Personnel Management/Human Resource Management UGC/NTA NET Study Material (UNIT 2)

Personal Management/

Human Resource Management

 

Syllabus

Human Resource Management: Conceptual framework, Human Resource Planning, Job Analysis, Recruitment, Selection, Placement, Induction, Training and Development, Performance Management, Job Evaluation, Compensation Management, Employee Benefits and Incentives, Managing Career.
New Trends in HRM: Changing environment of HRM and contemporary challenges, Emerging HRM Concepts.


Human Resource Management Concept

Human Resource management
The term human resource can be divided as : ”Human Resource” + “Management”
Human Reosurce represents the total of the inherent abilities acquired knowledge and skills as exemplified in the talents and aptitudes of the employees. Simply, Human Resources are the people and their characteristics at work organizational level.

According to Leon C. Megginson
Human resource is the total knowledge, skill, creative abilities, talents and aptitudes of an organization’s workforce, as well as the values, attitudes and beliefs of the individuals involved.

Management represents the art of getting work done through and with people in formally organized groups.
Thus, Human resource management is the human facet of the management process.

Definitions

1. According to ML Cuming
Human resource management is concerned with obtaining the best possible staff for an organization and having got them looking after them, so that they want to stay and give their best to their jobs.

2. According to Nelson
Human resource management is the process of hiring, developing, motivating and evaluating employees to achieve organizational goals.

3. According to Wendel French
Human resource management is the systematic planning and control of a network of fundamental organizational processes affecting and involving all organizational members. These processes include human resource planning, job and work design, job analysis, staffing, training and development, performance appraisal and reviews, compensation and reward, employee protection and representation and organization improvement .

4. According to Jucius
Human resource management may be defined as that field of management which has to do with planning, organising and controlling and functions of procuring, developing, maintaining and utilising a labour force, such that the

(a) objective for which the company is established are attained economically and effectively
(b) objectives of all levels of personnel are served to the highest possible degree
(c) objectives of society are duly considered and served.
According to National Institute of Personnel Management of India

5. According to Dale Yoder
Human resource management as that part of the phase of management dealing effectively with control and use of manpower as distinguished from other source of power.

6. According to FEL Brech
Human resource management is the art of management progress which is primarily concerned with the human constituents of an organization.

7. According to Susan E. Jackson and Randall S. Schuler
Human resource management refers to all the activities an organization uses to modify the behaviours of all the people who work for it.

8. According to Edison
Human resource management is the science of human engineering.

9. According to Schwind, Das and Wager
Human resource management aims to improve the productive contribution of individuals while simultaneously attempting to attain other societal and individual employee objectives.

10. According to Belcourt et al
Human resource management is a set of interrelated functions and processes whose goal is to attract, socialize, motivate,maintain and retain an organization’s employees.

11. According to Milkovich and Boudreau
Human resource management is a series of integrated decisions that form the employment relationship, their quality contributes to the ability of the organization and employees to achieve their objectives.

12. According to John Stoney
Human resource management is a distinctive approach to employment which seeks to achieve competitive advantage through the strategic deployment of a highly committed and capable workforce, using and integrated array of cultural, structural and personal techniques.

13. According to Keith Sisson
Human resource management is a particular field of management’s policies,procedures and processes involved in the management of people in work organizations.

14. According to National Institute of Personnel Management of India
Human resource management is that part of management which is concerned with people at work and with their relationships within the organization. It seeks to bring men and women who make up an enterprise together enabling each one of them to make his or her own best contribution to its success both as an individual and as an individual and as a member of a working group.

15. According to Flippo
Human resource management is the planning, organizing, directing and controlling of the procurremnt, development, compensation, integration, maintenance and reproduction of human resources to the end that individual, organizational and societal objectives are accomplished.

Nature of Human Resource Management

1. Personnel management includes the function of employment, development and compensation. These functions are performed by the personnel management in consultation with other departments.
2. Personnel management is an extension to general management. It is concerned with promoting and stimulating competent workforce to make their dedicated and best possible contribution to the organization.
3. Personnel management advises and assist the line managers in personnel matters. Thus working as a staff department of an organisation.
4. It is based on human orientation. It tries to help the workers to develop their potential to full extent for the organisation.
5. It also motivates the employees through it’s effective incentive plans so that the employees provide best possible co-operation.

History and Development of HRM
Historical Evolution

Though it is said that PM/HRM a discipline is of recent growth, it has had its origin dating back to 1800 B.C. For example, the minimum wage rate and incentive wage plans were included in the Babylonian Code of Hammurabi around 1800 B.C. The Chinese, as early as 1650 B.C. had originated the principle of division of labour and they understood labour turnover even in 400 B.C. The span of management and related concepts of organisation were well understood by Moses around 1250 B.C. and the Chaldeans had incentive wage plans around 400 B.C. Kautilya, in India (in his book Arthashastra) made reference to various concepts like job analysis, selection procedures, executive development, incentive system and performance appraisal.

Stage 1 (Pre-Industrial Era (1400-1700 AD)
Beginning around 1400 AD and continuing until 1700 AD. This period is marked by an absence of any formal Human Resource Management function within the organization. Several dramatic changes occurred during this first stage that represent seeds from which modern Human Resource Management later grew.
First, there was cessation of feudalism, release of labour from land and beginning of free employment relationship on which modern labour markets are based.
Second, there was a shift from subsistence agriculture to a commercial mixed economy, the rise of urban economy, a diffusion economic control and distribution of wealth and income.
Third, there was a spectacular growth of towns and villages along with a middle class that included skilled craftsmen and merchants who were the forerunners of factory owners.

Stage 2 ( Industrial Revolution and Factory System (1700-1900 AD)
The Industrial relations began in 18th century in the UK, in 19th century in the USA and in the second half of 20th century in India. It was made possible by the replacement of human effort and skill by the work of machines. One of the contributions of industrial relations was the development of the ‘factory’ system. Factories greatly expanded production and created a new class of workers and managers. It brought about division of work. It necessitated supervising large number of workers. With the advent of factory system, personnel practices became autocratic, based on Commodity concept of Labour. Labour was purchased at terms designed to maximize the employer’s profit. Consequently, there was a total neglect of “Human Factor”; the focus was upon materials, market and production.

Stage 3 (Scientific Management, Welfare Work and Industrial Psychology (1900 – 1935)
Scientific Management and Welfare Work represent two separate and concurrent movements that began in the 19th century and along with contribution from Industrial Psychology; merged around the time of World War I to form the field of Human Resource Management.

Scientific management represents an effort to deal with labour and management inefficiencies through re- organisation of production methods and rationalization of work.

Welfare work is defined as anything done for comfort and improvement, intellectual or social for the employees over and above wages paid, which is not the necessity of industry, not required by law. It represents efforts to deal with labour problems by improving workers’ conditions. Industrial psychology represented the application of psychological principles towards increasing the efficiency of industrial workers.

Contribution of Scientific Management to Human Resource Management.
1. Taylor’s proposal for functional management called attention to the need for separate Human Resource functions in organization.
2. Taylor demonstrated the feasibility’ of job analysis as a basis for employee selection, training, job evaluation and compensation.
3. Taylor demonstrated that work and jobs can be systematically studied, analysed, redesigned or improved upon.
4. He stressed the importance of proper selection procedure and training methods.
5. Taylor advanced the idea of differential pay on the basis of productivity’.
6. He highlighted the need of workers to be won over and led by management.

Industrial Psychology
From scientific management, industrial psychology evolved. The objective of industrial psychology’ was to increase human efficiency by focusing on the maximum well-being of the workers and decreasing the physiological and psychological costs of work. Hugo, Munsterberg and William Gilbreth, contemporary psychologist sought to integrate psychology with Scientific Management by incorporating individuality in the selection, study and motivation of employees.

Major Areas of Welfare Work
Efforts were made in 19th and early 20th centuries to improve the working conditions of the factory workers. The welfare work movement became widespread during this period. Welfare work, like Scientific Management, was an attempt at a more systematic approach to labour problems. It has been defined as any’thing done for the comfort and improvement, intellectual or social, of the employees over and above wages paid, which is not the necessity’ of industry, not required by law. The primary purpose of welfare work included:
i. averting industrial conflict and unionization
ii. the promotion of good management and worker relations
iii. the efforts to increase workers’ productivity and reduce turnover

Welfare measures incuded:
i. Enable workers to have a richer and more satisfactory life.
ii. Raise the standard of living of the workers.
iii. Absorb the shocks injected by industrialization and urbanization on workers.
iv. Promote sense of belonging among workers, prevents absenteeism, labour turnover, strike etc.
v. Prevent social evils like drinking, gambling, prostitution etc.

Major Developments during this Stage

1881-1891

  • Factories Act of 1881 and 1891 was passed showing concern for the worker’s welfare. These acts were limited to working hours of women and children.

1919

  • All India Trade Union Congress (AITUC) was formed.
  • International Labour Organisation was established as an autonomous organ of the League of Nations in 1919. It has its headquarters at International Labour Office in Geneva, Switzerland. The main objectives of social justice include:

(a) It adopted an International Labour Convention and recommended to protect the worker’s claims in the event of the insolvency of their employer.

(b) It elaborated resolutions on the role of enterprises in employment growth, employment policy as a component of overall development and the rights of migrant workers.

1931

  • In order to improve the conditions of workers, the Royal Commission on Labour (J H Whitley Commission) recommended to abolish Jobber System, appoint labour officers and introduce Works Committees. Later Section 3(1) of Industrial Dispute Act, 1947 has provided for Works Committee and Section 49 of the Factories Act, 1948 made a provision for the appointment of Labour Welfare Officers in all the units with worker strength of 500 or more. These provisions are already implemented.

Stage 4 Golden Age of Industrial Relations and Personnel Management Maintenance Function (1935-1970)

After independence, the Factories Act 1948 made it obligatory for factories employing 500 or more workers to appoint labour officers to protect the interests of the workers and act as a spokesperson of labour. Meanwhile two professional bodies viz., the Idnian Institute of Personnel Management (IIPM) Kolkata and the National Institute of Labour Management (NILM) Mumbai have come into existence in 1950’s.

Major Changes during the Period
i. The first step was the enactment of Industrial Disputes Act, 1947, which not only provides for the establishment of permanent machinery’ for the settlement of industrial dispute but also makes these awards binding and legally enforceable.
ii. Another development was setting up of Indian Labour Conference— a tripartite body to look into industrial relation problems in India. It was constituted with the objective of establishing co-operative between government, employers and trade unions.
iii. Another important feature was change in attitude of government towards labour and their problems. Many labour laws were enacted to protect the interests of industrial workers during 1947 to 1956. These laws cover many issues concerning labour such as seniority, wage rates, paid holidays, disciplinary matters, social security etc.
iv. In 1957, the emphasis shifted from legal enactments to voluntary arrangements. In fact, the period between 1957-1965 can be regarded as an attempt to move away from legalism to voluntarism, which had dominated the industrial relations in India-through Works Committees/Joint Management Councils (JMC), recognition of unions, grievance procedures for workers, workers participation schemes etc.
v. Subsequent to this period, many political and international events affected the course of industrial relations. Between 1962 and 1971, India fought three wars, one with China and two with Pakistan. In 1966, National Commission of Labour (NCL) was appointed by the government to look into the matters. Some of the recommendations are in various stages of implementation namely; relating to workers’ training, induction and education, working conditions, social security, labour administration etc.

At present, at the plant level, Indian industrial relations are dominated by legalists. Many of these laws reflect the government’s socialistic orientation. On the other hand, the government has also made efforts, in addition to management and union attempts in several cases to promote a bipartite collective bargaining situation.

Stage V: Control of Labour Tradition (1970-1990)
The institution of the trade union, which is a product of capitalist industrialization, emerged in Britain and other developed countries in the West in the 19* century, basically to protect against the injustice and exploitation meted out to workers by the owners of Capital during the course of industrialization. Labour movement in many countries started its own political parties and engaged in struggle at both the political and economic fronts. Gradually, over the years, the labour class got integrated into the larger society with the acceptance of their demands by the employers, first for collective bargaining and then for worker’s participation in management. This led to their rise to prominence and power in industry and society in the 20* century. But trade unions witnessed significant loss of membership during the 1980s and 1990s. Various reasons for the loss of control of labour tradition could be analyzed as follows:
1. Trade union developed not under the leadership of workers but under the leadership of outsiders that is social workers and nationalist leaders. It was led by political leaders. Moreover, the political leadership was internally divided on ideological lines.
2. Governments increasingly took upon themselves the wage-welfare functions of trade unions for which it passed a plethora of labour legislations, protecting jobs of workers and also providing for various welfare measures. This, however, further weakened trade unions and impeded the growth of the system of collective bargaining in the industry: In fact, even though India has probably the largest number of labour law’s in the world, it does not have a central law that provides for the recognition of trade unions.
3. There has been significant change in the social composition of the labour force. A new generation of workers has emerged in their industries since the mid 50s or so, who are largely from upper castes and who are also young, educated and urban in origin. To them, a trade union constitutes not a movement, but an agency’ which has to provide them services in return for their subscription and political support. They’ leave a union when it is unable to provide them benefits and join those who promise to give them these benefits. Consequently, inter-union rivalry is high and the recognized unions particularly face difficulty’ in retaining the support of workers on a continuing basis.
4. In fact, rising unemployment and underemployment and increasing price have hit the working class hard. Such a situation not only makes the workers primarily hit the working class hard. Such a situation not only makes the workers primarily interested in questions of job security, pay and other material rewards that is to strive for consumption, which is conspicuous by its nature. This, in turn, makes them more individualistic.
5. The majority of Indian organizations are small and medium-sized and consequent size of trade unions in these enterprises has to be small. The political fragmentation of the union movement also contributes to its small size. This small size of unions also accounts for their poor financial strength.
6. The nature of linkage between unions at different levels and political parties varies a great deal from complete ‘ownership’ of unions by particular to allowing of different degrees of autonomy to unions by parties like congress party.

However, despite various weaknesses, unions in India often enjoyed considerable power at both the national and bargaining levels, especially till the early 1970s or so, because of their linkage with political parties and the support they got from the governments in power.

Reasons for their Failure
i. Development under outside leadership.
ii. Government took upon itself Wage-Welfare function and passed number of labour laws—which weakened the trade unions.
iii. Significant changes in social composition of labour force took place.
iv. Rising unemployment and increasing price made unions more individualistic.
v. Most Indian organizations being small and medium sized, small size of trade union, poor performance and p(x>r financial strength further weakened the trade union.
vi. Nature of linkage between union and political parties varies, allowing different degree of autonomy to union by the parties.

Stage 6 Professional Tradition (1990 – till date)
During the 1990s, organisational restructuring and cost cutting efforts have started in a big way-thanks to the pressures of liberalization, privatisation and globalisation (LPG era) forcing companies to focus attention on employee capabilities product/service quality, speedy response, customer satisfaction etc. Changing demographics and increasing shortages of workers with the requisite knowledge, skills and ability have grown in importance. The issue of workforce diversity has assumed greater importance-in view of the cultural, religious social, regional backgrounds of workers, especially in global sized companies such as Reliance, Ranbaxy, Asian Paints, TISCO, Tata Motors etc.

Post-2000, most organisations are pitted against global companies-wherever they are—and made to compete with the best. The result: HR is not being looked at as a luxury but being accepted as a compelling competitive necessity. Thanks to the sub-prime crisis, markets all over the globe—commodities, stocks, currencies and what not—have become bottomless pits. Companies that have tried to build castles in the air through exotic financial and derivative products have been sent to burial grounds with electrifying speed. CEOs of these companies are made to watch the end game with utter dismay and total disbelief. The survivors are compelled to sit back and take a relook at what happened and react to the eventual economic slump carefully. Survival of the fittest is the new corporate mantra. To this end, every company is trying to put resources to best use. Corporate expansion plans have almost hit a plateau and CEOs openly declare that their top most priority is to retain their best people. Apart from talent acquisition and retention, leadership development, aligning and integrating people’s performance with business goals, management of intellectual capital and compensation management would also be the key focus areas for HR managers in the coming years HR professionals, according to David (giannetto, author of The Performance Power Grid, need to, “use the economy to drive home the fact that providing quality service to customers and creating greater effectiveness and efficiency are the absolute best ways for your employees to help the business through the recession. Fear and the desire to keep your business up and running will unify your organization in ways you likely haven’t seen before.” The ultimate goal: “Present a vision and path toward greater prosperity that everyone in your organization will rally around,” he says.

Objectives of HRM
The objectives of HRM may be as follows :
i. To act as a liaison between the top management and the employees.
ii. To help the organization attain its goals by providing well-trained and well-motivated employees.
iii. To establish and maintain sound organisational structure and desirable working relationships among all the members of the organisation.
iv. To devise employee benefit schemes for improving employee motivation and group morale and enhancing employer-employee cooperation.
v. To maintain high morale of employees by improving working conditions and facilities.
vi. To provide an opportunity for expression and voice opinions in management.
vii. To provide fair, acceptable and efficient leadership.
viii. To help keep up ethical values and behaiour amongst employees both within and outside the organisation.
ix. To develop and maintain a quality life (QWL) which which makes employment in the organisation a desirable personal and social situation.
x. To ensure respect for employees by providing participation of workers in management.
xi. To create facilities and opportunities for the development of employees in the organisations.
xii. To provide better working conditions and favourable atmosphere for retaining the employees.
xiii. To recognize and satisfy individual needs and group goals by offering appropriated monetary and non-monetary incentives.
xiv. To manage change to the mutual advantage of individuals , groups, the organization and the society.

Scope of HRM
The scope of HRM is extensive and exhaustive. An understanding of HRM is important to anyone who is employed in an organization. HR issues become important wherever there is a group of workers. Staffing is performed by all the managers as a managerial function, either directly or indirectly through the HR department. All managers are, in this way, HR managers since they get involved in HR activities like choosing, training, inducting, compensating and motivating the employees along with industrial relations activities. Thus, they must under¬stand the scope and application of the personnel policies of their organization in order to ensure that their everyday personnel actions are consistent with those policies as any violation of such policies may get them into confrontations with their subordinates.
Further, knowledge of the basics of HRM is important even to non-managerial employees as they may be keen to know the impact of the personnel policies of their organization on their own compensation, training and career growth aspects. Thus, the personnel aspects of management run through the entire organization.

The Institute of Personnel Management (IPM) has described the scope of HRM as follows:

i. Personnel or Labour Aspect
It is concerned with manpower planning, recruitment, selection, placement, transfer, promotion, training and development, lay-offs and retrenchment, remuneration, incentives and productivity. etc.
ii. Welfare Aspect
This aspect is concerned with the working conditions and with amenities such as canteen, creches, rest- and lunch-rooms, housing, transport, medical assistance, education, health and safety, recreation and cultural facilities etc.
iii. Industrial Relations Aspect
This aspect is concerned with union-management relations, joint consultations, collective bargaining, grievance and disciplinary actions, and settlement of disputes etc.

In India HRM now consists of three main branches :
(a) Human resource administration which deals with administrative duties such as selection, placement, training, promotion , transfer, wage and salary administration etc.
(b) Industrial relations concerned with employer employee relations, negotiations,collective bargaining, grievance redressal, dispute and joint consultation
(c) Labour welfare consisting of facilities like canteens, creches, housing, education,medical aid, recreation etc.

Characteristics of human resource management

1. Comprehensive Function
Human resource management (HRM) covers all levels (lower, middle and top) and all categories (unskilled, skilled, clerical, technical, managerial and professional) of employees. It applies to the workers, officers, supervisors, managers, executives and other types of personnel. It covers both organised and unorganised employees.
2. Integral part of the process of management
HRM is the integral part of the management process as a whole. It is embedded in the organisation structure of an organisation. In other words, it is the central sub-system of an organisation and it permeates all types of functional management, i.e. marketing management, financial management and production management.
3. People-oriented
HRM is people-oriented function. In other words, it is concerned with employees both as individuals and as a group in attaining goals. Also, it is concerned with emotional, behavioural and social aspects of personnel in the organisation. It is a process of finding the best arrangement between people and organisations so that the goals of each are met.
4. Individual-oreinted
Under human resource management, every employee is considered as an individual so as to provide services and programmes to facilitate employee satisfaction and growth.
5. Development-oriented
HRM is concerned with developing potential of employees so that they get maximum satisfaction form their work and give their best efforts to the organisation.
6. Future-oriented
HRM is concerned with helping organisation achieve its objectives in the future by providing for competent and well-motivated employees.7. 7. As a Process

Human resource management is a process just like management process. A process “is an identifiable flow of information through interrelated stages of events directed towards achievement of objectives. Thus, a process consists of several activities and sub-activities. HRM uses four basic processes of management—planning, organising, directing and controlling in the area of recruitment selection, development, motivation and maintenance of the people in the organisation so as to achieve its objectives.
8. Staff Function
The function of human resource management is always advisory in nature. HRM do not manufacture or sell goods but they do contribute to the success and growth of an organisation by advising the operating department on human resource matters.
9. Pervasive function
HRM is inherent in all organisations at all levels. It is not confined to industry alone. It is equally useful and necessary in government, armed forces, sports organsitions and the like. It permeates all the functional areas e.g production, marketing, fiancé, research etc. each and every m anager is involve n human resource management.
10. As a Continuous Process : A process is a continuous phenomenon in which events and relationships are seen as dynamic and flexible. HRM is a continuous process and not a non-stop action. Therefore, it has to be performed on continuous basis. For example, Terry has observed that “It (HRM) cannot be on and off like water from a faucet; it cannot be practised only one hour each day or one day a week. Personnel management requires a constant alertness and awareness of human relations and their importance in everyday operations.”
11. Concerned with People : Human resource management is concerned with people in the organisation both present and potential. It is not merely concerned with the people presently employed in the organisation but with the people having potential to be brought in the organisation. In fact, HRM is the prime tool for bringing people in the organisation. Further, HRM is concerned with all types of personnel in the organisation—top management, middle management, supervisory management and operatives.
12. Directed towards Achievement of Objectives : HRM is directed towards achievement of organisational objectives by providing tools and techniques of managing people in the organisation effectively. The achievement of organisational objectives depends largely on the quality of its people and the way this quality is utilised in getting the things done.
13. Universal Existence : HRM is not confined merely to business organisations but is relevant to all organised activities. Further, it is relevant to all functional areas of a business organisation—production, marketing finance, research and development, etc. Unless managers themselves perform all the activities for which they are responsible, they have to secure the cooperation of other people to accomplish objectives within their part of the total organisation. Every member of the management group, from top to bottom, must be an effective human resource manager because he depends on the cooperative efforts of others.
14.  Young Discipline
HRM is of comparatively recent origin. It started in the last part of the 19th century. It is relatively a new specialized area as compared to manufacturing and marketing.
15. Interdisciplinary
HRM involves application of knowledge drawn from several disciplines like sociology, anthropology, psychology,economics etc. in order to deal with human problems effectively, a manager must depend upon such knowledge.

16. Part of Management
Human resource management is a part of management discipline, it is not a discipline in itself but is only a field of study. A discipline is an accepted science with a theoretical foundation that serves as the basis for research and analysis. HRM, being part of management process, draws heavily from management concepts, principles and techniques and applies these in the management of human resources.

Difference between Personnel Management and Human resource Management

Personnel Management Human Resource Management

Focus

Organization interest like profit maximization.

Views Human Resource as important resource, develop individuals in accordance with need and aspirations so that individuals would be motivated to make their best contribution towards the accomplishment of common goals.

Philosophy

Functional area of management.

It is philosophy, attitude, policy and practice.

Nature of Function

Staff function headed by Personnel Manager.

Part of every line function.

Pervasiveness

Concern of Personnel Manager

Concern of all manager from top to bottom.

Motivation

Concerned with selection, recruitment and appraisal.

Concentrate on Motivation.

Team work

Orderly way of administration of policies and programs.

Team building

Techniques

Pressure tactics and threats of punishments Team building, motivation and mutual understanding.

 

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