Nature of HRM

• Human Resource Management (HRM) is a management function

that helps managers recruit, select, train and develop members for
an organization.
• The salient features of HRM:
1. Organizations are not mere bricks, mortar,
machineries or inventories. They are
people. It is the people who staff and
manage organizations.
2. HRM involves the application of
management functions and principles.
The functions and principles are
applied to acquisitioning, developing,
maintaining, and remunerating
employees in organizations.
3. Decisions relating to employees must
be integrated. Decisions on different
aspects of employees must be
consistent with other HR decisions.
4. Decisions made must influence the
effectiveness of an organization.
Effectiveness of an organization must
result in betterment of services to
customers in the form of high-quality
products supplied at reasonable costs.
5. HRM refers to a set of programs,
functions and activities designed and
carried out in order to maximize both
employee as well as organizational
effectiveness.
6. HRM focuses attention on action, rather
than on record keeping, written procedures
or rules. The problems of employees at
work are solved through rational policies.
7. HRM is all about people at work, both
as individuals and groups. It tries to put
people on assigned jobs in order to
produce good results. The resultant gains
are used to reward people and motivate
them toward further improvements in
productivity.
8. HRM is concerned with any
organizational decision which has
an impact on the workforce or the
potential workforce. The term
‘workforce’ signifies people working
at various levels, including workers,
supervisors, middle and top
managers. It is concerned with
managing people at work. It covers
all types of personnel.
Personnel work may take different shapes
and forms at each level in the organizational
hierarchy but the basic objective of achieving
organizational effectiveness through effective
and efficient utilization of human resources,
remains the same. It is basically a method of
developing potentialities of employees so that
they get maximum satisfaction out of their
work and give their best efforts to the
organization.
9. HRM is not a one shot deal. It
cannot be practiced only one
hour each day or one day a
week. It requires a constant
alertness and awareness of
human relations and their
importance in every day
operations.
 Scope of HRM
1. The scope of HRM is vast. All major activities
in the working life of a worker – from the time of
his or her entry into an organization until he or
she leaves – come under the purview of HRM.
Specifically, the activities included are – HR
planning, job analysis and design, recruitment
and selection, orientation and placement,
training and development, performance
appraisal and job evaluation, employee and
executive remuneration, motivation and
communication, welfare, safety and health,
industrial relations (IR) and the like.
2. The scope of HRM is very wide. Research in
behavioral sciences ,new trends in managing
knowledge workers and advances in the field
of training have expanded the scope of HR
function in recent years. The Indian Institute of
Personnel Management has specified the
scope of HRM thus:
i. Personnel Aspect: This is concerned with
manpower planning, recruitment, selection,
placement, transfer, promotion, training and
development, lay off and retrenchment,
remuneration, incentives, productivity, etc.
ii. Welfare Aspect: It deals with working
conditions and amenities such as
canteens, creches, rest and lunch
rooms, housing, transport, medical
assistance, education, health and
safety, recreation facilities, etc.
iii. Industrial Aspect: This covers union-
management relations, joint
consultations, collective bargaining,
grievance and disciplinary procedures,
settlement of disputes, etc.
 Evolution of HRM
The expression Human Resource
Management (HRM) is a relatively recent
title for all aspects of managing people in
an organization. A formal beginning of
HRM functions in India was made in
1929, when the Royal Commission on
Labour was set up by the Government of
India. Two years later the Commission
submitted its report recommending the
appointment of labour officers to look
after the employment and dismissal of
workers as well as their working
conditions.
The scope of the function of Labour Officer
was widened during the Second World
War, when such facilities as housing,
medical and recreational activities were
added to their existing responsibilities. In
the process the Labour Officer got
designated as Welfare Officer (W.O.).
The enactment of Industrial Disputes Act,
1946 and Factories Act 1947 further
added the management of leave, wages,
bonus and retirement in the scope of the
function of W.O.
Growth in the business, competition and
increasing size during sixties and seventies led
to the need for attracting and retaining talented
people. Hence formulating policies on human
resource planning, recruitment and selection,
training and development, performance and
potential appraisal, internal mobility and
compensation management etc. also became a
part of the functions of the W.O. who now
became the personnel manager. With the
increasing recognition of the importance of the
human resources and their contribution to the
survival of the organizations, personnel function
has now been redesignated as human resource
management function. Some of the reasons for
this transition have been the increasing
cost of labour, periodic stoppage of work,
government legislation, changes in
production and distribution
methodologies, information technology
and strategic use of employees’
contribution. Today the HRM function
can be seen as the amalgam of
organizational behavior, personnel
management, industrial relations and
labour legislation.
However, concern for the welfare of
workers in the management of business
enterprises has been in existence since
ages. Kautilya’s Arthashastra states that
there existed a sound base for
systematic management of resources
during as early as the 4th century BC.
Experts of HRM in our country have tried to
chronicle the growth of the subject only since the
1920s. This was the period when state
intervention to protect the interests of workers
was felt necessary because of the difficult
conditions which followed the First World War
and the emergence of trade unions. The Royal
Commission (1931) recommended the
appointment of labour-welfare officers to deal
with the selection of workers and to settle their
grievances. The Factories Act, 1948, made
appointment of welfare officers compulsory in
industrial establishments employing 500 or more
workers each.
In course of time, two professional bodies
, the Indian Institute of Personnel
Management (IIPM) and the National
Institute of Labour Management (NILM)
were set up. IIPM had its headquarters
at Kolkata and NILM at Mumbai. These
two places were the premier centers of
traditional industry (jute and cotton
respectively) in pre-Independent India.
The aftermath of the Second World War and
the country’s political independence witnessed
increased awareness and expectations of
workers. During 1960s, the personnel function
began to expand beyond the welfare aspect,
with labour welfare, IR and personnel
administration integrating into the emerging
profession called personnel management
(PM). Simultaneously, the massive thrust
given to the heavy industry in the context of
planned economic development, particularly
since the Second Five-Year Plan and the
accelerated growth of the public sector in the
national economy resulted in a shift in focus
towards professionalization of management.
By the 1970s, a shift in professional
values was discernible. It shifted from a
concern for welfare to a focus on
efficiency. In the 1980s, professionals
began to talk about new technologies,
HRM challenges and HRD. The two
professional bodies, IIPM and NILM,
merged in 1980 to form the National
Institute of Personnel Management
(NIPM).
In the 1990s, the emphasis shifted to
human values and productivity through
people. Reflecting this trend, the
American Society for Personnel
Administration (ASPA) was renamed as
the Society for Human Resources
Management (SHRM). Thus, beginning
in the 1920s, the subject of HRM has
grown into a matured profession.
 Strategic Role of Human Resource
Management
Since the 1990s, there has been an increased focus
on the strategic role of human resource
management (HRM). The strategic management
approach to HRM refers to the relationship between
human resource (HR) practices and the strategic
objectives, that is, the long-term goals of the
organization. With the increasing recognition of the
potential of human resources in providing competitive
advantage, organizations have begun to consider
employees as valuable ‘assets’ or ‘investments’. This
view has become more significant in today’s
knowledge economy that depends on the skill and
knowledge of the workforce. From being a routine,
administrative, and reactive function, the HR function
today has evolved to being proactive and strategic.
The past decade has seen HR researchers
and practitioners directing their attention
to important questions. For instance,
what is HR strategy? What factors
determine whether an organization
adopts a strategic approach to HRM? Is
there a relationship between the
characteristics of the organization and
the adoption of a particular strategic
human resource management (SHRM)
approach? Does an organization achieve
competitive advantage by linking HR
strategy with business strategy?
 Human Resource Strategy
Human resources refer to the people who
work in an organization. The term seeks
to communicate the belief that the
employees of an organization are not just
people, but valuable resources that help
an organization to achieve its objectives.
People are central to organizations. The
financial capital, technology, or processes
of the organization, by themselves,
cannot accomplish organizational goals.
These resources depend on human
resources for their effective and efficient
utilization.
HRM is concerned with a holistic approach towards
the management of people working in an
organization, who contribute to the achievement of
organizational objectives. Human resource
management ensures the most effective and
efficient use of human talent for accomplishing the
goals of an organization. In order to successfully
utilize and manage the human resource of an
organization to achieve organizational objectives,
each organization needs to develop a well-defined
HR strategy. Chandler defined ‘strategy’ as the
‘determination of the long term goals and
objectives of an organization, and the allocation of
resources necessary for carrying out these goals’.
Like strategy, HR strategy is concerned
with two key elements:
1. Determining the strategic objectives
(What goals is the strategy supposed
to achieve? For example, the goals
may be high productivity, reduced
accidents, etc.).
2. Developing a plan of action (How will
the human resources be organized
and allocated to accomplish the
objectives of the organization?).
Human resource strategy, therefore,
involves the planned and effective use of
human resources by an organization to
help it to gain or maintain an edge over its
competitors. This definition indicates the
central role that the people of the
organization play in the organizational
pursuit of a competitive advantage. An
organization is said to achieve competitive
advantage when it is able to gain and
maintain an edge over its competitors,
thereby increasing its market share.
The centrality of people is most evident in
knowledge-based organizations, such
as software and information services,
where the difference between success
and failure depends on the skills and
knowledge of its workforce rather than
on the level of technology.
Human Resource Planning
Human resource planning is ‘the process
of analyzing and identifying the need for
and availability of human resources so
that the organization can meet its
objectives’. It helps determine the HR
requirements of firms and develop
strategies for meeting those
requirements so that the organization
achieves its objectives. It seeks answers
to questions such as:
1. What are the implications of proposed
strategic plans with respect to human
resources?
2. What are the implications of proposed
strategic plans for staffing, training and
development, and management succession?
3. How will a projected shortfall in the supply of
skilled employees impact various HR
practices of the firm?
4. What are the implications for attracting,
retaining, motivating, and rewarding workers
with skills that are in short supply?
Human resource planning is not carried out in a
vacuum. Organizational goals and objectives
provide the context for HRP. The HRP process
examines the implications of business
strategies and goals on human requirements –
the number and type of people required; the
training they will require; and whether the
organization will have to employ additional
employees. Hence, HRP is a proactive
process. It anticipates changes in industry,
marketplace, economy, society, and technology
to ensure that the organization is well prepared
to meet these changes when they occur.
Earlier, HRP used to be a reactive process. Business
needs defined HR needs. Strategic business decisions
were taken in isolation without appreciating the HR
implications of those decisions. Today, however,
changes in business, economic, and social
environments have led to an integration of business
planning with HRP and also to a long-term, proactive
perspective of HRP. In the contemporary business
environment, human resources are part of strategic
planning process. Human resource issues are
considered at every stage of strategic plans (mergers,
acquisitions, expansions, etc.) from planning to
implementation. HRP is essentially the means to the
end of building more competitive organizations.
The quality of HR and their contribution to the
organization is of strategic importance for
bringing about competitive advantage for the
firm. For example, a public sector bank
defined its business strategy as ‘improving
corporate image through improved customer
service’. Service improvement depends on
the quality of employees and their skills. An
initial diagnosis revealed that the employees
of the bank lacked basic interpersonal and
communication skills. A series of training
programs was designed and implemented to
bridge this skill gap. Armed with the required
skills, the employees helped the bank
achieve its business objective of ‘improved
customer service’. Therefore, it is
important for strategic business plans to
include planning for human resources, and
for HR plans to support business plans.
It is clear that HRP does not take place in
isolation. It is guided by organizational
goals and objectives. Different business
strategies result in different HR issues,
since strategic plans have HR implications.
Business strategy directly affects HR
strategies and activities.
 Recruitment and Placement
JOB ANALYSIS
• Job analysis was almost non-existent three
decades ago. The major thrust behind the job
analysis has been the civil rights movement which
requires that the factors governing hiring, firing
and promoting should be job-related. The only
means of establishing this job-related factor has
been to identify what the job entails and what an
incumbent worker must possess to perform
successfully on the job. Job analysis helps
establish this.
• A synonym for job is work. Work is
understood as physical and mental
activity that is carried out at a particular
place and time, according to
instructions, in return for money.
• Job analysis refers to the process of
collecting information about a job. The
process of job analysis results in two
sets of data: (i) job description and (ii)
job specification.
Job description indicates what all a job
involves –tasks and responsibilities tagged on
to a job, job title, duties, machines, tools and
equipment, working conditions and hazards
form a part of job description.
The capabilities that the job-holder should
possess form part of job specification.
Education, experience, training, judgment,
skills, communication skills and the like are a
part of job specification.
Job analysis has its impact on all functions of HRM.
Job analysis, if properly done, will enhance the
effectiveness of all HR activities.
Job Description will include a statement containing
items such as
Job title
Location
Job summary
Duties
Machines, tools, and equipment
Materials and forms used
Supervision given or received
Working conditions
Hazards
Job Specification includes a statement of human
qualifications necessary to do the job. It usually
contains such items as
Education
Experience
Training
Judgment
Initiative
Physical effort
Physical skills
Responsibilities
Communication skills
Emotional Characteristics
Unusual sensory demands such as sight, smell,
hearing
• Job Description and Job Specification in
Job Analysis lay the foundation for
• Human resource planning
• Employee hiring
• Training and development
• Performance appraisal
• Salary and wage fixation
• Safety and health
Recruitment

Some of the external sources of supply of

projected human resource in India are as
follows:
Employment Exchange: Set up under
Compulsory Notification of Vacancies Act,
1959, these exchanges supply names of
potential candidates to all establishments,
in the private and public sector, where
more than 25 persons are employed.
According to the Act, employment
exchanges provide information about the
availability of potential workforce, up to the
level of supervisory non-gazetted
positions.
Employment Agencies: A number of private
agencies, including computerized ones
(Naukri.com, for example), keep data of potential
candidates. This information is provided to
organizations looking for workforce.
Professional Association: A number of
professional associations, like Institute of
Engineers, All India Medical Association, All
India Management Association etc. carry
personal information about people in specialized
areas, who are available for suitable job
openings.
Campus Recruitment: Of late, a large
number of organizations have started
visiting campuses of institutions offering
professional education for meeting their
needs for managerial or supervisory
workforce.
In addition, the organization can also
generate applications through
advertisements in both the print and
electronic media.
Internal Recruitment
Internal recruitment seeks applicants for positions
from those who are currently employed. Internal
sources include present employees, employee
referrals, former employees, and formal
applicants. There are three major advantages of
internal recruitment. First, it is less costly than
external recruiting. Second, firms typically have
a better knowledge of the internal candidates’
skills and abilities than the ones acquired
through external recruiting. Third, an
organizational policy of promoting from within
can enhance employees’ morale, organizational
commitment and job satisfaction.
Selection
Human resource planning identifies employment
needs, job analysis determines the qualifications
needed and recruiting provides a pool of
applicants for selection. Selection is much more
than choosing the best candidate. It is an
attempt to strike a happy balance between what
the applicant can and wants to do and what the
organization requires. Various selection tools
and techniques are used to find people with
relevant qualifications who are willing to accept
the job offers and give satisfactory service and
performance in the long run.
To select means to choose. Selection is the
process of picking individuals who have relevant
qualifications to fill the jobs in an organization.
The basic purpose is to choose the individual
who can most successfully perform the job, from
the pool of qualified candidates.
To meet this goal, the company obtains and
assesses information about the applicants in
terms of age, qualifications, skills, experience,
etc. The needs of the job are matched with the
profile of candidates. The most suitable person
is then picked up after eliminating the less
suitable applicants through successive stages of
the selection process.
Selection is usually a series of hurdles or steps.
Each one must be successfully cleared before
the applicant proceeds to the next. The
sequencing of steps may also vary from job to
job and organization to organization. For
example, some organizations may give
importance to testing, while others may
emphasize interviews and reference checks.
Similarly, a single brief selection interview might
be enough for applicants for lower level
positions, while applicants for managerial jobs
might be interviewed by a number of people.
A preliminary interview is generally planned by
large organizations to cut the costs of selection
by allowing only eligible candidates to go
through the further stages in selection. A junior
executive from the HR Department may elicit
responses from applicants on important items
determining the suitability of an applicant for a
job such as age, education, experience, pay
expectations, aptitude, location choice etc. This
‘courtesy interview’ as it is called, helps the
department screen out the obvious misfits. If the
department finds the candidate suitable, a
prescribed application form is given to the
applicants to fill and submit.
Screening Interview
Application blank or form is one of the most
common methods used to collect information on
various aspects of the applicants’ academic,
social, demographic, work-related background
and references. It is a brief history sheet of an
employee’s background. It is always better to
ask the applicant to sign a statement that the
informaton contained on the resume or
application blank is true and that he or she
accepts the employer’s right to terminate the
candidate’s employment if any of the information
is found to be false at a later date.
Selection Testing
Another important decision in the selection
process involves applicant testing and the kinds
of tests to use. A test is a standardized,
objective measure of a person’s behavior,
performance or attitude. It is standardized
because the way the test is carried out, the
environment in which the test is administered
and the way individual scores are calculated –
are uniformly applied. It is objective in that it tries
to measure individual differences in a scientific
way, giving very little room for individual bias
and interpretation.
Some of the commonly used employment
tests are mentioned below:
Intelligence tests: These are mental ability
tests. They measure the incumbent’s
learning ability and also the ability to
understand instructions and make
judgments. Intelligence tests do not
measure any single trait, but rather several
abilities such as memory, vocabulary,
verbal fluency, numerical ability,
perception, spatial visualization, etc.
Aptitude Tests: Aptitude tests measure an
individual’s potential to learn certain skills
– clerical, mechanical, mathematical, etc.
These tests indicate whether or not an
individual has the ability to learn a given
job quickly and efficiently.
Personality Tests: Personality tests are
used to measure basic aspects of an
applicant’s personality such as motivation,
emotional balance, self-confidence,
interpersonal behaviour, etc. The most
frequently used tests are the Manifest
Anxiety Scale, Minnesota Multiphasic
Personality Inventory, the California
Psychological Inventory, Edwards
Personal Performance Schedule ,etc.
Selection Interview
Interview is the oral examination of
candidates for employment. This is the
most essential step in the selection
process. In this step, the interviewer tries
to obtain and synthesize information about
the abilities of the interviewee and the
requirements of the job. Interview gives
the recruiter an opportunity to:
1. size up the interviewee’s
agreeableness;
2. ask questions that are not covered in tests;
3. obtain as much pertinent information as
possible;
4. assess subjective aspects of the candidate –
facial expressions, appearance,
nervousness and so forth;
5. make judgments on interviewee’s enthusiasm
and intelligence;
6. give facts to the candidate regarding the
company, its policies, programmes etc., and
promote goodwill towards the company.
Medical Examination
Certain jobs require physical qualities like
clear vision, acute hearing, unusually high
stamina, tolerance of arduous working
conditions, clear tone of voice etc. Medical
examination reveals whether or not the
candidate possesses these qualities or
not.
Hiring Decision
The Line Manager concerned has to make the
final decision now – whether to select or reject a
candidate after soliciting the required information
through different techniques discussed earlier. A
true understanding between line managers and
HR managers should be established so as to
facilitate good selection decisions. After taking
the final decision, the organization has to
intimate the decision to the successful
candidates. The organization sends the
appointment order to the successful candidates
either immediately or after some time,
depending upon its time schedule.
Placement is an important human resource
activity. If neglected, it may create employee
adjustment problems leading to absenteeism,
turnover, accidents, poor performance etc. The
employee will also suffer seriously. He/she may
quit the organization in frustration, complaining
bitterly about everything. Proper placement is,
therefore, important to both the employee and
the organization. The benefits of placements
may be summarized thus:
The employee is able to:
1. Show good results on the job
2. Get along with people easily
3. Keep his spirits high, report for duty regularly
4. Avoid mistakes and accidents