CHAPTER- 2

INTRODUCTION TO HUMAN RESOURCE

MANAGEMENT

Al. CONCEPT OF HRM

The concept of human resource management assumes immense importance as
human resource management plays vital role in meeting the challenging requirements of
highly skilled and competent human resources in the era of globalization. The functions
and principles of management have been undergoing a sea change since the
announcement of economic liberalization in the country in 1991. Human resources play
an active role in the modem economic scenario of any country. The abundant physical
resources alone cannot benefit the growth of the country, without human resource
component, which transforms resources into real productive resources.

Growth in the business, competition and increasing size of industrial

organizations during sixties and seventies led to the need for attracting and retaining
talented people. Hence formulating policies on human resource planning, recmitment and
selection, training and development, performance and potential appraisal, internal
mobility and compensation management, etc. also became a part of the functions of the
Welfare Officers, who was now designated as the Personnel Manager or HR Manager.
With the increasing recognition of the importance of human resources and their
contribution to the survival and growth of the organizations, personnel function is now
called as human resource management function. Today the HRM function can be seen as
an amalgam of organizational behavior, personnel management, industrial relations and
labor legislation

Organizational Behavior
It is a field of study that tries to examine why people behave the way they do. It
focuses on the behavior of the employees at the levels of an individual, group and total
organization. Such topics as motivation, job satisfaction, communication, supervision,

18
inter and intra group behavior, organizational development, structures and designs are
examined to develop sensitivity to human factors in organizations.

Figure 2.1

Human Resource Management Functions.

Personnel Management
It studies policy formulation and implementation on such issues as human
resource planning, recruitment and selection, training and development, performance and
potential appraisal, promotions, transfers, quality of working life and compensation
management, etc.

Industrial Relations and Labor Legislations

Deals with union-management relations, union structure, collective bargaining,
grievance handling, discipline management and implementation of various labor
legislations. Armstrong observes that at present HRM operates within the context of five
factors:
• External turbulence,
• Social, economic and political change
• The global environment,

19
 • Internal environment of technological change, and
• The pressurefor increasing shareholder value.

Of these the impact of change, turbulence and ambiguity is especially

pronounced. There is vast amount of turbulence, uncertainty, and demand from the
economic and business environment. This is called an era of “unfrequented change”.
Indeed, predictability has become a thing of the past. The days of comprehensive job
descriptions have disappeared. Rather, attempt is being made to provide a one-sentence
definition of the overall purpose of a role and enlist key result areas, major
accountabilities or areas of competence. There is also an effort to indicate briefly a main
area of the job for which an individual is expected to deliver results. The keywords are
performance and delivery rather than duty or task. There is focus on “soft” contracting
rather than “hard” contracting.

A2. DEFINITION
Management has been defined by Mary Parker Follett as, “the art of getting things
done through people.” But it is felt that management is much more than this.
Management has elaborately been defined as “that field of human behavior in which
managers’ plan, organizes, staff, direct and control human, physical and financial
resources in an organized effort, in order to achieve desired individual and group
objectives with optimum efficiency and effectiveness.” It is clear from this definition that
management is concerned with the accomplishment of objectives by utilizing physical
and financial resources through the efforts of human resources. Thus, human resources
are a crucial sub-system in the process of management. The term human resource is quite
popular in India with the institution of ‘Ministry of Human Resource Development’ in
the Union Cabinet.

It would not be out of place to explain the term human resource with the help of a
couple of authoritative definitions. According to Leon C. Magginson, the term human
resources indicate, “the total knowledge, skills, creative abilities, talents and aptitudes of
an organization’s workforce, as well as the values, attitudes and beliefs of the individuals
involved.” The term human resources can also be explained in the sense that it is resource
20
like any natural resource. The term ‘human resources’ may be defined as the total
knowledge, skills, creative abilities, talents and aptitudes of an organization’s workforce,
as well as the values, attitudes, approaches and beliefs of the individuals involved in the
affairs of the organization. It is the sum total or aggregate of inherent abilities, acquired
knowledge and skills represented by the talents and aptitudes of the persons employed in
an organization.

Several terms have been used by various management thinkers to represent

human resources. These include ‘personnel’, ‘people at work’, 'manpower’, ‘staff,’ and
‘employees’. Whatever the term may be used, the human resources of an organization
include all individuals engaged in various organizational activities at different levels.
According to Leon C. Magginson, “From the national point of view, human resources
may be defined the knowledge, skills, creative abilities, talents and aptitudes obtained in
the population; whereas from the viewpoint of the individual enterprise, they represent
the total of the inherent abilities, acquired knowledge and skills as exemplified in the
talents and aptitudes of its employees.” Jucius Michael calls these resources, ‘human
factors’, which refer to “a whole consisting of inter-related, inter-dependent and
interacting physiological, psychological, sociological and ethical components.” Thus,
human resources are multi-dimensional in nature. People working in the organization
have different needs at different times. These needs may be physiological, social, and
psychological.

On the other hand personnel management has come to be recognized as inherent

part of management, which is concerned with the human resources of an organization. Its
objective is the maintenance of better human relations in the organization by the
development, application and evaluation of policies, procedures, and programmes
relating to human resources to optimize their contribution towards the realization of
organizational objectives. In other words, personnel management is concerned with
getting better results with the collaboration of people.

According to the Institute of Personnel Management (U.K.), “Personnel

Management is an integral but distinctive part of management, concerned with people at

21
work and their relationships within the enterprise. It seeks to bring together into an
effective organization the men and women who staff the enterprise, enabling each to
make his / her best contribution to its success, both as a member of a working group and
as an individual. It seeks to provide relationships within the enterprise that are conducive
both to effective work and human satisfaction.”

Scott, Clothier and Spriegel have defined personnel management as that branch of
management which is responsible on a staff basis for concentrating on those aspects of
operations which are primarily concerned with the relationship of management to
employees and employees to employees and with the development of the individual and
the group. The objective is to attain maximum individual development, desirable working
relationship between employees and employers, and employees and employees, and
effective molding of human resources as contrasted with physical resources. Personnel
management is responsible for maintaining good human relations in the organization. It is
also concerned with development of individuals and achieving integration of goals of the
organization and those of the individuals.

Northcott considers personnel management as an extension of general

management, that of promoting and stimulating every employee to make his fullest
contribution to the purpose of a business. Personnel management is not something that
could be separated from the basic Managers function. It is a major component of the
broader Managers function and has roots and branches extending throughout and beyond
the organization. According to French Wendell, “Personnel Management is the
recruitment, selection, development, utilization, compensation and motivation of human
resources by the organization.

To quote Edwin B. Flippo, “Personnel Management is the planning, organizing,

directing, and controlling of the procurement, development, compensation, integration
and maintenance and separation of human resources to the end that individual and
societal objectives are accomplished.” This definition reveals that personnel or human
resource (HR) management is that aspect of management, which deals with the planning,
organizing, directing, and controlling the personnel functions of the enterprise.

22
 Lawrence Appley is of the view that, “Management is personnel administration.”
This view is partially true as management is concerned with the efficient and effective
use of both human as well as non-human resources. Thus, personnel management is only
a part of the management process. At the same time, it must be recognized that personnel
management is inherent in the process of management. This function is performed by all
the managers throughout the organization rather than only by the personnel department.
If the manager is to get the best of his people, he must undertake the basic responsibility
of selecting people who will work under him and to develop, motivate and guide them.
Thus, HRM is a long-term perspective whereas personnel management is a short-term
perspective. Human resources are also regarded as human factor, human asset, human
capital, and the like. The terms labor and manpower have been used widely denoting
mostly the physical abilities and capacities of employees. The term personnel had been
used widely in the recent past to denote persons employed in any services. Thus, this
term denotes the employee as a whole but it does not clearly denote various components
of human resources like skill, knowledge, values etc.

A3. NATURE OF HUMAN RESOURCE MANAGEMENT

Inherent Part of Management

Personnel / Human resource management is inherent in the process of
management. This function is performed by all the managers throughout the organization
rather than by the personnel department only. If a manager is to get the best of his people,
he must undertake the basic responsibility of selecting people who will work under him.
Further he should also take interest in training and motivating the employees and of
appraising their performance for improving their quality.

Persuasive Function
Personnel Management is a persuasive function of management. All managers at
various levels in the organization perform it. In other words, every manager from
managing director to the foreman is required to perform the personnel function on a
continuous basis. It is not a responsibility that a manager can leave completely to

23
someone else. However, he may secure advice and help in managing people from experts
who have special competence in personnel management and industrial relations.

Basic to All Functional Areas

Personnel Management permeates all the functional areas of management such as
production management, financial management, and marketing management. That is,
every manager from top to bottom, working in any department has to perform the
personnel functions. Though the personnel department is created under the supervision of
a person designated as ‘Personnel Manager’, it should not be assumed that the other
managers are relieved of this responsibility.

People Centered
Personnel management is people centered and is relevant in all types of
organizations. It is concerned with all categories of personnel from top to bottom of the
organization. The broad classification of personnel in an industrial enterprise may be as
follows:
• Blue-collar workers (i.e. those working on machines and engaged in
loading, unloading etc.) and white-collar workers (i.e. Clerks employees).
• Managers and non-Managers personnel & Professionals (such as
Chartered Accountants, Company Secretaries, Lawyers, etc.) and non­
professional personnel.

Personnel Activities or Functions

Personnel management involves several functions concerned with the
management of people at work. It includes manpower planning, employment, placement,
training, appraisal, and compensation of employees. For the performance of these
activities efficiently, a separate department known as Personnel Department is created in
most of the organizations.

Continuous Process
Personnel management is not a ‘one shot’ function. It must be performed
continuously if the organizational objectives are to be achieved smoothly. To quote G. R.

24
Terry, “The personnel function cannot be turned on and off like water from a faucet; it
cannot be practiced only one hour a day or one day a week. Personnel management
requires a constant alertness and awareness of human relations and their importance in
everyday operations.

Based on Human Relations

Personnel management is concerned with the motivation of human resources in
the organization. The human beings can’t be dealt with, like physical factors of
production. Every person has different needs, perception, and expectations. The managers
should give due attention to these factors. They require human relations skills to deal
with the people at work. Human relations skills are also required in training, performance
appraisal, transfer, and promotion of subordinates. If the personnel function is performed
properly, the human relations in these organizations will be cordial.

A4. SIGNIFICANCE AND SCOPE OF HUMAN RESOURCE

MANAGEMENT

Human resources play a crucial role in the development process of modem

economies. Arthur Lewis observed “there are great differences in development between
countries which seem to have roughly equal resources, so it is necessary to enquire into
the difference in human behavior.” It is often felt that, though the exploitation of natural
resources, availability of physical and financial resources and international aid play
prominent role in the growth of modem economies, none of these factors is more
significant than efficient and committed manpower. It is in fact, said that all development
comes from the human mind.

A nation with abundance of physical resources will not benefit itself unless
human resources use them properly. In fact human resources are solely responsible for
making use of national resources for the transformation of traditional economies into the
modem and industrial economies. Lack of organization of human resources is largely
responsible for the backwardness of any nation. Countries are underdeveloped because
their people are underdeveloped. In essence, the difference in the level of economic

25
development of the countries is largely a reflection of the differences in quality of their
human resources. The key element in this proposition is that the values, attitudes, general
orientation, and quality of the people of a country determine its economic development.
The shift from manufacturing to services and the increasing pace of technological
changes are making human resources the most significant ingredient for the nation’s
well-being and growth. And in a service-oriented industry like banks and railways the
quality, quantity and utilization of human resources becomes all the more important.

Most of the problems in organizations are human and social rather than physical,
technical, or economic. No industry can be rendered efficient so long as the basic fact
remains unrecognized that it is principally human. It is not a mass of machines and
technical processes but a magnified nervous system. One of the fundamental tasks of
management is to manage human resources, in the service of the economic objectives of
the enterprise.

Successful management depends may be not solely, but significantly upon the
ability to predict and control human behavior. Among other things, if a company is
economically successful, it means, the management has been able to manage human
resources effectively. The human resources are “the active force of industrialization, and
strategies for development should concentrate particularly on their enhancement. Human
resource system in an organization is not only unique subsystem but also a principal and
central sub-system and it operates upon and controls all other subsystems. Thus, in the
words of Wendell L. French, “Human Resource Management is a major pervasive
subsystem of all organizations.”

As a result of the globalization and liberalization, during 1990s, there emerged a

new concept human resource management. The economy and the policy of Government
of India is fast changing in the wake of the liberalization policies mooted by Rajiv
Gandhi Government, and formalized by the Narasimha Rao Government. Consequently
the form and the content of capitalist relations between the various factors of production
have undergone a sea change. What has emerged is a new era in human resources
management. As a result of the liberalization, industrial relation (IR) and human

26
resources management (HRM) have acquired strategic importance. The success of the
new policies depends, to a large extent, on the introduction of modified industrial
relations and human resources policies at the national and enterprise levels. Some
pressure for change has already been witnessed in the IR and HRM areas. The actors of
the system now realize that neither the economy nor the industrial enterprise can survive
by clinging to the earlier rigid systems.

Organizations today, amidst such a commercially competitive global economic

environment are struggling for their survival and growth. The recent liberalization policy
and bold economic reforms pronounced by the Government have thrown up many
challenges and opportunities to the Indian industry. With the explosion in information
technology, increased global competition, rapidly changing markets, deregulation, etc.,
organizations have to redesign their strategy and outlook towards HRM, since human
resources hold the key to meet all these challenges.

A.5 EVOLUTION OF MANAGEMENT OF HUMAN RESOURCES

A.5.1 EVOLUTION OF MANAGEMENT OF HUMAN RESOURCES: A

GLOBAL PERSPECTIVE

Evolution of Management Thought - The field of management as a branch of

serious study, has thrown up different theories and postulates. These are of recent origin,
but management practices are not. Drucker (1986) considers management as one of the
social innovations, which has made profound impact during this century. As a
terminology, “Management” is of recent coinage, but managers have existed since long.
However, the emergence of management as a discipline has given a new face to the
manner in which organizations function.

Industrialization created the need for management, which eventually was

described by writers as the 4th factor of production after Adam Smith - land, labor, and
capital (Say 1964). The later half of the 19th century saw Fredrick W. Taylor, an engineer
by profession; develop systematized Managers practices for the industry. He gave theory

27
of Scientific Management. The principles laid down by Taylor prepared the foundations
for modem management thought. The management principles proposed by Taylor were
however, adapted, and refined by many organizations all over the world.

Even in this scenario at times the paternalistic value system of the early factory
owners saw the introduction of the concept of welfare of employees. Owners of industry
like Robert Owen provided various welfare measures such as recreation, meals, housing,
education, sanitation, etc for employees. In short, these attempts even though isolated
were directed to recognizing employees as having needs beyond their economic one.
(Hay & Gray 1977). It took Hawthorne Experiments (1927 - 1932) to clearly point out
the inherent deficiencies of the Scientific Management policies. The conclusion arrived at
by Mayo (1945) formed the conceptual basis of a new approach to man management in
organizations, cutting across all cultures. The study also proved that when treated as
psychological beings human beings are far more productive. The shift in management
thought, therefore, has also been considerably influenced by the conceptual work done in
the area of human behavior particularly with regard to motivation. Conceptual and
empirical explanations of human behavior, in terms of “why they behave, the way they
do and “How it occurs.” has given basis to various theories of motivation. In the coming
years where globalization is the key word, the future challenges of Human Resource
Management are in managing diversity, cultural transition, and employees with new
values, trade union partnership, quality orientation and continuous development of
workforce as a knowledge worker.

HRM from 1915 to 1970s

The evolution of HRM from 1915 to 1970s has been classified by Berridge in four
stages: (a) welfare stage (1915 to 1920s), (b) personnel administration stage (1930s), (c)
the developing stage (1940s and 1950s) of personnel management, and (d) personnel
management, the mature stage (1960s and 1970s). The welfare stage involved provision
of welfare facilities such as canteens and efforts to look after employees’ interests.
During World War I, welfare Officers were appointed in ammunition factories. In the
second, personnel administration stage, recruitment, basic training and record keeping
activities also appeared in work situations.

28
 In the third developing stage of personnel
personnel activities emerged. The welfare Officers became staff or labor managers. They
were subsequently involved in industrial relations. During the fourth mature stage of
personnel management, organization and management development and manpower
planning were embodied in the domain of personnel. There was sophistication of
selection, training, salary administration, and performance appraisal (MBO). There was
also immense focus on legislation and personnel management became increasingly
professionalized.

The HRM Stages from 1980s TO 1990s

Berridge further classified the evolution of HRM from 1980s to 1990s in two
stages: (a) phase one - 1980s, and (b) phase two -1990s. As he observes, the concept of
HRM emerged from the writings of American academics associated with Human
Resource Management School. These academics visualized HRM as a strategic and
coherent management-oriented approach to managing people and accomplishing their
commitment to promote organization’s interests. The HRM (phase one) stage appeared
when personnel specialists attempted to cope with the enterprise culture and market
economy. HR and business strategy were integrated to evolve strategic HRM approaches.
Performance-related pay emerged as a motivational device.

A.5.2 EVOLUTION OF MANAGEMENT OF HUMAN RESOURCES : AN

INDIAN PERSPECTIVE

Kautilya’s Period
Kautilya provides a systematic treatment of management of human resources as
early as in the fourth century BC in his treatise titled ‘Arthashastra’. There prevailed
logical procedures and principles in respect of labor organizations such as Shreni or the
guild system and the cooperative sector. The wages were paid strictly in terms of quantity
and quality of work turned out, and punishments were imposed for unnecessarily
delaying the work or spoiling it. The government used to take active interest in the
operation of both public and private sector enterprises and provided well-enunciated
procedures to regulate employer-employee relationship. Kautilya provides an excellent

29
discussion on staffing and personnel management embracing job descriptions,
qualifications for jobs, selection procedures, executive development, incentive systems
(carrot and stick approach) and performance evaluation.

Varnashram
We find several indications of prevalence of guild system involving performance
of work at the residence of the entrepreneurs themselves. In course of time, the guild
system was followed by the cooperative sector consisting of craftsmen and traders,
purporting to promote their professional interests. Indeed, numerous professional
societies were formed on these lines with their own systematic procedures and policies to
nurture their own interests. Again, there are several indications regarding the operation of
principles of the division of labor. The concept of Varnashram or caste system was
originally based on these principles. The individuals, who used to earn their livelihood by
engaging themselves in activities such as teaching, were designated as Brahmin, while
those specializing in fighting were termed as Kshatriya. Individuals engaged in the areas
of trade, business and agriculture were called Vaishya, and those devoting themselves to
manual work were known as Shudra.

Later on, these professions emerged to be hereditary, which facilitated the transfer
of skills and training from one generation to another. Numerous professions based on
such specialized transfer of skills became hereditary including goldsmiths, weavers,
potters, blacksmiths, carpenters, hunters, charioteers, snake-charmers, architects,
sculptors, armourers and they turned out to be separate communities themselves. From
the fourteenth century BC to the later half of the tenth century AD, justice and equity
marked the relationships between the employer and employees.

Personnel Management during 1970s

In the early seventies, as Punekar observes, the personnel field covered three
major areas of professional discipline: (a) labor welfare, ,(b) industrial relations, and (c)
personnel administration. These three areas revealed the chronological order of the
development of the personnel field. Immediately after industrialization, labor welfare,
mainly social reformist in nature, came into the picture. The inevitable emergence of

30
trade unions, as resistance organizations to employers, opened the field for industrial (or
union-management) relations.

Lastly, with the development of scientific management of industry, personnel

administration took root. The three areas of labor welfare, industrial relations and
personnel administration were being looked after by three professional functionaries: (a)
welfare Officers, (b) labor Officers, and (c) personnel Officers. However, in the early
eighties, the area of labor welfare largely merged with personnel administration. These
two combined areas are referred to as personnel management.

Personnel Management during 1980s

In 1980, management of human resources was regarded as a specialized
profession such as that of medicine and law. In addition to the industrial relations
functions (although sometimes the industrial relations formed a separate department), the
personnel department was responsible for other varied functions including employment,
safety, training, wage and salary administration and research and development. The head
of the personnel department was associated with top management and helped it in the
formulation of personnel policies for the company. Indeed, the activities involved in the
personnel department were akin to those performed in this department in other western
countries.

It could be very well summarized that the Human Resources Management In

Indian organizations grew through various phases, under the influence of the following
factors: (i) Philanthropic thinking (ii) Legislative frame work (iii) Government policies
(iv) Labor unions (v) Emerging trends/concepts in management and (vi) changes in the
economy. The story of Tata Steel, is worth mentioning here as an example of institutional
commitment to man management process. The history of man management in Tata Steel
initially was rooted on the concept of welfare of laboring class and later focused on the
development of people. (Pandey 1990) Tata steel has the history of introducing various
proactive HRM policies, well before many of them became statutory obligations. During
the said period, the Human Resources Management function started to be recognized as a

31
professional function. Managers trained in the area (mainly social work) were selected to
hold the responsibility for the HRM functions in the organization.

A6. THE PARADIGM SHIFT FROM PM TO HRM

A.6.1 HRM VERSUS PERSONNEL MANAGEMENT

HRM is a distinctive approach, which can be distinguished from traditional
Personnel Management in three different ways as follows:

• The first approach is by simple retitling of Personnel Management, as

many companies did by renaming their Personnel Department as HR
department.
• The second approach is by reconceptualising and reorganizing personnel
roles in line with the conceptual frame work of Harvard Business School
(1985), i.e. subsuming personnel and labor relation activities in four policy
areas like - employee influence, human resource flow, reward systems and
work systems, differentiating HRM from Personnel Management concepts
pioneered by Institute of Personnel Management, UK, i.e. employee
relations, employee resourcing and employee development. Thus, it is
apparent that HRM concept categorizes employee relations (industrial
relations) as separate strategic functions, which fall under the traditional
Personnel Management function.
• The third approach designates HRM as a distinctively different and new
approach for management. This approach integrates HRM into Strategic
Management and emphasizes on frill utilization of Human Resources.

There are two major activities within the HRM, the first is concerned with the
recruitment, selection, placement, compensation and appraisal of the human resources
(personnel function), more commonly termed as Human Resource Utilization (HRU)
function. The second group of functions is directed towards working with the existing
human resources in order to improve their efficiency and effectiveness. Such activities
are also designed to enable the existing members of the organization to assume new roles

32
and functions. These activities are concerned with Human Resources Development
(HKD).

The global shift of'personnel function' with the focus on administrative aspects to
a 'developmental function' has also made its impact in Indian organizations. The
paradigm shift, of the traditional personnel function to a critical function is effectively
discussed by Stomey (1992). The difference in orientation was mainly due to the change in
outlook, from maintenance to development. Stomey (1992), conceptualizes the paradigm
shift with 'Twenty seven points of difference in four basic dimensions:

❖ Beliefs and assumptions

❖ Strategic aspects
❖ Line Management
❖ Key levers
Table 2.1
TWENTY-SEVEN POINTS OF DIFFERENCE
Dimension Personnel and IR HRM
Beliefs and Assumptions

1. Contract Careful delineation Aim to go 'beyond contract'

of written contracts
2. Rules Importance of devising clear 'Can-do' outlook; impatience
rules/mutuality With 'rule'
3. Guide to Management Procedure Business-need

4. Behavior referent Norms/custom Values/mission

And practice
5. Managers task Monitoring Nurturing
vis-a-vis labor
6. Nature of relations Pluralist Unitarist
7. Conflict Institutionalized De-emphasized

Strategic Aspects

8. Key relations Labor-management Customer

9. Initiatives Piecemeal Integrated
10. Corporate plan Marginal to Central to
11. Speed of decision Slow Fast

33
 Line Management
12. Management role Transactional Transformational leadership
13. Key Managers Personnel/IR General/business/ line
managers
14. Communication Indirect Direct
15. Standardization High (e.g.’ parity' an Low (e.g. ‘parity’ not seen as
relevant)
issue)
16 Prized management Negotiation Facilitation
skills
Key Levers
17. Selection Separate, marginal Integrated key task
18. Pay Job evaluation {fixed Performance-related
grades)
19. Conditions Separately negotiated Harmonization
20. Labor-management Collective bargaining Towards individual contracts
contracts
21. Thrust of relations Regularized through Marginalized (with exception
with stewards facilities and training of some bargaining for change
models)
22. Job categories and Many Few
grades
23. Communication Restricted flow Increased flow
24. Job design Division of labor Teamwork
25. Conflict handling Reach temporary truces Manage climate and culture
26. Training and Controlled access to Learning companies
development courses
27. Foci of attention Personnel procedures Wide ranging cultural,
and interventions structural and personnel
strategies

Although this model is drawn from the U K experience, it assumes relevance in

the Indian context also. Researchers working on HRM in the Indian context are of the
opinion that similar shift is taking place in India also. (Ramesh 1990, Venkata Ratnam
1992, Pareek & Rao 1992 etc). Uday Pareek and T V Rao were among the pioneers who
not only introduced the developmental concept in India, but also assisted many
organizations in designing developmental systems. They too have discussed the paradigm

34
shift from traditional personnel function to Human Resources system, as follows: (Pareek
& Rao 1992, pp 4)

Personnel Function Human Resources System

Independent Sub-system of larger system.
Several Functions Organic Whole
Coping Role Proactive role
Responsible for personnel Responsibility for HR.
Maintenance function Developmental
Motivation by salary Motivation by challenges.

Efforts by reputed institutes of management, and professional bodies like National

Institute of Personnel Management (NIPM), Indian Society for Training and
Development (ISTD) etc. have catalyzed this shift in India. The transition is not easy nor
could it be done overnight.

A.6.2 THE NEW FOCUS

The eighty's saw introduction of the developmental concept in Indian
organizations. It was by then recognized that systematic attention to human resources was
the only way to increase organizational effectiveness. (Rao 1990). Monappa & Joshi
(1985) based on their interactions with H R professionals concluded that the HR
(personnel) function was considered to be in the lower order of hierarchy in terms of
importance, i.e. not at par with other functions. Later, Akhilesh and Sekar (1990), based
on a survey of NIPM corporate members observed that the major hurdle for the HR
professionals in their effective performance is the lack of top management support and
lack of adequate and meaningful research inputs to the profession. At the same time they
could notice the change in role and status of the HR profession within the organization.
Whether, the organizations have renamed their traditional personnel department as HRM
or have made HRD as a sub-system of this department, academicians have categorically
stated that a comprehensive view of all people related Systems is needed. For instance,
Pareek & Rao (1981) developed a four part Human Resources system comprising of i)
Job and Salary, ii) Planning and Administration, iii) Human Resources Development and

35
iv) Worker Affairs. The researchers, while proposing the model pointed out the
interactive nature of the sub-systems involved.

Mankidy J (1991) proposes a three-segment model for Human Resource

Management. The different segments in this model are: i) administrative, ii)
developmental and iii) preventive, all interlinked with each other. The successful HRM
approach according to Mankidy should integrate all the sub-systems from manpower
planning to superannuation, within the framework of the business plan. This integration
(linkages) has to be developed with the philosophical backing of the ' HRM philosophy’,
which is shared by the organization. With development becoming the 'running theme'
behind the HRM system, Mankidy opines, that the 'new comprehensively integrated
human resources management would transform itself into a very significant system which
can facilitate organizational effectiveness" (pp 7).

Seth (1992) also refers to the new approach to HRM highlighting the value shift
and it getting acceptance as a line management function. This is essentially a departure
from the traditional school. According to Seth, HRM is progressive reinforcement of the
values of democracy, liberalism humanism and shared control over the work place. HRM
is no more the prerogative of the HR specialist. The new approach, according to Seth is
that management of people is every manager's function. The researchers also propose
various other models for Human Resources Management in the recent years (Athreya
1992, Sadri & Ray 1993 etc). In all these models HRM function is viewed with a strategic
focus, directly related to the business objectives and the larger environment and having
interactive sub-systems. The current approach being discussed by experts in management
refers to Human Resource Management as a strategic function, i.e. it is considered as an
essential component of the strategic management process. (Monappa 1991. Athreya 1992,
Mankidy. J 1993).

In the strategic management framework, the HRM function, which .traditionally

was perceived as operating in isolation, assumes an integrative role. Monappa (1991) is
of the opinion that strategic human resources management, linking corporate business
objectives to the human resources objectives, is an essential prerequisite for

36
organizational success. For this purpose, it is necessary to identify the organizations
distinctive competencies and the types of people who needed to build and maintain the
organization. Mankidy (1993 b) also concurs with this view, and opines that the HR
systems need to be developed in tune with the emerging realities. Atherya (1992)
observes that in the new environment HRM in an organization has to be upgraded in the
light of the new business environment. Venkata Ratnam (1992) suggests 'Let the business
of personnel be business'. Current literature in the area of HRM increasingly stresses that
there is a need to integrate HRM function with the business goals.

A7. HRM FUNCTIONS

This shift in perspective naturally means, change in the profile of the Human
Resource professional. Sadri and Ray (1993) observe 'Gone are the days when personnel
Officers were retired army Officers or civil service personnel who looked after latrines,
creches and canteens. Today the HR Manager has emerged as an executive who is as
important if not more, than the Financial Controller, the Production Manager, the
Materials Manager, or the Maintenance Manager. His position in the years to come is
going to become more important. For this the HR expert has to have a global vision, keen
foresight, and an aptitude to influence and direct change. He then becomes the reason, the
agent, and the catalyst of organizational change at the same time’. (Pp 321). According to
Venkata Ratnam (1992) the new profile of HRM functionary will be that of brilliant,
young professionals who have selected HRM as their profession out of their own choice,
and are trained vigorously as their counterparts in other functions. The new breed of HR
professionals, will shun administrative chores and excessive legalism, instead they will
seek to develop integrative methods to harmonize various HR sub-systems, in relation to
the business goals.

A.7.1 EMERGING HRM FUNCTIONS

Increasing organizational size and its complexity, transition from traditional to
professional management, changing social and cultural norms, globalization of industry
and availability of information technology arc constantly changing the profile of HRM
functionaries. Today HRM manager cannot survive on the security of past. He has to play
a more dynamic role in not only performing the maintenance function but to think of

37
more creative ways to satisfy human aspirations and to provide the competitive edge to
organizations on a sustainable basis. Some of the emerging HRM functions are
highlighted below.

Assessment Centre
Just having a job does not contend employees. They want growth and individual
development in the organization. 'Assessment centre' is a mechanism to identify the
potential for growth. It is a procedure (not a location) that uses a variety of techniques to
evaluate employees for manpower purpose and decisions. It was initiated by American
Telephone and Telegraph Company in 1960 for line personnel being considered for
promotion to supervisory positions. An essential feature of assessment centre is the use of
situational tests to observe specific job behavior. Since it is with reference to a job,
elements related to the job are simulated through a variety of tests. The assessors observe
the behavior and take independent evaluation of what they have observed, which' results
in identifying strengths and weaknesses of the attributes being studied.

The International Personnel Management Association (IPMA) has identified the

following elements, essential for a process to be considered as assessment centre (IPMA,
1989).
1. A job analysis of relevant behavior to determine attributes and skills, etc.
for effective job performance and what should be evaluated by assessment
centre.
2. Techniques used must be validated to assess the dimensions of skills and
abilities.
3. Multiple assessment techniques must be used.
4. Assessment techniques must include job related simulations.
5. Multiple assessors must be used for each assessee.
6. Assessors must be thoroughly trained.
7. Behavioral observations by assessors must be classified into some
meaningful and relevant categories of attributes, skills and abilities, etc.
8. Systematic procedures should be used to record observations.
9. Assessors must prepare a report.

38
 10. All information thus generated must be integrated either by discussion or
application of statistical techniques.
Data thus generated can become extremely useful in identifying employees with
potential for growth. Following are some of the benefits of assessment centre.

1. It helps in identifying early the supervisory / Managers potential and gives

sufficient lead time for training before the person occupies the new
position.
2. It helps in identifying training and development needs.
3. Assessors who are generally senior managers in the organization find the
training for assessor as a relevant experience to know their organization
little better.
4. The assessment centre exercise provides an opportunity for the
organization to review its HRM policies.
Assessment centre is a complex process and requires investment in time. It should
safeguard itself from misunderstandings and deviations in its implementation. For this the
following concerns should be ensured.
1. Assessment centre for diagnosis are often converted as assessment centre
for prediction of long range potential.
2. The assessor’s judgment may reflect the perception of reality and not the
reality itself.
3. One is not sure if the benefits outweigh the cost.

Empowerment
Empowerment is another emerging function of HR management. Its practice
seems to have appeared in USA around 1970. In an article in Harvard Business Review,
Kaoter (1979) cited an example of a large plant of a major electronic company, which
launched two programmes to increase the effectiveness of supervisors. One programme
dealt with traditional competency training. The other was designed to empower the
supervisor by directly affecting their flexibility, access to resources, and connection with
higher level officials and control over working conditions. The results showed that

39
changes in supervisory behavior were much more rapid in structural change situation than
conventional training situation.

The concept of empowerment has been seen as the redistribution of power in

work settings and has been described as the reorientation of all forces, values and beliefs,
which determine human behavior in organizations. These values and forces liberate rather
than restrict the range of thought and action (Brown & Brown 1995). Empowerment is
seen to provide greater freedom and discretion to employees so that they develop mutual
trust, liberal sharing of information, become team players and release their full potential
to contribute to the organization. To do this, they need training and must be rewarded for
increased responsibility and accountability.

Job Enrichment
Work is often seen as a means to gratify the inner desires of actualization and
satisfaction. Job enrichment (IE) is an attempt in this direction. The concept of JE was
proposed by Hackman and Oldham (1975). It concerns with providing discretion,
flexibility and variety to the job to increase the employees' willingness to contribute.
Seven job characteristics are identified as constituting JE. These are:

1. Skill variety: The degree to which a job involves a number of skills in carrying it out.
2. Task identity: The degree to which a job requires completion of a ‘whole’ and
'identifiable' piece of work.
3. Task significance: The degree to which a job has an impact on the lives and work of
other people.
4. Autonomy. The degree to which a job provides freedom, independence and discretion
to the employees in scheduling and determining the procedure ofwork.
5. Feedback from job. The degree to which the job itself provides direct information of
how effective the performance is.
6. Feedback from others. The degree to which the employee receives clear feedback
from supervisors and co-workers.
7. Dealing with others. The degree to which a work requires working closely with other
people.

40
 In a study of JE, Gandhi (1992) collected data from 71 Junior and Middle level
personnel in textile mills at Ahmedabad who filled up questionnaires on job enrichment,
work and organizational identification. His results showed that organization identification
is significantly determined by JE as a whole. However individual comparisons showed
that out of seven job characteristics, only autonomy and skill variety predicted
organizational identification. None of the other characteristics correlated significantly
with work identification.

Parity and Justice

In the recent times employees are becoming greatly concerned with fairness in
treatment on the job. The preamble of the constitution of India reads a "Sovereign,
socialist, secular, democratic republic" which promises social, economic and political
justice, liberty of thought, expression, worship, equality of status and opportunity and
dignity of individual. These promises are enshrined in Articles 14, 15, 16 (equal
opportunity employment), Article 24 (prohibition of child labor) Article 39 (equal pay for
equal work), Article 41 (right to work) and Article 43 A (workers participation in
management). These promises are further reinforced in several labor legislations. HRM
managers have to be extra sensitive to ensure, - that the constitutional and legislative
guarantees are not ignored/violated by individual managers and/or organizations.
Safeguarding these guarantees and ensuring that the organizations comply with the laws
of the land is the most important emerging function of HRM managers today. This is
particularly true because of increased general awareness of the employees and the
frequency with which public interest litigation cases are filed.

The function of HRM is progressively molded by the rapidly increasing

knowledge of social sciences, changing profile of the work force, globalization,
competition and social justice. The HRM approach has to be flexible, innovative and
constantly responding to the challenges of the environment. It has, therefore, to be
responsive to the human hopes and aspirations and situational changes both within and
outside the organization.

41
 Instances of Indian organizations introducing innovative HRM strategies are
increasing. As a result, concepts like team based systems; empowerment, managing diversity etc.
are being implemented successfully by organizations. Indian organizations like TISCO,
Phillips, Modi Xerox, Videocon, Cadbuty India etc. are increasingly using innovative HR
management technologies to revolutionize their shop floors. (Business Today, June 29 to July
14,1994). Successful turn around of the public sector giant, Steel Authority of India (SAIL),
is attributed to the HRM approach initiated by the company.

B. AN INTRODUCTION TO HUMAN RESOURCE

DEVELOPMENT

B.l HRD - A CONCEPTUAL OVERTURE

Human Resource constitutes the most complex aspect of administration in
organizations, and is subjected to varied influences. Human beings are sensitive as they
think, speak, feel and act. Employees therefore, cannot be handled like a machine or
shifted and altered like templates in a room layout. It is through the combined efforts of
people that monetary and material resources are utilized for achieving organizational
objectives. Without human efforts organizations cannot achieve their objectives. Thus,
human resources occupy a significant place in any organization. Handling it is a
challenging task before the management. HRD is concerned with an organized series of
learning activities, within a specified time limit, designed to produce behavioral change
in the learner (Naddler, 1969). HRD is a process, which helps employees of an
organization to improve their functional capabilities for their present and fixture roles, to
develop their general capabilities, to harness their inner potentialities both for their self
and organizational development and to develop organizational culture to sustain
harmonious superior-subordinate relationships, teamwork, motivation, quality and a
sense of belongingness.

Rao and Abraham (1988, (pp 51) report that ‘HRD has evolved as a separate
function in the last few decade. Having a separate HRD department was expected to
contribute to the development of HRD processes because a group of people charged with
the responsibility was likely to ensure the effective performance of that function. Based

42
on a survey, the authors indicate that in 1984, thirty percent of the 54 companies studied,
had separate HRD departments and other 38 percent had separate HRD functions as a
part of the traditional personnel department.

B.1.1 CONCEPT OF HUMAN RESOURCE DEVELOPMENT

A detailed study of the term HRD has helped in bringing out the contents and
contours and shall throw sufficient light as well, on the importance the people at work
have gained in the organization. The organizations of all sorts function with the help of
physical resources, financial resources and human resources. The effective and efficient
utilization of physical and financial resources depends on how well are the human
resources utilized and developed. It is now being felt that there is a need for accepting
and introducing a system called the Human Resource Development, which consciously
helps in developing and utilizing human resources. Human Resource Development
(HRD) is a process through which employees in an organization are assisted to realize
their full potential in their present and future jobs. It is primarily concerned with the
development of employees through such mechanism as training, feedback, counseling,
career planning, performance and potential appraisal, organization development
techniques, employee welfare schemes and rewards.

M.N. Khan rightly remarks that HRD is the process of increasing knowledge,
skills, capabilities, positive work attitudes and values of all people working at all levels in
a business undertaking. Similarly, C.S. Sanker holds the view that HRD is a
developmental oriental planning effort in the personnel area, which is basically concerned
with the development of human resources in the organization improving the existing
capabilities and acquiring new capabilities for the achievement of corporate and
individual goals.

Leonard Nadler (1979) made a distinction between Human Resource Utilization

(HRU) and Human Resource Development (HRD). The HRU according to him refers to
the traditional functions of personnel administration while HRD is concerned with an
organized series of learning activities, within specified time limits, designed to produce
behavioral change in the learner.

43
 Table 2.2
Leonard’s Versions of HRD

Area of Activity Focus Purpose

Training Learning related to present Improved performance on the

job. present job of the individual.
Education Learning to prepare the Preparation of an individual for
individual for a different but an identified job in the not too
identified job. distant identified future.
Development Learning for growth of the General growth not related to
individual not related to a any specific job.
specific present or future job.

There are three different kinds of HRD activities: 1) activities designed to make
people more effective in their present positions, may be labeled to as ‘training; 2) the
activities designed to enable individuals to move to other positions within the
organization. The focus is on a job that is different but identifiable, where the behavior
needs are known and 3) the activities which are designed to prepare an individual for
future position or for new activities within the organization.

T.V. Rao, views HRD as a process rather than a set of mechanism and techniques
by which the employees of an organization are helped in a continuous and planned way
to:
1. Acquire or sharpen capabilities required to perform various functions
associated with their present or expected future roles,
2. Develop their general capabilities as individuals and discover and exploit
their own inner potentials for their own and/or organizational development
purpose, and
3. Develop an organizational culture in which superior-subordinate
relationships, teamwork and collaboration among sub-units are strong and

44
 contribute to the professional well-being, motivation and pride of
employees.

Ishwar Dayal (1991) considers the following three items, important in HRD:

(a) Ways to better adjust the individual to his job and the environment.
(b) The greatest involvement of an employee in various aspect of his work.
(c) The greatest concern for enhancing the capabilities of the individual.

S.R. Gollapudi, explains the meaning of HRD through his popular ‘SWAN’
theory, whereby, ‘S’ denotes Strength, ‘W’ denotes Weakness, ‘A’ denotes Attitudes and
‘N’ denotes Needs.

Strength: Strength is the ability to perform a particular task, job or duty. HRD enables in
increasing the strength and ability of the Individuals through its different mechanism. So
that it helps them in exerting folly for their own growth as well as growth and
development of the organization as a whole.

Weakness: Weakness means deficiency or poor knowledge in a particular field, as a

result of which, an individual fails in achieving the requisite objectives and also in
competing with other co-workers for his future development., HRD deals with
overcoming such weaknesses of the individuals through its different sub-systems and
help in achieving the desired results.

Attitudes: Attitude is a state of mind that pre-dominantly affects the working style of an
employee. It may be positive or negative, favorable or unfavorable, good or bad, towards
self, his family, friends, society, organization or nation as a whole. HRD deals with how
to change undesirable attitudes in an individual and convert him into more purposeful and
effective individual to achieve the targets set for oneself as well as the organization
through co-operative efforts.

45
Needs: Needs are the desires or achievement motives of a man. It is observed that people
motivated by the need for achievement were those who desired to be challenged and had
an intense desire to be successful. Such people set prudent, realistic, though moderately
difficult goals for themselves, their employee and their department. HRD deals with
recognizing the needs of the individual and assist him in fulfilling those needs through
work and organization so as to induce him in achieving, side by side the organization
targets with commitment.

We may thus define HRD as a process of the development of employees through

training, performance appraisal, potential development exercise, communication policies,
job enrichment programmes etc. and building of an organizational climate which may
encourage openness, risk-taking, role clarity, awareness of employees’ responsibility,
increased communication, improvement of personnel policies, management styles etc. so
that employees may be effective in translating their potential energy into kinetic energy
and the organization may be benefited in terms of better image, higher productivity,
better utilization of resources etc. HRD in a way involves total management and if it is to
be effective, the organization has to introduce change in management at all levels.

B.1.2 CHARACTERISTICS OF HRD

HRD is an effort to develop capabilities and competence among employees as
well as create organizational environment conductive to the employees’ development.
Keeping this in view, it is essential to strengthen the HRD system. The experts and the
academicians advocate the following essentials before an organization can venture to
attempt the introduction of HRD. An urge and desire on the part of the personnel in the
organization to find better methods. Requisite skills, attitudes and ability in the persons
engaged in HRD.

(i) An urge and desire on the part of the personnel in the organization to find
better methods.

(ii) Requisite skills, attitudes and ability in the persons engaged in HRD.

46
(iii) Proper support between the HRD team/department and the key personnel
in the organization.

(iv) Removal of hurdles and irritants from the organization affecting

productivity of the employees.

(v) Involvement of the personnel of the organization to get a lot of unwritten

information for understanding the dynamics of the organization for
developing an HRD programme.

(vi) Use of entrepreneurship development programme to keep continuous track

of every employee and use performance appraisal and training etc. to
inject /change in desired direction.

(vii) The need for suggesting the introduction of only such indigenous methods,
which can be implemented by the HRD section without much cost and
resistance. Besides, the need for technical consideration may also be kept
in mind.

(viii) The HRD section must be ready to face resistance to it’s ideas and dispel
these with facts, patience and consideration. The aim should be to develop
acceptance through co-operation.

(ix) The HRD section must make all the employees in the organization
understand the implications of new methods through seminars, lectures,
role-playing or any other methods to thwart the potential fears amongst the
employees of the proposed changes.

(x) Members of HRD team may possess a pleasant personality, common

sense, imagination, enthusiasm, objectivity and the sense of humor
required to induce change toward HRD as it has been rightly said that it is
easier to change the mountains than to changes the minds of the people.

(xi) HRD to be successful needs revolution in the total concept of management

and not merely sporadic and piecemeal attempts.

47
B.2. ROLE AND SIGNIFICANCE OF HRD
B.2.1 ROLE
For any dynamic and growth oriented organization to survive in a fast changing
environment, HRD activities plays a very crucial role. Recent economic restructuring in
India at macro level influenced the need for production at unit (micro) level and
production restructuring necessitated labor restructuring vis-a-vis restructuring of HRD
activities in organizations. Training and retraining and redeployment have now become
buzzwords in corporate circle as market globalization, de-licensing and free flow of
technology (as per New Industrial Policy of July 1991) have intensified competition,
rendering traditional skills and knowledge redundant. Many organizations in India are
now threatened with manpower obsolescence to withstand, due to which, HRD activities
have now received prime importance.

Hence, role and significance of HRD in an organization can be appreciated when

we consider the fast changing environment coupled with technological changes and
intensified competition. This has necessitated the need for renewal of capabilities of
people working in the organization, which are simultaneously reinforced by changes in
the organization by Organizational Developmental (OD) process. Increased morale and
motivation of employees no doubt are necessary to achieve productivity and functional
effectiveness. But these alone cannot sustain a dynamic organization, unless
competencies of human resources are renewed constantly, developing and enabling
organizational culture. An enabling organization culture is possible when employees of
an organization are found to use their initiative, take risks, experiment, innovate, and
make things happen. The role and significance of HRD can further be appreciated when
we consider different sub-systems of HRD like, Performance Appraisal, Career Planning
and Development, Manpower Planning, Management Succession and Development,
Training, Organizational Development (OD) and Quality of Work Life (QWL).

B.2.2 SIGNIFICANCE OF HRD

The HRD systems aim at employee competency development, employee
motivation development and organizational climate development. Any organization that

48
wants to be dynamic and growth oriented to succeed in a fast changing environment can
become dynamic and grow only if the HRD systems are properly introduced.

T.V. Rao, has explained clearly and beautifully all the three aims of the HRD
systems and has stated about employee competency development,” that an employee
requires a variety of competencies (knowledge, attitude, skills in technical areas,
Managers areas, behavioral and human relations areas and conceptual areas) to perform
different tasks or functions required in their jobs. The nature of jobs is constantly
changing due to changes in the environment, organizational priorities, goals and
strategies, profiles of fellow employees (subordinates, bosses, colleagues etc.),
technology, new opportunities, new challenges, new knowledge base etc. Such changes
in the nature of jobs require continuous development of employee competencies to
perform the job well. Thus, competency development is needed on a continuing basis for
effective job performance.” HRD aims at constantly assessing the competency
requirements of different individuals to perform the jobs assigned to them effectively and
provide opportunities for developing these competencies.

HRD also aims at preparing people for performing roles/jobs/tasks/functions

which they may be required to perform in the future as they go up on the organizational
hierarchy or as the organization takes up new tasks through diversification, expansion,
modernization, economization, etc. HRD tries to develop the potential of employees for
future likely jobs and roles in the organization. The competent human resources can be
dynamic in an enabling culture. Thus, the organization can develop, change and excel
only if it possess developed human resources. In the same way, Leon C. Megginson
states that resources will not benefit it unless human factor makes use of them. Actually,
it depends only on the determined manpower of a country to change their traditional
economies into modem and fast growing economies.

The results of the famous Hawthorn studies, conducted,, by Elton Mayo and his
colleagues for the national research council, also clarified that humanistic approach in
business and industry provides better results. For this purpose it is necessary to behave
with a human being as a human being and not as a commodity. Large-scale production

49
has increased the number of labor force remarkably. In this reference P. Subba Rao
opined, “The increase in industrial labor led to formation and development of trade
unions and various social groups. It has also been recognized that management without
labor would be sterile and labor management would be disorganized, ill equipped and
ineffective. It is realized that the concrete cooperation between labor and management is
highly essential to fulfill the individual, organizational and national goals. This
approach aims at the development of a sense of mutual confidence, dependence and
respect and at the same time encouraging both management and the workers to come
closer to each other for removing misunderstandings, redressing grievances if any, in a
peaceful atmosphere and with open mind and fostering individual pursuits or mutual
benefits and social progress. To sum up, the goals of HRD are: -

1. Develop the individual to realize his potential as an individual to the

maximum extent.
2. Develop the individual’s capabilities to perform his present job better;
3. Develop the capabilities to handle likely future roles;
4. Develop and maintain a high motivation level of the employees;
5. Strengthen superior-subordinate relationships;
6. Strengthen team spirit among different teams;
7. Promote inter-team collaboration; and
8. Promote climate development and organizational health development.

B.3 NEED OF HRD

The idea of human resources development (HRD) is gaining widespread
importance in India as well as in many other countries around the globe. Some pursue it
like zealots. Some others see it as the current fad in management circles, which must be
pursued, to keep up with the Joneses and there are some who see it with outright
cynicism. But since the idea is still evolving and taking shape it is not easy to delineate
its scope and limits. It is believed that Kurl Lewin’s (1947) studies of behavior of small
groups and setting up of National Training Laboratories, were the first steps for HRD
profession, which till late in 1940’s was the domain of psychiatrists, psychologists,
counselors and nurses. He furthered the concept of human relations training and the

50
experimental approach. Participants in training groups (T-groups) effectively identified
problems.

The spirit of HRD existed for ages but the need for HRD is being felt now, with
the growth of organizations. As technology grew, human competencies have to grow and
keep pace with it. Twenty years ago personnel function had just a few people and dealt
with training etc. Ten years back personnel became HRD function and training had to
look beyond classroom training. Five years back the need was felt for everyone to start
contributing for creation of a culture. The function of HRD is considered necessary for
the purpose of imparting the necessary job-knowledge to the manpower and developing
in them necessary skills / aptitudes in order:

• To ensure the optimum use of manpower at all levels so that they deliver
the best possible services.
• To meet the dynamic needs of the industrial development and to meet the
needs of organizational - development and requirements of social order.
• To meet the challenges put forward by changes in technology, job systems
and working methods, technical developments etc and to prepare the
manpower accordingly to meet such challenges.
• To meet the needs of a developing economy of the country like India, and,
• To ensure employees high morale, full capacity-utilization resulting in
higher productivity etc.

B.4 HISTORY AND GROWTH OF HRD

HRD is a beautiful idea with grand promise of enriching the work life in an
organization. It aims to link productivity with people and a sense of personal fulfillment.
The possibilities inherent in the idea are more like a dream come true. There is much of
the ideal and the unreal in the concept and the process of HRD. The idea itself is on the
anvil of the social scientists. They are heating and hammering' it to shape up to the
realities.

51
B.4.1 HISTORICAL BACKGROUND OF HRD
History of HRD reveals that it is a new organizational activity. Organizational
training prior to the Industrial Revolution was little known. Then skilled craftsmen and
artisans paid homage to closely supervised “demonstration - practice - feedback -
practice - again” method only. The industrial revolution was the start of giant knowledge
explosion. Between 1750 and 1900, human knowledge doubled. It doubled again by 1950
and again by 1965. This rapid expansion of knowledge was an efficient transfer of
knowledge to adults in the world of work. The time line between skill acquisition and
skill obsolescence began to shorten which further fuelled the need for updating skills.

Malcolm Knowles and Leonard Nadler were the two major contributors during
60’s and 70’s in the filed of HRD. Knowles spoke for a more human approach that is
learner centered instead of being content-centered. His concepts encouraged changing the
trainer from controller to facilitator. Whereas Leonard Nadler provided a structure and
order to the emerging concepts in the field of HRD and observed that purview of HRD
had grown well beyond the corporate scholar house. His writings and teachings
minimized ambiguity and fostered communication.

The concept, contents and structure of HRD is the culmination of the gradual
importance given by different organizations to human resources from time to time in
response to the changing socioeconomic and political environment. The concepts of HRD
could find their place, though with varying degrees, and may be with a different title not
only in the west but all over the world including India. The idea of human resource
development is very old. It was the bi-product of the industrial civilization. The
industrial revolution brought with it, the factory system and certain terminologies
connected with it. ‘Resource’ has been one such term. It refers to a source having
economic worth, and financial material resources. Human labor was not being regarded
initially as a resource.

B.4.2 HRD : THE INDIAN SCENARIO

The human resource development in India is of recent origin. The term gained
importance only in the early seventies. In the area of management sciences, the decade

52
of 1980s was known as the decade of computers and, the decade of 1990s as a decade of
new technologies in every field including HR. Research, experimentation, and
experience in the field of HRD has grown enormously in the last decade. Many
organizations have set up new departments known as “HRD Departments” which
symbolize the recognition of the importance of people’s competency development.
Traditional Indian business houses made their contribution through informal cultures that
integrated the employee into the company. The Indian tradition tended to be paternalistic
and was based on near familial bonds of loyalty, which drew sanction from a type of
social contract under which the employer was a father figure for the employee and his
family. Jamsedji Tata stands out for his vision of a dynamic industrialized India. Jamsedji
anticipated the India of trusteeship that was popularized many years later by Gandhiji and
Vinoba Bhave and showed by his own conduct the sincerity of his belief that personal
advantage must be subordinate to the progress of industries and the security of the people
employed for the country’s advancement. He ventured into the infrastructure areas like
steel and electricity much before the Government of India could come on the scene. His
farsighted initiatives in the worker’s welfare area were far ahead of even the
industrialized west.

Except Tata, Bajaj and Birla, to name a few, British rule left Indian industry
without an industrial culture. Industrial growth had been stifled and at the dawn of
independence. Indian businessmen thought and behaved like traders and commission
agents rather than entrepreneurs and industrialists. Until recently the efforts of most
industrialists were concentrated on managing the Government rather than managing their
people. A controlled economy called for emphasis on political rather than people
management. However, people management could not escape attention of the
industrialists and the Government for a long time after India became independent. The
journey of giving importance to people, which was started as a voluntary act of fulfilling
social responsibility, was gradually made compulsory through enactment of various Acts
from time to time. But the adherence of the Acts also made the entrepreneurs and
industrialists realize that it is unwise to ignore the importance of the people. This change
was further due to the overall change, which appeared in the economic, political,
psychological and legal environment. The contribution of the development of

53
management science and behavioral science in changing the attitude towards people has
been significant.

B.5 OBJECTIVES OF HRD

The basic objective of HRD is development of individuals by identifying and
bridging the gaps in their knowledge, skills and attitudes through training based on
systematic training needs analysis. Besides competency development, HRD also
prepares individuals to perform future roles and functions as organization gradually
grows in business, enters into diversification, modernization and globalization to face
new challenges. The main objectives are:

1. To develop capabilities of all individuals working in an organization in

relation to their present role.
2. To develop capabilities of all such individuals in relation to their future
role.
3. To develop better inter-personal and employer-employee relationships in
an organization.
4. To develop team spirit.
5. To develop coordination among different units of an organization.
6. To develop organizational health by continuous renewal of individual
capabilities (averting manpower obsolescence) keeping pace with the
technological changes.

Here, HRD attempts at potential development of individuals. Building motivation

of employees and keeping it upbeat is another aim of HRD. Thus converting employees
into units of productivity also generates in them a sense of commitment towards work
and belongingness for organization. Development component of HRD is to conduct
learning experiences for a future undefined job. The focus being on future undefined job
an organization before going ahead with employee development must be able to identify
individuals who enjoy high risk and new undefined challenging jobs. Such risk takers
may not necessarily confine in higher levels of an organization, even though
conventionally, development function rests in the higher levels only.

54
B.6 HRD-MECHANISM
The goals of HRD i.e. employee competency development, employee motivation
development and organizational climate development can be achieved through HRD sub­
systems. These Sub-Systems are also called as HRD instruments or methods or
techniques or aids or process mechanism or constituents. HRD is a total system with
various sub-systems but there is a lack of openness in concept of HRD system. Various
HRD thinkers and professionals have designed the mechanism of HRD in different ways.
T.V. Rao opines that HRD sub-systems should comprise; (i) the performance appraisal,
(ii) Potential appraisal, (iii) Career Planning, (iv) Training, (v) Feedback and
performance coaching, (vi) Organization Development, (vii) Rewards, (viii) Employee
Welfare, (ix) Quality of work life and (x) Human resource information system. Udai
Pareek makes a reference of: (i) Performance appraisal, (i) Feedback, (iii) Counseling,
(iv) Training under HRD system. M.S.S. Varadan traces HRD mechanism into: (i)
Performance Appraisal, (ii) Role Analysis, (iii) Organization Development and (iv)
Quality Circles. Lallan Prashad finds: (i) Man Power Planning, (ii) Injunction of new
blood, (iii) Promotion scheme, (iv) Job rotation, (v) Job enrichment and (vi) Job
redesign as part of HRD. P.N. Singh observes that FIRD mechanism includes: (i)
Induction, (ii) Performance appraisal, (iii) Motivation and (iv) Training and
Development.

From the above discussion, it may be inferred that there is no unanimity about the
constituents and components of HRD and divergent views in this regard have made it a
little difficult to develop a holistic system of HRD. However, on the basis of their views,
the HRD sub-systems may be listed below:

• Performance Appraisal
• Training and Development
• Career Planning
• Potential Appraisal
• Organization Development
• Rewards and Incentives
Employee Welfare Activities
55
 • Counseling
• Human Resource Information System.
• Task Forces
• Quality Circles
• Job Rotation

1. Performance Appraisal
Performance appraisal is one of the oldest and most universal practices of
management. In earlier period ‘merits were compared with the others and ranked. More
recently emphasis has been given to measuring the result of employee’s performance.
The direction of attempting to measure is what the man does (Performance - Appraisal)
rather that what he is (Merit-Rating). C. Heyel States, performance appraisal is the
process of evaluating the performance and qualifications of the employees in terms of the
requirements of the job for which he is employed, for purposes of administration
including placement, selection for promotions providing financial rewards and other
actions which require differential treatment among the members of a group as
distinguished from actions affecting all members equally.

H. Levension has mentioned three functions of performance appraisal: (i) It seeks

to provide an adequate feed-back to each individual for his or her performance (ii) It
purports to serve as a basis for improving or changing behavior towards some more
effective working habits and (iii) it aims at providing data to managers with which they
may judge future job assignments and compensation. On the basis of above discussion
major components of a performance appraisal system may be listed as:

I. Identifying job responsibilities and duties and performance dimensions,

standards and goals.
2. Prioritizing and weighing performance dimensions and performance goals.
3. Determining appropriate methods for apprising performance:
4. Developing suitable appraisal instruments and scoring devices.
5. Establishing procedures that enhance fair and just appraisals of all
employees.

56
 6. Providing performance feedback to all employees.
7. Relating observed and identified performance to the rewards provided by
organization.
8. Designing, monitoring and auditing processes to ensure proper operation
of the system and to identify areas of weakness.
9. Granting opportunities to employees for appeal whenever and wherever
such action is appropriate.
10. Training of employees in all phases of the appraisal system.

2. Training and Development

Training is a process of learning a sequence of programmed behavior. It is
application of knowledge. It gives people awareness of the rules and procedures to guide
their behavior, attempts to improve their performance on the current job or prepares them
for an intended job. Armstrong Michael holds the view that training fills the gap between
what someone can do and what he should be able to do. Its first aim is to ensure that as
quickly as possible, people can reach an acceptable level in their jobs. Training then
builds on this foundation by enhancing skills and knowledge required to improve
performance in the present job or to develop potential for future jobs.

Thus training is a tool of developing an individual’s ability and effectiveness to

perform his present and future jobs. It can also strengthen inter-personal relationships,
increase teamwork and collaboration and reduce the wastage. Training also improves the
productivity and efficiency with the help of improved quality and high morale. Thus, it is
a tool of the individual’s advancement and organizational effectiveness and in order to be
successful, we should adopt a systematic approach for training and this means.

• Identifying and analyzing training needs.

• Defining training objectives - training must aim to achieve measurable
- goals expressed in terms of improvements and changes in behavior, which
lead to better performance.
• Preparing training plans, which will meet objectives, and will describe the
cost and benefits of the proposed training programmes?

57
 • Monitoring and analyzing results.
• Feeding back the results of evaluation so that training can be improved.

3. Career Planning
The concept of career planning emerged in the U.S.A. in the 1970’s and has
become popular. It encouraged employees to analyze and assess their ambitions and gave
them information about the company’s career opportunities. V.D. Dudeja holds the view
that Career Planning essentially means helping the employees to plan their career in
terms of their capabilities within the context of organizational needs.
Career planning is concerned with identifying individuals today who can fill planned
future posts. It involves anticipation so as to enable advance preparation of individuals to
be ready in time for future positions. Career planning reduces labor turnover, curtails
absenteeism and ensures the retentions of good people. Edwin B. Flippo defined a career
as a sequence of separate but related work activities that provides continuity, order and
meaning in a person’s life. The Principle objectives of career planning are: (1) to secure
the right man for the right job and at the right time, (2) to maintain a contented team of
employees, (3) to provide adequate career avenues to employees to higher levels of
responsibilities and (4) to strengthen the retention programme of the organization, (5) to
reduce employee dissatisfaction and turnover, (6) to improve motivation and moral, (7)
to correct employee placement, (8) to enable the employee to develop and prepare him to
meet the future challenges, (9) to increase the utilization of Managers reserves within
an organization.

4. Potential Appraisal
Potential appraisal is also an important subsystem of Human Resource
Development. Under this system, employee potential or capability to perform the
functions are examined and methods to improve skills are also evolved. Potential
appraisal means development of latent abilities of an individual when organization is
expanding in-scales, diversifying its operations, introducing changes, capacities to
perform new roles and responsibilities must continually be developed among employees.
However, it looks that HRD function has a long way to go in introducing a system of
potential appraisal as:

58
 1. Identification of functions in the organization and qualities required to
accomplish these functions;
2. Methods and instruments to measure these qualities;
3. Continuous potential assessment of each employee to perform upper level
roles;
4. Elevation policy and appropriate feedback.

The basic philosophy of HRD is that individuals in an organization have

unlimited potential for growth and development and their potentialities can be developed
to perform further higher roles through appropriate efforts, and employee’s potentiality
can be tapped effectively only if the right climate is prevailing in the organization.

5. Organization Development
Organization Development (OD) as an approach to planned change in
organizations has been widely used in recent years. Udai Pareek defined it as; “a planned
effort, initiated by process specialist (s) to help an organization develop its diagnostic
skills, coping capabilities, linkage strategies in the form of temporary and semi­
permanent system and a culture of mutuality”.

Warren G, Bennis defines OD as a complex educational strategy intended to

change the beliefs, attitudes, values and structure of organizations so that they can better
adapt to new technologies, markets and challenges and the dizzying rate to change itself.
Dale S. Beach defined OD as a complex educational strategy designed to increase
organizational effectiveness and wealth through planned intervention by a consultant
using theory and techniques of applied behavioral service. Wendell and Bell Jr. stated
OD as a long range effort to improve an organizations’ problem solving and renewal
processes particularly through a more effective and collaborative management of
organization culture-with special emphasis on the culture of formal work teams- with the
assistance of a change agent or a catalyst and the use of the theory and technology of
applied behavior science, including action research. OD therefore, is a planned effort
made by an organization, using process specialists, to create healthy and self-renewing
process. This helps in improving upon the organization’s health and a favorable work

59
climate. Hence, the culture created through OD efforts may be considered helpful in
nurturing development of human resources.

Organizational development efforts broadly aim at improving the organizational

effectiveness and job satisfaction of the employees. These aims can be attained by
humanizing the organizations and encouraging the personal growth of individual
employees. Specifically the OD objectives are:

1. To increase openness of communication among people.

2. To increase commitment, self-direction and self-control.
3. To involve the members in the process of analysis and implementation.
4. To encourage the confrontation regarding organizational problems with a
view to arrive at effective decisions.
5. To enhance the personal enthusiasm and satisfaction levels.
6. To increase the level of trust and support among employees.
7. To develop strategic solutions to problems with high frequency.

6. Rewards and Incentives

Rewarding employee performance and behavior is an important instrument of
HRD. Appropriate rewards not only recognize and motivate employees they also
communicate the organization’s value to the employees. In HRD systems, innovation and
use of capabilities are rewarded in order to encourage the acquisition and application of
positive attitudes and skills. Typical rewards include certificates of appreciation,
newsletter announcements, increase in salary, bonuses, special privileges, and desired
training. An ‘incentive’ or ‘reward’ can be anything that attracts a worker’s attention and
stimulates him to work. In the words of Butack E.H., “An Incentive scheme is a plan or
programme to motivate individual or group performance. An incentive programme is
most frequently built on monetary rewards (incentive pay or a monetary bonus), but it
may also include a variety of, non-monetary rewards or prizes”. It does not include (i)
wages and salary payments and merit pay, (ii) over-time payments, pay for holiday
work or differential according to shifts i.e. all payments which could be considered
incentives to perform work at undesirable times and (iii) premium pay for performing

60
danger tasks. It is related with wage payment plans, which tie wages directly, or
indirectly to standards of productivity or to the profitability of the organization or to both
criteria.

7. Employee Welfare Activities

It is an established fact that welfare measures protect the workman, conserve his
energy and keep the worker’s behavior in desirable manner, Some welfare benefits like
medical, insurance, disability insurance, holidays, vacations and housing must be
provided by the organization in order to maintain their work commitment and motivation.
HRD system focuses on employee welfare and quality of work-life by continually
examining employee needs and meeting them to the extent feasible.

8. Counseling
Counseling serves several purposes in any organization. It is helping the
employee to recognize his own strengths, weaknesses and potential, helping him to
prepare action plans for his own development, helping the executives to understand the
limitations of his seniors and problem ofjuniors and also helping in evaluating the impact
of their decisions and so on. This would help the employees in overcoming the barriers
emanating from either their ignorance or poor knowledge in the field. Counseling is a
means and not an end in itself. It is an effective HRD instrument in helping people
integrate with their organization and have a sense of involvement and satisfaction.
Performance counseling essentially focuses on the periodical analysis of performance on
the job and identification of training needs for future improvement.

9. Human Resource Information Systems

A corporate human resource information system needs to be developed and
commissioned, which enable the storage and processing of all important man power
inventory data, like training programmes attended, performance records, potential
appraisals, accomplishments etc. that may be kept at corporate office to facilitate data-
based effective decision making.

61
10. Task Force
A task force is a group of most skilled employees selected and appointed by
management engaged in various functions with an orientation to problem solving. Task
forces consist of members drawn from various location/areas/fields for handling all
special tasks such as new product introduction, formulation of the major plans for
restructuring organization etc. These bodies (task forces) are given specific time targets
encouraged to design their own methodology and are given consideration, importance
and autonomy in their sphere of operation.

11. Quality Circles:

Quality circle is a small group of employees in the same work area, doing similar
type of work, who voluntarily meet regularly for about an hour every week to identify,
analyze and resolve work related problems not only to improve quality, productivity and
the total performance of the organization, but also to enrich the quality of work life of
employees. There is a misconception that quality circles and task force are one and the
same. But quality circle is not task force but the former is broader than the later.

Objectives of Quality Circles

The important objectives of quality circles are:

1. To develop, enhance and utilize human resources effectively.

2. To improve quality of products /services, productivities and reduce cost of
production per unit of output.
3. To satisfy the workers’ psychological needs for self-urge, participation,
recognition etc. with a view to motivating them. Accomplishment of this
objective will ensure enhancement of employee morale and commitment.
4. To improve various supervisory skills like leadership, problem solving,
inter-personal and conflict resolving and
5. , To utilize individual imaginative, creative and innovative skills through
participation, creating and developing work interest, including problem­
solving techniques etc. Achievement of these objectives effectively
requires the use of certain techniques.

62
 The basic idea behind quality circles is to develop fully the human capabilities of
all employees and thereby lead to the improvement of the organization. The basic
principle centers around the advantages of employee’s participation in management,
improved personnel capabilities of individual employees, developing workers potential to
become supervisors of the future, reduce conflicts stemming from work environment and
increased involvement of workers in their jobs.

12. Job Rotation

Job Rotation involves periodic assignment of an employee to completely different
sets of job activities. One way to tackle routine work is to use job rotation. The move
away from purely generalist training, a history, constitution, procedures etc. towards
specialized training, has also made possible rotation and transfer more purposive. The
earlier concept of jack-of-all-trades generalist who can handle any assignment is giving
way to better fitment of role and person. Thus, when an activity is no longer challenging,
the employee is rotated to another job, that has similar skill requirements and is at the
same level. The strength of job rotation is that it reduces boredom through diversifying
the employee’s activities.

B.7. CHALLENGES FACED BY HRD - TODAY

Generally, our line managers have no appreciation for the idea that HRD is an
integral part of every manager’s responsibility. It is looked on as the responsibility of the
corporate department. The existence of a separate department for HRD has in fact
reinforced this belief. Changing this belief has become a major challenge for our HRD
departments today. Even when there is a realization that development of people is part of
every manager’s responsibility, there is no sense of urgency about it, because the results
from people’s development will not be forthcoming immediately. Very often, these
results are also not very obvious. It appears as though we value ‘the immediate short-run
benefits’ more than ‘delayed long-term benefits’. It will not be wrong to say that some of
our organizational policies and practices for assessing the Managers performance also
reinforce this value among the managers. The prime challenge for the top management,
personnel and HRD functionaries today is to mould the beliefs and values of their
employees in favor of the HRD policies and systems. One possible strategy for meeting

63
the challenge is to identify the existing people related belief and value systems of the key
functionaries of the organization.

Three important groups of functionaries in HRD are -

a) Top management;
b) HRD and personnel executives; and
c) Field executives and managers.

Needless to say, unless the top management is committed to HRD, in the sense,
that they have internalized the HRD oriented beliefs and values; their HRD efforts cannot
make any dent. While the top management’s commitment is a necessary condition for a
meaningful HRD function in the organization, this is not a sufficient condition for
inculcating such commitment at the lower levels, especially in complex organizations like
banks where a multitude of other factors also influence the belief / value systems of the
employees. Therefore, it is also necessary to identify the belief and value system existing
at the other two levels namely the HRD and personnel functionaries, field executives and
managers.

Normally organizations take care to see that HRD functionaries have an

appreciation for the concept and rationale (often called philosophy) of HRD as well as the
requisite HRD skills. However, this is not enough; having the appropriate beliefs and
values is also crucial. Also, one cannot assume that a person having formal qualifications
in HRD has required beliefs and values. The field executives and managers are the ones
who actually carry out the HRD functions and as such the importance of their having the
right kind of orientation cannot be over-emphasized. The following are some possible
methods for identifying the beliefs and values of the different functionaries:
a) Raising a number of soul-searching questions to one concerning a
checklist of critical beliefs and values that he or she holds about
employees.
b) Depth interviews with the functionaries by trained personnel.
c) Analysis of the existing practices, systems and communication (including
feedback) patterns in the area of HRD.

64
 d) Mould and re-shape the belief and value systems of the key functionaries
in favor of the HRD activities.

In order to mould the belief and value systems of the HRD functionaries, first and
foremost, it is necessary that the top management’s commitment to HRD should be
‘visible’ to them. It is not enough that the top management is committed; it should also
be visible to the HRD functionaries through their actions. Then, the HRD functionaries
can be exposed to appropriate education and training programmes. If necessary, re­
deployment of the existing personnel and induction of new people to man the HRD
positions should be made in order to ensure that the HRD functionaries have the requisite
beliefs and values apart from their skills and knowledge of the concept and philosophy of
HRD.

A realistic system of understanding and resolving industrial conflicts should be

strengthened, in the HRD perspective, by promoting the collaborative and consensual
aspect of labor-management relations. This proposition follows from the assumption
stated earlier that every employee possesses a minimum interest in using his human
resources (knowledge, skill, experience etc.) for productive purposes and is also aware of
his obligations to work in terms of the contract of employment. His productivity and
commitment to work is likely to vary according to the degree of discretion and control
over his work available to him at the workplace. He needs supervision and guidance
from management, as his work is an integral part of a complex organizational, economic
and technological system. But within the limits of this complexity, his performance is
likely to be higher if he has greater freedom and discretion to work. He is also culturally
conditioned to expect freedom and control over his work, as both he and his organization
exist within the larger social-political system, which is oriented to the concept and
institutions of democracy and decentralization of control. On the part of management,
employees should be recognized as important stakeholders. Their knowledge, skills,
experience, and such other resources should be looked upon as important factors in
performance along with other resources such 'as finance, technology and management.
These factors underlie the schemes and systems of participative management. These
schemes include joint department or works committees, quality circles, grievance
committees, and workers’ representation on the boards of directors.
65