TEXT

An AND CASES
overview
Understanding the
Nature and Scope of
Human Resource
Management
Learning Objectives
Important terms
The nature, scope and objectives of HRM
Importance of HRM
Strategic HRM & its Importance
Difference between SHRM and THRM
History and Evolution of HRM
A HRD in a typical business establishment
Why to study HRM
 Introduction
HR..?????
HR as an Imp. FoP
All the org.s depend upon people for their operations. Not only dependent, rather,
the most imp factor.

Since, the optimum utilization of FOPs ultimately depends upon HR factor.

(i) Computer
(ii) Visit to any org.
(iii) Skill and will - know-how of tech. but also motivation to make the equipment
produce effectively.
HR mgmt. and managers role play a critical role in bridging the gaps b/w employees
needs by adopting a set of appropriate strategies/practices and policies)
 Introduction
Management - method of effectively utilizing available resources for the purpose of
delivering G&S to the max. satisfaction of max. no. of people.
N.G. Nair

HRM is the management of purposeful resources i.e. human beings.

HRM is a process consisting of four functions-acquisition, development, motivation

and maintenance of HRs so that the goals of the org are achieved in efficient and
effective manner.
David A. Decenzo and Stephen P. Robbins
 Clearing the fog

Resource - the stock of assets and skills that belong to a firm at a point of time

HR - The total knowledge, skills, creative abilities, talent, aptitude, expertise,

adaptability, commitment and loyalty of employees of an org. workforce.

Workforce - signifies people working at various levels including workers, supervisors,

middle and top managers.

Capability - ability to perform an activity, a way of combining assets, people and

processes to transform inputs into outputs.
 Clearing the fog

Competitive advantage firms ability to perform more distinctively and effectively

than rivals. To attain CA, firms need to add value to customers and offer a
product/service that can not be easily imitated by rivals. Cost leader n diff (value)

Core competences - activities that the firm performs especially well when compared to
its competitors and through which the firm adds value to its goods and services over a
long period of time.
Skills, expertise etc.
share, profit, loyalty, satisfaction

Value sum total of benefits received and cost paid by customer in a given situation.
 Clearing the fog
Knowledge - understanding of the phenomenon

Attitude - relatively stable cluster of feelings, beliefs and intentions towards specific
objects or a predisposition to act in a certain way; may not be predictive of behavior.
Eg. an employee has a passion for org. and its mission and excited to be a part of it.

Judgmental state of mind- Working conditions by employer

Skills - individuals abilities of human beings to perform a piece of work

Ability - capacity to do physical and intellectual tasks.

Aptitude - to learn the capacity to do physical and intellectual tasks

 Clearing the fog

Competency - right skills and capabilities to do job or the ability to learn right skills

Mindset - emp. understand the value of collaborating with peers and comes to work
everyday looking for ways to improve the performance of and increasing the impact
he can have

Behavior - human conduct relative to social norms or the way a living being acts or its
observable response

Perception - conscious understanding of sth or psychological process whereby

people select an environment stimuli and interpret.
Objectives of HRM:
contributions to organizational effectiveness:

Provide org. with well-trained and motivated employees

Employ skills and abilities of the workforce efficiently
To communicate HR policies
Safe physical surroundings
Increasing employees job satisfaction and maintain QWL
Manage change to the mutual advantage of individuals,
groups, the enterprise, and the public
To be ethically and socially responsible to the needs of society
Help org. reach its goal
 Features of HRM
HRM assumes that it is the people who make the difference
Pervasive - manifested throughout
Action-oriented - workplace problems are solved through rational policies than R.C
People-oriented (individual and group)- help emp. explore their talents and develop
their potential fully.
Developmental oriented - T&D, rewards, job rotations training is offered to sharpen their
skills, gain experience and exposures
Future-oriented - it brings people and org. together, bridges the gap b/w people
expectations and org. needs
Comprehensive function - any decision that affects the workforce is concerned
Interdisciplinary function - managers need to understand human brains and behavior.
Continuous process - not a one shot deal, requires constant awareness & alertness of
human relations and their importance in day to day life.
 Scope of HRM
Personal aspect Welfare aspect Industrial relation
concerned with deals with aspect covers
Manpower planning Working conditions and Union-mgmt. relations
Selection amenities Joint consultation
Placement Canteens Collective bargaining
Recruitment Creches Grievances and disciplinary
Transfer Rest and lunch rooms procedures
Promotion Housing Settlement of disputes
T&D Transport
Lay offs Education
Retrenchment Health & safety
Remuneration Medical assistance
Incentive Recreational/leisure facilities
Productivity (activity that amuses,
stimulates or diverts)

increased from merely being a health and happiness to cradle to grave concept.
 Pause and Ponder

Do we need HR managers to manage

people functions? Can't line managers
themselves manage HR functions?

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 Integrated approach
Sr Functions Scope Activities
.
1 Planning HRP (manpower planning), Prep. Of HR inventory, man power planning and forecasting, job
Job design analysis, job description, job specification, job evaluation, HRD budget

2 Organizing Design of org. Design of org. structure, span of control, authority relationship,
hierarchical order, design comm. channel, OD prog.

3 Directing Labor relations Leadership, motivation, effective comm., publications, productivity

prog./MBO

4 Coordinating Emp. Assistance Conciliation, compromises, conflict resolution/grievance setting

negotiation, counselling

5 Controlling Personnel research and Perf. Evaluation, setting of perf. Standards, deciding feedback,
information system attitude survey, personnel research. HRD budget review

6 Acquisition & Absorption Selection and staffing Advertisement, recruitment, selection, testing, induction, interview

7 Development & Utilization T&D Labor/supervisory training, MDP, evaluation of training effectiveness

8 Maintenance & Retention Compensation and benefits, Wages, salaries, incentive administration, maintaining personal
IRs, Emp. Assista9nce records, canteen, transport, hospital & school facilities, insurance,
extrinsic rewards

9 Motivation and Empowerment OD, emp. Assistance, Conducive work culture, promoting empowerment, intrinsic rewards
personnel research inf. (flexi time), leadership training, brain storming, promoting innovation
System and creative spirit, improving morale, social welfare/security, HRD
 Importance of HRM
Individual Level Enterprise Level
Promote team growth Attracts and retain talent
offer growth opportunities Train people for
Allows people to work challenging roles
with diligence and Develop skills and comptcs
commitment Increase productivity and
profits

Society Level National Level

Employment opportunities Better exploitation of
multiply natural, physical and
Excellent org. output to financial resources
society Enhanced standard of
living
 History of PM/HRM
Recent origin but management of people is old history
Serious thoughts, organized practices, inclusion, various stages era to era
Emphasis on approach
Industrial rev. 1850s (Master-Servant relations) R/T/C
Trade union close to 19th (Emp. Grievance handling)
Social responsibility era beg of 20th cen (welfare, Paternalistic)
SM 1900 1920 (efficiency)
Human relations 1930 1950 (relations, behaviour, OB)
Behavioral science 1950 1960 New insights and role of manager)
System and contingency 1960s onwards
HRM 1980s onwards
 History of PM/HRM
(i) The Industrial Revolution (1850s)
Introduction of modern factory system
Mass manufact. Tech
Large scale emp. Cadre
Imp. of labor reduced
Owners lost direct contact
Large labor concentration led to poor working conditions
Adam Smiths concept of laissez faire workers were treated badly, fired, indiscrimination
Specialized & monotonous jobs due to app. of science and rapid prog. of tech.
keen to meet prod. target rather than satisfying workers demand
Three systems of HRM were developed R/T/C
Master-servant Philosophy
 History of PM/HRM

(ii) Labor Movements/Trade Unionism: (late 19th)

Workers joined hands to protect against exploitative, unfair labor practices through unions
Objective was to safeguard the interest of workers, problems which arose due to
child labor
long working hours
working conditions
Pay & benefits etc. through collective bargaining.
Weapons i.e. strikes, slowdown for acceptance of demand
Activities forced to adopt employee grievance system and arbitration.
 History of PM/HRM
(iii) Social Responsibility Era (early 20th)
Humanistic and Paternalistic approach
Based on the philosophy of child-father/labor-owner
Industrialists adopted and offered a no. of concessions reduced no.
of work hours, improved working conditions
Led to social welfare aspect
Critics suggest the emergence due to interrupted performance by
unions
Philosophy ???
 History of PM/HRM
(iv) Scientific Management (1900 -40)
1900 - First Emp. Dept. was formed by B.F Goodrich of U.S.A;
1902 - First Labor dept. was formed by M/s National cash register Co. U.S.A;
1910 - Call for right man for right job became popular;
1911 seeking industrial effectiveness F.W. Taylor developed four principles
(principles of scientific management) which emphasized on HRD:-
SM of job design - job description.
SM of selecting persons - Job specification
SM of workers training T & D
Friendly relations b/w managers and workers
 History of PM/HRM
(V) Human Relations movement:
Hawthorne studies by Elton Mayo and Harvard colleagues during 1924-32 highlighted
following aspects:
The imp of social and psychological aspects i.e. feelings, attitudes, sentiments and its
impact on productivity.
Org. is considered as social system not as techno-economic system as viewed by SM
school of thought
Concluded that productivity depends upon
Social factors at workplace
Group formation
Nature of leadership
Communication
 History of HRM cont
(v) Behavioral Science Era (1960s) - In contrast to human relations pet milk theory (had
been largely rejected), behavioral scientists consider understanding of human behaviour.
Recognizing the fact of individual differences
Expanded a useful way of thinking about the role of a manager
Providing insights rather techniques; and given the concept of HR model
HR approach assumes that
the job/task itself is the primary source of satisfaction/motivation
Basic job of manger is to use untapped potential
Work satisfaction as By-product
Participation
MBO
Healthy Work environment
Improved communication
 History of PM/HRM cont
(vi) Modern Era ( 1970 onwards): HRM
Industrial rev. industrial relations dept.
With the inclusion of supervisory and managerial staff personnel dept.
With competition of market share, resources including human resources people
being as prime source of org. effectiveness nomenclature
ASPA - SHRM
Sustained CA through innovation, creativity and continued improvement; which is
possible through people. Hence focus is on employees
The responsibility of HRD and HRM is not the sole of HR/personnel department. It
is the concern of all department.
Human Capital
 Brief history of HRM
Period Concept Impact
Ancient Roman, Chinese, Bible, India The philosophy od managing HBs was found developed in ancient times Min.
period wages, staffing, manpower planning
Upto 1900 Nine inventions, Indust. revolution Tech. development, mass production, prosperity to employers, misery to employees
1900-40 Benevolent paternalism by Robert Welfare measure, emphasis on morale and motivation, working conditions; efforts
Owen (1913) U.K are irregular and voluntarily confined
Scientific management by F.W Taylor Scientific app. on standards, universal impact, org. is viewed as techno-economic
(1911) U.S.A system.
1940-70 Industrial Psychology by Hugo- Emphasis on morale, motivation, working environment. Intrinsic and extrinsic
Musterberg (1931) U.S.A motivation and human relations
Human relations movement Emphasis on feeling, attitude and sentiment of workers; on emotions rather than
Hawthorne studies by Prof. Elton logic. Approach shifted from SM to Human Relations (new discipline as OB)
Mayo (1945) U.S.A
Behavioral app. - motivation theories Improved comm., reward and punishment, MBO, Job design, Job analysis, financial
of Maslow, Herzberg, McGregor and non-financial incentives
Experience from War and training Improved recruitment, selection and testing methods, MDPs and supervisory
within industry development prog.
Mod. Era Innovation and Creativity, Human Scope increased specialized HRM, HRM is concern for all, HBs are not machines,
after 1970 capital, Empowerment, focus on overall develop. & satisfaction of unique expectations, human capital is
 Evolution of HRM function
The Emerging concept emp. should be accepted as partners. They should have feelings that org. is their own. Must be
provided with opportunities to exploit their potential, offered better QWL and focus should
be on HRD.
HR concept employees are the most valuable assets of org.. There should be conscious efforts to satisfy
needs and aspirations of emp.

Humanitarian concept psychological, social and physical needs of workers must be met (Mayo study)

management must assume a fatherly attitude satisfying various needs of employees

The paternalistic

Goodwill concept welfare measures like safety, first aid, lunch room, rest room will have a positive impact on
production

Factor of production like machinery, money and land; workers are a factor of production
concept

The commodity concept labor was regarded as commodity to be bought and sold. Wages based on demand and supply
Govt. did very little to protect workers.
HRM Functions
Organisation for HR Department

Factors Influencing HR Team Structure

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Organisation for HR Department (Contd.)

HRM in a Small-scale Unit

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Organisation for HR Department (Contd.)

HRM in a Large-scale Unit

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Organisation for HR Department (Contd.)

Composition of HR Department 29
 Organisation for HR Department (Contd.)

Outsourcing
Outsourcing (also called subcontracting) is the process by which
employers transfer routine or peripheral work to another org. that
specializes in that work and can perform it more efficiently
Some executives assume that outsourcing HR activities offers CA
reduce cost, flexibility, specialist
In-house team to focus on value added
Whatever the triggers and justification for subcontracting HR
activities, their outsourcing will have significant impact on the org. of
HR department

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 Pause and Ponder

Should this happen? Would this happen?

Could this happen? How could all HR
activities be outsourced? Can a firm
function with a HR department organised
on per-functionary basis? Answer.

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 Skills for HR Professionals
HR manager needs to have technical, cognitive and interpersonal skills
and processes to accomplish his or her work
The HR executive needs to be multi-knowledgeable
Diverse knowledge is a must for HR managers for another reason: There
are instances of org.s where finance executives become HR directors,
and worse still, stores managers are made personnel managers
Every profession mandates academic qualification that the practioner
must possess
Anybody, irrespective of his or her qualifications can become an HR
executive

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 HR Competency Model
Skills for HR Professionals

Source: Adapted from Human Resource Management by

Christopher Mabey, et. al., Blackwell Business, p. 31
(Contd.)

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 Line Managers
From MD down to the first line supervisors, line managers carry on
certain specific human resource activities like:
Placing right people in right places
Treat people and organisations as resources that need investment to grow
Advice on HR choices
Offer on-the-job training to new hires and new operations for in-house people
Interpret company policies and procedures.
Ensuring safety and health to employees
Act as people managers in small firms
HR professionals should not delegate all their tasks to the line
managers

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Strategic Importance of HRM

SHRM (integration of all HR prog. and policies with corporate strategy)

pattern of planned HR developments & activities intended to enable an org. to achieve
its goals.
Accepting HR as a strategic partner in both strategy formulation and implementation
through HR activities.
While formulating st plans
HRM plays imp. role in Environmental scanning, Competitive intelligence, Internal
threats and weaknesses
While executing strategies
Help firm carry out restructuring, downsizing without rubbing emp. On wrong side
 Difference b/w SHRM and traditional HRM

Strategic HRM differs significantly from traditional HRM

In traditional arrangements, responsibility for managing human resources lies with
HR personnel.
In a strategic approach, people management rests with any individual who is in direct
contact with workers or line managers
It is based on three propositions: first, that - human capital is a major source of CA (key
asset); second, that it is people who implement the strategic plan; and, third, that a
systematic approach should be adopted to defining where the org. wants to go and
how it should get there
Difference b/w SHRM and traditional HRM
Point of distinction Traditional HRM Strategic HRM

Responsibility for HRs Specialists Line managers

Focus Production Service, partnership

Objective Better performance Improved understanding and use

of human assets

Role / Initiative Administrative, reactive, Strategic, proactive, initiator,

transactional, respondent leader of change,

Control Rules, policies, position power Flexible, based on human

resources

Control / culture Bureaucratic, top-down, Open, participative,

centralization empowerment

Major emphasis Following the rules Developing people

Accountability Cost centers Investment in human assets

Cont
Integrating mechanism - builds and maintain cordial relationship b/w people working at various levels and
other departments.

Product subsystem

HR Subsystem
Procurement
Training Marketing
Finance subsystem
Compensation subsystem
Appraisal
Rewards

Technology
subsystem

system approach
(eg. University)
 HRM function in future: influencing factors
Size of workforce demand for better pay, benefits and working conditions
Composition of workforce/Changing demographic profile rising percentage of women
(Equal right movement), shifting character of workforce in terms of age, sex religion, region and caste
i.e. managing heterogeneous and culturally diverse groups and integrating their efforts require talent and
Knowledge workers i.e. Brawn to brain
Competition, Internationalization of business, Growth of service economy, Customer
orientation
Concerns for TQM, participation, QWL, environment and ethics
Emp. Expectations better educated, more demanding, ready to voice strong, voilent and join protest
in case expectations are not met, financial and non-financial demands ever growing - job security and
social security
Changes in technology in view of increased automation, computerization and automation, unless
emp. update their knowledge and skills, can not survive and grow which necessitate training (concern fro
Deskilling, reskilling and multiskilling).
 HRM function in future: influencing factors
Life-style changes unlike predecessors, ready to change jobs, shift to new places
Job redesign; career opportunities; productivity, effective recruitment and selection
Talent hunting, developing and retaining; rewards; safety, welfare, healthcare benefits
HR as a spacing board for success (executive with people mgmt. skills would be able to steal the
show);
Lean and mean organizations; labor relations; healthcare benefits.
The ability of an org. to anticipate changes and respond in innovative and timely manner have always made the
diff. in success and failure. Innovations, whether in business strategy, market responses, work ethics or tech.
processes are designed by people not machines. However, in Indian industry, tendency to take people for granted
has set in. Where work in organized in little bureaucracy, system is more important than people. In the age of
competition, quality products and customer satisfaction become prime factors in organizational success. To get
best out of people, one needs to recruit well, place appropriately, train and develop consistently, compensate
adequately, create and maintain org culture which motivates innovation.
 Why Study HRM?
Taking a look at people is a rewarding experience
HRM is a study about people in organisations how they are hired,
trained, compensated, motivated and maintained
It is people who build factories, structure organisations and manage them
successfully
The rapid growth of globalisation has increased the number and
significance of MNCs which in turn increased the mobility of people
By stressing on competencies, commitment, performance, rewards, ethical
behaviour and positive attitudes, HR professionals are able to convert
average employees into better and to the best citizens

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