INTRODUCTION

Human Resource Management (HRM) is the function within an organization that focuses on
recruitment of, management of, and providing direction for the people who work in the
organization. Human Resource Management can also be performed by line managers.
Human Resource Management is the organizational function that deals with issues related
to people such as compensation, hiring, performance management, organization
development, safety, wellness, benefits, employee motivation, communication,
administration, and training.
Human Resource Management is also a strategic and comprehensive approach to
managing people and the workplace culture and environment. Effective HRM enables
employees to contribute effectively and productively to the overall company direction and
the accomplishment of the organization's goals and objectives.Human Resource
Management is moving away from traditional personnel, administration, and transactional
roles, which are increasingly outsourced. HRM is now expected to add value to the
strategic utilization of employees and that employee programs impact the business in
measurable ways. The new role of HRM involves strategic direction and HRM metrics and
measurements to demonstrate value.

The Human Resource Management (HRM) function includes a variety of activities, and
key among them is responsibility for human resources -- for deciding what staffing needs
you have and whether to use independent contractors or hire employees to fill these needs,
recruiting and training the best employees, ensuring they are high performers, dealing with
performance issues, and ensuring your personnel and management practices conform to
various regulations. Activities also include managing your approach to employee benefits
and compensation, employee records and personnel policies. Usually small businesses
(for-profit or nonprofit) have to carry out these activities themselves because they can't yet
afford part- or full-time help. However, they should always ensure that employees have --
and are aware of -- personnel policies which conform to current regulations. These policies
are often in the form of employee manuals, which all employees have.
Some people distinguish a difference between HRM and Human Resource DeveIopment
(HRD), a profession. Those people might include HRM in HRD, explaining that HRD
includes the broader range of activities to develop personnel inside of organizations, e.g.,
career development, training, organization development, etc.
The HRM function and HRD profession have undergone tremendous change over the past
20-30 years. Many years ago, large organizations looked to the "PersonneI Department,"
mostly to manage the paperwork around hiring and paying people. More recently,
organizations consider the "HR Department" as playing a major role in staffing, training and
helping to manage people so that people and the organization are performing at maximum
capability in a highly fulfilling manner. There is a long-standing argument about where HR-
related functions should be organized into large organizations, eg, "should HR be in the
Organization Development department or the other way around?"
Recently, the phrase "taIent management" is being used to refer the activities to attract,
develop and retain employees. Some people and organizations use the phrase to refer
especially to talented and/or high-potential employees. The phrase often is used
interchangeably with HR -- although as the field of talent management matures, it's very
likely there will be an increasing number of people who will strongly disagree about the
interchange of these fields.

HSTORY OF HUMAN RESOURCE MANAGEMENT

For any organization, the employees are the biggest resources. That's pretty much how the
term was coined. However, the practice has been in existence, seems some time before it
was given a name. Let's see how this complex management form came into existence.
hey say that communication is the oldest existential phenomenon on earth. Well, if that's
the case then human resource management would get the second place in the sibling
hierarchy. n spite of being added as a subject in management courses fairly late, HRM has
been a concept that was utilized ever since human beings started following an organized
way of life. So shall we start digging up the history of human resource management?


Some of human resource management's vital principles were used in prehistoric times.
Like, mechanisms being developed for selecting tribal leaders. Knowledge was recorded
and passed on to the next generation about safety, health, hunting, and gathering. 1000
B.C to 2000 B.C saw the development of more advanced HR functions. The Chinese are
known to be the first to use employee screening techniques, way back in 1115 B.C. And
turns out it was not Donald Trump who started "the apprentice" system. They were the
Greek and Babylonian civilizations, ages before the medieval times.

HRM has seen a lot of nick naming in its age. Since it was recognized as a separate and
important function, it has been called "personnel relations" then it evolved to "industrial
relations", then "employee relations" and then, finally, to "human resources". strongly
believe, that human resources is the most apt name for it. t, quintessentially, proves the
importance of the human beings working in the organization.





So by the end of the 1970s, HRM had taken over the world! Almost all big and medium
scale industries had a department to manage their recruitment, employee relations, record-
keeping, salaries and wages, etc. Towards the 1980s, the importance of HR continued to
intumesce for several reasons like increase in skilled labor, training, regulation compliance,
dismissal, etc. The HR managers were the ones who did the hiring and the firing

HRD N NDA

HRD has come to a stage where it can be treated as a Profession in ndia. The first
dedicated department was started in ndia about 25 years ago at L&T, A Center for HRD
was started at XLR seven years latter, A National HRD Network was formed in the year
1985 and has sustained itself with good work since then, an Academy of HRD was started
in 1990, over fifty books have appeared in the last two decades on HRD, a few institutions
have started Master's in HRD programs, a Doctoral program is in place, and the body of
knowledge in this field is growing.

n spite these developments, judged against the criteria needed to be called a profession
and as compared to the development of this profession abroad, it may be concluded that
the body of knowledge passed on in schools that prepare HRD professionals lacks basic
understanding of HRD. The basics are neither taught nor followed by the professionals,
there is no code of conduct, ethics and values and the professional bodies have shied away

from formulating norm, values, certification requirements etc. There are no licensing
mechanism to practice and mentorship lacking except at an informal level. Judged against
these criteria it is concluded that HRD has remained at best as an occupation or a
preoccupation of a few it has a long way to go. The next steps to be taken in ndia to make
HRD a strong Profession are presented.

Introduction: 25 Years of HRD in India
t is more than two decades the term Human Resource development became popular in the
country. t was in 1975 a decision to start a dedicated Department to promote Human
Resources Development was initiated in ndia at Larsen & Toubro Limited.
Pareek and Rao (1975) outlined a philosophy for the new HRD system. They outlined 14
principles to be kept in mind in designing the HRD System. These principles deal with both
the purpose of HRD systems and the process of their implementation. Some of these
principles include:
1. HRD systems should help the company to increase enabling capabilities. The
capabilities outlined in their report include: development of human resources in all
aspects, organizational health, improvements in problem solving capabilities,
diagnostic skills, capabilities to support all the other systems in the company, etc.
2. HRD systems should help individuals to recognize their potential and help them to
contribute their best various organizational roles they are expected to perform;
3. HRD systems should help maximize individual autonomy through increased
responsibility;
4. HRD systems should facilitate decentralization through delegation and shared
responsibility;
5. HRD systems should facilitate participative decision making
6. HRD system should attempt to balance the current organizational culture along
with changing the culture;
7. There should be a continuous review and renewal of the function.

After L&T accepted these recommendations in full and started implementing the State Bank
of ndia the single largest ndian Bank and its Associates have decided to use the
ntegrated HRD systems approach and decided to create new HRD Department. Since

then, by mid eighties a large number of organizations in ndia have established HRD
Departments.

By mid eighties HR has become an accepted role and most organizations have changed
their personnel, training and other related functions to HRD. Some have differentiated
Human Resource Development from Human Resources Department and some did not.
However, HRD has come to mean new expectations, new body of knowledge and new
function. The establishment of Center for HRD at XLR; the formation of the National HRD
Network in 1985; the starting of the Academy of HRD in 1990; Starting of Diploma
Programs in HRD; starting of Symbiosis Center for Management and HRD; starting of the
Doctoral Program in HRD jointly by AHRD and XLR etc. are highlights of HRD in ndia. All
these have added to the expectations of CEOs, line managers and HR managers from
HRD Managers.
The STD and NPM did not lose time in focusing on HRD in their conferences. Although
this diluted the use of Human Resources Development and contributed to the confusion
between HRD and HR, expectations from HRD continued to grow. Today almost all
Managers dealing with Personnel, Training, Social Work, Welfare, Administration etc.
functions call themselves HRD Managers or Facilitators. n some of the T companies those
who deal with Visas and arrange housing and transportation etc. for employees are also
called as HRD staff (meaning Human Resources Department staff or even Human
Resources Development staff). On one hand we have specialized courses including a
Doctoral Programs in Human Resource Development and on the other hand even
unqualified undergraduates are projected as HRD Managers. This has created a lot of
confusion in the field as the number carrying HR titles in their designations
multiplied overnight without corresponding multiplication of HR skills and HRD
competencies. Lay people and the public could not differentiate the fine distinctions
between Human Resource Development Professional and HR Professional as both carried
HRD designation. n one case it meant Human Resources Development Manager and in
the other it meant Manager Human Resources Department and in both cases referred to as
HRD Manager and becomes difficult to differentiate. This confusion is shared by other
countries does not solve the issue but reaffirms the need to remove the confusion. A
number of questions need to be answered to sort out the confusion and to establish that the
need for HRD practice is based on theoretically sound principles and deserves to be
considered as a profession. These include:

s it possible for any one to perform HRD roles?

Does HRD require specialized training and preparation? And knowledge?
s it a separate profession with its body of knowledge? Or an Occupation?
What is in it that qualifies it to be a profession? What is the worldwide scenario on this
issue?

These are some of the questions that bother practitioners and academics alike. To answer
some of these questions an attempt is made in this chapter to review the current situation of
HRD as a profession. First an attempt is made present some literature on HRD in the
U.S.A. and other countries. This is followed by a summary of appropriate literature on
Professions and occupations. Much of this comes from Sociologists. This is followed by a
review of the situation of HRD in ndia. n the light of the criteria available to classify any
discipline or a set of activities as leading to profession, the issue of HRD as Profession is
examined. An attempt is made in this article also document as much of the sate of HRD in
ndia as possible.

VARIOUS FORMS OF HRD ORGANISATION
HRD roles can be structured in various ways. The form of structuring depends upon the
size of the organisation, history of the organisation, nature of its activities, the structure of
the organisation and the like. The following are some of the forms:
1) HRD Function Through a Separate Department
A group of persons may be assigned HRD roles and created as a separate unit or
department. This department could be a part of the Personnel Department or an
independent entity with some linkages with the personnel department. The size of the HRD
department depends on the size of the organisation as well as its spread of activities
including the geographic spread. While there are no rigid rules or principles it may be useful
to have one full-time HRD person to look after about 500 to 1000 employees (including
employees, supervisors, and managerial staff). Alternately, for every 100-200 managerial
staff it is useful to have a HRD staff member. He or she may be called a HRD manager or
HRD Executive or HRD Officer, etc. The designation may be in tune with the organisational
culture and acceptable designation.

Whether the department should be a part of the personnel department or not depends on
the credibility and status of the personnel department. HRD staff act as change agents. A
lot of their work involves inspiration and persuasion. f the personnel department is
perceived as a "maintenance department or as an administrative department, that ensures
discipline, salary administration, perks, welfare, etc. keeping HRD department as a part of
personnel may create credibility problems for HRD. However, if personnel department has
a high degree of credibility and is seen also as a development-oriented department, the
HRD could be made a part of it. This decision of placing the HRD department needs to be
taken after careful consideration of these factors.
rrespective of whether it is a part of personnel or a separate department, it should have
strong linkages with the personnel and should have scope to influence personnel decisions
as well as get an opportunity to understand employee development needs through the
personnel management issues. Such linkages may be provided through various
committees and other mechanisms. For example, there could be a committee on

Performance Appraisals to monitor the effective implementation of performance appraisals

with representation from HRD, personnel and other line managers. Similarly, in reward
administration and personnel policy formulation HRD staff may be involved.
HRD departments should also have linkages with corporate planning, management
services, organisation and planning, industrial engineering, etc. departments/units/groups.
HRD staff will have a lot to learn from these departments and also contribute to their
effective functioning.
2) Committee/Task Forces form of Organisation
Another effective way of promoting HRD is through committee/task force and work-groups,
in relatively small organisations or even in medium sized organisations. Even large
organisations could experiment with committee/task force form of organising HRD.
n this form of group of persons form different departments and/or areas/regions/locations is
constituted by the top management to form an HRD Task Force or HRD Committee. The
members of this task force are given HRD facilitation responsibilities in addition to their line
or other responsibilities. They are not only to promote HRD in their own unit/department but
also should formulate policies for the entire company, identify appropriate HRD systems,
plan strategies of implementing, participate in the implementation process and monitor and
review HRD implementation.
Different titles could be used for this group. t could be a "HRD Group or "HRD Committee
or "HRD Task Force or "HRD mplementation work group or "Working Group on HRD,
etc. The main difference from this and the HRD department is that HRD is not the main job
of the members of this group while it is the main job of the members or staff of the HRD
department. The members, however, are expected to do this task all through the year and
additional facilities may be given to them to facilitate their HRD work. The task force or the
group may have a chairman or Head who may be given a HRD Officer or a Staff member to
assist him/her or assist the group. The Personnel Manager or the Chief of Training (if there
is such provision) or one of the members of the corporate planning cell may be given the
task of the member-secretary of this task force or group.
The group may keep meeting periodically to perform various HRD functions which a HRD
department would have performed. The group may however assign a large part of the

administrative work to the department or person who works as a Secretary or Chairman of

the task force or the group.
The composition of group and the credibility of group members are very important for the
effectiveness of the team. The team should be line managers, who are considered effective
in their own jobs. They should have positive attitude to the HRD function and should be
trained or oriented sufficiently in HRD facilitation skills.
The form of organisation for HRD is likely to be effective, if there is committee culture in the
organisation and these committees take their work seriously. This also implies that the
group members are able to set aside a good part of their time for HRD work.
3) HRD Organisation Around the CEO
Another way of organising for HRD is to have the Chief Executive Officer as the HRD
facilitator. This may become inevitable in small scale organisations, voluntary agencies,
educational institutions and other small size organisation. For example, schools and
colleges, smaller travel agencies or hotels, voluntary agencies, government offices, like that
of the BDOs office or the Collector's office or the Police Station or the Post Office, etc.
cannot have separate formal HRD departments or staff. n such organisations the Chief
Executive of the unit should become the HRD facilitator. t should be an integral part of his
or her role. He or she may, if necessary, appoint from time to time temporary teams or
working groups to look at specific tasks or activities.
n case where CEO himself or herself has to perform this function, the function faces a very
high risk. The risk involved is the non-HRD priorities that keep coming to the CEO as
challenge, problems and crisis situations leaving him or her very little time to do any HRD
work. n order to avoid this danger the CEO can also appoint one of his or her senior staff
as a second in command to look after the HRD activities. The CEO may also develop a
check-list of HRD activities and keep reviewing once in a year how effectively he or she
has been performing this function.
4) Organising HRD Through other Departments/Units
n addition to the above three forms of organising HRD could be organised through some of
the existing departments or units. Some of the appropriate departments or units that could
be used for undertaking HRD responsibilities are: Corporate Planning or Strategic Planning
Cell (if there is some such unit), the training department or training centre, the personnel

department, the management service department, the administrative department and the
like.
This may be considered as the least preferred or least effective form of organising for HRD.
This is because these departments have established their own identity which may interfere
with effective implementation of HRD. They may not have the same commitment to HRD as
the other three groups are likely to have. However, in some organisations where these
groups/departments are already doing good work this may work as the simplest, and cost-
effective form of organising HRD. f personnel and training departments are given HRD
responsibilities, extra care needs to be taken to ensure that they do not reduce HRD to
training and performance appraisals.
f there is an OD (Organisation Development) cell it will be ideal to assign the HRD tasks, if
the organisation decides to use this form of organisation. OD and HRD have very similar
concerns and OD facilitators are normally well equipped to handle HRD activities.


HRD DEPARTMENTS AND THEIR TASKS

The main objective of the HRD department is to create learning environment and a
developing climate in the organisation. By learning, it is meant, a culture where employees
continuously learn from their own experience and from the various learning opportunities
the organisation provides. The HRD department also should be sensitive to the motivational
pattern of employees and try to develop motivation. The HRD department should create an
"enabling culture where the employees are able to make things happen and in the process
discover and utilise their potential. The most important objective of the HRD function is to
create learning environment in the organisation so that each member of the organisation
continuously learns and acquires new competencies (knowledge, attitudes and skills).
n order to achieve HRD objectives, the HRD department should:
a) develop a human resources philosophy for the entire organisation and get the top
management committed to it openly and consistently,
b) keep inspiring the managers to have a constant desire to learn and develop,

c) constantly plan and design new methods and systems of developing and strengthening
the HRD climate,
d) beware of the business/social/other goals of the organisation and direct all their HRD
effort to achieve these goals,
e) monitor effectively the implementation of various HRD sub-systems/mechanisms,
f) conduct human process research, organisational health surveys and renewal exercises
periodically,
g) influence personnel policies by providing, necessary inputs to the Personnel
Department/Top Management.
n order to perform these functions and tasks well, the HRD departments need to be
manned by people with certain types of spirit and competencies. The personnel function
also should be structured appropriately.

COMPETENCIES REQUIRED FOR HRD STAFF

HRD is a specialised area and to be successful in this field one should have some essential
qualities. The following qualities are important for a HRD Manager to be successful:
1) Person of positive thinking with positive attitudes to people,
2) A high desire to learn,
3) nterested in people,
4) Helpful attitude,
5) nitiative taking or proactivity,
6) Practice and perseverance,
7) Communication skills,
8) Objectivity in approach,
9) Belief in Team Spirit, and
10) Personal example and sense of decline.

Every staff member of the HRD department should be considered as HRD manager. The
HRD Manager is a person on mission. Therefore, he or she should have the qualities of a
missionary. His or Her mission is to create a learning environment/development climate in
the organisation. n the modern organisations, employees tend to get too much concerned
about their personal power, needs, status, rewards, promotions, subjectivity in appraisals,
routinisation of work, dependence on rules and regulations, immediate goals, doing things
without reflection and iderning, creating crisis situations and getting busy with solving them,
fire fighting operations, exercising authority, controlling subordinates, changing the boss or
top management rather than changing themselves and so on. ntrospection or self-
examination and an orientation to learn from one's own experiences is lacking. All these
factors affect the quality of life in organisations. While the organisational growth, its future,
personnel policies, etc. have a good degree of impact on the employee satisfaction and
work motivation, the employee himself or herself, his or her thoughts, obsessions, biases,
aspirations, emotional maturity, reflective nature, etc. matters a lot in determining his or her
satisfaction. A healthy environment in the organisation (characterised by openness, trust,
mutual support and helpfulness, collaborative attitudes, willingness to sacrifice personal
and small group goals for larger interests, autonomy, positive attitude to each other etc.)
combined with a development desire on the part of individuals can go a long way in building
people and organisation. The mission of the HRD manager is to build such a climate in the
organisation and simultaneously to bring change in the thinking of individuals.


DEVELOPING HRD FACILITATION COMPETENCIES

As the above discussion makes it clear, some special skills are required for facilitating
HRD. The professional knowledge and skills in HRD can be acquired in the following ways:
1) Short-term Training Programmes of HRD and HRD FaciIitation SkiIIs
Many institutions, professional bodies and consulting agencies are offering short-term
courses on HRD. The ndian nstitute of Management, the Centre for HRD of XLR,
Jamshedpur and a few Schools of Management offer short duration (one week to one
month) programmes on HRD. These programmes are of different categories. The basic
programmes are meant for the beginners in HRD. Even managers could be sponsored for
these programmes. There are advanced and experienced sharing programmes for HRD

staff and HRD task force committee members. These programmes are not very regular
ones and one has to keep looking for these. Among the professional bodies, the National
HRD Network and the ndian Society for Applied Behavioural Science are the only two
bodies that offer exclusive HRD and OD facilitators laboratories. These programmes are
offered normally in summer months. The diploma and certificate courses offered by NPM
and STD provide a wider knowledge base required by HRD specialists. The various
reference books and study material provided in this course of GNOU itself is a good
introduction to the basics of HRD.
2) Process Competencies
Besides professional knowledge, every HRD staff member or facilitator should have some
process skills. By process skills it is meant an understanding of human processes in
organisations. These processes include inter-personal dynamics, personality and dynamics
of individuals, organisational behaviour processes, organisational health and the like. Such
human processes competencies can be acquired through specialised skill training. Such
training is offered at present in our country only by two professional bodies: The ndian
Society for Applied Behavioural Science (SABS) and the ndian Society for ndividual and
Social Development (SSD). These are offered in the form of Personal Growth
Laboratories, Human Growth Laboratories, Explorations in Role and dentity, Basic Human
Process Growth Laboratories, Explorations in nstitution Building Workshops, etc. These
bodies also develop process skills through their professional development programmes.
The NTL nstitute of Applied Behavioural Sciences in USA and the Tavistak nstitute in
London also offer similar programmes. Besides, some of the voluntary agencies keep
conducting such labs for developing process competencies.
3) Other Forms of SkiII DeveIopment
Attending training programmes is a good way to lay foundations for development. The best
way to develop one's own self is by experimentation on the job and continuous review and
reflection. HRD facilitators can develop themselves by trying out new ideas, networking with
fellow professinals and getting to know their work, visiting other organisations and learning
from their experiences, consulting, being in touch with line managers and Learning from
them and so on. There is a good degree of literature available for an interested HRD
facilitator (Rao, 1990) and these may be used for the development of one's professional
preparation.

THE ROLE OF HRD MANAGERS

An HRD manager administers training and development for an organization's employees.
An HRD (human resources development) manager, also referred to as a training and
development manager, is a human resources professional who administers training and
development activities for employees. This professional's average salary as of August 2010
is $66,000 per year, according to ndeed.

Needs Assessment
Working with executives and department managers within an organization, an HRD
manager assesses the need for training of employees within each department. This may
include individual or group training, or training programs for the entire organization.

DeveIopment
After assessing the needs of training for employees, the HRD manager develops training
programs. This includes designing the most appropriate program, such as online or
classroom training, and creating coursework and tests to ensure employees successfully
complete the program.
Procurement
f training cannot be developed internally, the HRD manager works with vendors to select
and procure development programs for employees. This work involves testing vendor
programs, then working with vendors to customize programs to meet the needs of the
organization.
Identification
HR professionals sometimes use the terms "human resources development" and "human
resources management" (HRM) interchangeably. Generally, HRM is the activity of
managing HR functions, while HRD is the process of selecting and developing employees.
EmpIoyee SeIection
When an organization is ready to select employees for jobs, HRD personnel analyze the
available jobs and attempt to match them with potential employees' skills.
EmpIoyee DeveIopment
Development includes the activities an organization undertakes to train employees, retain
them and prepare them for the next step in their careers. The employee development
function also includes leadership and management development, which prepares
employees to lead groups and to manage business functions.
TaIent Management
Talent management refers to the process of not only developing employees for the next
career steps, but also to the process of developing the most talented and high-potential
leaders to prepare them for leadership and management roles.

THE BENEFTS OF HRD

Employees form the backbone of an organization. Human capital is a precious commodity
that plays a vital role within organizations and contributes directly to their success or failure.
The most successful organizations are those that motivate, train and monitor their
workforce to function as the backbone of their firms. HRD, or human resource development,
is a systematic process in which individuals and groups are trained to acquire new
competencies to make them more self-reliant and improve their effectiveness in the
realization of organizational goals.

Employees who feel valued will add more value to their organization. A well-thought-out
and well-run HRD plan will achieve measurable positive outcomes for the company. An
effective safety training course, for example, will lead to fewer safety violations. A
manufacturing skills course of study will result in decreased down time and increased
output. A customer service training program will produce (and retain) more customers.

HRD can happen through training and efficient utiIization of resources.

Human resource development (HRD) is an essential component for growth and economic
development. t can occur at both the nationwide level and the firm-wide level. The
enhancement of HRD of a country is dependent on the government and national policies,
while at the firm or micro level HRD can happen through training and efficient utilization of
resources. Resources are efficiently utilized to support HRD when the maximum benefit is
created at the lowest possible cost.

PeopIe Commitment
Organizations that embrace the fundamentals of HRD realize the importance of their human
resources and focus their efforts on providing employee security; choosing, hiring, training
and retaining the right people for the right tasks; rewarding and valuing employee effort;
providing fringe benefits, salary raises, bonuses and the like; and providing a degree of
employment security. Employees whose basic personal and development needs are met
are committed employees, who translate the positive effects of HRD efforts into improved
productivity.
Improved EmpIoyee Performance and Learning Capacity
Patricia McLagan in the book "Models for HRD Practice," defines HRD as "the integrated
use of training and development, career development and organizational development to

improve individual and organizational effectiveness." According to this and similar

definitions, the main focus of human resource development lies in training and enhancing
the capabilities of employees. Organizations that strongly focus on training and improving
the skills, values, attitudes, perspectives and knowledge of their workforce are more likely
to retain employees that utilize their full potential and contribute it to the benefit of the
organization. According to Swart et al. in the book "Human Resource Development:
Strategy and Tactics," HRD activities decreases staff turnover by 7.05 percent annually.
Improved OrganizationaI Effectiveness
According to C. S. Lakshmi in the book "Human Resource Development n Public
Enterprises," human resource development improves organizational effectiveness. Trained
and talented employees contribute directly to the effectiveness of an organization. HRD
focuses on continually motivating and improving the competencies, dynamism and
effectiveness of its employees; developing positive attitudes and problem solving skills;
upgrading individual and collective experience, knowledge and perceptions; and enhancing
their competitive skills. These and similar activities fine-tune employees to align and
integrate their personal goals with organizational goals.

Improved Communication and InvoIvement
According to Juani Swart et al., HRD improves intra-organizational communication and
employee involvement. HRD practices are committed to measuring and continually
improving the organizational culture, enhancing teamwork, and improving involvement and
participation activities.
Economic DeveIopment
As the human resources of a country develop, the country progresses and the benefits
spread all over the country. Better skilled and well-trained human resources attract a larger
foreign direct investment into the country and improve the brand image of the country
internationally. HRD for an economy is dependent on the economic policy of the
government and the effort by the institutions in the economy to actively participate in the
development process.

Increase in EntrepreneuriaI Activity

Human resource development may occur as a result of better education, training or
development of vocational skills for individuals. This activity results in an increase in
entrepreneurial activity due to the creative process that is encouraged by HRD. Moreover,
even in an economy faced by high levels of unemployment, vocational training can
generate substantial number of entrepreneurs who look for self-employment. Thus, HRD
opens more options and wider avenues of success for individuals.
Increase in Productivity
HRD leads to better and efficient utilization of the available resources. The same numbers
of individuals are able to improve their performance through training or learning of more
productive skills. This leads to an increase in productivity in the same company at the firm-
wide level and to an increase in the overall value of goods produced at the country-wide
level. An increase in productivity of employees generates high economic progress for the
country.
Counteracting SociaI Taboos
HRD can lead to a change in social perception of many people and can result in the
development of the society. Better educated and skilled workers can think and act more
constructively and result in a change of the social environment. mproved education leads
to self-awareness and prevents individuals from embracing superstitions.
Human Rights
A better trained and educated workforce is well aware of its rights and is better able to
protect against human rights violations. Workplace environments improve and workers
rights are acknowledged with HRD.
ProfitabiIity
At the firm-wide level, HRD leads to increased productivity and better client service. This
leads to increased revenues at reduced costs for the company. Most companies today are
focused on hiring a well-trained and competitive workforce in order to develop a unique
selling point and enhance their profitability.

Demographic Effect
HRD results in more households with two working parents. This provides enhanced income
for the household and at the same time reduces the time available to parents for raising
kids. As a result, a better educated workforce results in a smaller increase in the population
of the country. For countries like ndia, HRD can help prevent the population from
increaseing beyond control.



HR PLANNNG SYSTEM
Planning is very important to our everyday activities. t is amazing that this important part of
HR is mostly ignored in HR in most organizations because those at the top do not know the
value of HR planning. Organizations that do not plan for the future have fewer opportunities
to survive the competition ahead.
Process of Human Resource PIanning
The process of Human Resource Planning is one of the most crucial, complex and
continuing managerial functions which, according to the Tata Electrical Locomotive
Company, "embraces organization development, management development, career
planning and succession planning.
t may be rightly regarded as a multi-step process, including various issues, such as:
1. Deciding goals or objectives;
2. Estimating future organizational structure and manpower requirements;
3. Auditing Human resources;
4. Planning job requirements and job descriptions; and
5. Developing a human resource

Human Resource PIanning System

Human Resource PIanning System
Objectives of Human Resource Planning: Human Resource Planning fulfils
individual, organizational and national goals; but, according to Sikula, "the ultimate
mission or purpose is to relate future human resources to future enterprise needs, so as
to maximize the future return on investment in human resources. n effect, the main
purpose is one of matching or fitting employee abilities to enterprise requirements, with
an emphasis on future instead of present arrangements. The objectives may be laid
down for a short-term (i.e. for one year).

.Estimating the Future Organizational Structure or Forecasting

the Manpower Requirements The management must estimate the structure of the
organization at a given point in time. For this estimate, the number and type of
employees needed have to be determined. Many environmental factors affect this
determination. They include business forecasts, expansion and growth, design and
structural changes, management philosophy, government policy, product and human
skills mix, and competition.
Forecasting provides the basic premises on which the manpower planning is built.
Forecasting is necessary for various reasons, such as:
a) The eventualities and contingencies of general economic business cycles (such
as inflation, wages, prices, costs and raw material supplies) have an influence on the
short- range and long-run plans of all organizations.
b) An expansion following enlargement and growth in business involves the use of
additional machinery and personnel, and a re-allocation of facilities, all of which call
for advance planning of human resources.
c) Changes in management philosophies and leadership styles.
d) The use of mechanical technology (such as the introduction of automatic controls,
or the mechanization of materials handling functions) necessitates changes in the
skills of workers, as well as a change in the number of employees needed.
e) Very often, changes in the quantity or quality of products or services require a
change in the organization structure. Plans have to be made for this purpose as well.
uditing Human ResourcesOnce the future human resource needs are estimated,
the next step is to determine the present supply of manpower resources. This is done
through what is called "Skills nventory. A skills inventory contains data about each
employee's skills, abilities, work preferences and other items of information which
indicate his overall value to the company.
D. Job nalysis After having decided how many persons would be needed, it is
necessary to prepare a job analysis, which records details of training, skills,

qualification, abilities, experience and responsibilities, etc., which are needed for a job.
Job analysis includes the preparation of job descriptions and job specifications.
E. Developing a Human Resource Plan This step refers to the development and
implementation of the human resource plan, which consists in finding out the sources of
labour supply with a view to making an effective use of these sources. The first thing,
therefore, is to decide on the policy- should the, personnel be hired from within through
promotional channels or should it be obtained from an outside source. The best policy
which is followed by most organizations is to fill up higher vacancies by promotion and
lower level positions by recruitment from the labour market.
Human resource pIanning - a contemporary approach
Armstrong (2001) has modified the phases of traditional human resource planning to reflect
aims more appropriate for contemporary circumstances. He outlines these aims as:
O to attract and retain the number of people required with the appropriate skills,
expertise and competences;
O to anticipate problems of potential surpluses or deficits of people;
O to develop a well-trained and flexible workforce, thus contributing to the
organisation's ability to adapt to an uncertain and changing environment;
O to reduce dependence on external recruitment when key skills are in short supply
by formulating retention and development strategies;
O to improve the utilisation of people by introducing more flexible systems of work.
This approach differs from traditional HRP in that it puts greater emphasis on the 'soft' side
of HRP but there are still elements of the 'hard' approach, e.g. in the balance between
demand and supply forecasting. t also differs from the traditional approach in its emphasis
on the internal labour supply. The key stages of the model are shown in Figure 5.5.
A fundamental difference between this model and the traditional HRP model is the
underlying assumption that much of the process might be rather vague:
t cannot be assumed that there will be a well-articulated business plan as a basis for the
HR plans. The business strategy may be evolutionary rather than deliberate; it may be
fragmented, intuitive and incremental. Resourcing decisions may be based on scenarios

that are riddled with assumptions that may or may not be correct and cannot be tested.
Resourcing strategy may be equally vague or based on unproven beliefs about the
future. t may contain statements about, for example, building the skills base, which are
little more than rhetoric. (Armstrong, 2001: 362)

$ource: Adapted from Armstrong (2001) andbook of uman #esource anagement
!ractice, p. 363. Reprinted with permission of Kogan Page.

Such statements could lead one to question whether there is any point to the process at all!
Armstrong (2001) goes on to argue that even if all that is achieved is a broad statement of
intent, 'this could be sufficient to guide resourcing practice generally and would be better
than nothing at all'. However, this does suggest that any plans inevitably have to be
tentative, flexible and reviewed and modified on a regular basis.
u usiness strategy
Business strategy can be either deliberate or emergent (Whittington, 1993). Deliberate
strategies assume a rational evaluation of external and internal circumstances and an
identification of the best way to ensure competitive advantage. Emergent strategies, on the
other hand, are the product of market forces: 'the most appropriate strategies . emerge as
competitive processes that allow the relatively better performers to survive while the weaker
performers are squeezed out' (Legge, 1995: 99).
u Resourcing strategy
n this model the resourcing strategy derives from the business strategy and also feeds into
it. For example, the identification of particular strengths and capabilities might lead to new
business goals, especially if strategy formation is emergent rather than deliberate. The
rationale underpinning Armstrong's perception of this strategy is related to the resource-
based view of the firm (see Chapter 2): 'the aim of this strategy is therefore to ensure that a
firm achieves competitive advantage by employing more capable people than its rivals'
(Armstrong, 2001: 364). Thus, the implicit assumption is that the vertical integration
between business strategy and resourcing strategy will include practices designed to attract
and retain a high-quality workforce, such as offering rewards and opportunities that are
better than competitors and seeking to maximise commitment and trust.
Porter (1985) proposes three strategic options for securing competitive advantage: cost
reduction, quality enhancement and innovation. A high-commitment approach is more likely
to 'fit' with the latter two strategies than with a strategy based on cost reduction. Work in the
USA (Arthur, 1992) found that the majority of firms in the study that were following a cost
reduction business strategy had poor HR practices (e.g. relatively low pay, minimal training,
little communication and no formal grievance mechanisms). However, the cost reduction
model is frequently associated with a lack of formalisation and planning (see, for example,

Sisson and Storey, 2000; Marchington and Wilkinson, 2002) so the process of developing a
resourcing strategy may be more likely to include a high-commitment approach.
u Scenario pIanning
This element is not explicit in traditional HRP models and reflects a development in
planning models designed to cope with increased uncertainty and unpredictability in the
environment. Scenario planning can be used to supplement or replace more traditional
demand and supply forecasting. This approach is 'predicated on the assumption that if you
cannot predict thefuture, then by speculating on a variety of them, you might just hit upon
the right one' (Mintzberg, 1994: 248). Mintzberg (1994) argues that it is difficult to determine
the required number of scenarios, i.e. enough to have a good chance of getting it right but
not so many as to be unmanageable. The ease with which scenario planning can be
undertaken has been greatly improved by the use of computer modelling, in which figures
and formulae can be altered to calculate the implications of different predictions. However,
this can in itself lead to problems of information overload and difficulties in how to respond
to the results. Porter (1985) suggests five key options:
O Bet on the most probable one.
O Bet on the best one for the organisation.
O Hedge bets so as to get satisfactory results no matter which one results.
O Preserve flexibility.
O Exert influence to make the most desirable scenario a reality.
This approach can help to broaden perspectives and consider a number of future options
but each decision has its own costs and these also need to be considered. For example,
opting to preserve flexibility might be at the expense of following a clear-cut business
strategy to secure competitive advantage. Similarly, devoting resources to the best scenario
for the organisation might be little more than wishful thinking.
Scenario planning has been described here as a fairly formal process but it can also be
regarded as an informal approach to thinking about the future in broad terms, based upon
an analysis of likely changes in the internal and external environment (Armstrong, 2001).

u Forecasting and Iabour turnover

Demand and supply forecasting in the model includes all the objective and subjective
techniques described in the traditional model. The key difference lies in the emphasis given
to labour turnover analysis; in the traditional model this is seen as an element of supply
forecasting but here it is deemed worthy of its own category. Nevertheless, the techniques
used to measure it are the same as discussed earlier in the chapter.
u Human resource pIans
Human resource plans are derived from the resourcing strategy and take into account data
from a combination of scenario planning, demand and supply forecasting and labour
turnover analysis. The model again reflects the lack of certainty and predictability: 'the plans
often have to be short term and flexible because of the difficulty of making firm predictions
about human resource requirements in times of rapid change' (Armstrong, 2001: 375). The
plans are divided into four broad areas: resourcing, flexibility, retention and downsizing.
Resourcing pIan
This is primarily concerned with effective use of the internal labour market as well as
attracting high-quality external applicants. Armstrong (2001) identifies two main
components to the resourcing plan: the recruitment pIan (e.g. numbers and types of
people required, sources of candidates, recruitment techniques, etc.) and the 'empIoyer of
choice' pIan. Steps that organisations have taken to find additional sources of applicants to
address skills shortages and improve the diversity of the workforce are discussed in
Chapter 6, so here we highlight some of the initiatives used to make employers more
attractive to high-quality applicants. The CPD Recruitment and Retention Survey (2002b)
found that nearly two-thirds of employers have increased starting salaries or benefits for
recruits and 70 per cent have either introduced or improved the flexibility of working hours.
Some organisations also offer 'golden hellos' (financial inducements to new recruits),
particularly to graduates. The CPD survey found little evidence of this but other studies
(e.g. RS, 2001c) list a number of organisations that offer signing-on bonuses, e.g. Boots,
Barclays, HSBC and PriceWaterhouseCoopers. The practice is mainly restricted to larger,
private sector organisations but has recently spread to the public sector, e.g. teaching and

some areas of local government. The main reasons for introducing a golden hello (RS,
2001c) are:
O to ease recruitment difficulties;
O as a response to competition;
O to help graduates settle in a new job;
O to help retain staff.

CONCLUSION

The study of human resources management in SMEs needs to be strongly encouraged.
CEO/founders in SMEs view human resource management decisions as very important to
the growth of their enterprises, and new venture growth is very important to our nation's
economy. New directions are being developed in human resource management which
appear to directly address the concerns of CEO/founders in SMEs. We issue a challenge to
human resource scholars to do more with SMEs. The attention paid to date has been scant
and this is disappointing. Ultimately if we are to have robust theories of managing human
resources in organizations, then the theories need to apply to large businesses, but also to
SMEs, where the majority of jobs reside.

An important issue raised by one of the reviewers is why so little attention has been
paid to human resource management practices in SMEs. We believe that there have been
several obstacles to conducting the recommended types of research. One reason is the
difficulty in gathering data. SMEs may be reluctant to participate in academic studies
because of the potential time away from the business required or because they do not view
human resource management practices as a source of improved business performance.
Another reason may be the publication process itself. n order to gain tenure, researchers in
human resources are required to publish in "mainstream" academic journals that devote
almost no attention to human resource management issues in SMEs. Also, the small
samples that reside in SMEs may preclude the use of quantitive data analysis. Although not
unheard of, qualitative studies in small companies are very difficult to publish in mainstream
journals.

We are optimistic that more human resource management scholars may be attracted
to doing research in SMEs. One reason for our optimism is the increasing recognition that
in-depth case studies play an important role in the study of effective human resource
practice (Barney & Wright, 1998). Another reason is that increasingly human resource
management practices are being studied across organizations (e.g., Huselid, 1995;
Welbourne, 1997) rather than within organizations. As a result, the sample size issue is no
longer a concern. t is our belief that well-crafted studies within SMEs and surveys of
employer practices across SMEs will be valuable additions to the strategic human resource
management literature that is becoming so popular in the mainstream journals.