UNIT-1 Subject Code:-RMB202

Essentials of HRM

MEANING OF HRM

• Human Resources is the part of the organization that deals with people
• Managing the human resource
• This means acquiring developing and supporting staff as well as ensuring they fulfill their
role at work
• HR is the total knowledge, skill, creative abilities, talents and aptitudes of an organisation’s
workforce as well as the values, attitudes and beliefs of the individuals involved.
➢ To select
➢ Develop
➢ Motivate
➢ Maintain human resources

DEFINITION OF HRM.
• It is define as a process of bringing people and organization together so that goals of
each can meet.
• HRM may be defined as a set of policies, practices and programmes designed to
maximize both personal and organizational goals.
• A Management function that helps managers recruit, select, train and develop members
for an organization.
• HRM is the effective use of human resources in order to enhance organizational
performance .
• HRM is the art of procuring, developing and maintaining competent workforce to achieve
goals if an organization in an effective and efficient manner.

So the Human Resource Manager job includes:

1. Conducting Job analysis ( determining the nature of each job)
2. Planning labour needs and recruiting job candidate
3. Selecting Job candidates
4. Orienting and training new employees
5. Managing wages and salaries (compensating employees)
6. Providing incentives and benefits
7. Appraising performance
8. Communicating ( interviewing, counselling, disciplining)
9. Training and development

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 Nature of HRM
1. Broader function
2. People oriented
3. Action oriented
4. Development oriented
5. Continuous function
6. Future oriented

1. Broader function :-
• Human Resource Management is a comprehensive function because it is about managing
people in the organization. It covers all types of people in the organization from workers till
the top level management.

2. People oriented :-
• Human Resources is the core of all the processes of human resource management. So
HRM is the process which brings people and organizations together so that their goals
can be achieved.

3. Future oriented :-
• HRM is very important activity which helps organization to achieve in future by providing
well motivated and competent employees.

4. Action oriented :-
• Human Resource Management believes in taking actions in order to achieve individual
and organizational goals rather than just keeping records and procedures.

5. Development Oriented :-
• Development of employees is an essential function of human resource management in
order to get maximum satisfaction from their work so that they give their best to
organization

6. Continuous Function :-
• As human resource is a living factor among all factors of production therefore it requires
continuous improvement and innovations in order to get excellence. So it requires a
constant alertness of human relations and there importance in every day to day
operations.

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 Elements of HRM.
1. Acquisition :-
• Acquisition function is concerned with recruitment and selection of manpower
requirement for an organization. It ensures that the company has the right number of
people at the right place and at the right time who are capable to complete required work.
It is the starting point of human resource management function. Acquisition is primarily
concerned with planning, recruitment, selection and socialization of employees. It selects
and socializes the competent employees who have adopted the organization's culture.

2. Development :-
• Development phase begins after the socialization of newly appointed employees in an
organization. It is concerned with imparting knowledge and skill to perform the task
properly. Moreover, it is an attempt to improve employee performance by imparting
knowledge, changing attitudes and improving skills. It can be done through teaching,
coaching, class-room courses, assignments, professional programs and so on. The
ultimate goal of employee development is of course to enhance the future performance of
the organization by the efficient employees. The development of employees is not only for
newly appointed employees, it is also for existing employees to develop them according
to change in internal and external environment.

3. Motivation :-
• Only training and development do not inspire employees to do better work. For this, they
should be motivated. Here motivation means an activity which induces and inspires
people to perform well in actual work floor. Motivation includes job specification,
performance evaluation, reward and punishment, work performance, compensation
management, discipline and so on. It is important for better work performance because
high performance depends on both ability and motivation.

4. Maintenance :-
• Maintenance is the last components of human resource management. it is concerned with
the process of retaining the employees in the organization. This contributes towards
keeping the employees who can do extremely better for the organization. It creates such a
homely and friendly environment for those high performers, and make them to remain in
the same organization for a longer period of time. This requires that the organization
should provide additional facilities, safe working conditions, friendly work environment,
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 and satisfactory labor relations. If these activities are performed in right manner, we can
expect to have capable and competent employees in the organization. These employees
are committed to the organizational objectives and are satisfied with their jobs.
SCOPE OF HRM

SCOPE OF HRM

1. Job Analysis & Design :-

• Defining tasks, integrating job components and employee characteristics in such a way
that meets the needs of employees as well as the organization.
2. HRP(Human Resource Planning) :-
• Determining the number and kind of personnel required to fill various jobs positions in the
organization.
3. Training & Development :-
• Training and development is must to prepare the employees for the actual management
situation. employees’ participation in committees and board meetings may also contribute
towards their development.
4. Employee Motivation :-
• The motivation of employees can be done by providing financial and non-financial
incentives.
5. Remuneration of Employees :-

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 • Providing adequate wages and other benefits (fringe benefits) to achieve standard of
living and to inspire them to show better work performance. It includes determining
wages rates, incentives systems of wage payment.
6. Social Security and Welfare of Employees :-
• Providing safe and secure working conditions and also amenities such as subsidized
meals, health care, medical assistance housing, transportation etc.
7. Industrial relations :-
• Industrial relations include union-management relations, collective bargaining, grievance
and disciplinary procedures, settlement of disputes.
8. Employee Hiring :-
• It includes recruiting (looking for) possible employees and selecting the best one to occupy
the various posts in the organization, including or settling them into the jobs.

Function’s Of H.R.M

Functions of H.R.M

• MANAGERIAL
1. Planning
2. Organizing
3. Directing
4. Controlling

• OPERATIVE
1. Procurement
2. Training & Development
3. Remuneration
4. Working conditions
5. Motivation & compensation
6. Personal records
7. Industrial relations
8. Maintenance
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Managerial Function

1. Planning :-
• It is the process of deciding in advance about what is to be done (deciding about
objectives), how and by whom it is to done (deciding about the steps/strategies to be
adopted to attain objectives). In the context of HRM, the planning function extends to the
acquisition of competent workforce for the organization. The process of HR Planning
involves three steps:
a) forecasting of manpower demand- determining the number and type of people required in
the organization
b) analyzing manpower supply- determining the availability of manpower within the
organization.
c) balancing demand and supply- correcting shortage or surplus through personnel decisions.

2. Organising :-
• It concerned with bringing together the manpower and material resources for the
attainment of objectives of the enterprise. The process of organising involves grouping of
personnel activities, assignment of different groups of activities to different individuals,
delegation of authority according to tasks assigned and responsibilities involved, and
coordination of activities of different individuals.

3. Directing:-
• It deals with guiding, leading and motivating employees so that they efficiently perform
their jobs and contribute towards achieving organisational objectives. It is done by giving
necessary orders and instructions to employees regarding the assigned work, and
motivating them to perform in a satisfactory manner. Communication, motivation and
leadership are the essential elements of directing.

4. Controlling :-
• The controlling function of management concerned with regulation of activities in
accordance with plans. In context of HRM, controlling function compromises measuring
employees’ performance, correcting negative deviations and ensuring the
accomplishment of plans efficiently. Controlling also makes employees aware of their
performance through review reports, records and personnel audit programmers, etc.

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 Operative Function

1. Procurement function:  The first operative function of personnel management is procurement.

It is concerned with procuring and employing people who possess necessary skill, knowledge
and aptitude. Under its purview you have job analysis, manpower planning, recruitment,
selection, placement, induction and internal mobility. 

2. Training and Development:  It is the process of improving, moulding, changing and developing
the skills, knowledge, creative ability, aptitude, attitude, values and commitment based on
present and future requirements both at the individual’s and organisation’s level.

3. Motivation and compensation:  It is a process which inspires people to give their best to the
organisation through the use of intrinsic (achievement, recognition, responsibility) and extrinsic
(job design, work scheduling, appraisal based incentives) rewards.

4. Maintenance:  It aims at protecting and preserving the physical and psychological health of
employees through various welfare measures.

5. Personal Records: this operative function of HRM is concerned with maintaining effectiveness
of HR programmes and practices through proper maintenance of personnel records. This
function covers activities such as HR audit (involves examination and evaluation of policies,
procedures and practices to determine the contemporary relevance and effectiveness of
HRM)and HR research (involves a constant search of new trends and practices in the field of
HRM and then their adoption by the organisation for improving its competitive position.)

IMPORTANCE OF HRM
1. RECRUITMENT AND SELECTION
2. TRAINING
3. PERFORMANCE APPRAISAL
4. TRADE UNIONS
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 5. DEVELOPMENT

• RECRUITMENT :-
The process by which a job vacancy is identified and potential employees are notified.
MAIN FORMS OF RECRUITMENT THROUGH ADVERTISING IN NEWSPAPERS,
MAGAZINES, TRADE PAPERS AND INTERNAL VACANCY LISTS.

• SELECTION :-
The process of assessing candidates and appointing a post holder. Applicants are short
listed and the only most suitable candidates are get selected.

• TRAINING :-
✓ Provides new skills for the employee
✓ Keeps the employee up to date with changes in the field
✓ Aims to improve efficiency

• PERFORMANCE APPRAISAL (REWARD) :-

• The system of pay and benefits used by the firm to reward workers. Hrm encourages the
people working in an organisation, to work according to their potential and gives them
suggestions that can help them to bring about improvement in it.

• TRADE UNIONS :-
• Contributes to smooth change management and leadership. Trade unions are formed to
protect and promote the interests of their members. Their primary function is to protect
the interests of workers against discrimination and unfair labor practices.
• Development developing the employee can be regarded as invesining a valuable asset. It
is a source of motivation. Hrd is the integrated use of :-
• TRAINING AND DEVELOPMENT :-
a) Organisational development, and
b) Career development to improve individual, group and organisational effectiveness."

✓ Hrm is also important because it includes employment issues like:

i. Discrimination,
ii. Equal employment opportunity
iii. Harassment
iv. Affirmative action
v. Diversity management
vi. Occupational health and
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vii. Safety industrial relations

Difference Between HRM and Personnel Management

H.R.M P.M

HRM is proactive in nature. It is not only PM is mainly reactive in nature. It

concerned with the present organizational satisfies itself by ensuring peaceful measure
conditions but foresees future necessities management relations in the present.
and then acts appropriately.
PM which is employee centred , aims at
HRM as a resource centered activity hiring, training, compensating, and
focuses more on the managerial aspects in maintaining the existing force of the
terms of delegating the responsibility of organization.
HRM to line
authority and management development. PM emphasis division of labour in work
performance.
HRM insists on team work
Responsibility rests with all managers:
Responsibility rests with HR Manager. top, middle and lower managers.

Interest of both the organization and Interests of the organization most

employees equality important. important.

Focuses on nurturing human talent. Concentrates on monitoring people and

work in terms of measurable output.
Treats people as valuable assets.
Treats people as a tool to be replaced
Maintain relation with customer. when worn out.

Maintain relation with labour

management.

Difference between HRM & HRD

HRM deals with all aspects of the human HRD only deals with the
resources function development part.

HRM is concerned with recruitment, HRD is concerned with

rewards among others employee skills development.

 HRM functions are mostly  formal  HRD functions can be infomal like

mentorship
HRM is a routine and administrative
process. HRD is continuous process
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HRM is concerned with people functions HRD is developing the whole
only. organization employee skills.
 Involvement of the entire work It is basically the
force from top to bottom is more responsibilities of the HR
and a must in most of the cases department
HRM deals with the day to day
operations of the human Human Resource
resources department. This Development deals with the
curriculum would include bus. law, training and the developmental
compensation, employee aspect of employees. Most HRD
relations, benefits, and medical curriculum include classes like T
etc. & D, organizational dev.,
industrial psy.

S.H.R.M.
• Strategic Human Resource Management = Strategic + human resource management
• Strategic means devising a comprehensive decision plan that sets critical direction for an
organisation and guides the allocation of resources.
• HRM means an integrated strategy and planned development process for effective
utilisation of human resources for the achievement of organisational mission and
objectives.
So,
• Strategic human resources management is concerned with all those activities affecting
the behaviour of individuals in their effort to formulate and implement the strategic needs
of the business.
• SHRM is the linking of human resource management with strategic goals and objectives
in order to improve business performance and develop organisational cultures that foster
innovation and flexibility.
Nature of S.H.R.H

1. Long term focus- SHRM has long-term focus, more than a year, as the business
strategies itself are long term oriented.

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2. Associated with goal-setting- SHRM is closely associated with goal-setting, policy
formulation and allocation of resources. It is performed at top management levels.
3. Interrelated with business strategies- SHRM is interrelated with business strategies.
4. Fosters (to promote the growth or development)corporate excellence skills- SHRM views
employees as the strategic capability of the organisation and attempts to distinguish the
organisation from its competitors in the markets on that basis.

Objectives of SHRM

1. To develop strategic competencies- the basic aim of SHRM is to develop strategic

competencies of an organisation , in order to ensure that the outfit has the required
standards and number of committed, skilled and highly motivated manpower, for attaining
competitive advantage which is sustainable.
2. To give sense of direction- giving sense of direction even in turbulent ambience so as to
strike a balance between the organistaional needs and those of the individual as well as
the as staff.
3. To Achieve integration- SHRM aims to provide a unifying framework, so that an
integrated HR system operates synergistically in consonance with the organisational
strategic objectives.
4. To formulate business strategy- SHRM contributes to the formulation of business
strategy by drawing attention to ways in which the business can capitalise on the
advantages provided by the strengths of its human resource.

Importance of SHRM

1. Helps firms in Achieving cost- effective engagement of Labour- SHRM helps firm in
achieving cost-effective engagement of labour as part of the competitive advantage
initiative.
2. Enables firm to meet changing needs- the flexible structure and dynamic policies of
SHRM enables the firm to meet the changing needs and expectations of the customers
effectively and promptly.
3. Provides clear-cut goals, direction, and future focus- since SHRM requires a well-defined
mission and vision for its effective implementation, it is able to provide clear-cut goals,
direction, and future focus to the entire organisation.
4. Enhances coordination- SHRM greatly enhances coordination among the various
functional centers and the top management. It also enables the firm to detect goal and
performance deviations early and prevent them eventually.
5. Develops a base for measurement- it makes it necessary to develop a quantifiable base
for measuring the efficacy of the various HR policies and practices.
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 6. Helps in exploitation of emerging opportunities- it enables the firm to pre-empt its
competitors by exploiting the emerging opportunities through a continuous scanning of
the external environment.

Barriers to S.H.R.M

1. Absence of long-term orientation- SHRM requires long-term planning, orientation and HR

intervention strategies among the top management and the HR mangers alike. However,
organisations often content themselves with short-term goals and gains.
2. Lack of adequate support from top management- in strategic human resource
management, HR managers must work at the top levels of management in shaping not
only the HR strategies but also the corporate strategies.
3. Fear of Failure- since SHRM reckons with many uncertainties and imponderables, HR
managers often hesitate to undertake strategic HR initiatives due to the fear of failure.
4. Resistance from labour unions- the introduction of SHRM requires extensive changes is
the work culture, HR practices, and processes. The real or perceived consequences of
such changes may frighten the employees. Consequently, the SHRM proposals may meet
with a strong resistance from the workers and the unions.
5. Absence of measurement techniques- unlike other functions of the firm, it is difficult to
quantify the efficiency of HR managers or policies in the absence of creditable HR
systems of measurement.

Strategic management

• Strategic management is the set of managerial decision and action that determines the
long-run performance of a corporation. It includes environmental scanning (both external
and internal), strategy formulation (strategic and long range planning), strategy
implementation, and evaluation and control. The study of strategic management therefore
emphasizes the monitoring and evaluating of external opportunities and threats in lights
of a corporation’s strengths and weaknesses.
• Strategic management involves four steps-
➢ Analyze the opportunities and threats or constraints that exists in the external
environment
➢ Formulate strategies that will match the organisation’s strengths and weaknesses with
the environmental threats and opportunities
➢ Implement the strategies
➢ Evaluate and control activities to ensure that the organisation’s objectives are achieved.

Strategic management process

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 1. Environmental scanning :-
• Environmental scanning has the management scan external environment for
opportunities and threats and internal environment for strengths and weaknesses. The
factor which are most important for corporation factor are referred as a strategic
summarized as SWOT standing for strengths, weaknesses, opportunities and threats.

Environmental scanning

External analysis
Internal analysis

a) External Analysis :-
• The external environment consist of opportunities and threats variables that outside the
organization.
Opportunities- is a favourable condition in the organisation’s environment which enables it to
consolidate and strength its position. Ex- economic boom, favourable demographic shifts, arrival
of new technologies, loosening of regulations.

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Threat- is an unfavourable condition in the organisation’s environment which creates a risk for,
or causes damage to , the organisation. Ex- economic down turn, unfavourable political,
unexpected shifts in consumer tastes
• External environment has two parts:
• Task environment
• Social environment
• Task environment- includes all those factors which affect the organisation and itself
affected by the organisation. These factors effects the specific related organizations.
These factors are shareholders community, labour unions, creditors, customers,
competitors etc,.
• Social environment- is an environment which includes those forces does not affect the
short run activities of the organization but it influenced the long run activities or decisions.
PEST analysis are taken for social environment PEST analysis stands for political and
legal, economic, socio-cultural logical and technological.

b) Internal Analysis :-
• Internal strengths and weaknesses/ internal assessment
Internal strengths and internal weaknesses are an organization’s controllable activities
that are performed especially well or poorly. They arise in the management, marketing,
finance/accounting, production/operations, research and development activities of a business.
Identifying and evaluating organizational strengths and weaknesses in the functional areas of a
business is an essential strategic-management activity.
Strength- is an inherent capacity which an organisation can use to gain strategic advantage. Ex-
good reputation among customers, resources experience, knowledge and capabilities.
Weaknesses- is an inherent limitation or constraint which creates strategic disadvantages. Ex-
gaps in capabilities, financial deadlines, low morale.

2. STRATEGY FORMULATION.

• A strategy formulate to execute the business activities. Strategy formulation includes

developing:-
➢ Vision and mission (the target of the business)
➢ Strength and weaknesses (strong points of business and also weaknesses)
➢ Opportunities and threats (these are related with external environment for the business)

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• Strategy formulation is also concerned with setting long term goals and objectives,
generating alternative strategies to achieve that long term goals and choosing particular
strategy to pursue.
• The consideration for the best strategy formulation should be as follows:-
a) Allocation of resources
b) Business to enter or retain
c) Businesses to divest or liquidate
d) Joint ventures or mergers
e) Whether to expand or not
f) Moving into foreign markets
g) Trying to avoid take over
LEVEL OF STRATEGY
• Strategies are formulated at three levels:
1. Corporate level,
2. Business unit level, and
3. Functional level
• Corporate-level Strategy:-  This is formulated by the top management of an organization
made up of more than one line of business. The corporate-level strategy of the family-
controlled Companies is to continuously innovate in all its business with right technology,
relentlessly cut costs and focus on the overseas markets. The major questions that need
to be answered at this stage are – What kinds of business should the company be
engaged in? What are the goals and expectations for each business? How should
resources be allocated to reach these goals?
• In formulating corporate-level strategies, the company should decide where it wants to
be- in 10 or 15 years hence, in at least eight areas- market standing, innovation,
productivity, physical and financial resources, profitability, managerial performance and
development, worker performance and attitudes, and social responsibility.
• Business-level Strategy:- While the major question at the corporate-level is, ‘ In what
industries or business should we be operating?”, the appropriate question at the business
unit level is , “How should we compete in the chosen industry or business?” A business
unit is an organizational subsystem that has a market, a set of competitors, and a goal
distinct from those of the other subsystems in the group.
• A single company that operates within one industry is also considered a business unit. For
instance, an independent company that builds and sells swimming pools is considered a
business unit. In such an organization, the corporate-level strategy and the business-unit
strategy are the same.
• Functional-level Strategy:- Each business unit will consist of several departments, such as
manufacturing, sales, finance and HRD. Functional level strategies identify the basic
courses of action that each of the departments must pursue in order to help the business
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 unit to attain its goals. In formulating functional level strategies, managers must be aware
that the different functions are interrelated. Each functional area, in pursuing its purpose,
must mesh its activities with activities of other departments. The strategy of one
functional area cannot be viewed in isolation. Rather, the extent to which all functional
strategies are integrated determines the effectiveness of the unit’s business strategy.
3) Strategy implementation
• Strategy implementation requires a firm to establish annual objectives, device policies,
motivating employees and allocate resources so that formulated strategies can be
executed. Strategy implementation includes developing strategy supportive culture,
creating an effective organisational structure, redirecting marketing efforts, preparing
budgets, developing and utilizing information system and linking employee compensation
to organizational performance.

4) Strategy evaluation
• Strategy evaluation helps determine the extent to which the company’s strategies are
successful in attaining its objectives. Basic activities involved in strategy evaluation are:-
• Establishing performance targets, standards and tolerance limits for the objectives,
strategies and implementation plans.
Traditional/Conventional HR versus Strategic HR
• STRATEGIC HR
• SHRM realizes that people can make or break an organisation because all decision made
regarding finance, marketing operations or technology are made by an organization's
people.
• It compels people at all levels to focus more on strategic issues rather than operational
issues.
• It believes that there is no best way to manage people in any given organisation.
• TRADITIONAL/CONVENTIONAL HR
• HR focus on employee relations, to partnership with internal and external groups.
• Transformation in nature, in that it helps the people and the organisation to adopt, learn
and act quickly.
• Is proactive and consider various time frames in a flexible manner.

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 Linking HR strategy with business strategy
• To be successful, it is required that all departments work hard to achieve business goals.
To achieve business goals, organisation devises business strategy. Thus business
strategy is the set of methods or plans to achieve business goals.
• It is a known fact that organisations run by human force. Human work force is an
important factor which can make or mar organisation. Thus HR strategy plays vital role to
meet the organization goals. So while devising HR strategy, care should be taken that it
helps in executing business strategy. 
• When business owners and managers formulate business plans and strategies, they
often leave out an important component of these plans. Human resources staff are often
not consulted nor invited to participate in the planning process. When marketing, sales,
manufacturing or finance are asked to implement their strategies and tactics for the

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 coming year, they may find themselves short-handed, or worse, with people with the
wrong aptitudes. Aligning HR with business strategies makes sense and helps ensure the
company can realize goals.
• With HR at the planning table, HR can forecast how many people will be needed and
with what skills. HR can inventory the current workforce to see who can be promoted to
new positions, who should be trained and how and what recruitment and outsourcing
strategies might be necessary to fulfill the plan.
• Hr strategy linked with Business Strategy in the form of :-
1. Job Analysis
2. Providing opportunity (Management Games, Workshops etc)
How HRM linked with Business Strategy.
1. Management deciding number of manpower according to the nature of job.
2. Optimize utilization of resource by skilled manpower.
3. Maintaining working condition through strategy formulation.
4. Remuralation, incentive, salary, wages as per business plan/ target.
5. Maintaining employee for organizational goal.
6. For better business strategy.
7. Dynamic in nature due to change in Govt. norms.
HRM linkage with TQM & productivity
Total quality management (TQM) consists of organization-wide efforts to install and make
permanent a climate in which an organization continuously improves its ability to deliver
high-quality products and services to customers. While there is no widely agreed-upon
approach, TQM efforts typically draw heavily on the previously developed tools and
techniques of quality control. TQM enjoyed widespread attention during the late 1980s
and early 1990s before being overshadowed by ISO 9000, 

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