Unit-I: Nature and Scope of HRM
Meaning and Definition of Human Resource Management (HRM)
Human Resource Management
(HRM) can be defined as the set of programs, functions, and activities designed
and performed in order to maximize both employee as well as organizational
effectiveness. It is a management function that helps organization in
recruiting, selecting, training, developing and managing its members. HRM is
concern with the management of people in the organization from Recruitment to
Retirement.
According to Flippo, “human
resource management is the planning , organizing , directing
and controlling of the procurement, development, compensation, integration,
maintenance, and separation of human resource to the end that individual,
organizational and social objectives are accomplished.”
According to the Invancevich
and Glueck, “HRM is concerned with the most effective use of people to achieve
organizational and individual goals. It is the way of managing people at work,
so that they give their best to the organization”.
According to Dessler (2008)
the policies and practices involved in carrying out the “people” or human
resource aspects of a management position, including recruiting, screening,
training, rewarding, and appraising comprises of HRM.
Generally HRM refers to the
management of people in organizations. It comprises of the activities,
policies, and practices involved in obtaining, developing, utilizing,
evaluating, maintaining, and retaining the appropriate number and skill mix of
employees to accomplish the organization’s objectives. The goal of HRM is to
maximize employees’ contributions in order to achieve optimal productivity and
effectiveness, while simultaneously attaining individual objectives (such as
having a challenging job and obtaining recognition), and societal objectives
(such as legal compliance and demonstrating social responsibility). In short
Human Resource Management (HRM) can be defined as the art of procuring,
developing and maintaining competent workforce to achieve the goals of an
organization in an effective and efficient manner.
Nature/Characteristics of HRM
Human Resource
Management is a process of bringing people and organizations together so
that the goals of each are met. The various features of HRM include:
1. It is pervasive in nature as it is present
in all enterprises.
2. Its focus is on results rather than on
rules.
3. It tries to help employees develop their
potential fully.
4. It encourages employees to give their best
to the organization.
5. It is all about people at work, both as
individuals and groups.
6. It tries to put people on assigned jobs in order to produce good results.
7. It helps an organization meet its goals in
the future by providing for competent and well-motivated employees.
8. It tries to build and maintain cordial
relations between people working at various levels in the organization.
9. It is a multi-disciplinary activity,
utilizing knowledge and inputs drawn from psychology, economics, etc.
Objectives
of HRM
The primary objective of HRM
is to ensure the availability of competent and willing workforce to an
organization. The specific objectives include the following:
1) Societal Objectives: seek to ensure that
the organization becomes socially responsible to the needs and challenges of
the society while minimizing the negative impact of such demands upon the
organization. The failure of the organizations to use their resources for the
society’s benefit in ethical ways may lead to restriction.
2) Organizational Objectives: it recognizes
the role of HRM in bringing about organizational effectiveness. It makes sure
that HRM is not a standalone department, but rather a means to assist the
organization with its primary objectives. The HR department exists to serve the
rest of the organization.
3) Functional Objectives: is to maintain the
department’s contribution at a level appropriate to the organization’s needs.
Human resources are to be adjusted to suit the organization’s demands. The
department’s value should not become too expensive at the cost of the
organization it serves.
4) Personnel Objectives: it is to assist
employees in achieving their personal goals, at least as far as these goals
enhance the individual’s contribution to the organization. Personal objectives
of employees must be met if they are to be maintained, retained and motivated.
Otherwise employee performance and satisfaction may decline giving rise to
employee turnover.
Scope
of HRM
The scope of HRM refers to all
the activities that come under the banner of HRM. These activities are as
follows:
1. Human resources planning: Human resource
planning or HRP refers to a process by which the company to identify the number
of jobs vacant, whether the company has excess staff or shortage of staff and
to deal with this excess or shortage.
2. Job analysis design: Another important
area of HRM is job analysis. Job analysis gives a detailed explanation about
each and every job in the company. Based on this job analysis the company
prepares advertisements.
3. Recruitment and selection: Based on
information collected from job analysis the company prepares advertisements and
publishes them in the news papers. This is recruitment. A number of
applications are received after the advertisement is published, interviews are
conducted and the right employee is selected thus recruitment and selection are
yet another important area of HRM.
4. Orientation and induction: Once the
employees have been selected an induction or orientation program is conducted.
This is another important area of HRM. The employees are informed about the
background of the company, explain about the organizational culture and values
and work ethics and introduce to the other employees.
5. Training and development: Every employee
goes under training program which helps him to put up a better performance on
the job. Training program is also conducted for existing staff that have a lot
of experience. This is called refresher training. Training and development is
one area were the company spends a huge amount.
6. Performance appraisal: Once the employee
has put in around 1 year of service, performance appraisal is conducted that is
the HR department checks the performance of the employee. Based on these
appraisal future promotions, incentives, increments in salary are decided.
7. Compensation planning and remuneration:
There are various rules regarding compensation and other benefits. It is the
job of the HR department to look into remuneration and compensation planning.
8. Motivation, welfare, health and safety:
Motivation becomes important to sustain the number of employees in the company.
It is the job of the HR department to look into the different methods of
motivation. Apart from this certain health and safety regulations have to be
followed for the benefits of the employees. This is also handled by the HR
department.
9. Industrial relations: Another important
area of HRM is maintaining co-ordinal relations with the union members. This
will help the organization to prevent strikes lockouts and ensure smooth
working in the company.
Functions
of HRM
The function performed by the
resource management can broadly be classified into two categories, viz.
(1) Managerial functions, and
(2) Operative functions
(1) Managerial Functions:
Planning: Planning is a predetermined course of
actions. It is a process of determining the organisational goals and
formulation of policies and programmes for achieving them. Thus planning is
future oriented concerned with clearly charting out the desired direction of
business activities in future. Forecasting is one of the important elements in
the planning process. Other functions of managers depend on planning function.
Organising: Organising is a process by which the
structure and allocation of jobs are determined. Thus organising involves
giving each subordinate a specific task establishing departments, delegating
authority to subordinates, establishing channels of authority and
communication, coordinating the work of subordinates, and so on.
Staffing: It is a process by which managers select,
train, promote and retire their subordinates This involves deciding what type
of people should be hired, recruiting prospective employees, selecting
employees, setting performance standard, compensating employees, evaluating
performance, counseling employees, training and developing employees.
Directing/Leading: Directing is the process of activating
group efforts to achieve the desired goals. It includes activities like getting
subordinates to get the job done, maintaining morale motivating subordinates
etc. for achieving the goals of the organisation.
Controlling: It is the process of setting standards
for performance, checking to see how actual performance compares with these set
standards, and taking corrective actions as needed.
(2) Operative Functions: The operative, also called, service
functions are those which are relevant to specific department. These functions
vary from department to department depending on the nature of the department
Viewed from this standpoint, the operative functions of HRM relate to ensuring
right people for right jobs at right times. These functions include
procurement, development, compensation, and maintenance functions of HRM.
Procurement: It involves procuring the right kind of
people in appropriate number to be placed in the organisation. It consists of
activities such as manpower planning, recruitment, selection placement and
induction or orientation of new employees.
Development: This function involves activities meant
to improve the knowledge, skills aptitudes and values of employees so as to
enable them to perform their jobs in a better manner in future. These functions
may comprise training to employees, executive training to develop managers,
organisation development to strike a better fit between organisational
climate/culture and employees.
Compensation: Compensation function involves
determination of wages and salaries matching with contribution made by
employees to organisational goals. In other words, this function ensures
equitable and fair remuneration for employees in the organisation. It consists
of activities such as job evaluation, wage and salary administration, bonus,
incentives, etc.
Maintenance: It is concerned with protecting and
promoting employees while at work. For this purpose virus benefits such as
housing, medical, educational, transport facilities, etc. are provided to the
employees. Several social security measures such as provident fund, pension,
gratuity, group insurance, etc. are also arranged.
Significance/importance/need
/Role of HRM
HRM becomes significant for
business organization due to the following reasons:
1. Objective: HRM helps a company to achieve
its objective from time to time by creating a positive attitude among workers.
Reducing wastage and making maximum use of resources etc.
2. Facilitates professional growth: Due to
proper HR policies employees are trained well and this makes them ready for
future promotions. Their talent can be utilized not only in the company in
which they are currently working but also in other companies which the
employees may join in the future.
3. Better relations between union and
management: Healthy HRM practices can help the organization to maintain
co-ordinal relationship with the unions. Union members start realizing that the
company is also interested in the workers and will not go against them
therefore chances of going on strike are greatly reduced.
4. Helps an individual to work in a
team/group: Effective HR practices teach individuals team work and adjustment.
The individuals are now very comfortable while working in team thus team work
improves.
5. Identifies person for the future: Since
employees are constantly trained, they are ready to meet the job requirements.
The company is also able to identify potential employees who can be promoted in
the future for the top level jobs. Thus one of the advantages of HRM is
preparing people for the future.
6. Allocating the jobs to the right person:
If proper recruitment and selection methods are followed, the company will be
able to select the right people for the right job. When this happens the number
of people leaving the job will reduce as the will be satisfied with their job
leading to decrease in labour turnover.
7. Improves the economy: Effective HR
practices lead to higher profits and better performance by companies due to
this the company achieves a chance to enter into new business and start new
ventured thus industrial development increases and the economy improves.
Personnel management and Its nature
Personnel
management can be
defined as obtaining, using and maintaining a satisfied workforce. It is a
significant part of management concerned with employees at work and with their
relationship within the organization.
According to Flippo,
“Personnel management is the planning, organizing, compensation, integration
and maintenance of people for the purpose of contributing to organizational,
individual and societal goals.”
According to Brech, “Personnel
Management is that part which is primarily concerned with human resource of
organization.”
Nature of Personnel Management
1.
Personnel
management includes the function of employment, development and compensation-
These functions are performed primarily by the personnel management in
consultation with other departments.
2.
Personnel
management is an extension to general management. It is concerned with
promoting and stimulating competent work force to make their fullest contribution
to the concern.
3.
Personnel
management exists to advice and assists the line managers in personnel matters.
Therefore, personnel department is a staff department of an organization.
4.
Personnel
management lays emphasize on action rather than making lengthy schedules,
plans, work methods. The problems and grievances of people at work can be
solved more effectively through rationale personnel policies.
5.
It is
based on human orientation. It tries to help the workers to develop their
potential fully to the concern.
6.
It
also motivates the employees through its effective incentive plans so that the
employees provide fullest co-operation.
7.
Personnel
management deals with human resources of a concern. In context to human
resources, it manages both individual as well as blue- collar workers.
Difference
Between Personnel Management And Human Resource Management
Human resource management is
the new version of personnel management. There is no any watertight difference
between human resource management and personnel management. However, there are
some differences in the following matters.
1. Personnel management is a traditional
approach of managing people in the organization. Human resource management is a
modern approach of managing people and their strengths in the organization.
2. Personnel management focuses on personnel
administration, employee welfare and labor relation. Human resource management
focuses on acquisition, development, motivation and maintenance of human
resources in the organization.
3. Personnel management assumes people as a
input for achieving desired output. Human resource management assumes people as
an important and valuable resource for achieving desired output.
4. Under personnel management, personnel
function is undertaken for employee's satisfaction. Under human resource
management, administrative function is undertaken for goal achievement.
5. Under personnel management, job design is
done on the basis of division of labor. Under human resource management, job
design function is done on the basis of group work/team work.
6. Under personnel management, employees are
provided with less training and development opportunities. Under human resource
management, employees are provided with more training and development
opportunities.
7. In personnel management, decisions are
made by the top management as per the rules and regulation of the organization.
In human resource management, decisions are made collectively after considering
employee's participation, authority, decentralization, competitive environment
etc.
8. Personnel management focuses on increased
production and satisfied employees. Human resource management focuses on
effectiveness, culture, productivity and employee's participation.
9. Personnel management is concerned with
personnel manager. Human resource management is concerned with all level of
managers from top to bottom.
10. Personnel management is a routine
function. Human resource management is a strategic function.
Differences
between Human Resource Management (HRM) and Human Resource Development (HRD)
1. HRM is a subset of the entire management
processes of an organization. HRD is a subset of HRM.
2. Scope of HRM is wider. Scope of HRD as
compared to HRM is narrower.
3. HRM manages and develops the human
elements of an organization in its entirety on longer term basis. HRD focuses
on those learning experiences which are organized for a specific period to
bring about the desired behavioral changes.
4. HRM emphasizes that employees, their
abilities and their attitudes constitute an important organizational resource
that should be used effectively and efficiently to achieve organizational as
well as employees' goals. HRD emphasizes mainly on training and development of
employees.
5. HRM takes decisions on HRD plans. HRD thus
depends on the decisions of HRM.
6. HRM at its center has HRD. HRD's
cooperation is important for overall success of HRM. HRD has to work within the
realm of HRM and therefore, its objectives should be in tandem with the broader
objectives of HRM. Thus, HRM and HRD are interdependent.
7. HRM takes care of all the human needs and
tries to satisfy these needs so that the employees are motivated from all the
angles to contribute their best to achieve organizational goals. HRD focuses on
upgrading the skills and competencies of the employees in order to improve the
performance of the employees on the job.
Problems/Challenges
before the Human Resource Manager
Personnel management which is
know as human resource management has adapted itself to the changing work
environment, however these changes are still taking place and will continue in
the future therefore the challenges before the HR manager are:
1. Retention of the employees: One of the
most important challenge the HR manager faces is retention of labour force.
Many companies have a very high rate of labour turnover therefore HR manager
are required to take some action to reduce the turnover
2. Multicultural work force: With the number
of multi cultural companies are increasing operations in different nations. The
work force consists of people from different cultures. Dealing with each of the
needs which are different the challenge before the HR manager is integration of
multicultural labour work force.
3. Women in the work force: The number of
women who have joined the work force has drastically increased over a few
years. Women employees face totally different problems. They also have
responsibility towards the family. The organization needs to consider this
aspect also. The challenge before the HR manager lies in creating gender
sensitivity and in providing a good working environment to the women employees.
4. Handicapped employees: This section of the
population normally faces a lot of problems on the job, very few organization
have jobs and facilities specially designed for handicapped workers. Therefore
the challenge before the HR manager lies in creating atmosphere suitable for
such employees and encouraging them to work better.
5. Retrenchment for employees: In many places
companies have reduced the work force due to changing economic situations,
labourers or workers who are displaced face sever problems. It also leads to a
negative atmosphere and attitude among the employees. There is fear and
increasing resentment against the management.
6. Change in demand of government: Most of
the time government rules keep changing. While a lot of freedom is given to
companies some strict rules and regulations have also been passed. The
government has also undertaken the disinvestment in certain companies due to
which there is fear among the employees regarding their job. The challenge
before the HR manager lies in convincing employees that their interest will not
be sacrificed.
7. Initiating the process of change: Changing
the method of working, changing the attitude of people and changing the
perception and values of organization have become necessary today. Although the
company may want to change it is actually very difficult to make the workers
accept the change. The challenge before the HR manager is to make people accept
change.
Evolution and Growth of Human
Resource management
The principal resource of any organization is
people and managing people is the most important and challenging aspect of an
organization. What we call human resource management today, dates back to 1800
B.C., which is evident from the inscriptions of Babylonian code of Hammurabi
and Kautilya’s Arthasashtra, which explains in detail the importance of selection, incentives, performance evaluation,
quality of a manager and wage rates. So, we understand that the concept of
managing people has existed even in the previous eras through ancient
literature and philosophy. India, China and Greece have been the origin points
of human resource management concepts.
Stages in Evolution of Human Resource Management
Industrial
Revolution: Till,
1930’s, there was no such department called “personnel management” that was
considered necessary to cater to the needs and welfare of the labor society.
The factory manager was acting as a link between the workers and the
management, and most of the time he had to comply with the rules of the management
to satisfy them, even if it were against the welfare of the workers. Also
proper attention was not given to areas like, worker safety, security and
living conditions. Industrial revolution saw mass exodus of workers to urban
areas in search of jobs.
Need for employment Department: Application of science and technology in production made
the rich owners even richer; the poor workers were not paid adequately and
their life became miserable. Since the owners lost direct contact with the
employees, managers came into the picture to take over control of production
and administration. Machines ruled the
industry and importance of labor got reduced. This condition existed for
sometime until the advent of new and improved management concepts by people
like F.W.Taylor who is considered to be the father of scientific management and
B.F.Goodrich who was instrumental in forming the “employment department”
which can be considered the fore runner of present human resource department.
Introduction of
Scientific Management:
Scientific methods were introduced to make the workers perform the job with
ease and perfection. It also saved enormous time and reduced the monotony of
work. Job-designs, job-specification, training and development and human relations
were given due importance and the owners slowly started realizing the
importance of labor. Through 1940’s to 1970’s behavioral approach was applied
to professional management, the major architects being Abraham Maslow, Herzberg
and Douglas McGregor. This approach suggested managers to modify their
leadership styles to suit the type of followers and motivate the workers.
Consequences of
World War I and II: World
War I and II also had profound influence on Human resource development. The
concepts of role playing, improved training methods, supervision and group
discussions came into the fray. The advent of labor unions also established a
clear pathway for the workers to claim their rights, ably supported by the
labor laws enacted by various governments. International labor organization was
formed in 1919 which created sensation in the worker community all
over the world. All said and done, empowerment of workers has been achieved
only in developed nations where “job security” is no more a great concern
because job opportunities are more. But in unorganized and small sectors,
employers continue to exploit workers because “supply” is more than “demand”.
The responsibility to develop and empower the
employees solely lies on the shoulders of human resource department. It should
try to address the problems of workers to the management and amicably settle
issues relating to wages, welfare, safety and security.