Introduction to HRM

Dr Musarrat Shaheen
IBS Hyderabad
The Concept of HRM
 What is HRM?

 HRM is concerned with the ‘people’ dimension in management.

 Since every organization is made up of people, acquiring their
services, developing their skills, motivating them to high levels of
performance, and ensuring that they continue to maintain their
commitment to the organization are essential to achieving
organizational objectives.
 What is HRM?
HRM is the process of
 acquisition (recruitment, selection & socialization of employees),
 development (training – both skill development & changing attitude, MDP and
career development),
 Motivation (job satisfaction, performance appraisal, rewards, compensation and
benefits),
 maintenance (providing good working conditions, safety, health, welfare and social
security)
 and integration (grievance handling, discipline, unions, collective bargaining and
industrial relations)
of human resources.
 Definition

 Gary Dessler defines HRM as the process of acquiring, training,

appraising and compensating employees, and of attending to
their labor relations, health and safety, and fairness concerns.

 Human Resource Management is the function performed in

organizations that facilitates the most effective use of employees
to achieve organizational and individual goals.
 History of HRM
 5000 BC to 1785 AD
- Men at work was characterised by slavery and repression
(Construction of pyramids to the early years of the Industrial Revolution).
 Early 1900s

- The exemplary woks of Douglas McGregor, Abrahm Maslow and others changed
the situation and “welfare officers” and “welfare secretaries” were appointed.
 1920s to 1930s (World War I)

- Labour Manager and Employment Manager

- Paid holidays and pensions
 History of HRM
 World War II
- Enhanced the importance of personnel.
- Collective bargaining and industrial relations gained prominence.
- Human relations movement was shaping up.
- Emphasized that employees were motivated by social and psychological factors.
 1960s to 1970s
- Public sectors employing specialists in personnel.
- Trade unions evolved in public sector.
- Demands on personnel managers grew in legal compliances.
- Motivation and OB, selection testing and management training emerged.
 History of HRM
 Early 1980s
- HRM born as a field of study.
- Personnel departments are rechristened as Human Resource
Department.
- Managements have started realizing that people costs are very
significant part of their budgeting.
 History of HRM
 1990s onwards.
- Increasing globalization, disruptive innovations, growth of internet-
enabled services, intense competition.
- Flat organizational structure, downsizing, outsourcing of HR functions
have changed the functioning of the organizations.
- Employers realized the importance of innovative and creative employees
who provide a sustainable competitive advantage by virtue of their intellectual
capital.
- The human resource management function became strategic.
Phases in the Evolution of HRM

Phase -7 Contemporary HRM era (1980 onwards)

Phase 6 Formalised HRM era (1960-80)

Phase -5 Industrial and Human relation movement era (1950-60)

Phase -4 Second World war era (1939-45)

Phase -3 Hawthorne studies era (1927-32)

Phase -2 First world war era (1914-18)

Phase -1 Industrial Revolution era (1780-1830)

 Evolution of HRM in India
 HRM evolved in India in 1920 for protecting the interests of the workers suffering from the difficult conditions of
World War-II in England

 The Royal Commission recommended the appointment of welfare officers in 1921

 The Factories Act,1948 mandated appointment of welfare officers in industrial establishments having more than
500 workers

 To build professional excellence in HRM, IIPM and NILM were established in Kolkata and Mumbai in 1948 and
1950 in that order which got merged in 1980

 The merger resulted into NIPM for professional managers

 The 1990s witnessed the emergence of HRM and expanded it to strategic HRM in the first decade of 21st Century

https://www.youtube.com/watch?v=RpHX03q_3UI&t=74s
 Objectives of Human Resource Management
1. To act as a liaison between the top management and the employees.

2. To arrange and maintain adequate manpower inventory, which in turn, ensures smooth functioning
of the organization.

3. To offer training as a way of developing skills, enhancing productivity , and most importantly,
increasing individual and organizational performance to achieve the desired results.

4. To devise employee benefits schemes for improving employee motivation and group morale and
enhancing employer-employee cooperation.

5. To ensure and enhance the quality of wok life, which refers to the employees’ perception of their
physical and psychological well-being at work.

6. To help keep up ethical; values and behaviour amongst employees both within and outside the
organization.
Scope of HRM
 Scope of HRM
Legal phase
 Compliance issues
 Firefighting issues
 As a policeman
Welfare phase
 Welfare administrator
 Appraiser, mediator, advisor
Development Phase
 Change agent, trainer, educator, integrator
HR as a source of competitive advantage
 Developer, counsellor, mentor, coach, problem solver
 A strategic partner
Importance of HRM
Personnel Management Vs HRM
 Personnel Management & HRM
 In an organization, a group of people (employers and employees) work together with a
common motive i.e. to achieve their organizational goal, which is only possible when
efforts of all the people in the organization are efficiently managed.
 There are two basic approaches that employers adopt to manage people or employee in
their company— 1) Personnel Management & 2) HRM
 Personnel management is an administrative function which exists in an organization to
ensure right personnel at right organizational activity.
› It is a traditional approach of managing employees which focuses on adherence to policies and rules of
organization.
 HRM is a modern approach of managing people at workplace which focuses on
acquisition, development, utilization and maintenance of human resource.
› It combines physical energies and their strengths with human competencies. In simple words, human
resource management can be referred as the policy which ensures right quality and quantity of human
resource in the organization.
 Difference between Personnel Management and HRM
Basis of Difference Personnel Management Human Resource Management
Objective It manages people in accordance with It determines human resource needs and formulate
organization’s goal. policies by matching individual’s needs with
organization’s needs.

Nature It is a routine function. It is a strategic function.

Focus Efficient management is given priority. Human values and individual needs are given
priority.
Orientation It is traditional approach of managing people at It is modern approach of managing people at
workplace and is concern of personnel workplace and is concern of managers of all level
department. (from top to bottom).

Point of Interest Organization’s interest is valued the most. Interest of organization and interest of employee
is harmonized.
Benefits Disciplined employees Committed human resource
Increased production Readiness to change
Increased production
Increased profit
Quality of worklife
Human Capital & HRM
Human Capital – The Concept
 So What is Human Capital?
 Human Capital is the sum of employees’ knowledge, skills, experience and commitment invested
in the organization

 Human Capital Management (HCM) is defined as the process of acquiring, training, managing,
retaining employees for them to contribute effectively in the processes of the organization.

 In simpler words, upgrading the existing skills of an employee and extracting the best out of
him/her refers to human capital management.

 It emphasizes that competitive advantage is achieved by strategic investments in human resources

through employee engagement, retention, talent management and learning and development
programs

 HCM treats employees as Value Adders to the organization.

 Relationship Between Human Resources and Human Capital
 Achieving success increasingly depends on an organization’s ability to manage its
human resources and their human capital.

 Human capital, although being an intangible entity, has tremendous impact on an

organization’s capital

 It cannot be managed the way organizations manage jobs, products and technologies

 If valued employees leave a company they take their human capital with them and
amount invested on them is lost

 Organizations must continue to develop superior knowledge, skills and experience

within their workforces and retain and promote top performers
Management Approaches to HRM
 Approaches of HRM

 Scientific Management Approach

 Human relations Approach

 Human Resources Approach

 Scientific Management- Frederick W. Taylor

 Scientific Management (1900s) is that kind of management which conducts a

business or affairs by standards established by facts or truths gained through
systematic observation, experiment or reasoning of work methods to improve the
efficiency of workers.

 Fedrick Taylor felt that workers indulge in soldiering that refers to the practice of
employees deliberately working at a pace slower than their capabilities because:
 Workers feared that if they increased their productivity, other workers would lose
their jobs
 Faulty wage systems
 Outdated methods of working
Scientific Management- Frederick W. Taylor(Continued)
Taylor emphasized on:
 Need for developing a scientific way of performing each job
 Training and preparing workers to perform that particular job
 Establishing harmonious relations between management and workers

 Piece rate incentive system: Taylor advocated to reward the worker who
exceeds the set target and increase the wages proportionately

 Time and Motion study: Taylor stated that jobs can be broken down into
various small tasks or motions and unnecessary motions are removed to
find out the best way of doing a job
 Scientific Management Steps

 Develop a science for each element of the job to replace old rule of thumb
methods

 Scientifically select employees and then train them to do the job

 Supervise employees to make sure that they follow the prescribed methods
for performing their jobs

 Continue to plan the work but use workers to actually get the work done
 Limitations of Scientific Management

 It doesn’t focus manager’s point of view

 It overlooked social needs of workers

 It overemphasized the economic and physical needs of the workers

 It ignored the human desire for job satisfaction

 Human Relations Approach- Elton Mayo
 Feelings, emotions and sentiments of employees were greatly influenced by
work conditions such as group relationships and management support and in
turn affect productivity

 Treating employees with respect would improve employee satisfaction and

help in achieving higher productivity

 This approach was very instrumental in improving the work environment

for many workers
 Limitations of Human Relations Approach

 It is based on an oversimplified concept of human behavior

 It did not recognize individual differences

 It did not recognize the need for a job structure

 It did not recognize the importance of performance management, career

development, job enrichment,etc
Human Resources Approach- Research in Behavioral Sciences-1970s

 Employees are assets to an organization

 The time and resources employed in managing and developing them are
an investment that the organization makes for better returns in the present
and in the future

 Policies, programs and practices must cater to the needs of employees and
should help them in their work and also in their personal development

 It is necessary to create and maintain a conducive work environment to

encourage the employees to develop and harness their knowledge and
skills for the benefit of the organization
Functions of HRM
Functions of HRM
 Functions of HRM

 Planning: It involves establishing clear organizational goals and objectives, developing

rules and procedures, and determining planning and forecasting techniques.
 Organizing: It is a process through which the firm establishes its structure and
determines the authority, responsibility and accountability of each member in relation to
the job.
 Staffing: It deals with the creation and maintenance of human resources through
employment, compensation, benefits, training and development, and industrial relation
measures.
 Directing: It aims at securing willing cooperation from the individuals and the groups
to achieve the predetermined goals.
 Controlling: It is the process of checking the efficiency of the individuals and the
groups in fulfilling the plans and goals through follow-up measures.
Operative Functions or HRM Functions
 Line and Staff Functions

 Lines and Staff are names given to

different functions in organizations.
 A "line function" is one that directly
advances an organization in its core
work. This always
includes production and sales, and
sometimes also marketing.
 A "staff function" supports the
organization with specialized advisory
and support functions. For example
Human Resources, Accounting, Public
Relations and Legal departments.
Why a distinct functions?
Line and Staff Conflict
Competencies of HR Managers
 HR Compass
 With the support of XLRI Jamshedpur,
a leading business school in the field
of HR in India, Confederation of
Indian Industry (CII), and National
Human Resource Development
Network (NHRD) have developed a
HR competency Model, called HR
Compass.

 Classifying competencies under

Technical vs. Behavioral and
Functional vs Generic the 2×2 matrix
identified 4 competency typologies
 HR Compass (The HR Competency Model)

Generic Functional

Generic Behavioral Functional Behavioral

   
Behavioral  Strategic Thinking & Alignment  Service Orientation
 Change Orientation  Personal Credibility
 Networking Management  Execution Excellence

Generic Technical Functional Technical

   
 Business Knowledge  Recruitment & Selection
 Financial Perspective  Performance Management
Technical    Talent Management
   Compensation and Benefit
   Managing Culture, Design & Change
   ER and Labor Laws
 
 HR Compass- Description
 Functional Technical competencies refer to HR specific functional knowledge
and skills which are required for a HR professional for delivering the HR tasks.

 Functional Behavioral competencies refer to those behavioral competencies

which are more critical for HR professionals than other professionals (e.g.,
service orientation, execution excellence etc.)

 Generic Technical Competencies refer to the competencies required for HR to

play strategic partner’s role.

 Generic Behavioral competencies refer to those critical behavioral competencies

which are required for all functions (e.g., strategic thinking, change orientation,
networking management etc.)
 New HR Competency Model -
Model 1: Dave Ulrich Model of HR Competencies

(Dave Ulrich. Human Resource Champions: The Next Agenda for Adding Value and Delivering.)
 Model 1: Dave Ulrich Model of HR Competencies
 In his book “Human Resource Champions—The Next Agenda for Adding Value and
Delivering,” Dave Ulrich defines four key roles played by HR in any organization.
 Strategic Partner: Develops and aligns strategies with business.  The strategic
partner fosters systems thinking and customer focus.
 Change Agent: The change agent understands the organization’s culture and
institutionalizes change capability within the organization assisting line managers to
lead and facilitate change.
 Administrative expert: The administrative expert creates and delivers effective and
efficient HR processes tailored to unique business needs, manages costs, and
delivers HR products and services.
 Employee champion: The employee champion helps implement actions that
enhance human capital contribution, help build workforce commitment and
equitable people processes and practices.
 New HR Competency Model – Contd…
Model 2: Five HR Competency Model

Ulrich, D., Brockbank, W., Yeung, A. &Lake, D. (1995). Human resource competencies: An empirical assessment.
Human Resource Management Journal, 34(4): 473-496.
 Model 2: Five HR Competency Model
 The 5 HR Competency Model suggests that HR professionals must master competencies dealing
both with people and business issues (large arrows).
 On these two dimensions, six domains of HR competence, dealing with relationships, processes, and
capabilities are arrayed.
 Credible Activist. Good HR leaders are both credible (respected, admired, listened to) and activists
(offer a point of view, take a position, challenge assumptions).
 Culture and Change Steward. HR leaders appreciate, articulate, and help shape an organization’s
culture.
 Talent Manager /Organizational Designer. Good HR leaders master theory, research, and practice
for both talent management and organization design. 
 Strategy Architect. Good HR leaders have a vision for how the organization can win in the future
and play an active part in the establishment of overall strategy that will deliver on this vision.
 Operational Executor. Good HR Leaders execute the operational aspects of managing people and
organizations. Policies need to be drafted, adapted, and implemented.
 Business Ally. Businesses succeed by setting goals and objectives that respond to external
opportunity and threats.
Interrelation of Human Resources with other Functional
Areas

Figure 1.3: Human Resources as Central Sub-System in an

Organization
Interrelation of HRM with other functions
 HRM and other Organizational Functions
 Product/Material & Human Resources: These products and services are developed and delivered by the human
resources of the firm.

 Production and Human Resources: Today’s production practices include concepts of teamwork and
empowerment. Quality products are produced by such empowered teams.

 Marketing and Human Resources: Today, companies focus on the quality of products, the pre-sales and post-
sales service, the customer-producer interface, etc. Marketing executives form the interface between the
company and its customers.

 Management Techniques and Human Resources: Employees are the prime focus for the successful
implementation of any management technique

 Organizational Structure and Human Resources: Many organizations whose prime focus is the customer, have
replaced vertical functional departments and tall hierarchies with flat and horizontal cross-functional structures
 Challenges for HR professionals

 Worker Productivity: HR department needs to facilitate by providing support to employees to be more

creative, proactive, outgoing and risk oriented to get optimum productivity

 Quality improvement: HR Managers need to ensure degree of excellence and commitment towards
concept of quality for their products, services and employees

 Changing attitudes of Workforce: HR managers need to deal with downsizing, job security, separation
of employees, discrimination and family issues to handle the attitude of employees

 Impact of the Government: Government policies and programs, labor laws and acts tune the pshyche of
employees which needs to be taken care by HR managers

 Quality of Work-Life: It refers to the extent to which an employee’s work meets his/her professional
needs like job satisfaction, high self esteem, rewarding employees, encouraging employee participation
and team building

 Technology and Training: HR manager need to take care of rapid and continuous technological changes
Strategic Human Resource Management
(Strategic HRM)
 Strategy and Strategic Management

 Strategy refers to the plans made and actions taken to enable an organization fulfill
its intended objectives

 It determines basic long-term goals and objectives of an organization and the

adoption of the courses of action and the allocation resources necessary for pursuing
these goals

 Strategic Management is the set of decisions and actions resulting in formulation

and implementation of strategies designed to achieve the objectives of an
organization
 Strategic Planning and HRM

 A strategic plan is an organization’s plan to boost its internal strengths and subdue its
weaknesses in light of external opportunities and threats so that the organization can
gain and maintain an edge over its competitors.

 The core of strategic planning lies in questions- ‘Where are we at present as a

business’?, ‘where do we actually want to be’?, and ‘what process we should
follow to get there’?

 The top-level managers formulate specific plans or say strategies to lead the company
from its current position to the desired one.

 These strategies aims to achieve a ’Strategic Fit’ of organizational goal with the human
resources functions.
 Strategies Formulated at Three Levels
 Level 1: Corporate Strategy: It basically deals with the question, ‘How many and what
type of business should we be involved in?’.
› The major strategic decisions at this level revolve around acquisition, divestment, expansion,
diversification, and growth.
 Level 2: Business/ Competitive Strategy: It deals with questions like, ‘On what basis,
each of our business will compete”.
› Business may like to achieve a cost leader position, or it may compete on basis of differentiated
product or service, also it may adopt a focused strategy.
 Level 3: Functional/Departmental Strategy: It deals with question, ‘How do our
competitive actions (such as maintaining the low-cost leadership position) be
interpreted in each of the departments/functions that actually must do the work?’
› Functional strategies categorize the broad guidelines that each department has to follow in order to
help the business accomplish its competitive goals.
 Strategic HRM – The Concept, Aims and Need
In HRM literature, this ‘alignment between HRM and strategic management’ is regarded by the term
‘strategic human resource management’.
That is designing HR strategies and objectives in alignment with the organizational goals.

Aims of Strategic HRM Need of Strategic HRM

1. The ultimate aim of strategic HRM is to generate

1. Gap identification between current position
organizational capabilities by confirming the appropriate
number of skilled, engaged, committed and well- and future vision.
motivated employees. 2. Explicit communication of organizational
2. Strategic HRM ensures that HRM is fully integrated strategic objectives/goals.
with the strategic goals of a firm, known as ‘vertical 3. Identification of HR limitations.
integration’. 4. Encouragement of proactive behaviour.
3. Similarly, HR policies aims to adhere well both within
HR policy areas and across other domains, known as
‘horizontal integration
 Theories of Strategic HRM
 The distinguishing feature of strategic HRM lies in postulation that firm performance is enhanced through the
employees working in an organization.

 Resource Based Theory: RBV states that any organization can achieve and sustain competitive advantage if it
succeeds in developing unique, valuable, non-imitable and non-substitutable resources, be it tangible or intangible
resources.
› Employees experience, knowledge, know-how, risk-taking propensity and wisdom of individuals associated with a
firm are recognized as most valuable as they are not easy to imitate,

 The Universalistic Theory/Best Practice Approach: There always exist a set of HR practices which are ‘universal’
in nature and perform better than the other practices.
› Any organization who adopts such practices will be rewarded by the improved performance, regardless of the
nature, sector, or country

 The Contingency Theory/ Best fit approach: The major emphasis is put upon the alignment of HR strategy with the
context and circumstances of an organization.
› Positive relationship between a set of HR practices and firm performance is contingent upon various
organizational factors such as business strategy, culture or technology a firm has.
 Theories of Strategic HRM – contd...
 The Configurational Theory: This theory is built upon the argument that the set of HR practices which
an organization adopts to improve firm performance must not only be consistent with the environmental
and organizational context and conditions, but also need to be internally coherent.
› It places huge significance upon the synergic integration of HR elements that build an HR system
internally coherent.

 AMO Theory: The ‘ability-motivation-opportunity (AMO)’ theory states that employee performance is an
outcome of ability + motivation + opportunity to participate.
› It encourage discretionary efforts among employees, develop unique skills, and provide employees
with the opportunity to perform.

 Human Capital Theory: Human capital theory advocates people as assets and asserts that investments by
organizations in people will generate worthwhile returns.
› That is why, people should be treated as assets rather than costs or expenditures.
 Effectiveness of Strategic HRM
Effectiveness of Strategic HRM is possible only when folliwing things are achieved—

 Horizontal and Functional Integration – Human resource functions should align with
organizational goals (vertical integration) and departmental goals (horizontal integration).

 Environment Fit - Changes in the external environment should have ha fit with the human
resource policies and planning.

 People-Organization Fit – Hiring and selection of employees should done with alignment
with the organizational goal and culture to have a high level or performance & productivity.

 People-Job Fit – To ensure performance and competetive edge Job requirement should be
kept in mind to hire and select skilled and capable employee.