Q.1 What is Human Resource Management?

Discuss the functions and

objectives of Human Resource Management in an organization.
Ans: Human Resource Management can be defined as a strategic and coherent
approach to the management of the most valued assets of an organization, i.e.,
people, who individually and collectively contribute to the organizational
objectives.
Edwin Flippo defines Personnel Management as the planning, organizing,
directing and controlling of the procurement, development, compensation,
integration, maintenance and separation of human resources to the end that
individual, organizational and societal objectives are accomplished.
HRM, however, is a broader concept than Personnel Management and includes
other more important functions to build the human capital. Human capital refers
to the stock of employee skills, knowledge and capabilities that may not show
up in a balance sheet, but have significant impact on a firms performance.
The primary objective of HRM is to ensure the availability of a competent and
willing work force to an organization. Beyond this, there are other objectives,
too. Specifically, HRM objectives are four fold: societal, organizational,
Functional and personal.
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. The failure of organizations to use
their resources for the societys benefit in ethical ways may lead to
restrictions. For example, the society may limit HR decisions through
laws that enforce reservation in hiring and laws that address
discrimination, safety or other such areas of societal concern.
2. Organizational Objectives: To recognize the role of HRM in bringing
about organizational effectiveness. HRM is not an end in itself. It is only
a means to assist the organization with its primary objectives. Simply
stated, the department exists to serve the rest of the organization.
3. Functional Objectives: To maintain the departments contribution at a
level appropriate to the organizations needs. Resources are wasted when
HRM is either more or less sophisticated to suit the organizations
demands. The departments level of service must be tailored to fit the
organization it serves.

4. Personal Objectives: To assist employees in achieving their personal

goals, at least insofar as these goals enhance the individuals contribution
to the organization. Personal objectives of employees must be met if
workers are to be maintained, retained and motivated. Otherwise,
employee performance and satisfaction may decline and employees may
leave the organization.
In order to realize these objectives stated above, HRM must perform certain
functions. Generally, it may be stated that there is a correlation between the
objectives and the functions. In other words, some functions help realize
specific objectives. For example, the organizational objective is sought to be
met by discharging such functions as HR planning, recruitment and selection,
training and development, and performance appraisal. Similarly, the personal
objective is sought to be realized through such functions as remuneration,
assessment, and the like.
HRM Objectives and their Corresponding Functions:
1. Societal Objectives:
a. Legal Compliance: It is very important for the HR department to
see to it that all the decision it takes are in line with legal
compliance. By doing this HR department needs to prove that it
acts in a responsible manner and contributes to the well being of
the society. HR Manager is expected to know the provisions of
various Acts related to the business in which he/she is operating.
Some of the most important Acts that an HR manager is expected
to know are the Industrial Dispute Act, the Payment of Wages Act,
the Payment of Bonus Act and the Factories Act, the Workmens
Compensation Act, etc. It is the duty of HR department to see to it
that the employee is duly paid for his/her services, there is no
injustice done to any employee, the safety and security of the
employees and that of society is taken care of, etc.
b. Benefits: Employee benefits constitute an indirect form of
compensation intended to improve the quality of the work lives and
the personal lives of employees. Employee benefits generally
represent approximately 42 percent of the total payroll costs to
employers. In return, employers generally expect a full benefits
package, the motivational value of these benefits depends upon
how the benefits program is designed and communicated which is

essentially an HR role. Employee benefits and services include a

motley crowd of fringes starting from accident compensation plans
to paid holidays. By paying the employees their due benefits, an
organization fulfills its duty towards the society partially.
c. Union-Management Relations: This function of HR is generally
termed as Industrial Relations. IR is concerned with the systems,
rules and procedures used by unions and employers to determine
the reward for effort and other conditions of employment, to
protect the interests of the employed and their employers, and to
regulate the ways in which employers treat their employees. It
covers the areas like collective bargaining; role of management,
unions and government; machinery for resolution of industrial
disputes; individual grievances and disciplinary policy and
practice; labour legislation; industrial relations training;
participative management; employee welfare; employee safety and
health; etc. It is required that the organization takes care of the
interest of its employees in terms of wages, physical safety, etc.
Conflict between the union and management is not in the interest
of the society as it can lead to serious consequences like employee
strikes, violence at workplace, etc.
2. Organizational Objectives:
a. Human Resource Planning: HRP is the process of forecasting an
organizations future demand for and supply of the right type of
people in the right number. It is only after this that the HRM
department can initiate the recruitment and selection process. HRP
is a sub-system in the total organizational planning. HRP helps the
organization to understand how many employees are or will be
needed by the organization to realize its objectives and how many
employees are available with the organization and how many more
and with which skill sets are required to be recruited.
b. Employee Relations: Bad employee relations can hamper the
growth of the organization. If the organization wants a motivated,
competent and trouble free workforce, it has to see to it that there
exists cordial management employee relations. The attitude of the
management towards the employees and unions plays an important
role in creating the employee relations which help the organization
to achieve its objectives.

c. Recruitment, Selection & Placement: Recruitment is understood as

the process of searching for and obtaining applicants for jobs, from
among whom the right people can be selected. Selection, on the
other hand, is the process of picking individuals (out of the pool of
job applicants) with requisite qualifications and competence to fill
jobs in the organization. Placement is allocation of people to jobs.
It is the assignment or re-assignment of an employee to a new or
different job. Having right people at the right time at the right place
is very much essential to achieve the organizational objectives.
This is achieved through proper recruitment and selection which
are essentially the HR functions.
d. Training and Development: Training and development is an
attempt to improve current or future employee performance by
increasing an employees ability to perform through learning,
usually by changing an employees attitude or increasing his/her
skills and knowledge. The enhanced performance by the employees
is very much required for organizational growth and to achieve
organizational objectives. Who needs training and of what sort is
decided by HR jointly with line managers. After this, it is the HR
department that facilitates this training.
e. Appraisal: In simple terms, performance appraisal is the
assessment of an individuals performance in a systematic way, the
performance being measured against such factors as job
knowledge, quality and quantity of output, initiative, leadership
abilities, supervision, dependability, co-operation, judgement,
versatility, health and the like. Assessment should not be confined
to past performance alone. Potentials of the employee for future
performance must also be assessed. Performance evaluation
contributes to firms competitive strength by identifying whether
an employee performs as per the standards set for him and then
bridging the gap between the actual performance and expected
performance.
f. Assessment: Assessment in terms of HR means assessment of
employee performance, skills, abilities and potential which allows
an organization to know what kind of skill inventory it has in terms
of employees and then allowing it to use this inventory to achieve
the organizational goals. It also helps the organization to develop

the skill sets that it presently does not possess, but which are
essential for achieving organizational objectives.
3. Functional Objectives:
a. Placement: Any function or department in the organization will be
able to achieve its target only if it has right people at the right place
and at the right time. Only when a department gets required
number of employees with required skill sets, will it be able to
achieve its goals. It is the responsibility of the HR department to
see to it that all departments in the organization get the required
number of employees with required skill sets.
b. Appraisal: Appraisals help the departments to know where the
employees stand in terms of target achievement and where are the
gaps between the actual performance and the desired performance.
The achievers are then rewarded whereas those who lack certain
skills are trained to reach the required level. This helps the
departments to maintain their contribution in the organization at the
required level and to contribute to the organizational objectives.
c. Assessment: Assessment is like taking an inventory of what the
department has in terms of human resources presently and what it
needs to have to maintain its contribution at the required level in
the organization so that organizational goals can be achieved along
with departments goals. HR department helps all other
departments to carry out this assessment.
4. Personal Objectives:
a. Training and Development: Training and development helps an
individual employee to gain new skills and knowledge and hence,
improves the ability of an individual to perform better. This helps
an individual to achieve his/her personal goals and also the
organizational goals through improved performance.
b. Appraisal: : Its a time bound exercise done by the companies to
assess the performance and the potential of the employees towards
achieving the self goal/targets as well the mission and vision of the
company. It complements the employees in achieving their
respective targets.
c. Placement: Being placed at the right job is a key to the success for
most individuals. HR department is instrumental in placing the
right candidate at the right place. Only when the candidate is
placed at the right place, he/she will be able to give 100 percent to

the job and this is very important to achieve personal as well as

organizational goals.
d. Compensation: Compensation occupies an important place in the
life of an employee. His/her standard of living, status in the society,
motivation, loyalty and productivity depend upon the
compensation he/she receives. The HR specialist has a difficult
task of fixing wages and wage differentials acceptable to
employees and their leaders.
Assessment: It follows the Appraisal. Its more individualistic in nature. The
KRAs of employees are compared against his actual performance. As it is only
one employee, its individualistic. This helps the employees to know their
strengths and weaknesses and then to devise a plan to achieve the personal as
well as organizational objectives.

Q. 3 What are the challenges before the Human Resource function in

todays Indian business scenario?

Ans: Professional organizations such as Mercer, Watson Wyatt Worldwide,

National Institute of Personnel Management and the Society for Human
Resource Management (SHRM) conduct ongoing studies of the most pressing
HR issues facing firms. For the past decade or so, there has been a constant
theme around the following issues:
a) Going global: HR practices in India are evolving rapidly not only due to
growing economy, but also due to liberalization. As a result, traditional
HRM practices have undergone a major transformation. For all the
opportunities afforded by international business, when managers talk
about going global, they have to balance a complicated set of issues
related to different geographies, cultures, employment laws, and business
practices. HR issues underline each of these concerns and include such
things as gauging the knowledge and skill base of foreign workforces and
figuring out how best to hire and train them, sometimes with materials
that must be translated into number of different languages. Relocating
managers and other workers to direct the efforts of a foreign workforce is
a challenge as well. HR personnel are frequently responsible for
implementing training programs and development opportunities to
enhance managers understanding of foreign cultures and practices. In
many cases, HR managers must adjust the compensation plans of
employees working abroad to ensure that they receive fair and equitable
pay in parts of the world where living costs differ. Perhaps the most
difficult task is retaining these employees in the face of the culture shock
they and their families are likely to experience.
b) Embracing new technology: Information technology has, of course,
changed the face of HRM in India and abroad. Perhaps the most central
use of technology in HRM is an organizations Human Resources
Information System (HRIS). Organizations determined to improve
productivity and lower costs are finding HR a good place to start.
Because HR affects the entire workforce everyone who works for the
company must be hired, trained, and paid, usually through HR the
impact of HRIS can be dramatic. It can be a potent weapon for lowering
administrative costs, increasing productivity, speeding up response times,
and improving decision making and customer service. Experts say, the
first step in choosing an HRIS is for HR personnel to evaluate the most
time consuming tasks, or the biggest headaches they experience, and
then choose the applications that can have the strong impact on the firms

financial measures. HR managers should calculate the costs, based on

average salaries or HR hours that could be saved by using an HRIS, along
with the hours of increased productivity that would occur as a result.
c) Managing change: Today, being able to manage change has become
paramount to a firms success. In a survey by the All India Management
Association (AIMA), 72% of executives polled said that they have at
least one change initiative going on in their organizations. However,
change efforts are not always successful. Most of the major reasons why
change efforts can fail come down to HR issues. In order to become
successful at change effort, the HR department shall typically build its
change management planning the following elements:
a. It links the change to the business strategy.
b. It creates quantifiable benefits.
c. It engages key employees, customers, and their suppliers, early.
d. It integrates required behavior changes.
e. It leads clearly, unequivocally, and consistently.
f. It invests to implement and sustains change.
g. It communicates continuously and personally.
h. It sells commitment to the change, not communication about the
change.
d) Managing Talent or Human Capital: Success in the organization depends
on an organizations ability to manage talent or human capital. Human
capital is the economic value of employees knowledge, skills, and
capabilities. This human capital is intangible and cannot be managed the
way organizations manage jobs, products and technologies. One of the
reasons for this is that the employees, not the organization, own their own
human capital. If valued employees leave a company, they take their
human capital with them, and any investment the company has made in
training and developing those people is lost. To build human capital in
organizations, managers must continue to develop superior knowledge,
skills, and experience within their workforce. Staffing programs focus on
identifying, recruiting and hiring the best and the brightest talent
available. Training programs complement these staffing practices to
provide skill enhancement, particularly in areas that cannot be transferred
to another company if an employee leaves. In addition, employees need
opportunities for development on job. The most highly valued
intelligence tends to be associated with competencies and capabilities that
are learned from experience and are not easily taught. Consequently,
managers have to do a good job of providing developmental assignments

to employees and ensuring that their job duties and requirements are
flexible enough to allow for growth and learning. Beyond the need to
invest in employee development, organizations have to find ways of
using the knowledge that currently exists. Too often, employees have
skills that go unused. Efforts to empower employees and encourage their
participation and involvement more fully utilize the human capital
available.
e) Responding to the market: Meeting customer expectations is essential for
any organization. In addition to focusing on internal management issues,
managers must also meet customer requirements of quality, innovation,
variety and responsiveness. Management innovations such as total quality
management (TQM) and process reengineering are two of the
comprehensive approaches to responding to customers. Each has direct
implications for HR.
a. TQM, Six Sigma, and HRM: The importance of HR to TQM and
Six Sigma begins with the formation of teams, and extends to
training, performance management, communication, culture and
even rewards. One of the reasons that HR programs are so essential
to programs such as Six Sigma is that they help balance two
opposing forces. One set of forces ( the need for order and control)
pulls every business toward stagnation, while another set of forces
(the need for growth and creativity) drives it toward disintegration.
Six sigmas focus on continuous improvement drives the system
toward disequilibrium, while Six Sigmas focus on customers,
management systems, and the like provide the restraining forces
that keep the system together. HR practices help managers balance
these two forces.
b. Reengineering and HRM: In addition to TQM and Six Sigma
programs, some companies take a more radical approach to process
redesign, called reengineering. Reengineering has been described
as the fundamental rethinking and radical redesign of business
processes to achieve dramatic improvements in cost, quality,
service and speed. Reengineering often requires that managers start
over from scratch in rethinking how work should be done, how
technology and people should interact, and how an entire
organization should be structured. HR issues are central to these
decisions. First, reengineering requires that managers create an
environment for change, and HR issues drive change. Second,

reengineering efforts depend on effective leadership and

communication processes, two other areas related to HRM. Third,
reengineering requires that administrative systems be reviewed and
modified. Selection, job descriptions, training, career planning,
performance appraisal, compensation, and labor relations are all
candidates for change to complement and support reengineering
efforts.
Containing Costs: There are increasing pressures on companies to lower costs
and improve productivity to maximize efficiency. Like other functional
department managers, HR mangers are now under pressure to show top
managers the bottom line financial results that their departments are
achieving. Labour costs are one of the largest expenditures of any organization,
particularly in services and knowledge-intensive companies. Moreover, the
healthcare costs of insuring workers and their families have skyrocketed in the
past decade, posing a much bigger burden to firms. Organizations are taking
many approaches to lowering labour related costs. In addition to shifting some
of the rising costs of healthcare back onto employees, firms are also
downsizing, outsourcing, offshoring, and engaging in employee leasing in an
attempt to enhance productivity. Each of these efforts has a big impact on HR
policies and practices.