HUMAN RESOURCE MANAGEMENT

UNIT-1
II/IV – MBA
SANKETIKA VIDYA PARISHAD ENGINEERING COLLEGE

K.Tulasi Raviteja
MBA, APSET (Ph.D)
Assistant Professor
Sanketika Vidya Parishad Engineering College

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Introduction to Human Resource Management
Human beings are social beings and hardly ever live and work in isolation. We
always plan, develop and manage our relations both consciously and unconsciously.
The relations are the outcome of our actions and depend to a great extent upon our
ability to manage our actions. From childhood each and every individual acquire
knowledge and experience on understanding others and how to behave in each and
every situations in life. Later we carry forward this learning and understanding in
carrying and managing relations at our workplace. The whole context of Human
Resource Management revolves around this core matter of managing relations at
work place.

Since mid 1980‘s Human Resource Management (HRM) has gained acceptance
in both academic and commercial circle. HRM is a multidisciplinary organizational
function that draws theories and ideas from various fields such as management,
psychology, sociology and economics.

There is no best way to manage people and no manager has formulated how
people can be managed effectively, because people are complex beings with complex
needs. Effective HRM depends very much on the causes and conditions that an
organizational setting would provide. Any Organization has three basic
components, People, Purpose, and Structure.

In 1994, a noted leader in the human resources (HR) field made the following
observation: Yesterday, the company with the access most to the capital or the latest
technology had the best competitive advantage;
Today, companies that offer products with the highest quality are the ones with a leg up
on the competition; But the only thing that will uphold a company‘s advantage
tomorrow is the caliber of people in the organization.

That predicted future is today‘s reality. Most managers in public- and private
sector firms of all sizes would agree that people truly are the organization‘s most
important asset. Having competent staff on the payroll does not guarantee that a
firm‘s human resources will be a source of competitive advantage. However in
order to remain competitive, to grow, and diversify an organization must ensure
that its employees are qualified, placed in appropriate positions, properly trained,
managed effectively, and committed to the firm‘s success. The goal of HRM is to
maximize employees‘ contributions in order to achieve optimal productivity and
effectiveness, while simultaneously attaining individual objectives (such as having a
challenging job and obtaining recognition), and societal objectives (such as legal
compliance and demonstrating social responsibility).

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Definitions of Human Resource Management

HRM has been defined by various scholars and institutions:

 Edwin Flippo: "HRM is the planning, organizing, directing, and controlling of the
procurement, development, compensation, integration, maintenance, and separation of
human resources to achieve individual, organizational, and social objectives."
 This definition highlights HRM as a systematic function involving various
aspects of people management

 Gary Dessler: "HRM refers to the policies and practices involved in carrying out the
‗people‘ or human resource aspects of a management position, including recruiting,
screening, training, rewarding, and appraising."
 Dessler emphasizes the role of HR policies and procedures in managing
employees.

 Michael Armstrong: "HRM is a strategic and coherent approach to the management of

an organization‘s most valued assets – the people working there who individually and
collectively contribute to the achievement of its objectives."
 Armstrong views HRM as a long-term, strategic process that aligns people
management with organizational goals.
Generally HRM refers to the management of people in organizations. It comprises of
the activities, policies, and practices involved in obtaining, developing, utilizing, evaluating,
maintaining, and retaining the appropriate number and skill mix of employees to
accomplish the organization‘s objectives. The goal of HRM is to maximize employees‘
contributions in order to achieve optimal productivity and effectiveness, while
simultaneously attaining individual objectives (such as having a challenging job and
obtaining recognition), and societal objectives (such as legal compliance and
demonstrating social responsibility).
In short Human Resource Management (HRM) can be defined as the art of
procuring, developing and maintaining competent workforce to achieve the goals of
an organization in an effective and efficient manner.

Nature of HRM
HRM is a management function that helps manager‘s to recruit, select, train and
develop members for an organization. HRM is concerned with people‘s dimension in
organizations.
The following constitute the core of HRM
1. HRM Involves the Application of Management Functions and Principles. The
functions and principles are applied to acquiring, developing, maintaining and
providing remuneration to employees in organization.
2. Decision Relating to Employees must be Integrated. Decisions on different
aspects of employees must be consistent with other human resource (HR) decisions.

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 3. Decisions Made Influence the Effectiveness of an Organization. Effectiveness
of an organization will result in betterment of services to customers in the form of high
quality products supplied at reasonable costs.
4. HRM Functions are not Confined to Business Establishments Only but applicable
to non- business organizations such as education, health care, recreation and like.

HRM refers to a set of programmes, functions and activities designed and carried out in
order to maximize both employee as well as organizational effectiveness.

Scope of HRM
The scope of HRM is indeed vast. All major activities in the working life of a worker –
from the time of his or her entry into an organization until he or she leaves the
organizations comes under the purview of HRM. The major HRM activities include
HR planning, job analysis, job design, employee hiring, employee and executive
remuneration, employee motivation, employee maintenance, industrial relations and
prospects of HRM.
The scope of Human Resources Management extends to:
 All the decisions, strategies, factors, principles, operations, practices, functions,
activities and methods related to the management of people as employees in any
type of organization.
 All the dimensions related to people in their employment relationships, and all the
dynamics that flow from it.

The scope of HRM is really vast. All major activities in the working life of a worker –
from the time of his or her entry into an organization until he or she leaves it comes
under the purview of HRM. American Society for Training and Development
(ASTD) conducted fairly an exhaustive study in this field and identified nine broad
areas of activities of HRM.

These are given below:

 Human Resource Planning
 Design of the Organization and Job
 Selection and Staffing
 Training and Development
 Organizational Development
 Compensation and Benefits
 Employee Assistance
 Union/Labour Relations
 Personnel Research and Information System.

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a) Human Resource Planning: The objective of HR Planning is to ensure that the
organization has the right types of persons at the right time at the right place. It prepares
human resources inventory with a view to assess present and future needs, availability
and possible shortages inhuman resource. Thereupon, HR Planning forecast demand
and supplies and identify sources of selection. HR Planning develops strategies both
long-term and short-term, to meet the man-power requirement.

b) Design of Organization and Job: This is the task of laying down organization structure,
authority, relationship and responsibilities. This will also mean definition of work
contents for each position in the organization. This is done by ―job description‖. Another
important step is ―Job specification‖. Job specification identifies the attributes of persons
who will be most suitable for each job which is defined by job description.
c) Selection and Staffing: This is the process of recruitment and selection of staff. This
involves matching people and their expectations with which the job specifications and
career path available within the organization.
d) Training and Development: This involves an organized attempt to find out training
needs of the individuals to meet the knowledge and skill which is needed not only to
perform current job but also to fulfil the future needs of the organization.
e) Organizational Development: This is an important aspect whereby ―Synergetic
effect‖ is generated in an organization i.e. healthy interpersonal and inter-group
relationship within the organization.
f) Compensation and Benefits: This is the area of wages and salaries administration
where wages and compensations are fixed scientifically to meet fairness and equity
criteria. In addition labour welfare measures are involved which include benefits and
services.
g) Employee Assistance: Each employee is unique in character, personality,
expectation and temperament. By and large each one of them faces problems
everyday. Some are personal some are official. In their case he or she remains worried.
Such worries must be removed to make him or her more productive and happy.
h) Union-Labour Relations: Healthy Industrial and Labour relations are veryimportant for
enhancing peace and productivity in an organization. This is one of the areas of
HRM.
i) Personnel Research and Information System: Knowledge on behavioral science and
industrial psychology throws better insight into the workers expectations,
aspirations and behaviour. Advancement of technology of product and production
methods have created working environment which are much different from the past.
Globalization of economy has increased competition many fold. Science of
ergonomics gives better ideas of doing a work more conveniently by an employee.
Thus, continuous research in HR areas is an unavoidable requirement. It must also
take special care for improving exchange of information through effective
communication systems on a continuous basis especially on moral and motivation

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Objectives of HRM
The primary objective of HRM is to ensure the availability of competent and willing
workforce to an organization. The specific objectives include the following:

1) Human capital : assisting the organization in obtaining the right number and types of
employees to fulfill its strategic and operational goals
2) Developing organizational climate: helping to create a climate in which employees are
encouraged to develop and utilize their skills to the fullest and to employ the skills and
abilities of the workforce efficiently
3) Helping to maintain performance standards and increase productivity through effective
job design; providing adequate orientation, training and development; providing
performance-related feedback; and ensuring effective two-way communication.
4) Helping to establish and maintain a harmonious employer/employee relationship
5) Helping to create and maintain a safe and healthy work environment
6) Developing programs to meet the economic, psychological, and social needs of the
employees and helping the organization to retain the productive employees
7) Ensuring that the organization is in compliance with provincial/territorial and federal
laws affecting the workplace (such as human rights, employment equity,
occupational health and safety, employment standards, and labour relations
legislation). To help the organization to reach its goals
8) To provide organization with well-trained and well-motivated employees
9) To increase the employees satisfaction and self-actualization
10) To develop and maintain the quality of work life
11) To communicate HR policies to all employees.
12) To help maintain ethical polices and behavior.

The above stated HRM objectives can be summarized under four specific objectives:
societal, organizational, and functional and personnel.

1) Societal Objectives: seek to ensure that the organization becomes socially

responsible to the needs and challenges of the society while minimizing the negative
impact of such demands upon the organization. The failure of the organizations to use
their resources for the society‘s benefit in ethical ways may lead to restriction.

2) Organizational Objectives: it recognizes the role of HRM in bringing about

organizational effectiveness. It makes sure that HRM is not a standalone department,
but rather a means to assist the organization with its primary objectives. The HR
department exists to serve the rest of the organization.

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 3) Functional Objectives: is to maintain the department‘s contribution at a level
appropriate to the organization‘s needs. Human resources are to be adjusted to suit the
organization‘s demands. The department‘s value should not become too expensive at
the cost of the organization it serves.

4) Personnel Objectives: it is to assist employees in achieving their personal goals, at least

as far as these goals enhance the individual‘s contribution to the organization.
Personal objectives of employees must be met if they are to be maintained, retained
and motivated. Otherwise employee performance and satisfaction may decline giving
rise to employee turnover.

Functions of HRM
Human Resources management has an important role to play in equipping
organizations to meet the challenges of an expanding and increasingly competitive
sector. Increase in staff numbers, contractual diversification and changes in
demographic profile which compel the HR managers to reconfigure the role and
significance of human resources management. The functions are responsive to current
staffing needs, but can be proactive in reshaping organizational objectives. All the
functions of HRM are correlated with the core objectives of HRM (Table 1.1). For
example personal objectives is sought to be realized through functions like
remuneration, assessment etc.

Figure 1 : Functions of HRM

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HR management can be thought of as seven interlinked functions taking place
within organizations, as depicted in Figure 1.3 Additionally, external forces—
legal, economic, technological, global, environmental, cultural/geographic,
political, and social—significantly affect how HR functions are designed,
managed, and changed. The functions can be grouped as follows:

Strategic HR Management:
As a part of maintaining organizational competitiveness, strategic
planning for HR effectiveness can be increased through the use of HR metrics
and HR technology. Human resource planning (HRP) function determine the
number and type of employees needed to accomplish organizational goals. HRP
includes creating venture teams with a balanced skill-mix, recruiting the right
people, and voluntary team assignment. This function analyzes and determines
personnel needs in order to create effective innovation teams. The basic HRP
strategy is staffing and employee development.
Equal Employment Opportunity:

Compliance with equal employment opportunity (EEO) laws and regulations

affects all other HR activities.

Staffing:
The aim of staffing is to provide a sufficient supply of qualified individuals
to fill jobs in an organization. Job analysis, recruitment and selection are the
main functions under staffing.
Workers job design and job analysis laid the foundation for staffing by
identifying what diverse people do in their jobs and how they are affected by
them.
Job analysis is the process of describing the nature of a job and specifying
the human requirements such as knowledge, skills, and experience needed
to perform the job. The end result of job analysis is job description. Job
description spells out work duties and activities of employees.
Through HR planning, managers anticipate the future supply of and
demand for employees and the nature of workforce issues, including the
retention of employees. So HRP precedes the actual selection of people for
organization. These factors are used when recruiting applicants for job
openings.

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Talent Management and Development:
Beginning with the orientation of new employees, talent management
and development includes different types of training. Orientation is the first
step towards helping a new employee to adjust himself to the new job and the
employer. It is a method to acquaint new employees with particular aspects of
their new job, including pay and benefit programmes, working hours and
company rules and expectations.
Training and Development programs provide useful means of assuring
that the employees are capable of performing their jobs at acceptable levels and
also more than that. All the organizations provide training for new and in
experienced employee. In addition, organization often provide both on the job
and off the job training programmes for those employees whose jobs are
undergoing change.
Likewise, HR development and succession planning of employees and
managers is necessary to prepare for future challenges. Career planning has
developed as result of the desire of many employees to grow in their jobs and
to advance in their career. Career planning activities include assessing an
individual employee‘s potential for growth and advancement in the
organization.
Performance appraisal includes encouraging risk taking, demanding
innovation, generating or adopting new tasks, peer evaluation, frequent
evaluations, and auditing innovation processes.
This function monitors employee performance to ensure that it is at
acceptable levels. This strategy appraises individual and team performance so
that there is a link between individual innovativeness and company profitability.
Which tasks should be appraised and who should assess employees‘
performance are also taken into account.
Total Rewards
Compensation in the form of pay, incentives and benefits are the
rewards given to the employees for performing organizational work.
Compensation management is the method for determining how much
employees should be paid for performing certain jobs. Compensation affects
staffing in that people are generally attracted to organizations offering a higher
level of pay in exchange for the work performed. To be competitive, employers
develop and refine their basic compensation systems and may use variable pay

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programs such as incentive rewards, promotion from within the team,
recognition rewards, balancing team and individual rewards etc. This function
uses rewards to motivate personnel to achieve an organization‘s goals of
productivity, innovation and profitability. Compensation is also related to
employee development in that it provides an important incentive in
motivating employees to higher levels of job performance to higher paying jobs
in the organization.
Benefits are another form of compensation to employees other than direct
pay for the work performed. Benefits include both legally required items and
those offered at employer‘s discretion. Benefits are primarily related to the area
of employee maintenance as they provide for many basic employee needs.
Risk Management and Worker Protection:
HRM addresses various workplace risks to ensure protection of
workers by meeting legal requirements and being more responsive to concerns
for workplace health and safety along with disaster and recovery planning.
Employee and Labor Relations:
The relationship between managers and their employees must be
handled legally and effectively. Employer and employee rights must be
addressed. It is important to develop, communicate, and update HR policies
and procedures so that managers and employees alike know what is expected.
In some organizations, union/management relations must be addressed as
well. The term labour relation refers to the interaction with employees who are
represented by a trade union. Unions are organization of employees who
join together to obtain more voice in decisions affecting wages, benefits,
working conditions and other aspects of employment. With regard to labour
relations the major function of HR personnel includes negotiating with the unions
regarding wages, service conditions and resolving disputes and grievances.

Importance of HRM

1. Importance for the Organisation:-

 Good human resource practices help in attracting & retaining the
best people in the organisation.
 In order to make use of latest technology the appointment of right
type of persons is essential. The right people can be fitted into

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 new jobs properly only if the management performs its HR
function satisfactorily.
 Globalisation has increased the size of the organisation who
employ thousands of employees in different countries. The
performance of the company depends upon the qualities of the
people employed. This has further increased the importance of
HRM
 HR planning alerts the organisation to the types of people it will
need in the short , medium & long run.
 HR development is essential for meeting the challenges of future.
The importance of HRM has increased because of the shortage of
really managerial talent in the country.

2. Importance for the employees

 HRM stress on the motivation of employees by providing
them various financial & non-financial incentives.
 Right organisational climate is also stressed upon so that the
employees can contribute their maximum to the achievement of
the organisational objectives.
 Effective management of HR promotes team wok & team
spirit among employees.
 It offers excellent growth opportunities to people who have the
potential to rise.
 It also encourages people to work with diligence & commitment.

3. Importance for the society:-

Good HR efforts lead to productivity gains (ration of output to

input) to the society, since it enables the managers to reduce costs,
save scarce resources, enhance profits & offer better pay, benefits &
working conditions to employees.

Principles of Human Resource Management

HRM operates based on fundamental principles that guide its practices:

1. Equity and Fairness – Treating all employees fairly and without

discrimination.
2. Right Person for the Right Job – Ensuring that employees' skills and roles
align with job requirements.

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 3. Continuous Development – Providing opportunities for learning, training,
and career progression.
4. Workforce Diversity and Inclusion – Creating an inclusive environment that
values employees from different backgrounds.
5. Employee Well-being – Ensuring a safe, stress-free, and motivating work
atmosphere.
6. Strategic Alignment – Ensuring that HR policies support the organization‘s
broader strategic goals.
7. Compliance with Labour Laws – Adhering to regulations and legal
frameworks to protect employee rights.

Changing Environment of Human Resource Management

HRM has evolved due to various internal and external factors:

A. Internal Factors

 Organizational culture and structure – The work environment and hierarchy

influence HR policies.
 Leadership style and management practices – Different leadership
approaches impact employee motivation and engagement.
 Technological advancements within the company – Automation and digital
tools improve HR processes and workforce management.

B. External Factors

 Technological Developments – AI, HR software, and automation are

reshaping workforce management.
 Globalization – HR must manage diverse and multinational teams with
varying legal and cultural norms.
 Legal and Regulatory Changes – New labour laws and workplace policies
require constant HR adaptation.
 Demographic Shifts – The aging workforce and millennial preferences are
altering HR strategies.
 Economic Conditions – HRM strategies must adapt to economic downturns,
recessions, or industry booms.
 Social and Cultural Changes – Workplace diversity, gender equality, and
work-life balance are gaining importance.

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Challenges of Human Resource Management

HR professionals face numerous challenges that require strategic solutions:

1. Talent Acquisition and Retention – The competition for skilled professionals

is increasing.
2. Workforce Diversity and Inclusion – Ensuring an inclusive culture is a
priority.
3. Employee Engagement and Motivation – Keeping employees productive and
satisfied is critical.
4. Change Management – Organizations must adapt to market shifts,
restructuring, and new technologies.
5. Remote Work and Hybrid Work Models – Managing virtual teams
effectively is a growing challenge.
6. Legal and Ethical Compliance – Adhering to labor laws and ethical
workplace practices.
7. Technological Integration – Implementing HR technology solutions and data
analytics.
8. Leadership Development – Training managers to become effective leaders.
9. Workplace Conflicts – Resolving disputes efficiently and maintaining a
harmonious work environment.
10. HR Analytics and Data Management – Using data-driven insights for
decision-making.

Ethical Aspects of Human Resource Management

Ethical HRM ensures fairness, transparency, and integrity in managing people. Some
key ethical aspects include:

1.Fair Hiring Practices – Ensuring unbiased recruitment and selection.

2.Employee Privacy – Protecting personal and professional employee data.
3.Fair Compensation – Ensuring competitive and equitable pay structures.
4.Harassment and Discrimination Policies – Implementing strict anti-
discrimination laws and ethical policies.
5. Workplace Safety – Prioritizing employee health, safety, and security.
6. Whistle blower Protection – Encouraging employees to report unethical
behavior without fear of retaliation.
7. Corporate Social Responsibility (CSR) – Implementing HR policies that
promote sustainability and community engagement.

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