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HUMAN RESOURCE MANAGEMENT
FUNDAMENTALS OFHUMAN RESOURCE
MANAGEMNT
CHAPTER
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ORGANIZATION
What are the primary objectives of an organization ?
• Profit• Survival• Growth
How organizations achieve these objectives ?
By converting the inputs ( Resources) into out put ( Goods & Services )
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RESOURCES
What do we mean by a resource ?
Resource means an asset or wealth which can be drawn upon for aid, as and when required.
Frequently used resources by the organizations
Human Resources. – Men & Women Financial Resources.- Money Physical Resources. – Material, MachineOr Land, Labour and Capital
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Human Resources The people (All men &
women ) employed by an organization to carry out various jobs, tasks and functions in exchange for wages, salaries and other benefits
The CEO, the Finance mgr, the Mktg. mgr, the HR mgr, the clerk, cleaning & maintenance staff etc.
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Human Resources
It is the sum total of knowledge, skills, abilities & attitudes of all the employees of an organization.
( Leon C. Megginson ,1982)
A whole consisting of interrelated, interdependent and interacting physiological, psychological, sociological and ethical components.
( Michael Jucius, 1980 )
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Human Resources
It is viewed as capital i.e. The human capital, which unlike finance has three components – Intellectual capital, Social capital and Emotional capital
(Sumantra Ghoshal, 1999 )
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Human Resources The intellectual capital consists of
knowledge, skills, learning capacity etc.
Social capital is made up of network of relationship, trustworthiness, sociability etc.
Emotional capital refers to self confidence, ambition, courage, risk taking abilities etc.
Thus it can be concluded that human resources refers to the quantitative and qualitative aspects of employees in the organization.
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Significance of Human Resources
Activation of Non human Resources
Means for developing Competitive Advantages.
Source of Creative Energy
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Human Resource Management
Is the efficient and effective utilization of human resources.
HRM is the design of formal system in an organization to ensure effective and efficient use of human talent to accomplish the organizational goals.
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Human Resource Management
A strategic and coherent approach to management of the most valued assets of an organization, i.e. people, who individually and collectively contribute to the organizational objectives
Is the comprehensive set of managerial activities and tasks concerned with developing and maintaining a qualified workforce- human resources in ways that contribute to organizational effectiveness.
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Human Resource Management
Consists of the policies, practices, and decisions that concern making effective and efficient use of the employees of an organization in order to achieve the organization’s objectives.
Involves all management decisions and practices that directly affect the people of an organization
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Human Resource Management
HRM refers to activities by which an organization recruits, selects, trains, develops, motivates, evaluates, compensates, and rewards people fairly.
Is the planning, organising, 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 achieved.
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Human Resource Management
Thus it can be concluded that human resource management means people management. It is the management of employees’ aspirations, expectations , knowledge, skills, & attitude etc to the end that individual, organizational and societal objectives are achieved.
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Why is HRM Important to an Organization?
HRM is of vital importance to the organizations as a means for achieving their objectives.
There is no such things as a technology problem, a financial problem or a sales problem – it all begins with people. People bring competence and commitment and the company provides trust and an environment.
MAX INDIA LTD.
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Why is HRM Important to an Organization?
Dag Hammarskjold Former Secretary-General united Nations stated,
“Fundamentally, man is the key to all problems, not money. Funds are valuable only when used by trained, experienced and devoted men and women. Such people, on the other hand, can work miracles even with small resources and draw wealth out of a barren land.”
(Report of the United Nations Expert Group Meeting on Human Resources Development in the Public Sector held at United Nations Headquarters, New York 22 to 23 June 1994)
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Evolution of the Human Resource Function
1. Industrial Revolution Era – 19th Century
2. Trade Union Movement Era – Close to 2oth century
3. Social Responsibility Era – Beginning to 2oth century
4. Scientific Management Era - 1900 – 1920s
5. Human Relations Era – 1930s – 1950s
6. Behavioural Science Era – 1950s – 1960s
7. Systems & Contingency Approach Era – 1960s onwards
8. Human Resource Management Era – 1980s onwards
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Industrial Revolution EraThe industrial revolution sparked a great interest in
business growth and expansion, and large scale business operations began to emerge throughout Europe and the USA. As these businesses grew and became increasingly complex, owners began to step aside and turn the operations of their firms to full time professional managers. This transition in turn, resulted in greater awareness of the various functions of management that were necessary for long term organizational success. In order to manage people in the factory system of industrial revolution, three systems of HRM were developed: recruitment of workers, training of workers & control of workers
The basic philosophy of managing workers revolved around master servant relationship
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Trade Union Movement Era
Soon after 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 such associations were to safeguard their interests and to sort out their problems. These developments forced managers to the adoption of employee grievance handling system, disciplinary practices, the expansion of employee benefit programmes, regulated working hours , holiday and vacation time etc.
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Social Responsibility Movement Era
Few early management pioneers and management writers like Robert Owen, Marry Parker Follette and Munsterberg recognized the importance of people in organizations. It was argued that a more humanistic and paternalistic approach be adopted towards workers. In order to increase productivity, it is necessary to improve the conditions of employees by removing them from an adverse environment. All these practices led to the development of social welfare aspect of labour management.
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Scientific Management Era
The first serious study of management practice set during the early years of twentieth century was based on scientific management. Scientific management was concerned with how to structure individual jobs to maximize efficiency and productivity. SM principles relevant to management of workers are – Job analysis, scientific selection and training of workers, financial incentives and standardization.
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Human Relations Era
The human relations era was instigated by the Hawthorne studies, a series of studies conducted to test some principles of scientific management.
The pattern of results seemed to contradict some of the ideas of scientific management, and the human relations era emerged as a result of efforts to explain the results of these studies.
The research revealed that individual and group behviour played an important role in organizations and that human behaviour at work was something managers needed to under stand.
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Behavioural Science Era
Stimulated by the findings of the Hawthorne studies, managers began to focus more and more attention on better understanding the human character of their employees.
During this era, Among the many social & individual psychologists who have contributed to management are Maslow (popularized hierarchy of human needs)& McGregor (proposed theory X, theory Y.)
Major contributions of behavioural scientists are in the areas of motivation leadership, communication, organizational change & development, group dynamics etc.
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Systems & Contingency Approach Era
HRM is a subsystem of organization as a system. Therefore it must be linked to other subsystems of the organization. It implies that HRM can not be stand alone process but it must be derived from the corporate strategy of the organization. In fact, the effectiveness of HRM depends on how well it is linked to the corporate strategy an how its internal processes are carried on. Contingency approach of management emphasizes on two points.
1. It focuses on situational factors that influence managerial decisions.
2. It highlights the need for developing skills for managers in situational analysis.
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Human Resource Management Era
The industrial revolution paved way for factory system, which gave birth to Industrial relations department to look after the workers. Later on with the increasing complexity of managing large business organizations, the scope of IR department was extended to cover supervisory staff & managerial personnel and the department was renamed as personnel department. With the increasing competition for market share and increased role of people in the competition the personnel department was renamed as human resource department.
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Personnel Management
As organizations grew, they began to create specialized units to cope with their increasing hiring needs & to deal with government regulations. During 1930 and 1940s these units gradually began to be called personnel departments ( set up as self contained departments charged with responsibility of hiring new workers ) The recognition that human resources needed to be managed gave rise to a new type of management function – Personnel management. The manager who ran the personnel department was called as personnel manager.
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Evolution & development of HRM in India
Period Development Status
Outlook Emphasis Status
1920s – 1930s
Beginning Pragmatism of capitalists
Statutory, welfare, paternalism
Clerical
1940s – 1960s
Struggling for recognition
Technical, legalistic
Introduction of techniques
Administrative
1970s – 1980s
Impressing with sophistication
Professional, legalistic
regulatory Conformance, standardization
Managerial
1990s Promising Philosophical Human values, Productivity through people
Executive
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Personnel Management & HRM : A Comparison
Some treat both as the same with difference only in nomenclature Pat Lowry ( 1990 ) observes – “ Personnel
work has always included strategic matters, and the present emphasis on business issues merely represents another change in the environment to which the personnel manager adapts by strengthening the competencies needed for the new situation. HRM is just the continuing process of PM – it is not different’
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Personnel Management & HRM : A Comparison Some scholars are of the view that on certain issues
both are same but on others, they are different
Armstrong ( 1887 ) views that “ HRM is regarded by some personnel managers as just a set of initials or old wine in new bottles. it could indeed be no more and no less than another name for personnel management, but as usually perceived, at least it has the virtue of emphasizing the virtue of treating people as a key resource, the management of which is the direct concern of top management as part of the strategic process of the enterprise”
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Personnel Management & HRM : A Comparison There is another set of scholars who strongly feel that there
is a difference between HRM and PM, they stress that such a difference exist in terms of both contents as well as emphasis. Legge ( 1999) has found the difference between PM
& HRM as1. PM is mostly concerned with non managers;
HRM is aimed at managerial personnel.2. PM attempts to influence line mgt; HRM involves
an integrated line mgt activity3. PM keeps itself detached from OD; HRM has
utmost focus on development issues.
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Difference between PM & HRMDimension PM HRM
Nature of relations
Pluralist / labour - Mgt
Unitarist/ customer
Perception of conflict
Institutionalized Pathological
ContractEmphasis on compliance
Beyond contract commitment
Role of procedures
Rules dominated Culture & values
Planning perspective
Reactive Proactive
Unions Acceptable Not desirable
Levels of trust Low High
Basis of design Division of labour Teams
Key people PM / IR specialistLine people / HRM
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Objectives of HRM
HumanResource
Management
Facilitatingorganizational
competitiveness
Complying withlegal & social
Enhancingproductivityand quality
Promotingindividual growthand development
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Objectives of HRM
Social Objectives.
Organizational Objectives.
Individual objectives.
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Objectives of HRM - Social
Every organization is dependent on the society for the inputs as well as for the out puts, it is the responsibility of every organization to be socially responsible.
Social objectives of HRM are concerned with balancing work and family, maintaining the harmonious and productive relations with the society. Meeting legal obligations
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Objectives of HRM - organizational
To help the organization to attain its goals effectively and efficiently by providing competent and motivated employees.
To help organizations to enhance productivity and quality
To utilize the available human resources effectively.
To help the organization to meet the challenges of the environmental factors by developing people on continuous basis.
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Objectives of HRM - Individual
To provide the career avenues to the employees.
To help the employees to grow.
To help the employees to develop their skills and knowledge to meet the challenges of their jobs.
To provide the environment and incentives and right compensation.
To provide the QWL.
To help them to separate from the organization happily and satisfactorily.
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Objectives
• To facilitate the retention of skilled and competent employees.• To build the competencies by facilitating continuous learning and development• To develop practices that foster team work and flexibility• To make the employees feel that they are valued and rewarded for their contribution• Developing management practices that engender high commitment• To facilitate management of work force diversity and availability of equal opportunities to all.
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Basic functions:
Procurement
Development
Compensation
Integration & Maintenance and
Separation
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Procurement
Procurement is the function through which an organization ensures that it always has the proper no of employees with the appropriate skills in the right jobs at the right time, to achieve the organization’s objectives. Procurement function involves
Job Analysis Human Resource Planning Recruitment & Selection
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Development
Human resource development is a major HRM function through which an organization build the competencies by facilitating continuous learning and development. Development function involves –
Training & Development Career Planning Organization Development Performance Appraisal
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Compensation
Rewarding people for their contribution is major function of HRM. A well thought out compensation system provides employees with adequate and equitable rewards for their contributions to meeting of organizational goals. Compensation includes the total of all rewards provided to employees for their contribution. The reward may be one or a combination of Pay Benefits & Non financial rewards.
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Integration & Maintenance Maintenance function is the function through which
an organization ensures employees’ commitment and loyalty to the organization. Maintenance activities include
Health Safety Communications Employee assistance programs Employee and Labour relations
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The Human Resource Management System
A system is an interrelated set of elements functioning as a whole Human resource management system is an integrated and
interrelated approach to managing human resources that fully recognizes the interdependence among the various tasks and functions that must be performed.
The humanResource function
The marketingfunction
The operationsfunction
The financefunction
The otherfunctions
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Who performs the HRM tasks
Human Resource Manager – An individual who normally acts in an advisory or staff capacity, working with other managers regarding human resource matters. HR mgrs were primarily responsible for coordinating the mgt of human resources to help the org. achieve its goals.
Shared Service Centers – A center that takes routine, transaction based activities dispersed throughout the organization and consolidates them in one place. Benefits & pension administration, payroll, relocation a& recruitment support, Global T & D etc.
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Who performs the HRM tasks
Line Managers- individuals directly involved in accomplishing the primary purpose of the organization. As the traditional work of HR managers diminishes, line managers are stepping up and performing duties often done by the HR managers. Line managers often perform many of the staffing functions such as interviewing, T & D, compensation etc.
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The HR functions in Organizations of various sizes
In Small Businesses -
Manager/Owner
Sales Operations Finance
The Human Resource Function
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In Medium Sized Firms
President
SalesManager
OperationsManager
FinanceManager
HumanResource Mgr.
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In a Large Firms
President/ CEO
VP - MKTG VP - Operations VP - Finance
HumanResource Mgr.
Mgr. T & D Mgr. Comp. Mgr. StaffingMgr. Safety & Health
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An Evolving HR Organization
President/ CEO
VP - MKTG VP - OperationsDirectorHealth & Safety
HumanResource Mgr.
Exec. Dev Mgr. Trg.Mgr. other
HRM FunctionsEmployeeBenefits
SSC
outsourced
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Human Resource Management Environment
External Environment
Internal Environment
Labour Force Legal Considerations
Econ
om
yTech
nolo
gy
Customers Competition Shareholders
Un
ion
sS
ocie
ty
Human Resource
Management
Staffi
ng HRD
Compen
satio
nMaintenance
Marketing Operations
Finance Others
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Human Resource Management Environment The set of interrelated, interdependent and
interacting factors that affect human resource management.
Factors out side its boundaries that affect a firm’s human resources make up the external environment. External factors include –
Labour Force, Legal Considerations, Society, Unions, Shareholders, Competition, customers, technology and the economy.
Each factor, either separately or in combination with others, can place constraints on how HRM tasks are completed.
