Essentials of HRM

UNIT-1
 MEANING OF HRM

• Human Resources is the part of the organization that deals with people
• Managing the human resource
• This means acquiring developing and supporting staff as well as
ensuring they fulfill their role at work
• HR is the total knowledge, skill, creative abilities, talents and
aptitudes of an organisation’s workforce as well as the values,
attitudes and beliefs of the individuals involved.
 To select
 Develop
 Motivate
 Maintain human resources
 DEFINITION OF HRM.

• It is define as a process of bringing people and organization together so that

goals of each can meet.

• HRM may be defined as a set of policies, practices and programmes designed to

maximize both personal and organizational goals.

• A Management function that helps managers recruit, select, train and develop
members for an organization.

• HRM is the effective use of human resources in order to enhance organizational

performance .

• HRM is the art of procuring, developing and maintaining competent workforce to

achieve goals if an organization in an effective and efficient manner.
 CONTD…

So the Human Resource Manager job includes:

• Conducting Job analysis ( determining the nature of each
job)
• Planning labour needs and recruiting job candidate
• Selecting Job candidates
• Orienting and training new employees
• Managing wages and salaries (compensating employees)
• Providing incentives and benefits
• Appraising performance
• Communicating ( interviewing, counselling, disciplining)
• Training and development
 Nature of HRM
• Broader function
• People oriented
• Action oriented
• Development oriented
• Continuous function
• Future oriented
 CONTD..

1. Broader function
• Human Resource Management is a comprehensive function because
it is about managing people in the organization. It covers all types
of people in the organization from workers till the top level
management.
2. People oriented
• Human Resources is the core of all the processes of human resource
management. So HRM is the process which brings people and
organizations together so that their goals can be achieved.
3. Future oriented
• HRM is very important activity which helps organization to achieve
in future by providing well motivated and competent employees.
 Cont….
4. Action oriented
• Human Resource Management believes in taking actions in order to
achieve individual and organizational goals rather than just keeping
records and procedures.
5. Development Oriented
• Development of employees is an essential function of human resource
management in order to get maximum satisfaction from their work so that
they give their best to organization
6. Continuous Function
• As human resource is a living factor among all factors of production
therefore it requires continuous improvement and innovations in order to
get excellence. So it requires a constant alertness of human relations and
there importance in every day to day operations.
 Elements of HRM.

1. Acquisition
• Acquisition function is concerned with recruitment and selection of
manpower requirement for an organization. It ensures that the company
has the right number of people at the right place and at the right time who
are capable to complete required work. It is the starting point of human
resource management function. Acquisition is primarily concerned with
planning, recruitment, selection and socialization of employees. It selects
and socializes the competent employees who have adopted the
organization's culture.
 CONT..
2. Development
• Development phase begins after the socialization of newly appointed employees in an organization. It is
concerned with imparting knowledge and skill to perform the task properly. Moreover, it is an attempt to
improve employee performance by imparting knowledge, changing attitudes and improving skills. It can be
done through teaching, coaching, class-room courses, assignments, professional programs and so on. The
ultimate goal of employee development is of course to enhance the future performance of the
organization by the efficient employees. The development of employees is not only for newly appointed
employees, it is also for existing employees to develop them according to change in internal and external
environment.

3. Motivation
• Only training and development do not inspire employees to do better work. For this, they should be
motivated. Here motivation means an activity which induces and inspires people to perform well in actual
work floor. Motivation includes job specification, performance evaluation, reward and punishment, work
performance, compensation management, discipline and so on. It is important for better work
performance because high performance depends on both ability and motivation.
4.Maintenance
• Maintenance is the last components of human resource management. it is concerned with the process of
retaining the employees in the organization. This contributes towards keeping the employees who can do
extremely better for the organization. It creates such a homely and friendly environment for those high
performers, and make them to remain in the same organization for a longer period of time. This requires
that the organization should provide additional facilities, safe working conditions, friendly work
environment, and satisfactory labor relations. If these activities are performed in right manner, we can
expect to have capable and competent employees in the organization. These employees are committed to
the organizational objectives and are satisfied with their jobs.
 SCOPE OF HRM
Job Analysis
HRP(Human
& Design Employee
Resource
Hiring
Planning)

Employee
Training & Remuneration
Development HRM

Employee
Social security
Industrial Motivation
welfare of
Relations Employee
 SCOPE OF HRM

.
1 Job Analysis & Design
• Defining tasks, integrating job components and employee characteristics in
such a way that meets the needs of employees as well as the organization.
2. HRP(Human Resource Planning)
• Determining the number and kind of personnel required to fill various jobs
positions in the organization.
3. Training & Development
• Training and development is must to prepare the employees for the actual
management situation. employees’ participation in committees and board
meetings may also contribute towards their development.
 Cont…..
4. Employee Motivation
• The motivation of employees can be done by providing financial
and non-financial incentives.
5. Remuneration of Employees
• Providing adequate wages and other benefits (fringe benefits) to
achieve standard of living and to inspire them to show better
work performance. It includes determining wages rates,
incentives systems of wage payment.
6. Social Security and Welfare of Employees
• Providing safe and secure working conditions and also amenities
such as subsidised meals, health care, medical assistance
housing, transportation etc.
 Cont…..
7. Industrial relations
• Industrial relations include union-management relations, collective
bargaining, grievance and disciplinary procedures, settlement of disputes.
8. Employee Hiring
• It includes recruiting (looking for) possible employees and selecting the
best one to occupy the various posts in the organization, including or
settling them into the jobs.
 o n s o f h rm
Fu n c t i

Managerial
Functions

Operative
Functions
 Functions of hrm
• MANAGERIAL • OPERATIVE
1. Planning 1. Procurement
2. Organizing 2. Training & Development
3. Directing 3. Remuneration
4. Controlling
4. Working conditions
5. Motivation & compensation
6. Personal records
7. Industrial relations
8. Maintenance
 Managerial function
1. Planning
• It is the process of deciding in advance about what is to be done
(deciding about objectives), how and by whom it is to done
(deciding about the steps/strategies to be adopted to attain
objectives). In the context of HRM, the planning function
extends to the acquisition of competent workforce for the
organization. The process of HR Planning involves three steps:
a) forecasting of manpower demand- determining the number and
type of people required in the organization
b) analyzing manpower supply- determining the availability of
manpower within the organization.
c) balancing demand and supply- correcting shortage or surplus
through personnel decisions.
 Cont…..
2. Organising
• It concerned with bringing together the manpower and material resources
for the attainment of objectives of the enterprise. The process of organising
involves grouping of personnel activities, assignment of different groups of
activities to different individuals, delegation of authority according to tasks
assigned and responsibilities involved, and coordination of activities of
different individuals.
3. Directing
• It deals with guiding, leading and motivating employees so that they
efficiently perform their jobs and contribute towards achieving
organisational objectives. It is done by giving necessary orders and
instructions to employees regarding the assigned work, and motivating
them to perform in a satisfactory manner. Communication, motivation and
leadership are the essential elements of directing.
 Cont…
4. Controlling
• The controlling function of management concerned with
regulation of activities in accordance with plans. In context of
HRM, controlling function compromises measuring employees’
performance, correcting negative deviations and ensuring the
accomplishment of plans efficiently. Controlling also makes
employees aware of their performance through review reports,
records and personnel audit programmes, etc.
 Operative function
1. Procurement function: The first operative function of personnel
management is procurement. It is concerned with procuring and employing
people who possess necessary skill, knowledge and aptitude. Under its
purview you have job analysis, manpower planning, recruitment, selection,
placement, induction and internal mobility. 
2. Training and Development: It is the process of improving, moulding,
changing and developing the skills, knowledge, creative ability, aptitude,
attitude, values and commitment based on present and future requirements
both at the individual’s and organisation’s level.
 Cont…..
3. Motivation and compensation: It is a process which inspires people to
give their best to the organisation through the use of intrinsic
(achievement, recognition, responsibility) and extrinsic (job design, work
scheduling, appraisal based incentives) rewards.
4. Maintenance: It aims at protecting and preserving the physical and
psychological health of employees through various welfare measures.
5. Personal Records: this operative function of HRM is concerned with
maintaining effectiveness of HR programmes and practices through proper
maintenance of personnel records. This function covers activities such as
HR audit (involves examination and evaluation of policies, procedures and
practices to determine the contemporary relevance and effectiveness of
HRM)and HR research (involves a constant search of new trends and
practices in the field of HRM and then their adoption by the organisation
for improving its competitive position.)
 IMPORTANCE OF HRM

• RECRUITMENT AND SELECTION

• TRAINING
• PERFORMANCE APPRAISAL
• TRADE UNIONS
• DEVELOPMENT
 CONT..
• RECRUITMENT
• The process by which a job vacancy is identified and potential employees are notified. MAIN
FORMS OF RECRUITMENT THROUGH ADVERTISING IN NEWSPAPERS, MAGAZINES, TRADE
PAPERS AND INTERNAL VACANCY LISTS.

• SELECTION
• The process of assessing candidates and appointing a post holder. Applicants are short listed
and the only most suitable candidates are get selected.

• TRAINING
• PROVIDES NEW SKILLS FOR THE EMPLOYEE
• KEEPS THE EMPLOYEE UP TO DATE WITH CHANGES IN THE FIELD
• AIMS TO IMPROVE EFFICIENCY

• PERFORMANCE APPRAISAL (REWARD) THE SYSTEM OF PAY AND BENEFITS USED BY THE FIRM
TO REWARD WORKERS. HRM ENCOURAGES THE PEOPLE WORKING IN AN ORGANISATION,
TO WORK ACCORDING TO THEIR POTENTIAL AND GIVES THEM SUGGESTIONS THAT CAN
HELP THEM TO BRING ABOUT IMPROVEMENT IN IT.
 CONT..
• TRADE UNIONS CONTRIBUTES TO SMOOTH CHANGE MANAGEMENT AND LEADERSHIP.
TRADE UNIONS ARE FORMED TO PROTECT AND PROMOTE THE INTERESTS OF THEIR
MEMBERS. THEIR PRIMARY FUNCTION IS TO PROTECT THE INTERESTS OF WORKERS AGAINST
DISCRIMINATION AND UNFAIR LABOR PRACTICES.

• DEVELOPMENT DEVELOPING THE EMPLOYEE CAN BE REGARDED AS INVESINING A VALUABLE

ASSET. IT IS A SOURCE OF MOTIVATION. HRD IS THE INTEGRATED USE OF :-
• TRAINING AND DEVELOPMENT,
• ORGANISATIONAL DEVELOPMENT, AND
• CAREER DEVELOPMENT TO IMPROVE INDIVIDUAL, GROUP AND ORGANISATIONAL
EFFECTIVENESS."

• HRM IS ALSO IMPORTANT BECAUSE IT INCLUDES EMPLOYMENT ISSUES LIKE:

DISCRIMINATION,
• EQUAL EMPLOYMENT OPPORTUNITY
• HARASSMENT
• AFFIRMATIVE ACTION
• DIVERSITY MANAGEMENT
• OCCUPATIONAL HEALTH AND
• SAFETY INDUSTRIAL RELATIONS
Difference between HRM and
Personnel management
.
HUMAN RESOURCE MANAGEMENT V/s PERSONNEL MANAGEMENT

HRM PM

•HRM is proactive in nature. It is not •PM is mainly reactive in nature. It

only concerned with the present satisfies itself by ensuring peaceful
organizational conditions but measure management relations in the
foresees future necessities and then present.
acts appropriately.
•HRM as a resource centered activity
focuses more on the managerial •PM which is employee centred ,
aspects in terms of delegating the aims at hiring, training,
responsibility of HRM to line compensating, and maintaining the
authority and management existing force of the organization.
development. •PM emphasis division of labour in
•HRM insists on team work work performance.
 .
• Responsibility rests with HR • Responsibility rests with all
Manager. managers: top, middle and lower
managers.
• Interest of both the organization and
employees equality important. • Interests of the organization most
important.
• Focuses on nurturing human talent.
•Concentrates on monitoring people
• Treats people as valuable assets. and work in terms of measurable
•Maintain relation with customer. output.
•Treats people as a tool to be
replaced when worn out.
•Maintain relation with labour
management.
 Difference between HRM & HRD
• HRM deals with all aspects of the• HRD only deals with the
human resources function development part.
• HRM is concerned with
recruitment, rewards among • HRD is concerned with
others employee skills
•  HRM functions are mostly  development.
formal 
• HRM is a routine and • HRD functions can be 
administrative process. infomal like mentorship
• HRM is concerned with people • HRD is continuous process
functions only.
• HRD is developing the
whole organization
employee skills.
 Cont……
• involvement of the entire work • It is basically the responsibilities
force from top to bottom is more of the HR department
and a must in most of the cases
• HRM deals with the day to day • Human Resource Development
operations of the human resources deals with the training and the
department. This curriculum developmental aspect of
would include bus. law, employees. Most HRD
compensation, employee curriculum include classes like T
relations, benefits, and medical & D, organizational dev.,
etc. industrial psy.
 SHRM
• Strategic Human Resource Management =
strategic + human resource management
• Strategic means devising a comprehensive decision plan that sets
critical direction for an organisation and guides the allocation of
resources.
• HRM means an integrated strategy and planned development
process for effective utilisation of human resources for the
achievement of organisational mission and objectives.
So,
• Strategic human resources management is concerned with all those
activities affecting the behaviour of individuals in their effort to
formulate and implement the strategic needs of the business.
• SHRM is the linking of human resource management with strategic
goals and objectives in order to improve business performance and
develop organisational cultures that foster innovation and
flexibility.
 Nature of shrm
• Long term focus- SHRM has long-term focus, more than a year, as the
business strategies itself are long term oriented.
• Associated with goal-setting- SHRM is closely associated with goal-
setting, policy formulation and allocation of resources. It is performed at
top management levels.
• Interrelated with business strategies- SHRM is interrelated with business
strategies.
• Fosters (to promote the growth or development)corporate excellence
skills- SHRM views employees as the strategic capability of the
organisation and attempts to distinguish the organisation from its
competitors in the markets on that basis.
 Objectives of SHRM
• To develop strategic competencies- the basic aim of SHRM is to develop
strategic competencies of an organisation , in order to ensure that the outfit has
the required standards and number of committed, skilled and highly motivated
manpower, for attaining competitive advantage which is sustainable.
• To give sense of direction- giving sense of direction even in turbulent
ambience so as to strike a balance between the organistaional needs and those
of the individual as well as the as staff.
• To Achieve integration- SHRM aims to provide a unifying framework, so that
an integrated HR system operates synergistically in consonance with the
organisational strategic objectives.
• To formulate business strategy- SHRM contributes to the formulation of
business strategy by drawing attention to ways in which the business can
capitalise on the advantages provided by the strengths of its human resource.
 Importance of SHRM
• Helps firms in Achieving cost- effective engagement of Labour- SHRM
helps firm in achieving cost-effective engagement of labour as part of the
competitive advantage initiative.
• Enables firm to meet changing needs- the flexible structure and dynamic
policies of SHRM enables the firm to meet the changing needs and
expectations of the customers effectively and promptly.
• Provides clear-cut goals, direction, and future focus- since SHRM
requires a well-defined mission and vision for its effective implementation,
it is able to provide clear-cut goals, direction, and future focus to the entire
organisation.
• Enhances coordination- SHRM greatly enhances coordination among the
various functional centers and the top management. It also enables the firm
to detect goal and performance deviations early and prevent them
eventually.
 Cont….
• Develops a base for measurement- it makes it necessary to develop a
quantifiable base for measuring the efficacy of the various HR policies and
practices.
• Helps in exploitation of emerging opportunities- it enables the firm to
pre-empt its competitors by exploiting the emerging opportunities through
a continuous scanning of the external environment.
 Barriers to shrm
• Absence of long-term orientation- SHRM requires long-term planning,
orientation and HR intervention strategies among the top management and
the HR mangers alike. However, organisations often content themselves
with short-term goals and gains.
• Lack of adequate support from top management- in strategic human
resource management, HR managers must work at the top levels of
management in shaping not only the HR strategies but also the corporate
strategies.
• Fear of Failure- since SHRM reckons with many uncertainties and
imponderables, HR managers often hesitate to undertake strategic HR
initiatives due to the fear of failure.
 Cont….
• Resistance from labour unions- the introduction of SHRM requires
extensive changes is the work culture, HR practices, and processes. The
real or perceived consequences of such changes may frighten the
employees. Consequently, the SHRM proposals may meet with a strong
resistance from the workers and the unions.
• Absence of measurement techniques- unlike other functions of the firm,
it is difficult to quantify the efficiency of HR managers or policies in the
absence of creditable HR systems of measurement.
 Strategic management
• Strategic management is the set of managerial decision and
action that determines the long-run performance of a corporation.
It includes environmental scanning (both external and internal),
strategy formulation (strategic and long range planning), strategy
implementation, and evaluation and control. The study of
strategic management therefore emphasizes the monitoring and
evaluating of external opportunities and threats in lights of a
corporation’s strengths and weaknesses.
• Strategic management involves four steps-
 Analyze the opportunities and threats or constraints that exists in
the external environment
 Formulate strategies that will match the organisation’s strengths
and weaknesses with the environmental threats and opportunities
 Implement the strategies
 Evaluate and control activities to ensure that the organisation’s
objectives are achieved.
Strategic management process
 Environmental scanning
• Environmental scanning has the management scan external environment
for opportunities and threats and internal environment for strengths and
weaknesses. The factor which are most important for corporation factor are
referred as a strategic summarized as SWOT standing for strengths,
weaknesses, opportunities and threats.
environmental scanning

Internal analysis External analysis

 External Analysis
• The external environment consist of opportunities and threats variables
that outside the organization.
Opportunities- is a favourable condition in the organisation’s environment
which enables it to consolidate and strength its position. Ex- economic
boom, favourable demographic shifts, arrival of new technologies,
loosening of regulatio0ns.
Threat- is an unfavourable condition in the organisation’s environment
which creates a risk for, or causes damage to , the organisation. Ex-
economic down turn, unfavourable political, unexpected shifts in
consumer tastes
• External environment has two parts:
• Task environment
• Social environment
 Cont..
• Task environment- includes all those factors which affect the
organisation and itself affected by the organisation. These factors
effects the specific related organizations. These factors are
shareholders community, labour unions, creditors, customers,
competitors etc,.
• Social environment- is an environment which includes those forces
does not effect the short run activities of the organization but it
influenced the long run activities or decisions. PEST analysis are
taken for social environment PEST analysis stands for political and
legal, economic, socio-cultural logical and technological.
 Internal Analysis
• Internal strengths and weaknesses/ internal assessment
Internal strengths and internal weaknesses are an organization’s
controllable activities that are performed especially well or poorly. They
arise in the management, marketing, finance/accounting,
production/operations, research and development activities of a
business. Identifying and evaluating organizational strengths and
weaknesses in the functional areas of a business is an essential strategic-
management activity.
Strength- is an inherent capacity which an organisation can use to gain
strategic advantage. Ex- good reputation among customers, resources
experience, knowledge and capabilities.
Weaknesses- is an inherent limitation or constraint which creates strategic
disadvantages. Ex- gaps in capabilities, financial deadlines, low morale.
 STRATEGY FORMULATION.
• A strategy formulate to execute the business activities.
Strategy formulation includes developing:-
 Vision and mission (the target of the business)
 Strength and weaknesses (strong points of business and also
weaknesses)
 Opportunities and threats (these are related with external
environment for the business)
• Strategy formulation is also concerned with setting long term
goals and objectives, generating alternative strategies to
achieve that long term goals and choosing particular strategy
to pursue.
 CONT..
• The consideration for the best strategy formulation should be as follows:-
a) Allocation of resources
b) Business to enter or retain
c) Businesses to divest or liquidate
d) Joint ventures or mergers
e) Whether to expand or not
f) Moving into foreign markets
g) Trying to avoid take over
 LEVEL OF STRATEGY
• Strategies are formulated at three levels:
• Corporate level,
• Business unit level, and
• Functional level
• Corporate-level Strategy:- This is formulated by the top management of
an organization made up of more than one line of business. The corporate-
level strategy of the family-controlled Companies is to continuously
innovate in all its business with right technology, relentlessly cut costs and
focus on the overseas markets. The major questions that need to be
answered at this stage are – What kinds of business should the company be
engaged in? What are the goals and expectations for each business? How
should resources be allocated to reach these goals?
 CONT..
• In formulating corporate-level strategies, the company should decide where it
wants to be- in 10 or 15 years hence, in at least eight areas- market standing,
innovation, productivity, physical and financial resources, profitability,
managerial performance and development, worker performance and attitudes, and
social responsibility.
• Business-level Strategy:- While the major question at the corporate-level is, ‘ In
what industries or business should we be operating?”, the appropriate question at
the business unit level is , “How should we compete in the chosen industry or
business?” A business unit is an organizational subsystem that has a market, a set
of competitors, and a goal distinct from those of the other subsystems in the
group.
• A single company that operates within one industry is also considered a business
unit. For instance, an independent company that builds and sells swimming pools
is considered a business unit. In such an organization, the corporate-level strategy
and the business-unit strategy are the same.
 CONT..
• Functional-level Strategy:- Each business unit will consist of several
departments, such as manufacturing, sales, finance and HRD. Functional
level strategies identify the basic courses of action that each of the
departments must pursue in order to help the business unit to attain its
goals. In formulating functional level strategies, managers must be aware
that the different functions are interrelated. Each functional area, in
pursuing its purpose, must mesh its activities with activities of other
departments. The strategy of one functional area cannot be viewed in
isolation. Rather, the extent to which all functional strategies are integrated
determines the effectiveness of the unit’s business strategy.
 Strategy implementation
• Strategy implementation requires a firm to establish annual objectives,
device policies, motivating employees and allocate resources so that
formulated strategies can be executed. Strategy implementation includes
developing strategy supportive culture, creating an effective organisational
structure, redirecting marketing efforts, preparing budgets, developing and
utilizing information system and linking employee compensation to
organizational performance.
 Strategy evaluation
• Strategy evaluation helps determine the extent to which the company’s
strategies are successful in attaining its objectives. Basic activities involved
in strategy evaluation are:-
• Establishing performance targets, standards and tolerance limits for the
objectives, strategies and implementation plans.
 Traditional/Conventional HR versus Strategic HR

• STRATEGIC HR
• SHRM realizes that people can make or break an organisation because all
decision made regarding finance, marketing operations or technology are made
by an organization's people.
• It compels people at all levels to focus more on strategic issues rather than
operational issues.
• It believes that there is no best way to manage people in any given organisation.

• TRADITIONAL/CONVENTIONAL HR
• HR focus on employee relations, to partnership with internal and external
groups.
• Transformation in nature, in that it helps the people and the organisation to
adopt, learn and act quickly.
• Is proactive and consider various time frames in a flexible manner.
 .
• .
.
 Linking HR strategy with business strategy
• To be successful, it is required that all departments work hard to achieve business
goals. To achieve business goals, organisation devises business strategy. Thus
business strategy is the set of methods or plans to achieve business goals.
• It is a known fact that organisations run by human force. Human work force is an
important factor which can make or mar organisation. Thus HR strategy plays
vital role to meet the organization goals. So while devising HR strategy, care
should be taken that it helps in executing business strategy. 
• When business owners and managers formulate business plans and
strategies, they often leave out an important component of these plans.
Human resources staff are often not consulted nor invited to participate in
the planning process. When marketing, sales, manufacturing or finance
are asked to implement their strategies and tactics for the coming year,
they may find themselves short-handed, or worse, with people with the
wrong aptitudes. Aligning HR with business strategies makes sense and
helps ensure the company can realize goals.
 CONT..
• With HR at the planning table, HR can forecast how many people
will be needed and with what skills. HR can inventory the current
workforce to see who can be promoted to new positions, who
should be trained and how and what recruitment and outsourcing
strategies might be necessary to fulfill the plan.
• Hr strategy linked with Business Strategy in the form of :-
1. Job Analysis
2. Providing opportunity (Management Games, Workshops etc)
HRM linkage with TQM & productivity.