Unit – 1: Introduction to Human

Resource Management
• Structure of Unit:
 Objectives
 What is Human Resource Management?
• Nature of HRM
 HRM in a changing Environment
 History and Evolution of HRM
 HRM Components
 Recruitment
 Selection
 Training and Development
 Job Analysis
 Performance Appraisal
 Pay
 Labor Relations
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 Human Resource Management

• A basic concept of management states that

manager works in organizations. Organization
has three basic components, People, Purpose,
and Structure. HRM is the study of activates
regarding people working in an organization.
It is a managerial function that tries to match an
organization’s needs to the skills and abilities of
its employees. Let’s see what is meant by the
three key terms… human, resource, and
management.
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• Human (Homo-sapiens – Social Animal)
• Resources (Human, Physical, Financial, Technical, Informational
etc)
• Management (Function of Planning, Organizing, Leading &
Controlling of organizational resources to accomplish goals
efficiently and effectively)

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 The Management Process
Planning

Controlling Organizing

Leading Staffing

1–4
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The management process, properly executed, involves a
wide variety of activities including planning, organizing, leading, and
controlling.
a. Planning
Planning is specifying the goals to be achieved and deciding in
advance the appropriate actions taken to achieve those goals. The
outcome of the planning process is the organization’s strategy.
b. Organizing
Organizing is assembling and coordinating the human, financial,
physical, informational, and other resources needed to achieve goals.
The outcome of organizing is an organizational structure.
c. Leading
Leading: is stimulating people to be high performers. It is directing,
motivating, and communicating with employees, individually and in
groups. Leading involves close day-to-day contact with people,
helping to guide and inspire them toward achieving team and
organizational goals. The outcome of leading is a high level of
motivation and commitment 6
D. Controlling: The controlling function makes sure that goals are
met. It asks and answers the question, "Are our actual outcomes
consistent with our goals?“. The outcome of controlling is an accurate
measurement of performance and regulation of efficiency and
effectiveness

v. Types of Mangers

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 vii. The Managerial Skills
Managers need three basic sets of skills: technical, interpersonal, and
conceptual.

a. Technical Skills
The skills that include knowledge of and proficiency in a certain
specialized field Managers need to be technically Competent
b. Interpersonal Skills/Human Skills:
Interpersonal skills include the ability to work well with other people
both individually and in a group. Mangers need good interpersonal
skills, knowledge about human behaviors and group processes, ability to
understand the feelings, attitudes and motives of others, and ability to
communicate, clearly and persuasively.
C. Conceptual skills: include analytical ability, logical thinking,
concept formation, and inductive reasoning.
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 What is human resource
management?
• As we said that HRM is the management of people
working in an organization, it is a subject related to human.
• For simplicity, we can say that it is the management of
humans or people. HRM is a managerial function that tries
to match an organization’s needs to the skills and abilities
of its employees. Human Resource Management is
responsible for how people are managed in the
organizations. It is responsible for bringing people in
organization helping them perform their work,
compensating them for their work and solving problems
that arise
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 Why are we concerned with HRM?
1. Helps you get results - through others.
Different managerial techniques help mangers to
direct the performance of employees in desirable
direction in order to achieve the organizational
objectives. Through the efforts of others working
in
an organization, managers get things done that
require effective human resource management.
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2. Helps you avoid common personnel mistakes

Qualified HR mangers utilize organization resources in such a way

that helps to avoid common pers mistakes like the following…
1. Hiring the wrong person for the job
2. Experiencing high turnover
3. Finding employees not doing their best
4. Having your company taken to court because of your discriminatory
actions
5. Having your company cited under federal occupational safety laws
for unsafe practices
6. Allowing a lack of training to undermine your department’s
effectiveness
7. Committing any unfair labor practices
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3. Helps you to gain Competitive Advantage
Among all the resources possessed by the organizations it is
only Manpower or the Human resources that create the real
difference.
Because all organizations can have the same technology,
they can possess same type of financial resources, same
sort of raw material can be used to produce the goods and
services but the organizational source that can really create
the difference is work force of the organization.
In today’s competitive environment, these are the people
which can create competitive advantageous for the
organizations. 12
 HRM IN A CHANGING
ENVIRONMENT
HRM in a Changing Environment: The Challenges
today’s organizations are facing challenges upon
following levels:
I. Environmental Challenges
II.Organizational Challenges
III.Individual Challenges

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 i. Environmental Challenges
• Environmental challenges: refer to forces external to the firm that are
largely beyond management’s control but influence organizational
performance
 Six important environmental challenges today are:
1. Rapid change,
2. Work force diversity,
3. Globalization,
4. Legislation,
5. Technology
6. Evolving work and family roles,
7. Skill shortages and the rise of the service sector

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 Environmental Challenges
• 1. Rapid Change: Many organizations face a volatile
environment in which change is nearly constant. If they are to
survive and prosper, they need to adapt to change quickly and
effectively. Human resources are almost always at the heart of an
effective response system
• 2. Work Force Diversity: Firms that formulate and implement
HR strategies that capitalize on employee diversity are more likely
to survive and prosper.
• 3. Globalization: One of the most dramatic challenges facing as
they enter the twenty-first century is how to compete against
foreign firms, both domestically and abroad.
• 4. Legislation: Many firms are now developing formal policies on
sexual harassment and establishing internal administrative
channels to deal with alleged incidents before employees feel the
need to file a lawsuit. 15
• 5. Technology
• 6. Evolving Work and family roles: Different companies
have recently begun offering child-care and eldercare
referral services as well to facilitate women workers as
well as are introducing alternative scheduling to allow
employees some flexibility in their work hours.

• Skill shortages and the rise of the service sectors: Even

now, many companies complain that the supply of skilled
labor is dwindling and that they must provide their
employees with basic training to make up for the
shortcomings of the public education system. To rectify
these shortcomings, companies currently spend large
amount year on a wide variety of training programs.
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 ii. Organizational Challenges
• Organizational challenges: refer to concerns that
are internal to the firm. However, they are often a
byproduct of environmental forces because no firm
operates in a vacuum.
 HR policies can influence an organization's
competitive position by :
1. Controlling costs,
2. Improving quality, and
3. Creating distinctive capabilities
4. Restructuring
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• a) Controlling costs: One way for a firm to gain a
competitive advantage is to maintain low costs and a strong
cash flow.
• b) Improving quality: The second way to gain a
competitive advantage is to engage in continuous quality
improvement. Many companies are implementing total
quality management (TQM) initiatives, which are programs
designed to improve the quality of all the processes that lead
to a final product or service.
• c) Creating Distinctive Capabilities
• d) Restructuring : A number of firms are changing the way the
functions are performed. For example, some companies are
restructuring HR for reasons such as time pressures, financial
considerations, and market pressures

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 iii. Individual Challenges
• The most important individual challenges today
involve:
1.Productivity
2.ethics and social responsibility,
3.empowerment, brain drain,
4.job security and matching people and
organizations.

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1. Productivity: is a measure of how much value
individual employees add to the goods or services
that the organization produces. The greater the
output per individual, the higher the
organization's productivity.
 Two important factors that affect individual productivity are ability
and motivation
2. Empowerment: In essence, the process of empowerment entails
providing workers with the skills and authority to make decisions that
would traditionally be made by managers. The goal of empowerment is
an organization consisting of enthusiastic, committed people who perform
their work ably because they believe in it and enjoys doing it (internal
control).
3. Ethics and Social Responsibility: Ethics is the bedrock of socially
responsible behavior.
4. Job Insecurity: For employees, however, chronic job insecurity is a
major source of stress and can lead to lower performance and
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productivity.
 History and Evolution of HR
• Key principles and practices associated with HRM date back to the
beginning of mankind. Mechanisms were developed for the selection
of tribal leaders, for example. More advanced HRM functions were
developed as early as 1000 and 2000 B.C. Employee screening tests
have been traced back to 1115 B.C. in China, for instance.

• The terminology used to describe the role and function of workers

has evolved from "personnel" to "industrial relations" to "employee
relations" to "human resources." The need for an organized form of
HRM emerged during the industrial revolution, as the manufacturing
process evolved from a cottage system to factory production. As
the United States shifted from an agricultural economy to an
industrial economy, companies were forced to develop and
implement effective ways of recruiting and keeping skilled workers.
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• There were two other particularly important
contributing factors to the origination of modern
HRM during 1880s to 1940s.
• The first was the industrial welfare movement,
which represented a shift in the way that managers
viewed employees—from nonhuman resources to
human beings.

• The second factor was Frederick W. Taylor's (1856-

1915) Scientific Management, a landmark book that
outlined management methods for attaining greater
productivity from low-level production workers.
 
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• Furthermore, during the 1970s, HRM gained
status as a recognized profession with the advent
of human resource programs in colleges.

• The whole evolutionary activities and concept of

HR recently help to shift the orientations: such as
changes from personnel to human resources, from
administration to management, and from human
relations to organizational effectiveness so now HR
has aligned with Senior Management.
• HR also now has more input on business strategies
- training, safety, globalization, etc.
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 Human Resource Management
Human Resource Management includes all
activities used to attract & retain employees and to
ensure they perform at a high level in meeting
organizational goals.
These activities are made up of
1. Recruitment & selection.
2. Training and development.
3. Performance appraisal and feedback.
4. Pay and benefits.
5. Labor relations.
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 Human Resource Planning

• HR Planning includes all activities managers

do to forecast current and future HR needs.
– Must be done prior to recruitment and selection
– Demand forecasts made by managers estimate
the number & qualifications the firm will need.
– Supply forecasts estimate the availability and
qualifications of current workers and those in
the labor market.

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 HRM Components

– Component should be consistent with the others,

organization structure, and strategy.
• Recruitment: develop a pool of qualified applicants.
– Selection: determine relative qualifications & potential for a
job.
• Training & Development: ongoing process to develop
worker’s abilities and skills.
• Performance appraisal & feedback: provides information
about how to train, motivate, and reward workers.
– Managers can evaluate and then give feedback to enhance
worker performance.
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 HRM Components
 Pay and Benefits: high performing employees should
be rewarded with raises, bonuses.
– Increased pay provides additional incentive.
– Benefits, such as health insurance, reward membership in
firm.
 Labor relations: managers need an effective
relationship with labor unions that represent workers.
– Unions help establish pay, and working conditions.
If management moves to a decentralized
structure, HRM should be adjusted as well.
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 Recruitment
– External recruiting: managers look outside the firm
for people who have not worked at the firm before.
• Managers advertise in newspapers, hold open houses, recruit
at universities, and on the Internet.
– External recruitment is difficult since many new jobs have specific
skill needs.
– A multi-prong approach to external recruiting works best.
– Internal Recruiting: positions filled within the firm.
• Internal recruiting has several benefits:
– Workers know the firm’s culture, may not have new ideas.
– Managers likely already know the candidates.
– Internal advancement can motivate employees.

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 HRM Planning: Outsourcing
– Outsourcing: managers can decide to contract
with outside workers rather than hiring them.
– Outsourcing is more flexible for the firm.
– Outsourcing often provides human capital at a lower cost.
• Outsource problems: managers lose control over
output.
– Outsource contractors are not committed to the firm.
• Unions typically are against outsourcing that has
potential to eliminate member’s jobs.

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 Selection Tools
Figure 10.3

Background
Background
Information
Information
Interviews
Interviews References
References

Selection
Selection

Performance
Performancetests
tests Paper
Papertests
tests
Physical
Physical
Ability
Abilitytests
tests

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 Selection Process
After a pool of applicants are identified, qualifications
related to the job requirements are determined:
• Background Information: includes education, prior
employment, college major, etc.
• Interview: almost all firms use one of two types:
– Structured interview: managers ask each person the same job-
related questions.
– Unstructured interview: held like a normal conversation.
– Usually structured interviews preferred; bias is possible.
• Physical Ability Test: measure strength & endurance.
– Good for physically demanding jobs.

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 Selection Process
 Paper & Pencil Tests: Either an ability and
personality test.
– Ability test: assess if applicant has right skills for the job.
– Personality test: seek traits relevant to job performance.
– Be sure test is a good predictor of job performance.
 Performance Tests: measure job performance.
– Typing speed test is one example.
– Assessment Center: candidates assessed on job-related
activities over a period of a few days.
 References: outside people provide candid
information about candidate.
– Can be hard to get accurate information.
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 Reliability & Validity
– Selection tools must be reliable and valid.
• Reliability: the degree to which the tool measures the
same thing each time it is used.
– Scores should be close for the same person taking the same test
over time.
• Validity: Does the test measure what it is supposed to
measure?
– Example: does a physical ability test really predict the job
performance of a firefighter?
• Managers have an ethical and legal duty to develop good
selection tools.
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 Training & Development
• Training: teach organizational members how to
perform current jobs.
– Help worker’s acquire skills to perform effectively.
• Development: build worker’s skills to enable them to
take on new duties.
– Training used more often at lower levels of firm,
development is common with managers.
– A Needs Assessment should be taken first to
determine who needs which program and what
topics should be stressed.
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 Types of Development
– Varied Work Experiences: Top managers must build
expertise in many areas.
– Workers identified as possible top managers given many different
tasks.
– Formal Education: tuition reimbursement is common
for managers taking classes for MBA or similar.
– Long-distance learning can also be used to reduce travel.

Whatever training and development efforts used,

results must be transferred to the workplace.

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 Job Analysis
• Job Analysis-the act of examining positions
within an organization
• Job Description-narrative explaining the scope
of a position
• Job Characteristics-tasks involved in a position
• Job Requirements-personal characteristics
necessary to fill a position

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 Performance Appraisal
• Process of evaluating employee performance
– job related strengths
– development needs
– progress toward goals
– determine ways to improve performance
– Pay an promotion decisions
• More systematic is better, for the most part

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 Performance Appraisal (cont)
• Self Appraisal: Individuals rate their job
performance and behavior.
• Peer Appraisal: An individual's work group rates
his performance
• 360 Degree appraisal: Includes input from an
individual, her supervisor, and her peers.
• Central Tendency Error- everyone ranked as average
• Leniency -individuals are ranked higher than they
deserve

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 Who Appraises Performance?
Figure 10.6

Supervisors
Supervisors

Peers
Peers Customers
Customers& &
Clients
Clients
Sources
Sourcesof
of
performance
performance
appraisals
appraisals

Self
Self Subordinates
Subordinates

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 Pay and Benefits
– Pay level: how the firm’s pay incentives
compare to other firms in the industry.
– Managers can decide to offer low or high relative
wages.
• Pay Structure: clusters jobs into categories
based on importance, skills, and other issues.
– Benefits: Some are required (social security,
workers comp).
– Others (health insurance, day care, and others) are
provided at the employers option.
– Cafeteria-style plan: employee can choose the best
mix of benefits for them. Can be hard to manage.
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 Pay
• Base Wage
– Job Based Pay-paid for the job that is done
– Competency Based Pay-pay is linked to job-relevant
skills, knowledge, and experience
• Incentive Pay-linked to job performance
– can increase motivation
– links employees to firm performance
– works well when employees trust firm

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 Individual Incentives
• Piece-Rate - Pay for each unit of output
• Commissions - Pay from percentage of sales
or profits
• Bonuses - Lump sum payments
• Merit Pay - Permanent increases in base pay
linked to individual’s previous performance
• Seniority - Increases over time

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 Labor Relations
• Labor relations specialists
– Advise management on all aspects of union–
management relations.

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