Introduction to HRM (Supplementary Note)

National Institute of Business Management Compiled by Gajaba Perera-Gunawardena 1. Introduction Human resources are undoubtedly the key resources in an organization, the easiest and the most difficult to manage! The objectives of the HRM span right from the manpower needs assessment to management and retention of the same. To this effect Human resource management is responsible for effective designing and implementation of various policies, procedures and programs. It is all about developing and managing knowledge, skills, creativity, aptitude and talent and using them optimally. Human Resource Management is not just limited to manage and optimally exploit human intellect. It also focuses on managing physical and emotional capital of employees. Considering the intricacies involved, the scope of HRM is widening with every passing day. It covers but is not limited to HR planning, hiring (recruitment and selection), training and development, payroll management, rewards and recognitions, Industrial relations, grievance handling, legal procedures etc. In other words, we can say that its about developing and managing harmonious relationships at workplace and striking a balance between organizational goals and individual goals. In the competitive environment of open economy human resource management with the increased modern trends becoming a significant factor for the efficient running of organization Human resource management emerged from personnel management and personnel management emerged from manpower planning.

2. Evolution of the Concept of HRM The various stages or phases in the transition or evolution of Personnel Management in Human Resource Management are shown below:

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(a) The Commodity Concept: Labor was regarded as a commodity or a tool to be bought or sold. (b) The Factor of Production Concept: Labor is like any other factor of production, like Money, materials, land, etc. (c) The Goodwill Concept Welfare measures like safety, first aid, lunch room, rest room will have a positive impact on workers productivity (d) The Paternalistic Concept: Management must assume a father or protective attitude towards employee It means satisfying the various needs of employees as parents meet the requirements of their child (e) The Humanitarian Concept: To improve productivity, physical, social and psychological needs of workers must be fulfilled and met. (f) The Human Resource Concept: Employees are the most valuable assets in the organization (g) The Emerging Concept : Employees should be accepted as partners of the organization They should belong to the organization as they are running their own organization. BOX 1 Personnel management can be defined as obtaining, using and maintaining a satisfied workforce. It is a significant part of management concerned with employees at work and with their relationship within the organization. According to Flippo, Personnel management is the planning, organizing, compensation, integration and maintenance of people for the purpose of contributing to organizational, individual and societal goals. According to Brech, Personnel Management is that part which is primarily concerned with human resource organization.

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BOX 2 Nature of Personnel Management 1. Personnel management includes the function of employment, development and compensation- These functions are performed primarily by the personnel management in consultation with other departments. 2. Personnel management is an extension of general management. It is concerned with promoting and stimulating competent workforce to make their fullest contribution to the concern. 3. Personnel management exists to advise and assist the line managers in personnel matters. Therefore, personnel department is a staff department of an organization. 4. Personnel management lays emphasize on action rather than making lengthy schedules, plans, and work methods. The problems and grievances of people at work can be solved more effectively through rationale personnel policies. 5. It is based on human orientation. It tries to help the workers develop their potential fully to the concern. 6. It also motivates the employees through it is effective incentive plans so that the employees provide fullest co-operation.

BOX 3 Role of Personnel Management Personnel manager is the head of the personnel department. He performs both management and operational functions of management. His role can be summarized as :
[Type text] 1. Personnel manager provides assistance to top managementThe top management is the people who decide and frame the primary policies of the concern. All kinds of policies related to personnel or workforce can be framed out

effectively by the personnel manager. 2. He advises the line manager as a staff specialist- Personnel manager acts like a staff advisor and assists the line managers in dealing with various personnel matters. 3. As a counselor, - As a counselor, personnel manager attends problems and grievances of employees and guides them. He tries to solve them in his best of capacity. 4. Personnel manager acts as a mediator- He is a linking pin between management and workers. 5. He acts as a spokesman- Since he is in direct contact with the employees, he is required to act as representative of an organization in committees appointed by the government. He represents the company in training programs.

BOX 4 Functions of Personnel Management Following are the four functions of Personnel Management: 1. Manpower Planning 2. Recruitment 3. Selection 4. Training and Development Box 5 Main Differences Between Personnel Management and Human Resource Management Differentiate personnel management and Human Resource Management The sole purpose of personnel management was to attain competitive advantage and best results for the organization The individual interests, desires and aspirations were submerged into the organizational objectives and goals In contrast HRM aims at the development of the individual in accordance with
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his interests, desires & aspirations. So that the individuals would be motivated to make their best contribution towards the accomplishment of goals. While the personnel function was designed to respond to the organizational objectives like profit maximization, HRM visualized human elements of enterprise as important resources. The term human resources at the macro level spell the total sum of all the components (like skill & creative ability) possessed by all the people, whereas the term personnel even at the macro level is limited to only employees of all organizations. One must not be under the impression that HRM has replaced traditional personnel management rather we can say that HRM has absorbed the personnel function in its refined form.

BOX 6 HRD is an integral part of Human Resource Management. Due to the amalgamation of Personnel function in its refined way with HRM, it became necessary for every organization to develop skills, talents, potentialities, capabilities & attitude of company work to meet the emerging challenges. Hence HRD policies have been adopted. HRD strategies are supposed to bring forth necessary changes in skills capabilities & attitude of people who are required to cope with the emerging changes. Thus HRD has become an integral part of Human Resource Management. HRD is an integral part of Human Resource Management. The main difference is that the PM was reactive, focused on the immediate and short-term needs of the labor force of an organization while HRM expanded into a proactive strategy of aligning the needs of the workforce to the strategic objectives of the organization . The PM was focused on traditional models of industrial relations e.g. union- based collective bargaining, HRM has moved towards a more devolved and participative model. HRM is more involved (often in an advisory capacity) in pay policy and jobdesign than PM ever was. HRM has more scope in influencing the nature of the work contract than PM ever had

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BOX 7 Objectives of HRM 1. Societal Objectives: To be ethically and socially responsible to the needs and challenges of the society while minimizing the negative impact of such demands upon the organization. 2. Organizational Objectives: To recognize the role of HRM in bringing about organizational effectiveness. HRM is only meant to achieve to assist the organization with its primary objectives. 3. Functional Objectives: To maintain departments contribution and level of services at a level appropriate to the organizations needs. 4. Personal Objectives: To assist employees in achieving their personal goals, at least in so far as these goals enhance the individuals contribution to the organization. This is necessary to maintain employee performance and satisfaction for the purpose of maintaining, retaining and motivating the employees in the organization.

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BOX 6 The following are the nine new Roles of HR Practitioner as suggested by Pat McLegan: 1. To bring the issues and trends concerning an organizations external and internal people to the attention of strategic decision-makers, and to recommend long-term strategies to support organizational excellence and endurance. 2. To design and prepare HR systems and actions for implementation so that they can produce maximum impact on organizational performance and development. 3. To facilitate the development and implementation of strategies for transforming ones own organization by pursuing values and visions. 4. To create the smoothest flow of products and services to customers; to ensure the best and most flexible use of resources and competencies; and to create commitment among the people who help us to meet customers needs whether those people work directly for the organization or not. 5. To identify learning needs and then design and develop structured learning programs and materials to help accelerate learning for individuals and groups. 6. To help individuals and groups work in new situations and to expand and change their views so that people in power move from authoritarian to participative modes of leadership. 7. To help people assess their competencies, values, and goals so that they can identify, plan, and implement development actions. 8. To assist individuals to add value in the workplace and to focus on the interventions and interpersonal skills for helping people change and sustain change. 9. To assess HRD practices and programs and their impact and to communicate results so that the organization and its people accelerate their change and development.

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Box 7 Functions of Human Resource Management Function 1: Human Resource Planning The penalties for not being correctly staffed are costly. Understaffing loses the business economies of scale and specialization, orders, customers and profits. Overstaffing is wasteful and expensive, if sustained, and it is costly to eliminate because of modern legislation in respect of redundancy payments, consultation, minimum periods of notice, etc. Very importantly, overstaffing reduces the competitive efficiency of the business. Planning staff levels requires that an assessment of present and future needs of the organization be compared with present resources and future predicted resources. Appropriate steps then be planned to bring demand and supply into balance. Function 2: Recruitment and selection of employees Recruitment of staff should be preceded by: An analysis of the job to be done (i.e. an analytical study of the tasks to be performed to determine their essential factors) written into a job description so that the selectors know what physical and mental characteristic applicants must possess, what qualities and attitudes are desirable and what characteristics are a decided disadvantage; Achieving organizational objectives requires having the proper number of employees with the appropriate skills. Staffing accomplishes this objective through four tasks. The first task is job analysis, which examines specific job functions in determining the skills, duties and knowledge required for each position. The second task is ensuring that the required numbers of employees, with the appropriate skills, are available when needed organizations engage in Human Resource Planning (HRP). The third task is recruitment, which is the process of attracting enough skilled people to apply for jobs in the organization. Fourth, the last step in the staffing process, is selection. This involves choosing the best suited individuals to fill the open positions in the firm.

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Function 3: Employee motivation To retain good staff and to encourage them to give of their best while at work requires attention to the financial and psychological and even physiological rewards offered by the organization as a continuous exercise. Basic financial rewards and conditions of service (e.g. Working hours per week) are determined externally (by national bargaining or government minimum wage legislation) in many occupations but as much as 50 per cent of the gross pay of manual workers is often the result of local negotiations and details (e.g. Which particular hours shall be worked) of conditions of service are often more important than the basics. Hence there is scope for financial and other motivations to be used at local levels. As staffing needs will vary with the productivity of the workforce (and the industrial peace achieved) so good personnel policies are desirable. The latter can depend upon other factors (like environment, welfare, employee benefits, etc.) but unless the wage packet is accepted as 'fair and just' there will be no motivation. Hence while the technicalities of payment and other systems may be the concern of others, the outcome of them is a matter of great concern to human resource management. Function 4: Employee education, training and development Human Resource Development (HRD) HRD has six sub-functions or activities, including training, development, career planning, career development, organization development and performance appraisal, make up Human Resource Development (HRD). Training: is a process designed to provide employees with the knowledge and skills needed for their present job. Focusing on long-term learning needs is developed. The ongoing process of career planning sets career goals for employees and identifies the means to achieve them. Career development is a formal approach used by firms to ensure that people with the proper qualifications and experiences are available when needed. A planned process for improving the firm by developing its structures, systems and processes to improve effectiveness and achieving desired goals is Organizational
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Development (OD). And finally, performance appraisal is a formal system of review and evaluation of individual or team task performance.

Function 5: Employee evaluation An organization needs constantly to take stock of its workforce and to assess its performance in existing jobs for three reasons: To improve organizational performance via improving the performance of individual contributors (should be an automatic process in the case of good managers, but (about annually) two key questions should be posed: Whatt has been done to improve the performance of a person last year? And what can be done to improve his or her performance in the year to come?). To identify potential, i.e. to recognize existing talent and to use that to fill vacancies higher in the organization or to transfer individuals into jobs where better use can be made of their abilities or developing skills. Function 6: Industrial relations Good industrial relations, while a recognizable and legitimate objective of an organization, are difficult to define since a good system of industrial relations involves complex relationships between: (a) Workers (and their informal and formal groups, i. e. Trade union, organizations and their representatives); (b) Employers (and their managers and formal organizations like trade and professional associations); (c) The government and legislation and government agencies and 'independent' agencies like the Advisory Conciliation and Arbitration Service.

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Function 7: Compensation Management: Compensation includes all rewards that individuals receive as a result of their employment. The pay is the money that a person receives for performing a job. Additional financial rewards other than base pay include paid vacations, sick leave, holidays and medical insurance, and they are called benefits. Nonfinancial rewards are non-monetary rewards, such as the enjoyment of the work performed or a pleasant working environment.

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