Chap1(hrm) : Human Resource Management

Concept, roots, human resource management and personnel management, changing HRM environmental

forces, new mandate for human resource management, staff vs. line function in management,

organization of HRM functions.

Concept background of HRM• Every organization is set up with a mission of its own. Such a

mission is expressed through its objectives or goals. Our organisations employ people to work to achieve these objectives and goals. People working in organizations are human resources, also referred as “the most valuable resource’ because of their talents and energies which can contribute to the creation and achievement of the organization's mission, vision, strategy and goals.

• The essence of the concept of human resource management (HRM) is that the people working in organizations are viewed as a valuable resource. If properly managed and treated, people help to increase productivity through their full commitment and capability and enable the firm to compete in local and global market.

• The term human resource management is improved version of the personnel management.

Concept Human(micro)Resource(macro)M

• The first definition of HRM is that it is the process of managing people in organizations in a structured and thorough manner. This covers the fields of staffing (hiring people), retention of people, pay and perks setting and management, performance management, change management and taking care of exits from the company to round off the activities. This is the traditional definition of HRM which leads some experts to define it as a modern version of the Personnel Management function that was used earlier.

• The second definition of HRM encompasses the management of people in organizations from a macro perspective i.e. managing people in the form of a collective relationship between management and employees. This approach focuses on the objectives and outcomes of the HRM function. What this means is that the HR function in contemporary organizations is concerned with the notions of people enabling, people development and a focus on making the “employment relationship” fulfilling for both the management and employees.

Definition of HRM• “Human resources management (HRM) is concerned with the

“people” dimension in management.” ------- DeCenzo and Robbins, 1993

• “Human resource management is the strtegic and operational management of activities focusing on the human resources in an organisation”. ---- Mathis and Jackson, 1991

• “ HRM can be defined as consisting of the following elements :traditional personnel administration (staffing, rewarding, work design); personnel development; a specific management philosophy that values labour as the major asset of an organization and that regards human beings as being able and willing to grow and develop; and the integration of the personnel function into strategic management”. ------- Pieper, 1990

Summary Analysis of HRM

• Regarding people as the most valuable resource

• An important function of management• Involving all managerial personnel• Including all operational activities (selection,

development, motivation and maintenance)• Integrating business strategy and operational

activities• Seeking to achieve a competitive advantage

Characteristics of HRM• HRM is a newly evolved area. Its main features are to consider employees as strategic resource and

treat them as an asset of the organization. It offers a distinct approach to the management of employment relations and seeks to achieve organizational performance.

• (1) An explicit relation between HRM and corporate strategy : (Every organisation has its own plan of competing in the market different from its competitors, called corporate strategy. HR department helps to achieve this plan by arranging, qualified and trained workers as the requirments of jobs and organizations.

• (2) Commitment of employees : (motivate for commitment)

• (3) Recognition of common interests and needs : (both employees and management are interested in the profitability and survival of the organization.

• (4) Response to external and internal environmental contexts : (Influences of forces in the wider social, economic, political and cultural environments & internal pressure from employees such as need for social security and flexibility.

• (5) Owned by line managers and not by personnel specialists: ( line managers are the managers with full responsibility of their own department. They have to implement departmental policies and suggestions from the experts and advisors where as personnel specialists are the HR specialists working in HR department responsible for making HR policies and strategies and supporting line managers in the HR matters.

• (6) Employees are seen as assets or human capital : In the past , employees are treated as a cost making factors, now regarded as most valuable assets. Through continuous learning and development HR departments is interested to make their organization as the “learning organization”.

Functions or Areas of HRM

• Job analysis :• Human resource planning• Recruitment and selection• Training and development• Performance appraisal : (Performance appraisal is

the process of evaluating employees’ performance related strengths and weaknesses.)

• Compensation and benefits• Health and safety• Industrial relations and collective bargaining

The rising Interest in HRM Why rising interest in HRM ?

• To have a competitive advantage• Globalization• Workforce diversity• Changing skill requirements• The contingent workforce• Continuous improvement program me• Decentralized work sites• Employee involvement• Minimizes the complexities of the organization• Changes in technology• To provide opportunities for educated workforce.

Roots of HRM

• We often hear the term Human Resource Management, Employee Relations and Personnel Management used in the popular press as well as by Industry experts. Whenever we hear these terms, we conjure images of efficient managers busily going about their work in glitzy offices .

• the “art and science” of HRM is indeed complex. We have chosen the term “art and science” as HRM is both the art of managing people by recourse to creative and innovative approaches; it is a science as well because of the precision and rigorous application of theory that is required.

Root (The Development of HRM Concept)

Early Scientific management

Rowntree and Cadbury business houses began appointment of welfare officer in the 18th century. They also made provisions for unemployement benefit, sick pay and subsidies housing for employees.

Industrial Revolution started from the late 18th century. Labours were treated as commodity to be bought or sold. The main feature of industrial revolution was advent of machine power, mass production and efficient transportation.

Scientific management F.W. Taylor invented principles of scientific management in the 19th century. He suggested to plan work and gave methods to maximize productivity and minimize inefficiencies.

Human relations movement

Elton Mayo and Fritz Roethlisberger investigated the causes of low productivity different from Tylor’s perspective. The Hawthrone studies laid the foundation for the human relations movement and explain why human elements are important to raise productivity.

Root (The Development of HRM Concept)

The HRM -ERA

During 1935-60 a labour relations movement in the form of presence of unions and collective bargaining practice emergedThe work of pioneers : The new HRM era began in the 1950’s. Peter F. Drucker is the main inventor of the human resource management concept. He had suggested how an effective management contributes to direct all managers towards a common goal. Douglas McGregor emphasized the strategic importance of personal policies and their integration with business objectives.Human capital concept : T.Schulz invented human capital theory and cited example of how qualified and committed human resources contributed in the post-war economy of Germany and Japan.

Concept of corporate culture : The book “The art of Japanese Management” written by R. Pascale and A. Athos in 1981 stated that shared values of management and workers are the secret of Japanese management. The book “In search of excellence” written by T.J. Peters and R. Waterman in 1982 named 43 successful companies in the U.S. that were driven by the managers’ values and achieved productivity by paying close attention to the needs of their people.

Root (The Development of HRM Concept)

The HRM-ERA The New HRMTraditional American personnel management(micro-level) and industrial relation systems were challenged by the process of globalization , rapid technological advances, shorter product lifecycles and changing customers and investors demands.Charles Fombrun, Noe Tichy cnd Mary Anne Devanna developed the concept of Matching model in 1984.Michael Beer and colleagues developed the Harvard Model in 1984. The matching model and the Harvard model are the most useful models to understand the new HRM concept

HRM(macro) vs Personnel management(micro)

• These definitions emphasize the difference between Personnel Management as defined in the second paragraph and human resource management as described in the third paragraph. To put it in one sentence, personnel management is essentially “workforce” centered whereas human resource management is “resource” centered. The key difference is HRM in recent times is about fulfilling management objectives of providing and deploying people and a greater emphasis on planning, monitoring and control.

• Personnel Management• Traditionally the term personnel management was used to refer to the set of activities

concerning the workforce which included staffing, payroll, contractual obligations and other administrative tasks. In this respect, personnel management encompasses the range of activities that are to do with managing the workforce rather than resources. Personnel Management is more administrative in nature and the Personnel Manager’s main job is to ensure that the needs of the workforce as they pertain to their immediate concerns are taken care of. Further, personnel managers typically played the role of mediators between the management and the employees and hence there was always the feeling that personnel management was not in tune with the objectives of the management.

HRM(macro) vs Personnel management(micro)

• Human Resource Management• With the advent of resource centric organizations in recent decades, it has become

imperative to put “people first” as well as secure management objectives of maximizing the ROI (Return on Investment) on the resources. This has led to the development of the modern HRM function which is primarily concerned with ensuring the fulfillment of management objectives and at the same time ensuring that the needs of the resources are taken care of. In this way, HRM differs from personnel management not only in its broader scope but also in the way in which its mission is defined. HRM goes beyond the administrative tasks of personnel management and encompasses a broad vision of how management would like the resources to contribute to the success of the organization.

• Personnel Management and HRM: A Paradigm Shift ?• Cynics might point to the fact that whatever term we use, it is finally “about managing

people”. The answer to this would be that the way in which people are managed says a lot about the approach that the firm is taking. For instance, traditional manufacturing units had personnel managers whereas the services firms have HR managers. While it is tempting to view Personnel Management as archaic and HRM as modern, we have to recognize the fact that each serves or served the purpose for which they were instituted. Personnel Management was effective in the “smokestack” era and HRM is effective in the 21st century and this definitely reflects a paradigm shift in the practice of managing people.

Scope of HRM• Human resources are undoubtedly the key resources in an organization, the easiest

and the most difficult to manage! The objectives of the HRM span right from the manpower needs assessment to management and retention of the same. To this effect Human resource management is responsible for effective designing and implementation of various policies, procedures and programs. It is all about developing and managing knowledge, skills, creativity, aptitude and talent and using them optimally.

• Human Resource Management is not just limited to manage and optimally exploit human intellect. It also focuses on managing physical and emotional capital of employees. Considering the intricacies involved, the scope of HRM is widening with every passing day. It covers but is not limited to HR planning, hiring (recruitment and selection), training and development, payroll management, rewards and recognitions, Industrial relations, grievance handling, legal procedures etc. In other words, we can say that it’s about developing and managing harmonious relationships at workplace and striking a balance between organizational goals and individual goals.

In the last 20 years, the scope of HRM is extensive and far-reaching. The scope of the study of HRM has undergone several changes. Personnel adminstration, or personnel management, has increasingly given way to “human resource management, or more recently, to strategic human resource management’ (SHRM). The scope has increasingly given way.