LESSON ONE

INTRODUCTION TO HUMAN RESOURCE MANAGEMENT

Overview
The HR manager’s goal is to influence the relationship between an organization and its
employees. Employees are assets that produce value for their employers and indeed
they are a very expensive asset. Some companies spend 20-30% of their operating
expenses on employees’ wages and benefits. For an organization to succeed, the
capability, energy, commitment and loyalty of employees must be recognized, recorded
and rewarded.
Definitions of Human Resource Management
Human resource management (HRM) is a strategic, integrated and coherent approach
to the employment, development and well-being of the people working in
organizations (Armstrong 2009).
HRM comprises a set of policies designed to maximize organizational integration,
employee commitment, flexibility and quality work (Guest, 1987).
Objectives of HRM
• To achieve organizational mission, vision, goals, and objectives using people as
valuable resources
• To achieve optimal utilization of staff capacity
• Ensuring that employees are committed to their jobs, teams, departments and the
entire organisation
• To ensure that organizational systems, processes and activities are integrated and
synergized through a strong organizational culture
• Optimal utilization of available resources
• To utilize creativity, innovation, teamwork and high quality management as key
drivers in organizational excellence
• To enable managers to be flexible and adapt to changes required in pursuing
excellence
Philosophies of HRM

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 • Human resource management is and has to be owned and driven by top
management in the interests of the key stakeholders
• Business or organizational strategies from the basis for human resource strategies
and there should a strategic fit
• Employees should be considered to be assets rather than liabilities
• Employees are capable of producing added value. It is the role of the
management to obtain such added value through human resource development
and performance management
• Organizational success comes from the employees’ total commitment to the
organizational mission, goals, objectives and values
• Building a strong organizational culture gives managers an advantage in
stimulating employees’ commitment
Characteristics of HRM
1. It is diverse-i.e. there are no universal characteristics of HRM. Many models exist
and practices within different organizations are diverse
2. It is strategic with emphasis on integration-human resource policies should be
integrated with business planning. The policies should also be in harmony with
one another
3. HRM is commitment oriented
4. It is founded on the belief that people should be treated as assets (human
capital)-human resources are valuable and a source of competitive advantage
5. It adopts a unitary rather than pluralist viewpoint-emphasis on individual
contracts rather than collective agreements
6. HRM is a management driven activity
7. It tends to focus on business values
8. It is concerned with employee centered outcomes
9. HRM functions as a system
10. It adopts a multidisciplinary approach-a behavioural science that is built upon
contributions from a number of behavioural disciplines.
11. It is pervasive in nature as it permeates all levels of management in organizations
FUNCTIONS OF HRM

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 Human Resource Planning:
• In the human resource planning function, the number and type of employees
needed to accomplish organizational goals are determined. Research is an
important part of this function because planning requires the collection and
analysis of information in order to forecast human resources supplies and to
predict future human resources needs. The basic human resource planning
strategy is staffing and employee development.
Job Analysis:
• Job analysis is the process of describing the nature of a job and specifying the
human requirements, such as skills, and experience needed to perform it. The
end product of the job analysis process is the job description. A job description
spells out work duties and activities of employees. Job descriptions are a vital
source of information to employees, managers, and personnel people because job
content has a great influence on personnel programmes and practices.
Employee Resourcing:
• This emphasizes the recruitment and selection of the human resources for an
organization. Human resources planning and recruiting precede the actual
selection of people for positions in an organization. Recruiting is the personnel
function that attracts qualified applicants to fill job vacancies. In the selection
function, the most qualified applicants are chosen for hiring from among those
attracted to the organization by the recruiting function. Orientation/Induction:
• Orientation is the first step towards helping a new employee 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.
Human Resource Development (Training and Development):
• The training and development function gives employees the skills and knowledge to
perform their jobs effectively. In addition to providing training for new or
inexperienced employees, organizations often provide training programmes for
experienced employees whose jobs are undergoing change. Large organizations
often have development programmes which prepare employees for higher level

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 responsibilities within the organization. Training and development programmes provide
useful means of assuring that employees are capable of performing their jobs at
acceptable levels.
Performance Appraisal:
• This function monitors employee performance to ensure that it is at acceptable
levels. Human resource professionals are usually responsible for developing and
administering performance appraisal systems, although the actual appraisal of
employee performance is the responsibility of supervisors and managers. Besides
providing a basis for pay, promotion, and disciplinary action, performance
appraisal information is essential for employee development since knowledge of results
(feedback) is necessary to motivate and guide performance improvements.
Career Planning:
• Career planning has developed partly as a 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.
Compensation/Reward Management:
• Human resource personnel provide a rational method for determining how
much employees should be paid for performing certain jobs. Pay is obviously
related to the maintenance of human resources. Since compensation is a major
cost to many organizations, it is a major consideration in human resource
planning. Compensation affects staffing in that people are generally attracted to
organizations offering a higher level of pay in exchange for the work performed.
It is related to employee development in that it provides an important incentive
in motivating employees to higher levels of job performance and to higher
paying jobs in the organization.
Labour Relations/Employee Relations:
• The term “labour relations” refers to 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

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 personnel responsibility primarily involves negotiating with the unions regarding wages,
service conditions, and resolving disputes and grievances.
Record-keeping:
• The oldest and most basic personnel function is employee record-keeping. This
function involves recording, maintaining, and retrieving employee-related information for
a variety of purposes. Records which must be maintained include application
forms, health and medical records, employment history (jobs held, promotions,
transfers, and lay-offs), seniority lists, earnings and hours of work, absences,
turnover, tardiness, and other employee data. Complete and up-to-date
employee records are essential for most personnel functions. More than ever
employees today have a great interest in their personnel records. They want to
know what is in for them, why certain statements have been made, and why
records may not have been updated.

Role of Human Resource Management

For HRM to manage their function effectively they should play certain roles.
Roles are set of behaviors that managers contribute while performing their work and
HR managers play the following roles;
1. Strategic partner role
2. Business partner role
3. Employee advocate role
4. Change Agent/champion

Strategic Partner Role

In this role the HR manager formulates long term strategies in the areas of recruitment,
training, employee relations, health and safety. n this role, the HR person contributes to
the development of and the accomplishment of the organization-wide business plan
and objectives.

The HR business objectives are established to support the attainment of the overall
strategic business plan and objectives. The tactical HR representative is deeply

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knowledgeable about the design of work systems in which people succeed and
contribute.

This strategic partnership impacts HR services such as the design of work positions;
hiring; reward, recognition and strategic pay; performance development and appraisal
systems; career and succession planning; and employee development. When HR
professionals are aligned with the business, the personnel component of the
organization is thought about as a strategic contributor to business success.

To be successful business partners, the HR staff members have to think like business
people, know finance and accounting, and be accountable and responsible for cost
reductions and the measurement of all HR programs and processes. It's not enough to
ask for a seat at the executive table; HR people will have to prove they have the
business savvy necessary to sit there.

Business Partner Role

To be explicit about the SBP concept, we believe the role must be developed around
providing human capital and organization change perspectives embedded into business
leadership teams. In order to be effective, they will need business credibility, the ability
to work in partnership with the other leaders, and deep HR and OD functional
knowledge. The SBP model is a way to ensure the human system implications and
needed change strategies are part of business leadership decisions. It involves both
what was always intended as strategic work in HR and new work in strategic thinking,
organization design, culture change, human system alignment and change
management. The specific context, characteristics, and demands of any industry or
organization sector will ultimately drive this role.

In order to put more context around the Strategic Business Partner role, as Hanna (1988)
says, we need to start by working from the outside-in. We live in a hyper- turbulent
world. Today we must adapt to numerous unprecedented challenges that change the
very nature of what business we are in and how that business gets conducted.

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Employee Advocate

As an employee sponsor or advocate, the HR manager plays an integral role in

organizational success via his knowledge about and advocacy of people. This advocacy
includes expertise in how to create a work environment in which people will choose to
be motivated, contributing, and happy.

Fostering effective methods of goal setting, communication and empowerment through

responsibility, builds employee ownership of the organization. The HR professional
helps establish the organizational culture and climate in which people have the
competency, concern and commitment to serve customers well.

In this role, the HR manager provides overall talent management strategies, employee
development opportunities, employee assistance programs, gain sharing and profit-
sharing strategies, organization development interventions, due process approaches to
employee complaints and problem solving, and regularly scheduled communication
opportunities.

Change Agent/Champion

The constant evaluation of the effectiveness of the organization results in the need for
the HR professional to frequently champion change. Both knowledge about and the
ability to execute successful change strategies make the HR professional exceptionally
valued. Knowing how to link change to the strategic needs of the organization will
minimize employee dissatisfaction and resistance to change.

Organization development, the overarching discipline for change management

strategies, gives the HR professional additional challenges. Consciously helping to
create the right organization culture, monitoring employee satisfaction, and measuring
the results of organization initiatives fall here as well as in the role of employee
advocacy.

The HR professional contributes to the organization by constantly assessing the

effectiveness of the HR function. She also sponsors change in other departments and in

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work practices. To promote the overall success of her organization, she champions the
identification of the organizational mission, vision, values, goals and action plans.
Finally, she helps determine the measures that will tell her organization how well it is
succeeding in all of this.

Challenges for HR Managers

The challenges that Human Resource managers face include:

A. Challenges resulting from Globalization of business

These include

1. Global security and terrorism

2. Occupational shifts
3. Workforce availability and quality concerns
4. Growth in contingent workforce (temporary workers, independent contractors,
leased employees and part times)
5. Technological shifts and the internet (issues of virtue employees, more weekly
hours worked, and more stress on balancing work and personal lives)
6. Competition for workers
B. Challenges due to Workforce demographics and diversity
The following issues pose a challenge

1. Racial/ethnic diversity
2. Cultural diversity
3. Women in the work force
4. Aging work force
5. Young work force
6. Handicapped employees
C. Organizational Restructuring
Challenges here emanate from

1. Job cuts
2. Ethical challenges

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 3. Survivor’s mentality of remaining workers
4. Loss of employee and customer loyalty
5. Communicating the changes to employees:
6. Managing employee morale.
7. Managing layoffs and downsizing.
8. Managing changes to job responsibilities.
9. Managing changes to company culture.

Historical Development of Human Resource Management (HRM)

Pre–World War II
• In the early 20th century and prior to World War II, the personnel function (the
precursor of the term human resource management) was primarily involved in record
keeping of employee information; in other words, it fulfilled a “caretaker” function.
During this period of time, the prevailing management philosophy was called
“scientific management.” The central thrust of scientific management was to
maximize employee productivity.
• It was thought that there was one best way to do any work, and this best way was
determined through time and motion studies that determined the most efficient use
of human capabilities in the production process. Then, the work could be divided
into pieces, and the number of tasks to be completed by a worker during an average
workday could be computed. These findings formed the basis of piece-rate pay
systems, which were seen as the most efficient way to motivate employees.
• At this point in history, there were very few government influences in employment
relations, and thus, employment terms, practices, and conditions were left to the
owners of the firm. As a result, employee abuses such as child labor and unsafe
working conditions were common.
• Some employers set up labor welfare and administration departments to look after
the interests of workers by maintaining records on health and safety as well as
recording hours worked and payroll.

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Post–World War II (1945–1960)
• The mobilization and utilization of labor during the War had a great impact on
the development of the personnel function. Managers realized that employee
productivity and motivation had a significant impact on the profitability of the
firm. The human relations movement after the War emphasized that employees
were motivated not just by money but also by social and psychological factors,
such as recognition of work achievements and work norms.
• Due to the need for classification of large numbers of individuals in military
service during the war, systematic efforts began to classify workers around
occupational categories in order to improve recruitment and selection
procedures. The central aspect of these classification systems was the job
description, which listed the tasks, duties, and responsibilities of any individual
who held the job in question. These job description classification systems could
also be used to design appropriate compensation programs, evaluate individual
employee performance, and provide a basis for termination.
• Because of the abusive worker practices prior to the War, employees started
forming trade unions, which played an important role in bargaining for better
employment terms and conditions. There were a significant number of
employment laws enacted that allowed the establishment of labor unions and
defined their scope in relationship with management. Thus, personnel
departments had to assume considerably more record keeping and reporting to
governmental agencies. Because of these trends, the personnel department had to
establish specialist divisions, such as recruitment, labor relations, training and
benefits, and government relations.

Social Issues Era (1963–1980)

• This period witnessed an unprecedented increase in the amount of labor
legislation that governed various parts of the employment relationship, such as
prohibition of discriminatory practices, occupational health and safety,
retirement benefits, and tax regulation.
• As a result, the personnel department was burdened with the additional
responsibility of legislative compliance that required collection, analysis, and

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 reporting of voluminous data to statutory authorities. For example, to
demonstrate that there was no unfair discrimination in employment practices,
data pertaining to all employment functions, such as recruitment, training,
compensation, and benefits, had to be diligently collected, analyzed, and stored.
• To avoid the threat of punitive damages for noncompliance, it was necessary to
ensure that the data were comprehensive, accurate, and up-to-date, which made
it essential to automate the data collection, analysis, and report generation
process.
• It was about this time that personnel departments were beginning to be called
Human Resources Departments and the field of human resource management
was born.
• The increasing need to be in compliance with numerous employee protection
legislations or suffer significant monetary penalties made senior managers aware
of the importance of the HRM function. In other words, effective and correct
practices in HRM were starting to affect the “bottom line” of the firms, so there
was a significant growth of HR departments, and computer technology had
advanced to the point where it was beginning to be used. As a result, there was
an increasing demand for HR departments to adopt computer technology to
process employee information more effectively and efficiently.
• This trend resulted in an explosion in the number of vendors who could assist
HR departments in automating their programs in terms of both hardware and
software.
• Another factor was the booming economy in most industrialized countries. As a
result, employee trade unions successfully bargained for better employment
terms, such as health care and retirement benefits. As a result, labor costs
increased, which put pressure on personnel managers to justify cost increases
against productivity improvements.
• With the increased emphasis on employee participation and empowerment, the
personnel function transformed into a “protector” rather than a “caretaker”
functions, shifting the focus away from maintenance to development of

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 employees. Thus, the breadth and depth of HRM functions expanded,
necessitating the need for strategic thinking and better delivery of HR services.

Cost-Effectiveness Era (1980 to the Early 1990s)

• The increased administrative burden intensified the need to fulfill a growing
number of legislative requirements, while the overall functional focus shifted
from employee administration to employee development and involvement. To
improve effectiveness and efficiency in service delivery, through cost reduction
and value-added services, the HR departments came under pressure to harness
technology that was becoming cheaper and more powerful.
• In addition, there was a growing realization within management that people
costs were a very significant part of their budgets. Some companies estimated
that personnel costs were as high as 80% of their operating costs. As a result,
there was a growing demand on the HRM function to cost justify their employee
programs and services.

Technological Advancement Era and Emergence of Strategic HRM (1990 to Present)

• The economic landscape underwent radical changes throughout the 1990s with
increasing globalization, technological breakthroughs (particularly Internet-
enabled Web services), and hyper competition. Business process reengineering
exercises became more common and frequent, with several initiatives, such as
right sizing of employee numbers, reducing the layers of management, reducing
the bureaucracy of organizational structures, autonomous work teams, and
outsourcing.
• Firms today realize that innovative and creative employees who hold the key to
organizational knowledge provide a sustainable competitive advantage because
unlike other resources, intellectual capital is difficult to imitate by competitors.
Accordingly, the people management function has become strategic in its
importance and outlook and is geared to attract, retain, and engage talent. These
developments have led to the creation of the HR or workforce scorecard as well
as added emphasis on the return on investment (ROI) of the HR function and its
programs.

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 • The increased use of technology and the changed focus of the HRM function as
adding value to the organization’s product or service led to the emergence of the
HR department as a strategic partner. With the growing importance and
recognition of people and people management in contemporary organizations,
strategic HRM (SHRM) has become critically important in management
thinking and practice. SHRM derives its theoretical significance from the
resource-based view of the firm that treats human capital as a strategic asset and
a competitive advantage in improving organizational performance.

Difference between HRM and Personnel Management

Personnel management is more administrative in nature, dealing with payroll,

complying with employment law, and handling related tasks. Human resource, on the
other hand, is responsible for managing a workforce as one of the primary resources
that contributes to the success of an organization.

Human resources management is described as much broader in scope than personnel

management. Human resources management is said to incorporate and develop
personnel management tasks, while seeking to create and develop teams of workers for
the benefit of the organization.

A primary goal of human resources management is to enable employees to work to a

maximum level of efficiency.

Personnel management can include administrative tasks that are both traditional and
routine. It can be described as reactive, providing a response to demands and concerns
as they are presented. By contrast, human resources management involves ongoing
strategies to manage and develop an organization's workforce. It is proactive, as it
involves the continuous development of functions and policies for the purposes of
improving a company’s workforce.

Personnel management is often considered an independent function of an organization.

Human resource management, on the other hand, tends to be an integral part of overall

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company function. Personnel management is typically the sole responsibility of an
organization’s personnel department. With human resources, all of an organization’s
managers are often involved in some manner, and a chief goal may be to have
managers of various departments develop the skills necessary to handle personnel-
related tasks.

Using the basis for comparison, the difference can be explained in the table below.

BASIS FOR PERSONNEL MANAGEMENT HUMAN RESOURCE

COMPARISON MANAGEMENT

Meaning The aspect of management that The branch of management that

is concerned with the work focuses on the most effective use
force and their relationship with of the manpower of an entity, to
the entity is known as Personnel achieve the organizational goals is
Management. known as Human Resource
Management.

Approach Traditional Modern

Treatment of Machines or Tools Asset

manpower

Type of function Routine function Strategic function

Basis of Pay Job Evaluation Performance Evaluation

Management Role Transactional Transformational

Communication Indirect Direct

Labor Management Collective Bargaining Contracts Individual Contracts

Initiatives Piecemeal Integrated

Management Actions Procedure Business needs

Decision Making Slow Fast

Job Design Division of Labor Groups/Teams

Focus Primarily on mundane activities Treat manpower of the

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BASIS FOR PERSONNEL MANAGEMENT HUMAN RESOURCE
COMPARISON MANAGEMENT

like employee hiring, organization as valued assets, to

remunerating, training, and be valued, used and preserved.
harmony.

Recommended Reading

Gilmore, S., & Williams, S. (Eds.). (2012). Human resource management. Oxford University Press.

Armstrong, M. (1999). A Handbook of Human Resource Management Practice: Michael Armstrong.

Kogan page.

Kumar, A., & Sharma, R. (2001). Personnel Management Theory And Practice, 3 Vols. Set. Atlantic
Publishers & Distri.

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