CHAPTER ONE

OVERVIEW OF HUMAN RESOURCE MANAGEMENT

INTRODUCTION

Businesses are diverse. Prisons, restaurants, oil companies, corner shops, fire brigades, churches,
hotel chains, hospitals, schools, newspapers, charities, doctors’ and dentists’ surgeries,
professional sports teams, airlines, barristers’ chambers and universities are all businesses in the
sense that they have overall corporate missions to deliver and these have to be achieved within
financial constraints. They all need to have their human resources managed, no matter how much
some of the resourceful humans may resent aspects of the management process which limit their
individual freedom of action.

Managing resourceful humans requires a constant balancing between meeting the human
aspirations of the people and meeting the strategic and financial needs of the business. At times
the balance can shift too far in one direction. Through the 1960s and 1970s the human
aspirations of senior people in companies and public sector operations tended to produce large
staffs, with heavyweight bureaucracies and stagnant businesses. This chapter discuss about an
over view of human resource management including, Definition, objectives and importance of
human resource Management and also its evolution.

1.1. DEFINITION AND BACKGROUND OF HRM

We often hear the term Human Resource Management, Employee Relations and Personnel
Management used in the popular press as well as by Industry experts. Whenever we hear these
terms, we conjure images of efficient managers busily going about their work in glitzy offices. In
this part, we look at the question “what is HRM?” by giving a broad overview of the topic and
introducing the readers to the practice of HRM in contemporary organizations.

HRM is a managerial function that tries to match an organization’s needs to the skills and
abilities of its employees. The functions covers the fields of staffing (hiring people), retention of
people, pay and perks(bonuses) setting and management, performance management, change
management and taking care of exits from the company to round off the activities.

Human Resource Management is responsible for how people are managed in the organizations.
It is responsible for bringing people in organization helping them perform their work,
compensating them for their work and solving problems that arise. The definitions emphasize the
difference between Personnel Management as defined in the second paragraph and HRM as
described in the third paragraph. To put it in one sentence, personnel management is essentially
“workforce” centered whereas human resource management is “resource” centered. The key
difference is HRM in recent times is about fulfilling management objectives of providing and
deploying people and a greater emphasis on planning, monitoring and control.

Human resource management is defined as a strategic and coherent approach to the

management of an organization’s most valued assets – the people working there who
individually and collectively contribute to the achievement of its objectives.

HRM is the study of activates regarding people working in an organization. It is a managerial

function that tries to match an organization’s needs to the skills and abilities of its employees.

Whatever the definition we use the answer to the question as to “what is HRM?” is that it is all
about people in organizations. No wonder that some MNC’s (Multinationals) call the HR
managers as People Managers, People Enablers and the practice as people management. In the
21st century organizations, the HR manager or the people manager is no longer seen as someone
who takes care of the activities described in the traditional way. In fact, most organizations have
different departments dealing with Staffing, Payroll, and Retention etc. Instead, the HR manager
is responsible for managing employee expectations vis-à-vis the management objectives and
reconciling both to ensure employee fulfillment and realization of management objectives.

The three key terms… human, resource, and management. Human (Homo-sapiens – Social
animal), Resources (Human, Physical, Financial, Technical, Informational etc) and
Management (Function of Planning, Organizing, Leading & Controlling of organizational to
accomplish goals efficiently and effectively)

FUNCTIONS OF HRM

Basic functions that all managers perform: planning, organizing, staffing, leading, and
controlling. HR management involves the policies and practices needed to carry out the staffing
(or people) function of management. HRM department regardless of the organization’s size must
perform following human resource management functions…

• Staffing (HR planning, recruitment and selection)

• Human resource development
• Compensation and benefits
• Safety and health
• Employee and labor relations

1.2 IMPORTANCE OF HRM

The success of organizations increasingly depends on people-embodied know-how- the

knowledge, skill, and abilities imbedded in an organization's members. This knowledge base is
the foundation of an organization’ core competencies (integrated knowledge sets within an
organization that distinguish it from its competitors and deliver value to customers).

HRM plays important role in creating organizations and helping them survive. Our world is an
organizational world. We are surrounded by organizations and we participate in them as
members, employees, customers, and clients. Most of our life is spent in organization, and they
supply the goods and services on which we depend to live. Organizations on the other hand
depend on people, and without people, they would disappear.

Factors Contributing to Growing of HRM

A. Accommodation to workers' needs: Workers are demanding that organizations

accommodate their personal needs by instituting such programs as flexible work schedules,
parental leave, child-care and elder-care assistance, and job sharing. The human resource
department plays a central role in establishing and implementing policies designed to reduce the
friction between organizational demands and family responsibilities.

B. Increased complexity of the Manager’s job: Management has become an increasingly

complex and demanding job for many reasons, including foreign competition, new technology,
expanding scientific information, and rapid change. Therefore, organizations frequently ask
human resource managers for assistance in making strategic business decisions and in matching
the distinctive competencies of the firm's human resources to the mission of the organization.

Executives need assistance from the human resource department in matters of recruitment,
performance evaluation, compensation, and discipline.

C. Legislation and litigation: the enactment of state laws has contributed enormously to the
proliferation and importance of human resource functions. The record keeping and reporting
requirements of the laws are so extensive that to comply with them, many human resource
departments must work countless hours and often must hire additional staff. Four areas that have
been influenced most by legislation include equal employment, Compensation, safety, and labor
relations. An organization's failure to comply with laws regulating these areas can result in
extremely costly back-pay awards, class action suits, and penalties.

D. Consistency: Human resource policies help to maintain consistency and equity within an
organization. Consistency is particularly important in compensation and promotion decisions.
When managers make compensation decisions without consulting the human resource
department the salary structure tends to become very uneven and unfair promotion decisions also
may be handled unfairly when the HR department does not coordinate the decision of individual
manger.

E. Expertise: Now days there exist sophisticated personnel activities that require special
expertise. For example, researchers have developed complex procedures for making employee-
selection decisions; statistical formulas that combine interviews, test scores, and application-
blank information have replaced the subjective interviews traditionally used in making selection
decisions. Similarly, many organizations have developed compensation systems with elaborate
benefits packages to replace simple hourly pay or piece rate incentive systems

F. Cost of Human Resource: Human resource activities have become increasingly important
because of the high cost of personal problem. The largest single expense in most organizations is
labor cost, which is often considerably higher than the necessary because of such problems as
absenteeism tardiness and discrimination.

Why are we concerned with HRM?

1. Helps you get results - through others: Different managerial techniques help mangers to
direct the performance of employees in desirable direction in order to achieve the organizational
objectives. Through the efforts of others working in an organization, managers get things done
that require effective human resource management.

2. Helps you avoid common personnel mistakes: Qualified HR mangers utilize organization
resources in such a way that helps to avoid common personnel mistakes like the following…

 Hiring the wrong person for the job

 Experiencing high turnover
 Finding employees not doing their best
 Having your company taken to court because of your discriminatory actions
 Having your company cited under federal occupational safety laws for unsafe practices
 Allowing a lack of training to undermine your department’s effectiveness
 Committing any unfair labor practices

3. Helps you to gain Competitive Advantage: among all the resources possessed by the
organizations it is only Manpower or the Human resources that create the real difference.
Because all organizations can have the same technology, they can possess same type of financial
resources, same sort of raw material can be used to produce the goods and services but the
organizational source that can really create the difference is work force of the organization.
Therefore they are the main sources of innovation creativity in the organizations that can be used
as a competitive advantage. In today’s competitive environment, these are the people which can
create competitive advantageous for the organizations.

The world around us is changing. No longer can we consider our share of the “good Life” given.
If we are to maintain some semblance of that life, we as individual, as organizations, as society
will have to fight actively for it an increasingly competitive global environment. If organizations
are able to manage its work force efficiently/effectively this will be beneficial for all
stakeholders (Organization, Employees and Society).
CHALLENGES/ISSUES OF MANAGING HRs IN PRESENT ERA

Following are the main issues that are faced by the mangers to manage the workforce of today’s
organization for achievement of objectives.

A. To Attract People: People will be interested to join any organization if it is providing them
quality working environment, attractive benefit and opportunities to excel in future. Keeping in
view the opportunities in the market, the first issues will be to attract good people for your
organization.

B. To Develop People Development: is related to provide the opportunities for training and
development to match the skills to job in particular areas. It requires careful need assessment for
training and selecting effective training methods and tools. After attracting/selecting, Continuous
development of workforce of the organization leads towards development of the organization. So
that they will start playing their important role in the organization.

C. To Motivate: Motivation means to influence performance of others and to redirect the efforts
in desirable direction by using different motivational tools that can help in fulfilling the mission
of organization. Third important issues/concern will be to keep your workforce motivated so that
they should keep on delivering effectively.

D. To Keep Talented People: this is related to retention of workforce in organization and to

take steps that can prevent undesirable detachments of talented and motivated workers from the
organization.

1.3. HUMAN RESOURCE MANAGMENT OBJECTIVES

Objectives are pre-determined goals to which individual or group activity in an organization is

directed. Objectives of personnel management are influenced by organizational objectives and
individual and social goals. The fundamental objective of any organization is survival, growth
and / or profits.

Institutions procure and manage various resources including human to attain the specified
objectives. Thus, human resources are managed to divert and utilize their resources towards and
for the accomplishment of organizational objectives. Therefore, basically the objectives of HRM
are drawn from and to contribute to the accomplishment of the organizational objectives. The
other objectives of HRM are to meet the needs, aspirations, values and dignity of individual
employees and having due concern for the socio-economic problems of the community and the
country.
The objectives of HRM may be as follows:
 To ensure effective utilization and maximum development of human resources.
 To ensure respect for human beings.
 To identify and satisfy the needs of individuals.
 To ensure reconciliation of individual goals with those of the organization.
 To achieve and maintain high morale among employees.
 To provide the organization with well-trained and well-motivated employees.
 To increase to the fullest the employee’s job satisfaction and self-actualization.
 To develop and maintain a quality of work life.
 To be ethically and socially responsive to the needs of society.
 To develop overall personality of each employee in its multidimensional aspect.
 To enhance employee’s capabilities to perform the present job.
 To equip the employees with precision and clarity in transaction of business.
 To inculcate the sense of team spirit, team work and inter-team collaboration.

1.4. THE EVOLUTION OF PERSONNEL AND HR MANAGEMENT

The history of Human Resources starts to be interesting with the evolution of the large factories.
It was in the 18th century. The rapid development of new industrial approach to work changed
the world dramatically. The quick and cheap production became a priority for many industries.
The factories hired thousands of workers, who worked up to 16 hours a day.

Soon, many entrepreneurs discovered that satisfied employees are more effective and can
produce more than depressed employees. Many factories started to introduce voluntary programs
for employees to increase their comfort and satisfaction. On the other hand, the government
started to intervene to introduce some basic human rights and the work safety legislation.

The second rapid development of Human Resources started in the beginning of 20th century.
Most organizations introduced the Personnel Management. The personnel department had large
responsibilities. It was dealing with issues, introducing the new law requirements. It had the
responsibility for the implementation of different social and work place safety programs.
Everything was focused on the productivity of employees. The regular productivity increments
were the key measure for the management of employees.

The significant change was introduced after the 2nd World War because the military developed
many training programs for new soldiers. After the war, the training became a respected process
in personnel department. During this period, the trade unions evolved. The trade unions
changed the rules of the game. The employer got a strong partner to discuss with. Trade unions
introduced many improvements at no significant costs for the employer. Today, trade unions are
not as strong as they were used to be, but many organizations still benefit or suffer from a strong
presence of trade unions in their factories.

The real HR Revolution began in 70’s of the 20th century. The technology and the globalization
have changed the rules of the game. Most HR Functions are running complex HRIS solutions,
which make information about employees available anywhere and anytime to managers and HR
Professionals.

The economy of the wealthy western countries shifted towards the services economy. The
quality of services became the crucial competitive advantage. HR became necessary because the
structure of the workforce changed. The leadership development was the right answer.
Managers and leaders have to think global today; they have to understand to different cultural
backgrounds. The corporate culture cannot be country specific; it has to reflect many nations
working for the organization. This is a fantastic opportunity for Human Resources. Human
Resources Management is global today. The global HR policies drive processes in different
countries, but the processes produce comparable results. The employees relocate from country to
country.

The future of Human Resources is bright. The globalization cannot be stopped because nations
collaborate. The organizations become less country specific, and they cannot identify themselves
with one country. New technologies will bring other revolutions to offices. The commute
working is standard today, but it will become a norm. The technology will connect employees as
they would sit in the next cubicle. iPads will allow quick and instant access to information about
employees and managers will be able to make all decisions and approvals online. However, the
future of Human Resources will be about new networking methods and how to make employees
know each other