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Chapter 1 Introduction to HRM

Meaning, def, objective, scope and importance of HRM


Meaning:
Before we define HRM, it seems pertinent to first define the term human
resources. In common parlance, human resources means the people. However,
different management experts have defined human resources differently. For
example, Michael J. Jucius has defined human resources as a whole consisting of
inter-related, inter-dependent and interacting physiological, psychological,
sociological and ethical components.
According to Leon C. Megginson From the national point of view human
resources are knowledge, skills, creative abilities, talents, and attitudes obtained
in the population; whereas from the view-point of the individual enterprise, they
represent the total of the inherent abilities, acquired knowledge and skills as
exemplified in the talents and aptitude of its employees.
Let us now define human resource management.
In simple words, HRM is a process of making the efficient and effective use of
human resources so that the set goals are achieved. Let us also consider some
important definitions of HRM.
According to Flippo Personnel management, or say, human resource
management is the planning, organizing, directing and controlling of the
procurement development compensation integration, 4intenance, and separation
of human resources to the end that individual, organizational and social
objectives are accomplished.
Objectives:
The primary objective of HRM is to ensure the availability of right people for right
jobs so as the organizational goals are achieved effectively.
This primary objective can further be divided into the following sub-objectives:
1. To help the organization to attain its goals effectively and efficiently by
providing competent and motivated employees.
2. To utilize the available human resources effectively.
3. To increase to the fullest the employees job satisfaction and self-actualization.
4. To develop and maintain the quality of work life (QWL) which makes
employment in the organization a desirable personal and social situation.
5. To help maintain ethical policies and behavior inside and outside the
organization.

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6. To establish and maintain cordial relations between employees and


management.
7. To reconcile individual/group goals with organizational goals.
The scope of HRM is extensive and far-reaching. Therefore, it is very difficult to
define it concisely. However, we may classify the same under following heads:
HRM in Personnel Management: This is typically direct manpower
management that involves manpower planning, hiring (recruitment and
selection), training and development, induction and orientation, transfer,
promotion, compensation, layoff and retrenchment, employee productivity. The
overall objective here is to ascertain individual growth, development and
effectiveness which indirectly contribute to organizational development.
It also includes performance appraisal, developing new skills, disbursement of
wages, incentives, allowances, traveling policies and procedures and other
related courses of actions.
HRM in Employee Welfare: This particular aspect of HRM deals with working
conditions and amenities at workplace. This includes a wide array of
responsibilities and services such as safety services, health services, welfare
funds, social security and medical services. It also covers appointment of safety
officers, making the environment worth working, eliminating workplace hazards,
support by top management, job safety, safeguarding machinery, cleanliness,
proper ventilation and lighting, sanitation, medical care, sickness benefits,
employment injury benefits, personal injury benefits, maternity benefits,
unemployment benefits and family benefits.
It also relates to supervision, employee counseling, establishing harmonious
relationships with employees, education and training. Employee welfare is about
determining employees real needs and fulfilling them with active participation of
both management and employees. In addition to this, it also takes care of
canteen facilities, crches, rest and lunch rooms, housing, transport, medical
assistance, education, health and safety, recreation facilities, etc.
HRM in Industrial Relations: Since it is a highly sensitive area, it needs careful
interactions with labor or employee unions, addressing their grievances and
settling the disputes effectively in order to maintain peace and harmony in the
organization. It is the art and science of understanding the employment (unionmanagement) relations, joint consultation, disciplinary procedures, solving
problems with mutual efforts, understanding human behavior and maintaining
work relations, collective bargaining and settlement of disputes.
The main aim is to safeguarding the interest of employees by securing the
highest level of understanding to the extent that does not leave a negative
impact on organization. It is about establishing, growing and promoting industrial
democracy to safeguard the interests of both employees and management.
Importance of Human Resource Management
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An organization cannot build a good team of working professionals without good


Human Resources. The key functions of the Human Resources Management
(HRM) team include recruiting people, training them, performance appraisals,
motivating employees as well as workplace communication, workplace safety,
and much more. The beneficial effects of these functions are discussed here:
Recruitment and Training
This is one of the major responsibilities of the human resource team. The HR
managers come up with plans and strategies for hiring the right kind of people.
They design the criteria which is best suited for a specific job description. Their
other tasks related to recruitment include formulating the obligations of an
employee and the scope of tasks assigned to him or her. Based on these two
factors, the contract of an employee with the company is prepared. When
needed, they also provide training to the employees according to the
requirements of the organization. Thus, the staff members get the opportunity to
sharpen their existing skills or develop specialized skills which in turn, will help
them to take up some new roles.
Performance Appraisals
HRM encourages the people working in an organization, to work according to
their potential and gives them suggestions that can help them to bring about
improvement in it. The team communicates with the staff individually from time
to time and provides all the necessary information regarding their performances
and also defines their respective roles. This is beneficial as it enables them to
form an outline of their anticipated goals in much clearer terms and thereby,
helps them execute the goals with best possible efforts. Performance appraisals,
when taken on a regular basis, motivate the employees.
Maintaining Work Atmosphere
This is a vital aspect of HRM because the performance of an individual in an
organization is largely driven by the work atmosphere or work culture that
prevails at the workplace. A good working condition is one of the benefits that
the employees can expect from an efficient human resource team. A safe, clean
and healthy environment can bring out the best in an employee. A friendly
atmosphere gives the staff members job satisfaction as well.
Managing Disputes
In an organization, there are several issues on which disputes may arise between
the employees and the employers. You can say conflicts are almost inevitable. In
such a scenario, it is the human resource department which acts as a consultant
and mediator to sort out those issues in an effective manner. They first hear the
grievances of the employees. Then they come up with suitable solutions to sort
them out. In other words, they take timely action and prevent things from going
out of hands.
Developing Public Relations
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The responsibility of establishing good public relations lies with the HRM to a
great extent. They organize business meetings, seminars and various official
gatherings on behalf of the company in order to build up relationships with other
business sectors. Sometimes, the HR department plays an active role in
preparing the business and marketing plans for the organization too.
Any organization, without a proper setup for HRM is bound to suffer from serious
problems while managing its regular activities. For this reason, today, companies
must put a lot of effort and energy into setting up a strong and effective HRM.

Changing role of HRM:


There are an incredible number of pressures on today's organizations. To name a
few: environmental pressures such as increasing globalization, rapid
technological change, and tougher competition; organizational changes such as
new organizational alliances, new structures and hierarchies, new ways of
assigning work, and a very high rate of change; changes in the workforce,
including employees' priorities, capabilities, and demographic characteristics.
Within these pressured organizations, there is a need for (and opportunity for)
the human resource function to play a critical role in helping organizations
navigate through these transitions. In order to play this role, however, HR will
have to increase its real and perceived value.
The role of human resources has been evolving for some time. The shift from
"personnel" to "human resources," for example, was part of the movement to
acknowledge the value of employees as an organizational resource, and was an
attempt to remove some of the stigma that was coming to be associated with
slow, bureaucratic personnel departments. This shift in label was accompanied
by a call for HR to become a strategic partner with the leaders of the business-to
contribute to significant business decisions, advice on critical transitions, and
develop the value of the employees-in short, to have a seat at the table.
Making the shift to a new HR role will raise unique issues for every HR group that
attempts it, but there are some common steps and activities that will increase
the likelihood of success. Some of these steps and activities are:
Strong HR leadership. As with any major change effort, a strong leader can
develop a clear vision, motivate others to share that vision, and help them work
toward achieving it. In order to change the role of HR in an organization, the HR
leader will need to work both within the HR group and with the organizational
leaders to reshape everyone's expectations of what HR can and will deliver. The
success of the change will depend upon HR's ability to meet the real needs of the
organization and the credibility it develops.
Acute future orientation. One of the ways that HR can provide value is to
understand how changing environmental, organizational, and workforce factors
will likely influence the business, anticipate the associated HR needs, and be
prepared to deliver appropriate solutions to meet those needs. By maintaining a
focus on workplace trends, for instance, HR can prepare to evaluate the impact
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that particular changes are likely to have on an organization's people and


processes, and be prepared to work with the business leaders to decide how to
respond-being ahead of the curve, not behind it. For example, one movement
that is likely to have significant impact on the way people are hired, managed,
and valued is that of intellectual capital. A "new role" HR department is one that
has learned about intellectual capital and its implications, evaluated the impact
on current practice, and developed ideas and recommendations for changing HR
practice and other business processes.
Flexibility and creativity. An HR group that is successful in the future will likely
be one that is responsive to the changing needs of its client organization.
Responsiveness in the changing world of work will require being flexible-as the
organizations change, so will their needs and priorities. In addition, traditional
activities and processes may not be sufficient to meet the unique needs of the
future-HR leaders will likely rely on creativity of their groups to achieve effective
results. Increasing globalization of the market will create a need for both
flexibility and creativity as businesses try to succeed in new locations, with a new
workforce, and with new customers
Delivering value. Although this is not a new challenge for HR, it remains a critical
one. HR is still perceived by many within today's organizations as simply a nonrevenue generating function. It is important to make apparent the value provided
by working with the management team to hire the right people, manage them
well, pay them appropriately, and build a working environment that encourages
success. Beatty and Schneier (1997) extended the concept of delivering value
within the organization by arguing that HR must deliver economic value to the
customers, as well as to employees.
Growth of HR function in India:1. The Report of the Royal Commission on Labour in India:
Human resource management in India dates back to the Report of the Royal
Commission on labour in India (1929-31) which recommended the appointment
of labour officers to deal with recruitment in order to check corrupt practices in
industries in India, particularly in areas of selection of workers. The Royal
Commission observed that:
(i) The jobber should be excluded from the engagement and dismissal of labour
and that, instead, a labour officer is appointed for the purpose.
(ii) The qualities required of a labour officer should be integrity, personality,
energy and the gift of understanding individuals and he should have a linguistic
facility.
If he is of the right type, the workers will rapidly team to place confidence in him
and regard him as a friend.
(iii) All labour should be engaged by him, and none should be dismissed without
consulting him and
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(iv) The labour officer should fulfill many duties and should particularly initiate
and administer welfare measures.
2. Appointment of Labour Officers:
Labour officers were entrusted with the responsibility of promoting welfare
activities. They functioned as industrial relations officers to handle grievances.
The Bombay Mill Owners Association in Bengal appointed Iabour officers to settle
grievances and disputes.
3. The Second World War:
During the Second World War, the need for enlisting labour support for the war
effort was considered imperative.
These officers were generally entrusted with the handling of welfare and labour
administration. They were to deal with working conditions, canteens, ration
shops, recreation facilities, medical facilities, workers housing etc.
The Second World War resulted in welfare officers being appointed by
government as well as industry. The function of the welfare officers included
welfare activities, personnel activities and industrial relations.
4. Enactment of Industrial Disputes Act:
The enactment of the Industrial Disputes Act 1947 made adjudication
compulsory. This made the welfare officer handle disputes and adjudicate
relating to conditions of service, wages, benefits etc.
The welfare officer thus became industrial relations officers. As a result
employers employed welfare officers with a legal background.
5. Enactment of Factories Act:
Section 49 of the Factories Act 1948 made it obligatory for factories employing
500 or more workers to appoint welfare officers.
A welfare officer had a list of duties laid down for him. Thus, they had to perform
activities concerned with welfare, personnel administration and industrial
relations.
6. 1960 And After:
Till 1960, recruitment was untouched by law but the rapid growth of industry and
the consequent demand for skilled and semi-skilled workers led to the
government enacting the Employment Exchange Act, 1959, to regulate
recruitment of workers and the Apprentice Act, 1961, to regulate the training of
workers to some extent.
7. In India:

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Thus, human resource management in India began with industrial discipline and
getting rid of troublemakers. At a later stage, personnel officers were appointed
as labour welfare officers to satisfy statutory requirements.
Later, the role of a personnel officer was converted into that of an industrial
relations officer. Today, his role is that of a human resource manager.
He works in the three areas-labour welfare, industrial relations and personnel
administration.
Functions of personnel management and role of personnel manager:Functions:1. Managerial Functions:
The Managerial functions of a personnel manager involve POSDCORB (Luther
Gullick) i.e., Planning, organization, staffing, directing, coordinating, reporting
and budgeting of those who actually perform the operative functions of the
Personnel Department.
The following are the managerial functions (viz. planning, organizing, directing
and controlling) performed by a personnel department:
A. Personnel Planning: Planning lays down a pre-determined course to do
something such as what to do, how to do, where to do, who is to do etc. A
personnel manager plans in advance the trend in wages, labour market, union
demands etc. Through planning, most of the future problems can be anticipated.
B. Organizing:
According to J.C. Massic, An organization is a structure, a framework and a
process by which a co-operative group of human being allocates its task among
its members, identifies relationships and integrates its activities towards
common objectives. The personnel manager has to design the structure of
relationships among jobs, personnel and physical factors so that the objectives of
the enterprise are achieved.
C .Directing:
This function relates to guidance and stimulation of the subordinates at all levels.
The personnel manager directs and motivates the employees of his department
so that they work willingly and effectively for the achievement of organizational
goals,
D. Controlling:
A personnel manager has to constantly watch whether there is any deviation
from the planned path. Controlling is concerned with remedial actions.
Continuous monitoring of the personnel policies relating to training, labour
turnover, wage payments, interviewing new and separated employees etc., is
the backbone of controlling.
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If deviations are unavoidable, corrective action can be planned in advance.


Controlling helps the personnel manager to evaluate the performance of
employees of the personnel department so far as the operating functions are
concerned.

2. Operative Functions:
The operative functions of the Personnel Department are also called service
functions. These include.
(a) Procurement function
(b) Development
(c) Promotion, transfer and termination function
(d) Compensation function
(e) Welfare function
(f) Collective bargaining function
(g) Miscellaneous functions.
These functions of the personnel Department are discussed below:
(1) Procurement:
It includes:
(a) Recruitment i.e., tapping the possible sources from where prospective labour
supply will come.
(b) Getting information regarding prevailing wage rates and job requirements.
(c) Selecting the best candidate by following a systematic selection procedure.
(d) Maintaining the records of employees.
(e) Introducing the new employee to the officers of the other departments such
as Security Officer, Time Keeper, and Cashier etc.
(2) Training or Development Function:
The training of the new employees and also of those who are being promoted is
the crucial function of Personnel Department. A training programme is devised
for this purpose. The training increases the skills and abilities of the employees.
The various aspects of training are:
(a) Training to new employees, instructors and supervisors.

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(b) Training in safety equipments and various policies of companies.


(c) Training through improvement of education such as evening classes, films,
Entertainment programmes etc.
(d) Encouraging employees to give suggestions.
(3) Promotion, Transfer and Termination:
The performance of the employees is evaluated for the purpose of taking
decisions concerning the employment. Merit rating is undertaken for evaluation
of the performance of the employees.
The functions of the Personnel Department in this regard are given below:
(a) To lay down a promotion policy.
(b) To formulate policies regarding transfer and termination.
(c) Analysis of voluntary separations and knowing the possible causes of such
separations.
(4) Compensation:
The employees should get adequate and equitable remuneration for the work
being done by them.
The functions of the Personnel Department concerned with fixation of fair wages
are:
(a) To evaluate jobs and determine their worth in terms of money.
(b) To collaborate with those who formulate wage plans.
(c) To assist in formulation of policies regarding pension plans, profit sharing
programmes, non-monetary benefits, etc.
(d) To compare the wages of the enterprise with the industry and remove
inconsistencies, if any.
(5) Welfare Activities:
These activities relate to physical and social well-being of the employees and
include:
(a) Provision of medical facilities such as first aid, dispensaries, etc.
(b) Suggesting ways and means by which accidents can be eliminated or
minimised.
(c) To make provisions for restaurants and other recreational facilities.
(d) To apply the labour laws effectively.

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(e) To publish a plant magazine.


(6) Collective Bargaining:
It includes:
(a) To assist in the negotiations which are held with the union leaders?
(b) To know the grievances of employees and following their problems properly.
(7) Miscellaneous:
(a) To advise the line managers regarding administration of personnel policies.
(b) To secure co-ordination of all personnel activities.
(c) To have an effective communication system.
(d) To provide good working conditions.
Role of personnel manager:Human resources Managers, nowadays wear many hats. They perform mainly
three different types of roles while meeting the requirements of employees and
customers, namely administrative, operational and strategic.
Administrative Roles: The administrative roles of human resources
management include policy formulation and implementation, housekeeping,
records maintenance, welfare, administrative, legal compliance etc.
Policy maker: The human resource manager helps management in the
formation of policies governing talent acquisition and retention, wage and salary
administrative welfare activities, personnel records, working conditions etc. He
also helps in interpreting personnel policies in an appropriate manner.
Administrative expert: The administrative role of an HR Manager is heavily
oriented to processing and record keeping. Maintaining employees file and HR
related databases processing employee benefit claims, answering queries
regarding leave, transport and medical facilities, submitting required reports to
regulatory agencies are examples of the administrative nature of HR
management. These activities must be performed efficiently and effectively to
meet changing requirements of employees, customers and the government.
Advisor: It is said that personnel management is not a line responsibility but a
staff function. The personnel manager performs his functions by advising,
suggesting , counseling and helping the line managers in discharging their
responsibilities relating to grievance redressal, conflict resolution, employee
selection and training . Personnel advice includes preparation of reports,
communication of guidelines for the interpretation and implementation of
policies, providing information regarding labor laws etc.

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Housekeeper: The administrative roles of a personnel manager in managing


the show include recruiting pre-employment testing, reference checking,
employee surveys, time keeping, wage and salary administration, benefits and
pension administration wellness programs, maintenance of records etc.
Counselor: The personal manager discusses various problems of the employees
relating to work, career their supervisors, colleagues, health, family, financial,
social etc and advises them on minimizing and overcoming problems if any.
Welfare officer: Personnel manager is expected to be the Welfare Officer of the
company. As a Welfare officer he provides and maintains (On behalf of the
company) canteens, hospitals, crches, educational institutes, clubs, libraries,
conveyance facilities, co-operative credit societies and consumer stores. Under
the Factories Act, Welfare officers are expected to take care of safety, health and
welfare of employees. The HR managers are often asked to oversee if everything
is in line with the company legislation and stipulation.
Legal consultant: Personnel manager plays a role of grievance handling,
settling of disputes, handling disciplinary cases, doing collective bargaining,
enabling the process of joint consultation interpretation and implementation of
various labor laws, contacting lawyers regarding court cases, filing suits in labor
courts, industrial tribunals, civil courts and the like.
In some organizations the above administrative functions are being outsourced
to external providers in recent times, with a view to increasing efficiency as also
cutting operational costs. Technology is being put to good use to automate many
of the administrative tasks.
Operational Roles:
These roles are tactical in nature and include recruiting, training, and developing
employees coordinating HR activities with the actions of managers and
supervisors throughout the organizations and resolving differences between
employees.
Recruiter: Winning the war for talent has become an important job of HR
managers in recent times in view of the growing competition for people
possessing requisite knowledge, skills and experience. HR managers have to use
their experience to good effect while laying down lucrative career paths to new
recruits without, increasing the financial burden to the company.
Trainer developer motivator: Apart from talent acquisition talent retention is
also important. To this end, HR managers have to find skill deficiencies from time
to time, offer meaningful training opportunities, and bring out the latent
potential of people through intrinsic and extrinsic rewards which are valued by
employers.

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Coordinator /linking pin: The HR manager is often deputed to act as a linking


pin between various divisions / departments of an organization. The whole
exercise is meant to develop rapport with divisional heads, using PR and
communication skills of HR executives to the maximum possible extent.

Mediator: The personnel manager acts as a mediator in case of friction between


two employees, groups of employees, superiors, and subordinates and
employees and management with the sole objective of maintaining industrial
harmony.
Organizing the Hr department structure:An efficiently run human resources department can provide your organization
with structure and the ability to meet business needs through managing your
company's most valuable resources -- its employees. There are several HR
disciplines, or areas, but HR practitioners in each discipline may perform more
than one of the more than six essential functions. In small businesses without a
dedicated HR department, it's possible to achieve the same level of efficiency
and workforce management through outsourcing HR functions or joining a
professional employer organization.
Safety:Workplace safety is an important factor. Under the Occupational Safety and
Health Act of 1970, employers have an obligation to provide a safe working
environment for employees. One of the main functions of HR is to support
workplace safety training and maintain federally mandated logs for workplace
injury and fatality reporting. In addition, HR safety and risk specialists often work
closely with HR benefits specialists to manage the company's workers
compensation issues.
Employee Relations:In a unionized work environment, the employee and labor relations functions of
HR may be combined and handled by one specialist or be entirely separate
functions managed by two HR specialists with specific expertise in each area.
Employee relations is the HR discipline concerned with strengthening the
employer-employee relationship through measuring job satisfaction, employee
engagement and resolving workplace conflict. Labor relations functions may
include developing management response to union organizing campaigns,
negotiating collective bargaining agreements and rendering interpretations of
labor union contract issues.
Compensation and Benefits:Like employee and labor relations, the compensation and benefits functions of
HR often can be handled by one HR specialist with dual expertise. On the
compensation side, the HR functions include setting compensation structures
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and evaluating competitive pay practices. A comp and benefits specialist also
may negotiate group health coverage rates with insurers and coordinate
activities with the retirement savings fund administrator. Payroll can be a
component of the compensation and benefits section of HR; however, in many
cases, employers outsource such administrative functions as payroll.
Compliance:Compliance with labor and employment laws is a critical HR function.
Noncompliance can result in workplace complaints based on unfair employment
practices, unsafe working conditions and general dissatisfaction with working
conditions that can affect productivity and ultimately, profitability. HR staff must
be aware of federal and state employment laws such as Title VII of the Civil
Rights Act, the Fair Labor Standards Act, the National Labor Relations Act and
many other rules and regulations.
Training and Development:Employers must provide employees with the tools necessary for their success
which, in many cases, means giving new employees extensive orientation
training to help them transition into a new organizational culture. Many HR
departments also provide leadership training and professional development.
Leadership training may be required of newly hired and promoted supervisors
and managers on topics such as performance management and how to handle
employee relations matters at the department level. Professional development
opportunities are for employees looking for promotional opportunities or
employees who want to achieve personal goals such as finishing a college
degree. Programs such as tuition assistance and tuition reimbursement programs
often are within the purview of the HR training and development area.

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