal of employee performance is the responsibility of supervisors and managers. Besides providing a basis for pay, promotion, and disciplinary action, performance appraisal information is necessary for employee development.
Career planning – It is the activity of HRM which includes assessing the potential of an individual employee for growth and advancement in the organization and planning for the same.
Compensation – Human resource personnel provide a rational method for determining how much employees are to be paid for performing certain jobs. Since compensation is a major cost to the organization, it is a major consideration in human resource planning. Compensation affects the staffing as well as it is an important incentive in motivating employees to higher levels of job performance and to higher paying jobs within the organization.
Benefits – These are another form of compensation to employees other than salary for work performed. As HRM function, employee benefits share several characteristics of the compensation function. Benefits include items which are provided as per the statutory provisions as well as those items which are offered at the discretion of the management.
Employee motivation – For retaining good employees and to encouraging them to give of their best while at work needs attention to the financial and psychological and even physiological rewards offered by the organization as a continuous exercise.
Health, safety, and welfare – These are the important activities of HRM. These activities are important so that the employees not only remain with the organization but also give their best output to the organization. HRM assists employees in achieving their personal goals, at least insofar as these goals improve the contribution of the individual to the organization. Personal objectives of employees are to be met if they are to be maintained, retained, and motivated. Otherwise, employee performance and satisfaction can decline, and employees can leave the organization. In case of welfare activities, they can be of varied nature and can include loans to the needy to counselling in respect of personal problems.
Employee relations – Good employee relations, while a recognizable and legitimate objective for an organization, are difficult to define since a good system of employee relations involves complex relationships between (i) employees (and their informal and formal groups), (ii) management (and their managers and formal organization), and (iii) statutory authorities. It is the interaction with employee union. Under this function the responsibility of HRM primarily involves keeping a cordial relationship with the employee unions and negotiating with the unions regarding wages, service conditions, and resolving disputes and grievances well in time to prevent industrial disturbances and strikes.
Record keeping – Maintenance of the record of employees is the oldest and most basic function of HRM. This function involves recording, maintaining, and retrieving employee related information for a variety of purposes. Records which are to be maintained include application forms, qualification, and training records, performance appraisal records, health and medical records, employment history (jobs held, promotions, and transfers etc.), seniority lists, earnings and hours of work, leave records, rewards and achievements and other employee data. Complete and up-to-date employee records are necessary for efficient HRM. More than ever employees today have a high interest in their personnel records. They want to know what is in them, why certain statements have been made, and why records have or have not been updated.
Grievance handling and redressal – Grievance procedures and redressal are important functions of HRM for improving the employee morale.
Employee satisfaction survey – Through a well-designed attitude survey, employee opinions is gathered on wages, promotions, welfare services, working conditions, job security, leadership, employee relations, and similar aspects. These surveys provide useful input to the management for decision making.
Managing change – HRM has to play an important role in managing the change which the organization has to undergo because of the changing external environment. Human resource personnel are to act as change agent and to facilitate the change so that it takes place smoothly.
Organization development – HRM plays a major role in the development of organizational culture and the organizational strategies. HRM relates people and work so that the organizational objectives are achieved effectively and efficiently. HRM achieves the improvement in the organizational performance through improvement in the employee performance.
Societal responsibility – HRM is to ensure that the organization is socially responsible to the needs and challenges of the society while minimizing the negative impact of such demands upon the organization. It also ensures that the organization complies with the laws and regulations of the land and meets the statutory requirements.
In addition to managing internal functions of HRM, there are outside forces which can affect HRM in the organization. Outside forces, or external factors, are those things for which the organization has no direct control over, however, they can be the things which can positively or negatively impact the organizational working. External factors can include (i) globalization and off-shoring, (ii) changes in the statutory regulations, (iii) health-care costs, (iv) employee expectations, (v) diversity of the work-force, (vi) changing demographics of the work-force, (vii) a highly educated work-force, (viii) lay-offs and down-sizing, (ix) technology used for HRM, and (x) increased use of social networking to distribute information to employees. External factors affecting HRM can be categorized in four categories as shown in Fig 5.
Fig 5 External factors affecting HRM
HRM is a strategic approach to the acquisition, motivation, development and management of the human resources of the organization. It is a specialized field which attempts to define an appropriate corporate culture, and introducing programmes which reflect and support the core values of the organization and ensure its success.
Broadly, there are three meanings attached to the concept of HRM. In the first place, employees of the organization are regarded as a valuable source, implying that there is a need to invest time and effort in their development. Secondly, they are human resource which means that they have their own special characteristics and, hence, cannot be treated like material resource. The approach focuses on the need to humanize organizational life and introduce human values in the organization. Thirdly, human resource does not merely focus on employees as individuals, but also on other social realities, units, and processes in the organization. These include the role or the job a person has in the organization, the dyadic unit, (consisting of the person and his superior), the different teams in which people work, inter-team processes, and the entity of the total organization.
In its essence, HRM is the qualitative improvement of human beings who are considered the most valuable asset of the organization such as the sources, resources, and end-users of all products and services. HRM is, no doubt, an outgrowth of the older process and approach. But it is much more than its parent disciplines i.e., personnel management and behavioural science. HRM is also more comprehensive and deep-rooted than training and development. Its approach is multi-disciplinary from the beginning to the end. It is a scientific process of continuously enabling the employees to improve their competency and capability to play their present as well as future expected roles so that the goals of the organization are achieved more fully and at the same time the needs of the employees are also met to an adequate extent.
Two major forces which affect different aspects of HRM are (i) changing work-force composition, and (ii) the globalization. The global economy impacts both large and small organizations. Out-sourcing, and international competition affect HRM. Strategic HRM is becoming more crucial for HRM to understand organizational strategy and to contribute directly to it. Attracting, retaining, and managing talent (having the right people with the right capabilities and being able to retain them) are crucial present-day HRM concerns in several organizations.
The use of technology, the Internet, Web-based resources, and blogs is affecting HRM. The Internet has become a valuable tool for human resource professionals and affects a number of human resource activities. There are several Websites which contain useful sources of human resource information.
The value of HRM activities increasingly has to be justified to the senior management in the organization by using financial and other data. By using analytic measures of cost-benefit profit per employee, new hire success, and the like, human resource efforts can be justified and the value HRM contributes to the goals of the organization can be documented.
Talent management is a growing concern of several organization and hence it is important for HRM. The training and development play a strategic role in the organization and hence they need to be linked to operational strategies and organizational competitiveness. The use of e-learning, and Web-based training has both the contributions and problems associated with them.
Performance management is an important aspect of HRM. A significant role is played by the performance appraisal process in improving the performance of human resource in the organization.
One of the growing issues in HRM is the risk management, which incorporates health, safety, and security. The risk management includes health and safety issues, compliance requirements for the statutory regulations, health promotion, prevention of work-place violence, and the importance of work-place security. There is the need to develop disaster and recovery plans for such situations as natural disasters, terrorist threats, or outbreaks of deadly diseases. Further, there are emerging issues as electronic monitoring, privacy, e-mail, and other employee rights issues affected by the technology.