32 Human Resource Management

Dr. Sulakshna Dwivedi

1.      Learning Outcome

2.      Introduction

3.      Nature of Human resources

4.      Meaning and definition of HRM

5.      Historical evolution of HRM

6.      HRM and Personnel Management

7.      HRM vis-a- vis other Management functions

8.      Objectives of HRM

9.      Functions of HRM

10.  Summary

1. Learning Outcome

After completing this module the students will be able to:

• Understand the nature of human resources.
• Understand the differentiation between Personnel Management and Human Resource Management.
• Understand the historical evolution of HRM. Understand objectives of HRM.
• Elaborate the functions of HRM

“I emphasize this – no matter how good or successful you are or how clever or crafty, your business and its future are in the hands of the people you hire”.

Akio Morita (Businessman and co-founder of Sony Corporation. Japan )

2. Introduction

The success in any organization depends upon many factors but one of the most important factors is able, motivated and committed employees. The crucial role of employees cannot be gainsaid in people intensive organization but even in technology driven organization or highly automated work structures, role of employees is of paramount importance

The terms employees/ manpower/ workforce/ human resources/ labour are used interchangeably to each other. Human Resource Management also known as personnel Management or Personnel Administration and even Labour Management is management of human resources. As management comprises of planning, organising, directing, and controlling, hence, HRM is planning, organising, directing, and controlling of human resources so that organisational and individual goals can be achieved effectively and efficiently.

Out of four factors of production viz. land, labour, capital and entrepreneurship, labour is also termed as human resources. Other resources in the organisation are financial resources, material resources (which comprised of input, work-in-progress, finished goods), technological resources etc. In economics, we have always studied that “Resources are rare, scarce, hence, never be wasted and to be utilized properly”. Let us understand the nature of this valuable resource.

3. Nature of human resources

There are two schools of thoughts for understanding the nature of human resources:

First school of thought says that this factor of production i.e. labour is resource as it is scarce or rare and hence to be utilized or tapped to their potential judiciously. As these resources are unique from other tangible resources because they have feelings, attitude, emotions, perception, beliefs etc. Hence they are human and unique and therefore need an individualised treatment.

Another School of thought explains that it should not be treated like a resource because as other resources are exploited to their maximum similarly labour is also exploited. Organisations try to get maximum out of their Labour force. So, it is summarised that to enhance positive treatment towards resources, labour should be treated like human resources but to avoid negative treatment, it is said that labour should not be treated like human resources.

As a whole, one can say that labour is a resource but different from other resources as labourers are human beings so should be managed and treated humanly, but unlike other resources should not be exploited.

4.  Meaning and definition of HRM

According to Flippo “Personnel management, or say, human resource management is the planning, organising, directing and controlling of the procurement development compensation integration, maintenance, and separation of human resources to the end that individual, organisational and social objectives are accomplished”.

Flippo’s definition focuses on two broad functions of HRM i.e. managerial and operative. Besides it, he has focused that HRM aims at achieving three goals i.e. individual, organisational and societal.

According to Decenzo and Robbins “HRM is concerned with the people dimension in management. Since every organisation is made up of people, acquiring their services, developing their skills, motivating them to higher levels of performance and ensuring that they continue to maintain their commitment to the organisation are essential to achieving organisational objectives. This is true, regardless of the type of organisation-government, business, education, health, recreation, or social action”.

Here, Decenzo and Robbins have focussed on people dimension in management or what is called people management.

The National Institute of Personnel Management (NIPM) of India has defined human resource/personnel management as “that part of management which is concerned with people at work and with their relationship within an enterprise. Its aim is to bring together and develop into an effective organisation of the men and women who make up an enterprise and having regard for the well-being of the individuals and of working groups, to enable them to make their best contribution to its success”.

According to Miller (1987), “…….those decisions and actions which concern the management of employees at all levels in the business and which are related to the implementation of strategies directed towards creating and sustaining competitive advantage”.

Torrington and Hall (1987) define personnel management as: “A series of activities which first enable working people and their employing organizations to agree about the objectives and nature of their working relationship and, secondly, ensures that the agreement is fulfilled”.

Another perspective is provided by Boxall and Purcell: “HRM includes anything and everything associated with the management of employment relationships in the firm. We do not associate HRM solely with a high-commitment model of labour management or with any particular ideology or style of management”.

Legge (1989) described the HRM philosophy by following propositions: “That human resource policies should be integrated with strategic business planning and used to reinforce an appropriate (or change an inappropriate) organizational culture, that human resources are valuable and a source of competitive advantage, that they may be tapped most effectively by mutually consistent policies that promote commitment and which, as a consequence, foster a willingness in employees to act flexibly in the interests of the ‘adaptive organization’s’ pursuit of excellence”.

“Human resource management is a distinctive approach to employment management which seeks to achieve competitive advantage through the strategic deployment of a highly committed and capable workforce, using an integrated array of cultural, structural and personnel techniques”. (Storey 1995, p.5).

In defining HRM, Torrington and Hall (1987) have emphasized on employment agreement and Boxall and Purcell have focussed on employment relationship. While Legge (1989); Storey (1995); and Miller (1987) are of the views that HR are valuable and source of competitive advantage and HRM deals with activities that creates and sustains competitive advantage.

The value of HR in service and IT organisations is even more critical because human ware has more important role than software and hardware. To emphasise this importance Mr. N.R. Narayana Murthy, Chairman Emeritus, Infosys Ltd is of the opinion, “you must treat your employees with respect and dignity because in the most automated factory in the world, you need the power of human mind. That is what brings in innovation. If you want high quality minds to work for you, then you must protect the respect and dignity. “

5.  Historical evolution of HRM

In India, the prevalence of HRM practices is an age old phenomenon. As early as 4th century B.C., Kautilya in his treatise “Arthshastra” has given a description of sound HR practices. In ‘Arthshastra’ there is mention of Guild system or shreni and there were logical procedures and principles to manage these Guilds.

After that, in Varnashram, we got evidence of division of labour. In Varnaashram, the society was divided into four categories (Brahmins, Kshetriyas, Vaishyas and Shudras) of people according to their occupation. During Mughal rule, in Medieval India, Indian trade and commerce were analysed and redefined by establishing various Karkhanas at various strategic locations but the working conditions and the plight of workers was below standard at that time and this sub human conditions and atrocities continued till British period. Even there was a provision in Plantation Act, 1863 that if a worker failed to finish their contract of work then he should be imprisoned for a maximum of 3 months. Cruelties in Plantations and other areas remained order of the day till enactment of Factory Act in 1881. Salient feature of this Act was

• Weekly off day
• Working Hour for women -11 per day
• Minimum age of Child worker -07 Years

Subsequently many labour unions emerged with passage of time e.g.

1890-Bombay Mill Hands Association

1905-Printers Union Calcutta

1907- Post Union at Bombay

1918- Madras Labour Union

In 1920, Central Labour Board was established and it tries to unite the different unions in Bombay and made All India Trade Union Congress (AITUC). In 1926, Indian Trade Union Act was passed. In 1929-31, Royal Commission on Labour advised on appointment of labour officers to check recruitment practices. Post Independence, The Industrial Dispute Act, 1947 recommended appointment of welfare officer in Industrial units to handle adjudication and dispute settlement issues. In Factories Act, 1948 make it mandatory for the factory that employs more than 500 workers to appoint welfare officer to look after health and safety issues. With mushrooming labour legislation to protect the workers, Industrial units started appointing welfare officers with having legal backgrounds so that then can even handle legal issues. In 1963, Standing Labour Conference (SLC) recommended that welfare officers and personnel officers’ duties should be demarcated and welfare officers should not be allowed to deal with Industrial Relations matters.

In the early seventies, Personnel Management covered Personnel Administration, Labour welfare and Industrial Relations. In 1980’s HRM was regarded as specialised profession having IR as one of important professional function. During 1990’s after LPG when Indian economy was opened up and more and more MNCs started coming to India. These MNCs gave a lot of competition to Indian domestic Industry and here comes a paradigm shift in the role of Human resources Department in an organisation.HRM became a strategic function in the growth and development of any organisation. Strategic HRM, Cross cultural management, Managing work force diversity, Total Quality Management, Innovation, Learning organisations became buzzwords in HR parlance.

With the advent of technology, IT sector and service Industry started developing at dizzying speed and growth in these sectors created changes in demographics and KSA (Knowledge, skills, and attitudes) of employees and replaced the ‘Industrial workers’ who used to work in Brick and mortar organisations to ‘knowledge workers’ of newly born Knowledge sector. Motivating, managing and retaining these Knowledge workers was a herculean task for HR Managers. Therefore, today, Talent acquisition, and management, career planning and development, succession planning and retention are key challenges for HR Managers.

6. HRM and Personnel Management

As we have already covered under the evolution of HRM that how this field has developed over the period of time. Thus, it is evident that Personnel Management precedes HRM in evolution. Even, new terms like HRD (Human Resource Development), People Management, Talent Management, Human Capital Management are using interchangeably to this generic term i.e. HRM. But, here our focus is on differentiation between HRM and Personnel Management. So, let’s understand this difference by 27 item distinction as given by Storey in 1992.

The 27 item checklist of differentiating between Personnel Management and HRM

Source: Storey 1992 (www.blackwell-synergy.com)

By going through all the points of distinction it is clear that Personnel Management was narrower in its perspective, while HRM is broader. If Personnel Management is past oriented then HRM is future oriented. Personnel Management is reactive in its approach while HRM is proactive in its nature. HRM fits well with present day business scenario where each business function has its strategic role. HRM works according to business needs and is flexible in its approach. HRM treats labour as a valuable resources or assets which need to be developed and nurtured for its appreciation while in Personnel Management Labour cast was treated as sunk cost. Thus, we can conclude that with changing environment, there was a need for evolution in Personnel Management and that did come in the form of Human resource management. As they say, “Change is the only constant in this world” and if the organizations will not be able to change this focus of Personnel Management then surely going to loose their competitive edge and even survival.

7. HRM vis-a- vis other Management functions

Just like other functional areas like finance, marketing, materials, quality control, research and development, customer care etc.HRM is also an important functional area of an organization. From entry to exit of an employee in an organization, HR department plays an active and consequential role. In smaller organizations, these functions are looked after by personnel assistant. But in larger organizations, there are separate departments called HR department having specialized staff under HR Manager such as related to administration, industrial relations, welfare and human resource development (HRD). All the functions of HRM involves an active involvement of other line managers e.g. if there is a requisition for executive in Quality Control department then obviously Q.C. Manager will also be party to the recruitment process and will also interview the candidates and even his placement, performance appraisal, training, promotion, increments and various other issues will be taken care of by Head of Quality Control department.. Similar is the case with other functional managers. Managing HR is not the job of HR Managers only but it is the job of all the functional managers. Hence, each and every functional manager should be people’s person first, as every line manager got their work done from their employees. From the core, HR Department is just like mother department in any organization who takes care of all the needs of its employees and in this pursuit aims to fulfill organizational objectives and plays a strategic role in attaining the vision of the organization.

9. Objectives of HRM

According to Scott, Clothier and Spriegel, “The objective of Personnel Management, or personnel administration in an organization, is to obtain maximum individual development, desirable working relationships between employers and employees, and employees and employees, and to effect the moulding of human resources as contrasted with physical resources”.

According to Indian Institute of Personnel Management, “Personnel management aims to achieve both efficiency and justice, neither of which can be pursued successfully without the other. It seeks to bring together and develop into an effective organization the men and women who make up an enterprise, enabling each to make his or her own best contribution to its success both as an individual and as a member of a working group. It seeks to provide fair terms and conditions of employment and satisfying work for those employed”.

Without any doubt, the basic objective of HRM is to achieve organizational goal, but besides that there are following objectives of HRM.

1. Efficient and effective utilization of human resources which will subsequently make best use of all other resources in an organization.
2. Maintaining healthy and harmonious industrial relations.
3. Synchronization of individual goals with organizational goals and individual development with organizational development.
4. To keep human resources motivated by providing able leadership, intrinsic and extrinsic rewards.
5. To train and develop human resources so that they are able to perform their functions and duties with dedication and full gusto.
6. With the development of human resources serving various other stakeholders of an organization. Hence contributing towards the development of a better society.

10.  Functions of HRM

HRM functions can be broadly classified into three types viz. managerial function, operative functions and advisory functions.

Managerial functions consist of planning, organizing, directing and controlling.

1. Planning

According to Koontz, “Planning is deciding in advance – what to do, when to do & how to do. It bridges the gap from where we are & where we want to be”.

• Different characteristics of planning:
• Planning decides about future course of action
• Intellectual activity which involves systematic thinking Problem solving
• Decision making
• Necessary for effective utilization of resources
• Helps in avoiding uncertainties and risks
• Ensures smooth functioning in an organisation without any interruptions

In HRM, planning is done regarding various operative functions of HR which are discussed under the head operative function. First, objectives are set which should be in consonance with organizational objectives and then forecasting is done. Different alternatives are searched to achieve those objectives and then best alternatives are chosen according to cost –benefit and keeping in mind other constraints. Plans are set accordingly and sub plans such as policies, strategies, procedures and budgets are prepared. In HRM according to various operative functions policies are made e.g. policy regarding recruitment, induction, selection, training, compensation etc.

2. Organizing

To put plan into actions, management has to appoint employees and allocation of work is done to them. Then this manpower is provided with different materials and physical resources so that they can do their work properly. Therefore, organizing is the process of bringing together different resources physical, financial and human resources and developing productive relationship amongst them for achievement of organizational goals (Chabbra, 2000).

According to Henry Fayol, “To organize a business is to provide it with everything useful or its functioning i.e. raw material, tools, capital and personnel’s”.

Thus, organization involves identification and grouping the activities to be performed and dividing them among individuals and creating authority and responsibility relationship among them (Koontz)

• Organizing as a process involves:
• Identification of activities.
• Division of activities into various categories.
• Assignment of duties to various categorized positions Establishing authority –responsibility relationship
• Synchronizing authority and responsibility relationships.

3. Directing

According to G.R. Terry, “Directing means moving to action and supplying simulative power to group of persons”.

Directing is an interpersonal aspect of management and very important function for all the line managers. It includes influencing, motivating, mentoring, coaching,transforming and inspiring the manpower so that they are propelled to achieve organizational goals.

Following are the elements of Direction:

• Supervision
• Motivation
• Leadership
• Communication

4. Controlling

Controlling entails measurement of actual performance against the standards and correction of deviation if any to ensure achievement of organizational goals. The purpose of controlling is to ensure that everything occurs in line with the standards. An efficient system of control helps to control deviations.

According to Theo Haimann, “Controlling is the process of checking whether or not proper progress is being made towards the objectives and goals and acting if necessary, to correct any deviation”.

According to Koontz & O’Donell “Controlling is the measurement & correction of performance activities of subordinates in order to make sure that the enterprise objectives and plans desired to obtain them as being accomplished”.

Therefore controlling has following steps:

a.  Determination and Establishment of standards for performance.

b. Measurement of actual performance.

c. Comparison of actual performance with the standards and finding out deviation if any.

d.  Taking Corrective action for removing the deviations.

Planning and controlling go hand in hand. All other management functions are incomplete without the controlling function. Controlling is forward looking function. As in one can go into the past to correct the actions but can learn through experience and avoid mistakes in future.

Operative functions consist of procurement, development, compensation, maintenance, integration and separation of human resources in an organization.

Procurement:

The purpose of procurement is to have “right person at right place and at a right time”. Procurement consists of following sub functions

Development: Once the right candidate is selected for a right kind of job, then next step is to sharpen the skills of the employee for that particular job and preparing or developing him for his future job. Development consists of following sub functions:

The purpose of this function is to treat every employee with fairness and justice by providing adequate and equitable remuneration and other monetary and non- monetary benefits. HR Manager has to deal with legal compliance as per various wages related Acts.

Maintenance:

The objective of this function of HRM is to maintain health, safety and security of employees. The sub function of this operative function includes:

• Taking care of social security measures of employees under following Acts. e.g. Employees Provident Fund and Miscellaneous provisions Acts, 1952
• Employee State Insurance Act,1948 Payment of Gratuity Act, 1972
• Maternity Benefit Act,
• Maintaining cordial and harmonious Industrial Relations.

Integration: The purpose of this function is to integrate the individual goals with organizational goals. The function comprises of taking care of employee needs, desires, and goals and try to synchronise it with organizational goals.

Separation:

It is the last operative function of HRM.The time when one employee says goodbye to an organization. It may take the form of retirement, superannuation, voluntary or compulsory retirement scheme, transfer, layoff or retrenchment. His final dues are settled by HR Department. This function includes taking exit interviews from employees to identify the reasons of their leaving the organization so that organization can improve upon those factors.

Advisory function or staff function consists of advisory to top level management and to line managers. Advisory to top level management in matters related to strategic role of HRM in an organization and advisory to line managers in context of assisting them in issues of manpower working in their respective departments.

13.   Summary

The role of HRM has never been so demanding and dynamic in nature than what it is today. With the changing competitive forces, corporate world has witnessed the shifts from brick and mortar organizations to online firms; from ‘ industrial worker’ to knowledge worker’; from ‘bureaucratic structures’ to ‘boundryless structures’; from ‘traditional groups and teams’ to ‘self managed teams’. These shifts have even changed the role of HR from ‘record keepers’ to ‘flame keepers’.

With the growing number of educated and ever demanding manpower, it has become Achilles Hill for HR Manager to manage, motivate and finally retain such manpower as organizations have started understanding that people are their greatest assets. With the changing technology, human resources also needs to change themselves at a very fast rate, hence developing and upgrading the skills of manpower is also a big challenge for HR Managers.

Hence, recruiting best of the talents, motivating and finally retaining them is very crucial in HR these days. Despite being mentors, developers, motivators, leaders, change agents, HR Manager have to explain the contribution of their department to the success of whole organization. Like other functional managers, HR Mangers too need to calculate cost and benefit analysis for their actions and decisions and how much those have contributed to the success of that organization. Ulrich and Brockbank (2005) mentioned five roles for HR Managers viz. employee advocates, human capital developers, financial experts, strategic partners and leaders. Despite being generalist in their fields they need to be specialist too. In the present scenario, HR the role, responsibilities and functions of HRM have shifted from more traditional to new and innovative roles which comprises of managing organizational culture, instilling learning and development attitudes which ultimately leads to making the organization a learning organization., managing talents and retaining them, manage the changes (change management); to understand other functional areas and their importance and in consonance with all developing the organization and achieving organizational goals and establishing themselves as strategic partners.

Learn More

Few important sources to learn more about Motivation:

• Aswathappa, K. (2005) Human Resource and Personnel Management- Text and Cases, Tata Mc Graw Hill, 4th ed.
• Armstrong, M. (2006) Strategic Human Resource Management, Kogan Page, London, UK.
• Armstrong, M. (2006) A handbook of human resource management practice, Kogan Page, London, UK.
• Baron, J. N. and Kreps, D. M. (1999) Strategic Human Resources Framework for General Managers, Wiley and Sons, New York.
• Bacon, D. R. (2003), A comparison of approaches to importance-performance analysis, International Journal of Market Research, 45(1) 55–71.
• Boxall, P., Purcell, J. (2011) Strategy and Human Resource Management, Palgrave Macmillan Basingstoke, UK.
• Dessler, G. (2005) Human Resource Management, Pearson Prentice Hall , New Jersey.
• Dwivedi, R. S. (1997) Managing Human Resource and Personnel Management in Indian Enterprises, Galgotia Publishing Company, New Delhi 2nd ed.
• Droussiotis, A., and Austin, J. (2007) Job satisfaction of managers in Cyprus, EuroMed Journal of Business, 2(2), 208–222.
• Guest D (1989) Personnel Management and HRM: Can You Tell the Difference? Personnel Management, pp.48-51.
• Mondy, R., W., Mondy, B., J. (2014) Human Resource Management, Pearson Education Limited, UK, Harlow.
• Storey,J. (1991) New Perspectives on Human Resource Management, Routledge, London.