Introduction

Human Resource Management (HRM) plays a vital role in modern organizations. It

encompasses a broad range of practices focused on managing people effectively to align with
strategic goals.

1. Historical Background and Chronological Development of HRM

The history of HRM traces back to early 20th-century industrialization. Initially termed
'personnel management,' the function was limited to record-keeping and administrative tasks.
With the rise of labor laws and unions, focus shifted to employee welfare. By the 1980s,
organizations began recognizing the strategic importance of HRM. Technology, globalization,
and a competitive labor market further pushed HR to become proactive and business-aligned.
Today, HRM is a strategic function responsible for workforce planning, talent acquisition,
performance management, learning and development, and organizational culture.

Pre-1900s Human Resources Management: Tough Work, Tougher

Conditions

The idea of a connection between worker wellbeing and their productivity emerged between
1890 and 1920 American business leaders, aided by scholars and politicians, embraced

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"industrial betterment" and embarked on plans to stabilize the labor force and encourage
employee loyalty. To carry out the somewhat surreptitious practices of the time, departments
called "industrial welfare," and "scientific management" were created.

1920s-1950s Human Resources Management

Lucky for us human beings, the workplace began to change with the realization that workers
were not puppets on a string, but people with emotional and psychological needs, "Personnel
departments" and "manpower development" increased develop stronger compensation
packages. "Human capital" became synonymous for the knowledge an individual embodies in
affecting economic growth.

1960s-1980s Human Resources Management

In the early '60's, the US legislature began passing fairer employment practices such as the
Equal Pay Act of 1963 and Civil Rights Act of 1964 compelling human resource departments
to focus on compliance issues. At the same time, human motivation theories including
Herzberg's Two Factor Theory and Deci and Ryan's Self-Determination Theory, began to
transform the workplace. Organizational management and industrial psychology contributed
to HR paying more attention to employees' need for achievement, advancement, and
recognition by matching the nature of the work itself with a person's skills and interests.

1990s-2010s Human Resources Management

The role of HR is more complex than ever. New and emerging technology has shifted the focus
from personnel management and administrative tasks, today's HR departments at least the
forward-thinking ones-spend their energies managing employee engagement and strengthening
culture, They're also charged with managing the employees themselves to increase the odds
they're happy at work and will continue to stick around for the foreseeable future.

Through the decades, the workforce evolved from labor-based to services-focused requiring
HR to shift from a process-centric function to a worker-centric function, according to SHRM.

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Understanding the needs, wants and motivations of a diverse and multi-generational workforce
has led HR to attract and retain high- performers, but the battle for top talent has accelerated.
The competitive business environment and globalization necessitates that workforce change
initiatives be based on and integrated into the business strategies giving more HR leaders a seat
at the C-Suite table.

The Future for HR Leaders

"Tomorrow's HR leaders will need to be bigger, broader thinkers, and they will have to be tech-
savvy and nimble enough to deal with an increasingly agile and restless workforce." Gartner
agrees saying HR leaders will need to be "more flexible and responsive to changing employee
needs."

Leaders who understand HR's enormous value in the workplace will have a unique, big picture
view from both the company perspective and employee perspective.

Here are five ways to help human resource management get there:

Embrace Technology & Analytics. Let go of old practices. Predictive analytics will grow to
"assess everything from employee retention to recruitment strategies to the success of wellness
programs" according to a report by SHRM. Leverage data to augment better informed
decisions.

Understand Employee’s Life Stage. Today's workforce is a hodgepodge of employees going

through a variety of personal and professional change. Different employees will be in different
stages of life and career and may require employers to make adjustments to find a balance
between work and life. They expect a wide range of employee experiences to be accommodated
by technology. In addition, they want ongoing coaching, greater visibility and recognition. HR
should manage these efforts.

Change Your Mind set. In today's competitive space where driving engagement with both
employees and customers is vital, it's important for marketing and HR executives to lead the
charge toward a meaningful partnership. Human resource management is changing and HR
leaders, "need to transform their perceived administrative roles to positions of innovation."
HCM (Human Capital Management) indicates there will be more cross-functional consulting
among HR and departments like marketing, customer service and finance.
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Shift from Being Reactive to Proactive. HR professionals have the "ability to completely
transform a business entire workforce,'" says human resource consultants, G&A Partners. Start
by consolidating processes, developing future leaders and building a culture of recognition to
sustain employee morale, productivity and retention.

Spend Time on Your Employer Brand Message. This communicates what sets your
organization apart and why prospective employees should consider it. But if storytelling isn't
your jam, consider connecting with your marketing team members for support. They can help
ensure you say exactly what you want to say. This will also help you think long-term about
how best to integrate this message into the daily experiences of your employees so it stays with
them.

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2. HRM practices bring the competitive advantages for the organization
The general concept of the competitive advantage is a reasonably straightforward. Each
business tries to gain the advantage that helps to increase the market share, margins or profits,
No firm exists to make employees lucky.

They exist to fund lives of shareholders. No one can complain about the organization building
the sustainable internal environment that brings immediate and 1long-term benefits compared
to competitors on the market. Human Resources in no exception; itis a strategic business
function. It has the HR Strategy, and it can build a significant competitive advantage for the
company.

A comprehensive HR Strategy makes a difference. A smart organization recognizes that

competitive and different people management techniques can make the business attractive.
Such an organization attracts the best talents and they want to use their creative minds in the
favor of the enterprise. They just develop products and services attractive to customers and
profitable for the organization. They can create a successful business that is widely recognized
by competitors.

An efficient management of the capital always brings an advantage. The organization does not
lose resources in ineffective investments. It keeps a tight control over the budgeting process,
this applies to the management of human capital, as well. The right allocation of available
resources allows the business to speed up the development of new products, introduce
innovations and focus on small market wars with competitors.

Human Resources has to develop such an HR Strategy that meets the requirement of the
efficient management. It does not mean the costs have to be lower. The organization just need
to gain a better competitive advantage over its competitors.

There are several models how to build the competitive advantage:

 Cost Leadership:
 Innovation Leadership;
 Differentiation Leadership;
 Operational Effectiveness Strategy.

The most common is the cost leadership strategy. However, it usually brings worst results for
all competitors. Most organization decrease profit margins and cut profits. It is often followed

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by several cost cutting exercises, and the leadership team loses its face in front of employees.
The innovative business has to avoid this strategy.

Innovations can build a very strong basis for the sustainable development of the competitive
advantage. However, such an organization needs to change its processes, procedures, policies
and practices significantly. This strategy is the most demanding. It requires Human Resources
to change the way it works.

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3. HR managers/Corporate leaders consider HR as the Strategic Business
Partner (SBP)

HR professionals consider HR as a Strategic Business Partner, I agree with this statement. In

the course of attaining organizational goals, HR plays a vital role in many ways. Some of them
are discussed as follows: The major difficulties faced by contemporary organizations are
competitive forces and will continuously be faced in near future also. Ensuring competitive
advantages is a vital objective for these organizations. Competitive forces make an organization
efficient and efficiency is retained by efficient human resources (HR). This writing up
examines the role played by human resources as a strategic business partner.

Different roles played by human resources

HRM has been one of the staple departments for the last few years in modern organizations
because of various vital roles and responsibilities. HR people are considered key in the
determining productive capabilities of the workplace. These types of activities are known as
Administrative services, Business Partner Roles, and Strategic Roles. When HR plays an
administrative role, they are to implement and enforce regulation, design policies, and maintain
the benefits of employees, their insurance, leaves, and so on. As a business partner, the HR
department aid other departments for executing their business models. Finally, it also plays an
important role as a strategic partner of the organization. As a strategic business partner, HR
department contribute in the process of making decision by the top level managers and it has
given the department unparalleled status. To be exact, HRM is not only planning strategic
activities but also executing the formulation of those strategy for the organization.

The use of human resources in both the financial and non-financial sectors
is supported by empirical data:

The aforementioned claims are backed up by a wealth of empirical studies. The function of
human resources in the financial and non-financial sectors is the main subject of these works.
Organizations can maximize the value of their human capital by having human resources apply
methodically sound plans and processes. The balance between the vertically aligned company

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strategies and functions and the horizontally aligned human resource management "processes"
is necessary for systemically sound strategies and processes. As a result, the concepts of
"Human capital" and "Human Investment" serve as the foundation for defining the function of
human resources in giving enterprises a competitive edge in terms of labour efficiency.

A dynamic human resource team to aid in strategic decision making

Overall, the role of human resources as a strategic business partner seems unparalleled in terms
of what needs to be done and the activities required to indulge in strategic decision making.
There has been a general consensus that to cater to the dynamic business setups. Human
resources need to create flexible program designs whilst also preserving a non-discriminate
and goal-oriented workplace. The recommendations provided above, despite some
disagreements, strongly support the claim that establishing a strategic business partner should
be an important role of human resources in contemporary organizations across the globe.

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4. HR iceberg, Psychological contract, Psychological capital, job rotation,
job enlargement and enrichment, cafeteria approach of benefits, 9-box grid
of employee development, talent management, and employee engagement

HR Iceberg:

a. HR Iceberg: The HR Iceberg shows that visible HR activities (e.g., hiring, payroll) are only
the surface. Below lie deeper cultural elements like trust, motivation, and values that truly
impact performance.

b. Psychological Contract: An informal agreement of expectations between employer and

employee. When broken, it leads to dissatisfaction, while fulfillment boosts loyalty and
engagement.

c. Psychological Capital: Refers to personal strengths such as optimism, resilience, hope, and
confidence. High psychological capital increases adaptability and performance.

d. Job Rotation, Enlargement, and Enrichment: Rotation involves moving employees

through different roles for skill development. Enlargement expands tasks to reduce monotony.
Enrichment adds responsibility and autonomy for deeper engagement.

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e. Cafeteria Approach of Benefits: Allows employees to choose from a menu of benefit
options tailored to their individual needs.

f. 9-Box Grid of Employee Development: This matrix evaluates employees based on

performance and potential, helping organizations plan succession and focus development
efforts.

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g. Talent Management: The end-to-end process of attracting, developing, and retaining high-
potential individuals to meet organizational goals.

h. Employee Engagement: A measure of how emotionally invested employees are in their

work. Engaged employees deliver better results, show higher loyalty, and improve team
morale.

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5. Important theories related to HRM practices

Human Resource Management or HRM is the strategic approach, which is more effective and
more efficient of people of the company or organization, who help to the organization to gain
the business to a competitive advantage. It is basically the management of development of
human skills, talent and use it for the organization's grow and success.

There are many theories of Human Resource Management. Such as:

1. Organizational Life Cycle Theory,

2. Social Exchange Theory,

3. Strategic Contingency Theory,

4. Theory of Reciprocity,

5. Theory of Psychological Conduct,

6. AMO Theory: Ability, Motivation and Opportunities

7. Transaction Cost Theory,

8. Resource-based Theory.

9. Institutional Theory,

10. Human Capital Theory

1. Organizational Life Cycle Theory:

This is the first human resource management theory. Historians and academicians have
observed that organizations, just like that of living organisms, have life cycles. They are born,
they grow and develop, they reach maturity, they begin to decline and age, and finally, in many
cases, they die.

2. Social Exchange Theory:

It is another theory of Human Resource Management. It is the theory that a person gives
something to another, also take something from another.

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3. Strategic Contingency Theory:

It is the theory that focuses what needs to be done in the form of problems to be solved. If the
person doesn't have the ability to solve the problem, then the person can`t be an effective leader.

4. Theory of Reciprocity:

It is the theory that says we get the result of what we done. lf we do good, we get the good
result. If we do bad, we get the bad result is.

5. Theory of Psychological Conduct:

It is another interesting theory f Human Resource Management. It's about how human
psychology is built. It's about how people behave in a complicated situation where the person
has no instructions at all. The theory mainly focused on people`s ethics, behavior’s etc.

6. AMO Theory: Ability, Motivation, and Opportunities:

The theory says that there are 3 important work components that shape employee
characteristics and contribute to the success of the organization. The employees can be very
competent and motivated. But if they don't get the opportunities to make contributions, it
affects their performance in their job.

7. Transaction Cost Theory:

Transaction cost theory in human resource management is part of corporate governance and
agency theory. It is based on the principle that costs will arise when you get someone else to
do something for you.

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8. Resource-based Theory:

The resource-based theory states that the possession of resources is valuable, difficult to
imitate, rare, and cannot be substituted. The resource-based theory suggests that organizations
should look inside the company to find the sources of competitive advantage through the use
of their resources.

9. Institutional Theory:

Institutional theory is an approach to understanding organizations and management practices

as the product of social rather than economic pressures. It has become a popular perspective
within management theory because of its ability to explain organizational behavior’s that defy
economic rationality.

10. Human Capital Theory:

It is another theory of Human Resource Management. It says that human beings can increase
their productive capacity through greater education and skills training.

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7. Conclusion
HRM has evolved into a strategic function that significantly contributes to organizational
success. By applying effective practices and grounding them in relevant theories, HR can
influence productivity, culture, and long-term growth.

8. References

1. Armstrong, M. (2020). Armstrong's Handbook of Human Resource Management Practice

(15th ed.). Kogan Page.
2. Dessler, G. (2022). Human Resource Management (16th ed.). Pearson.
3. Ulrich, D., Brockbank, W., Johnson, D., Sandholtz, K., & Younger, J. (2008). HR
Competencies: Mastery at the Intersection of People and Business. Society for Human
Resource Management.
4. Torrington, D., Hall, L., & Taylor, S. (2017). Human Resource Management (10th ed.).
Pearson.

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