COMSATS INSTITUTE OF INFORMATION TECHNOLOGY

VIRTUAL CAMPUS
LECTURE NOTES: CHAPTER 1-8
COURSE: HRM POLICIES AND PRACTICES
Course Code: MGT 450

Lecture 1
CHAPTER 1
UNDERSTANDING THE NATURE AND SCOPE OF HRM
Aswathappa, K. (2008). Human Resource Management, Text and
Cases, 5th Edition, McGraw Hill Company
Learning Objectives
What is HRM?
Scope of HRM
Difference between HRM and PM
HRM Functions and Objectives
HRM is defined as
HRM is management function concerned with hiring, motivating
and maintaining people in an organization. It focuses on people in
organization
Functions of HRM
HRM: the application of management functions and principles
related to employees. In HRM employees decisions are
integrated. Employee decisions bring effectiveness/efficiency
in organization. HRM functions applicable everywhere (not for
profit and profit driven organizations). HRM includes all major
activities in professional life of a worker All activities from
employee entry to managing performance and training until he
or she leaves the organization
Key HRM Activities
1. HR planning
2. Job analysis and design

3.
4.
5.
6.
7.

Recruitment and selection

Training & Development
Compensation
Safety and health
Industrial relations

Scope of HRM
1. Introduction to HRM
2. Employee hiring
3. Employee remuneration
4. Employee motivation
5. Employee maintenance
6. IR
7. Prospects of HRM
There two terms PM (Personnel Management) and HRM
(Human Resource Management). PM and HRM both are
different in scope and orientation. HRM is broad concept
whereas PM and HRD (Human Resource Development) are part
of HRM
Dimensions
1.Employment
contract
2.Rules
3.Guide to
management action
4.Behaviour referent
5.Managerial task
vis--vis labor
6.Speed of decision
7.Management role

PM
Care full delineation
of written contracts
Importance of
devising clear rules
Procedures

HRM
Aim to go behind
contract
Can do outlook,
impatience with rule
Business need

Norms ,customs and

practices
Monitoring

Values and mission

Slow
Transactional

Fast
Transformational
leadership
Direct
Facilitation

8.Communication
9. Prized
management skills

Indirect
Negotiation

10.Selection

Separate ,marginal
task
Collective barraging
contracts
Many

11.Labour
management
12.Job categories
and grade

Nurturing

Integrated, key task

Individual contracts
Few

13.Job design
14.Conflict handling
15.Respect for
employees
16.Shared interest
17.Evolution

Division of labour
Reach temporary
truce
Labour is used as
tool which is
spendable and
replaceable
Interest of
organizations are
uppermost
Procedure of HRM

18.Locus of control
19.Oganization
principles

External
Mechanistic
Top down
centralized

20.Key relations
21.Initiatives
22.Pay
23.Training and
development

Labour Management
Piecemeal
Job evaluation
Controlled accessed
to courses

Team work
Manage climate and
culture
Peoples are used as
assets to be used for
the benefit of
organization
Mutuality of interest
Latest of evolution of
subjects
Internal
Organic
Bottom-up
Decentralized
Customers
Integrated
Performance related
Learning companies

Objectives of HRM
The main objective of HRM is to ensure the availability of
willing and competent force to an organization. There are
other objectives of HRM too
1. Societal objectives
Societal objectives of HRM make ensure that the organization
is socially responsible. To be ethically and socially responsible.
Minimizing negative impact of societal demands on
organizations. For example: EOE laws forces organizations to
be ethical in recruitment, to minimize the discrimination
against hiring based on ethnicity, race, and religion etc.
2. Organizational objectives
To determine the role of HRM in organizational effectiveness.
Its purpose is to assist/serve organization. HR department also
serve other departments
3. Functional objectives

To maintain department contribution in organization

effectiveness. HR department services must fit to the
organizational needs

4. Personal objectives
To assist employees in achieving their personal/individual
goals. Maximum contribution to organization. Personal
objectives are achieved when employees are satisfied,
motivated and retained.
Satisfied employees
excellent services
organizational performance

excellent

Lecture 2
CHAPTER 1
UNDERSTANDING THE NATURE AND SCOPE OF HRM

Aswathappa, K. (2008). Human Resource Management, Text and

Cases, 5th Edition, McGraw Hill Company
Learning Objectives
Organization of HR Department
Composition of HR department
HR Policy
Human Capital management
Jobs and Career in HRM
There are two main issues regarding HR department
1. HR department placement in overall setup
2. Composition of HR department
Structure of HR
Structure of organization depend on whether organization is
small or large
In small organization there is no need to have separate
department to deals with activities relating to people
Many small organizations even do not have personnel
managers
Outsourcing to firms specializing in managing accounts,
pensions, funds and health & care
Earlier, in personnel department employee with little
knowledge and competencies were placed

 The responsibility was to arrange tours, picnics, and

retirement/farewell parties
Now focus has changed, HR department has key place in
overall organizations
Contrary to small-sized company, In large scale organization
there is big department heading by Manager/Director

Now a days popular trend is to outsource business activity and part

of HRM activities are also often outsourced to other departments
Reasons:
1.
2.
3.
4.

Restructuring
Downsizing
Growth in business
Decline in business

Benefits:
1. Cost efficiency
2. Access to expertise
HR Policy

A policy is plan of action

HR policies need to ensure consistency and uniformity in
treating people (guideline to course of action)
It motivates employees and build loyalty

Benchmark to evaluate performance

Table: The main chapters of HR policy documents are

1

HR Philosophy

How management/organization views human

resource and what value it associates to the
employee development.
Manpower planning, recruitment, probation,
promotion, transfer, termination, retirement policy
etc.
Work scheduling, overtime, duty hours, and holidays.
Pay, benefits, leaves, contributory provident fund,
gratuity, GP fund, retirement plans, medical facility,
social security, house rent/hiring facility etc.

Employment Policy

Compensation

Performance evaluation & Performance appraisal procedure, methods, and

Employee training
guidelines for training and development of
employees

Community Relationships

Social /Community activities, Corporate Social

Responsibility, Relationship with project
stakeholders.

Legal and Ethical Issues

Occupational Health and

Safety

Code of conduct, work ethics, norms, values,

information disclosure policy, privacy of personal
record and official communications, equal
employment opportunity policy, outside work policy
etc.
Smoke free work place, workplace facilities
(ergonomics), Health and safety policy and
guidelines

Disciplinary Actions

Procedure for initiating disciplinary proceedings,

opportunity of fair trail and hearing, right of appeal,
grievance handling procedure, code of conduct.

SECRETS OF BEST EMPLOYERS

Effected and committed leadership

Management of talent
Spotting and attracting talent
Setting high goals
Coaching and training
Effective appraisal and reward system
Building skills for future
Building growth into every job

HUMAN CAPITAL MANAGEMENT (HCM)

HRM is job of one department whereas HCM responsibility of
every employee
HCM attempts to measures cause and effect relationship
between different programs and policies

Identify and develop future opportunities for employees

(matching expectations with skills)
Continuously acquiring new skills
Still challenges ahead
Generally three positions of in HR department are

1 HR Specialist
Entry level position
HR specialist included in roles like interviewer , compensation
analyst, and trainer
HR specialist provide HR services
Specialist does everything for example orientation program,
interview applicant, negotiation for contract and wage
structure
2 HR Manager
HR manager administrate and coordinate activities, programs,
and policies
Top ranking person in HR department
Expected to have knowledge of all areas of HRM
Advise and oversee HR line managers (to make sure
implementation of HR policies)
Translate organizational strategy into HR policies
3 HR Executive
Top level HR executive (Vice President/DG)
Responsibilities
To link HR corporate strategy with HRM
Considering HR limitations/opportunities
Establishing HR Policies

Lecture 3
Chapter 2
Context of HRM

Aswathappa, K. (2008). Human Resource Management, Text and

Cases, 5th Edition, McGraw Hill Company
Learning Objectives:

Factors that affect HR practices and Policies

Internal and External Forces
Environmental Scanning

Context of HRM: The environment in which HR Professionals need to

work
Table: Internal and External Forces

1.
2.
3.

Political and Legal

Three constitutes of political environment
The legislature
Executive
Judiciary

The Legislature
It means parliament ,national assembly, provincial assembly
and senate
The Executive
Popularly known as government, who implement rules and
regulations (bureaucracy, federal, provincial, and district
government)
The Judiciary
the main function of judiciary is to make sure that legislature
and executives are working in accordance with constitution/law
and in public interest
Political and Legal Forces impact on HR
Labor Laws, EEO: For Example: term and conditions of
employment, wages and working conditions, discrimination in
employment based on race, gender, religion etc.
Economic
Economic factors which affects HR functions are followings
Economic growth, Competitors, industrial Labour (laws,
preference),Customers, National population, Per Capita income,

Suppliers
Suppliers

(employment

agencies,

institutes),

Economic

Factors

Those who provide Human Resources to the organization

Employment Agencies
Educational Institutes
Training Institutes
Consulting Firms
Competitors
Diversity
Todays Workforce is diversified, employees from different
countries, culture, ethnic groups)
There is difference of
Religion, Race, Language, Gender, Education level, Skills,
Values, Ages
Globalization
It has significant influence on HR polices and functions
HR Functions are being performed in global perspective like
employee hiring, training, motivation, compensation, retaining
Five ways in which technology can affect HR functions
1. More intellectual jobs
2. Virtual teams
3. Jobs becoming more challenging and rewarding
4. More interaction
5. Employees are more knowledgeable
Culture
Culture make personality of people who become member of
organization
There are sub cultures with in a culture
People
from
different
cultural
background,
work
in
organization that make another distinct culture
Attitude towards work and belief (for example: destiny is
fixed)
Time Orientation (past, present and future)
For example: American Society (present, retain employees as
far as useful for organization. Japanese (futuristic, hire
employee for long term)
Work ethics (moral values): hard work and commitment. Need
for achievement take higher responsibility
Preferences or confinement to specific occupation and regions
(Muslim may not prefer to work in Europe, Family business
(comfort zone)

Organizational culture (represent by its people, work believes,

norms, work ethics, history) for example GM believes in product
innovation
Strategy (long term growth or short term profit)
Task (job itself have effect on employee motivation, job
enrichment)
Leadership (define HR policies and practices)
Unions (WAPDA, PTCL)
Professional bodies (PEC, PMDC) define code of ethics,
accreditation
It is important to decide domain and scope of the organization
for analyzing its environment
Range of product to offer, geographical region, services, target
population (this makes task easy)
Lack of Domain consensus creates conflict
Task Environment
It identifies the technology to be employed and strategies to
be followed
Immediate outside environment
For example: Growth vs Retrenchment Strategy
Trends and projections of factors that might affect the
organization
Scanning help to give filter information
HR department provides feedback for policy making
HR department responsible to scan the environment relating
to human resources and labor market issues
Role of HR is like boundary spanning linking organization with
environment
Factors that affect HR practices and Policies
Conclusion: The forces inside of the organization and out side of
organization influence HR practices and policies. HR department
need to carefully analyze the internal and external forces to
streamline their HR functions.

Lecture 4
CHALLENGES IN HUMAN RESOURCE MANAGEMENT

Chapter from: Mello, J. A. (2001): Strategic Human

Resource Management, Cengage Learning, India
Edition.

Strategic Human Resource Management

Development of consistent and aligned collection and
practices programs and policies to achieve organization
strategic objectives

Major factors affecting strategic HRM are

1. Technological Advancement
2. Demographics and Diversity
3. Globalization

An organizations technology is the process by which inputs

from an organization environment are transformed into
outputs

It includes tools ,machinery ,equipment ,work procedure and

employee knowledge and skill

Advancement in technology and workforce critical to sustain

competitive advantage

With the introduction and implementation of new technology,

skills and knowledge of employees are also changing

Figure: Impact of Technology

Figure: ISSUES FOR INTEGRATING NEW TECHNOLOGIES

Source: Mello, J. A. Strategic Human Resource Management, 2011, P. 44.

Related to technology there are three areas of concern for HR

department
1. Telecommunication
2. Work place monitoring and Surveillance
3. e-HR

Telecommunication
Allow employees to work from home
Popular in both small and large-sized organizations

1.
2.
3.
4.
5.

Agreement between employees and supervisors

Management system provide discretion and flexibility in doing
job
In USA, tremendous growth in number of employees working
from home
In 1990, 3.4 million workers
Beginning of 2000, 19.6 million workers
Savings on relocation plan
Flexibility in hiring
Reduce real estate costs, higher in urban areas
Research reveals increase in productivity
Issues affecting success of telecommuting programs
Performance measurement and monitoring
Deciding which employees will be offered
Equipment expense
Managers are uncomfortable
Employee Surveillance and Monitoring
Internet
technologies
have
resulted
into
increased
productivity. Issues originating regarding use of internet for
personal activities. Number of organizations are using
electronic monitoring and surveillance system to track
activities of their employees
It is estimated that more than 80% of large employers using
monitoring and surveillance technology
Internet usage
E-mails
Computer files
Voice-mail
Telephone usage
In general employees have very limited privacy rights.
Increasing work demand, difficult to draw line between work
and personal life. Monitoring system raise concerns for privacy
of employees. It decrease moral and loyalty as well
Electronic Communications Privacy Act (ECPA) deals with
privacy issues in electronic communication at workplace
a) Business Purpose Exception (where nature of business is
such that need monitoring of activities)
b) Consent exception (where employee gives consent to
employer to monitor their activities in this case employees
have very little right to their privacy)

e-HR
Advancement of technology has helped HR to deliver
transactional services online. Allow to focus more on strategic

issues. HR functions that have been performed through use of

technology are Payroll (online transfer), Employee benefits,
Scheduling, Recruiting, Training, Career development
Work Force Demographics Changes And Diversity
Demographic factors and changing workforce composition are
creating number of challenges for HR
The motivation and initiatives behind diversity varies from
organization to organization
Numerous Laws that prohibits discrimination in employment
Generational Diversity
Positive aspects of older workers
As productive or more productive than younger workers
Have more organizational loyalty than younger workers
Possess broader industry knowledge & professional
networks
Self sufficiency
Negative aspects of older workers
Perceived resistance to change by older workers.
Increased health-care costs for senior workers
Blocking advancement opportunities for younger workers
Higher wage & salary costs for senior workers

Generation X (mid 1960 to late 1970s)

Have life-long exposure to technology & constant change
Seek self-control, independence, personal growth,
creativity
Not focused on job security or long-term employment

Generation Y: Baby Boom Echo (born after 1979)

High comfort level with technology
Global & tolerant outlook on life (role of media)
Highly entrepreneurial
Less employer loyalty, work from home, project work

Emphasis on management of professionals

Establishment of separate career tracks
Technical/Professional, Managerial /Administrative
Use of project teams as tool to deal with technical
reporting of technical professionals

Young Generation: Less employee loyalty, more loyal to self.

Staying with employers for shorter periods; demanding more
meaningful work & involvement in organizational decisions
(need effective retention strategies)

Increased personal & family dynamics effects. More singleparent families, dual-career couples, & benefits for partners.
Increased nontraditional work relationships. Part-time,
consulting, & temporary employment, flexibility. Outsourcing
activities provide entrepreneurial opportunities

Figure: Individual Dimensions of Diversity

Source: Mello, J. A. Strategic Human Resource Management, 2011, P. 60.

Understanding & appreciating diversity

Critical to target ethnic & minority groups
Having diverse workforce in organization
Make ensure that hiring & promotion decisions are
unbiased by person differences
Diversity management programs or initiatives
Must be integrated with organizations mission &
objectives

 Identify diversity benefits to organization

Appropriate diversity programs contingent on
organization, its people, mission & culture.
Decide which diversity aspects to include and which to
exclude
Managing Diversity
1 Determine why diversity is important
2 Articulate how diversity relates to mission & strategic
objectives
3 Define diversity & determine how inclusive its efforts will be
4 Make a decision as to whether special efforts should be
extended to attract diverse workforce
5 Assess how existing employees, customers, & other
constituencies feel about diversity
6 Determine specific types of diversity initiatives that will be
undertaken
Virtual teams:
Groups of people who work interdependently with shared
purpose across space, time, & organization boundaries using
technology to communicate & collaborate
Types of virtual teams
Global virtual teams
Teams assigned to accomplish specific projects
Cross-functional teams
Main Challenge: Recognize obstacles confronting teams that are
both cross-functional & virtual

Lecture 5
AN INVESTMENT PERSPECTIVE OF HUMAN RESOURCE
MANAGEMENT
Chapter from: Mello, J. A. (2001): Strategic Human
Resource Management, Cengage Learning, India Edition.
Learning Objectives
Major factors affecting strategic HRM are
Technological Advancement
Demographics and Diversity
Globalization
Employees are Assets because
Decision made by employees critical for success of
organization.
Competitive advantage does not come from innovative
product, efficient and superior services, marketing
strategy, financial management or state-of-the-art
technology.
Having appropriate system for attracting, motivating, and
managing human resources determines competitive
advantage of any organization.
Employees something of value and worth
Strategic view of HR consider employees as asset "and
develop appropriate programs to invest on this important
asset
Successful and most competitive organizations realize
that employees have value like other resources
Strategic view assist to plan investment on acquisition
and management of human resources considering
possible risk and return
Human Resources can not be duplicated
Investment perspective of human resource believe that
physical assets such as production facilities, products and
services, process, and technology can be imitated by

competitors while unique combination of human resource

capabilities can not be duplicated
Thoughts process, decision making process, and ability
to analyze complex data and environment are owned by
individual employees
If organization's main strategic objective is innovation:
must consider human resource as investment.
The value of employees come from their
1 Technical Knowledge (market, customers, process, and
environment)
2 Ability to Learn and Grow (openness to new ideas, acquisition of
knowledge and skills)
3 Decision Making Capabilities
4 Motivations
5 Commitments
6 Team work (Interpersonal skills, leadership skills)
Considering the risk and return on possible expenditures related to
acquisition and development of human assets allows an organization to
consider how current expenditures can best be allocated to meet long
term performance goals. (p. 5)
Example: New Training Program:
Cost of training in terms of money as well as opportunity cost (time
away from job)
Benefits: Increased performance, loyalty and motivation
Benefit Cost = Decision for New Training Program
Risk: Highly Skilled and Trained manpower have market value

Measuring Human Capital

HR practitioners striving to develop metric to measure the
value of HR relative to market value and profit
90% of Fortune 500 organizations in USA, Canada, and Europe
evaluate their HR practices on three metric
1. Employee retention and turnover
2. Corporate moral and employee satisfaction
3. HR expenses as a percentage of operational expenses
This approach fails to conceptualize the HR contribution in
shareholder value and profit because of following reasons
The staffing metrics focus and treat employee as expense
rather than asset
Accounting valuation method focus on current and past value
of assets whereas human capital asset value lies in its ability
to face and react to challenges coming ahead
The challenge is to develop financial metrics for value added
human capital investments initiatives for senior managers
Another important metric for measuring human performance was
developed by Mercer. Mercer model identify the process of
measuring human performance and documenting value created by
specific initiatives that create bottom line effect.
1 Identify a specific business problem that HR can impact
2 Calculate the actual cost of the problem to the organization
3 Chose the HR solutions that addresses all or part of the problem
4 Calculate the cost of the solution
5 six to 24 months after implementation, calculate the value of the
improvement for organizations
6 Calculate the specific return on investment (ROI) metrics

Management Value:
What value management places on value of its human resource
relative to other capital assets like brand names ,distribution
channel, facilities, plant, equipment and tools etc.
Senior management values and actions decide organization
investment in assets
The extent to which organization is investment oriented on
human asset can be known through these questions
1 Does the organization see its people as being central to its
mission strategy?
2 Does the both company wide and within individual business units
support the value of human assets and their role in achieving goals?
3 Does the management philosophy of the organization encourage
the development of any strategy to prevent the depreciation of
human assets; are they considered replicable and amortizable as
physical assets?
Attitude towards Risk
1. Universal principal higher a risk higher a return
2. In general, investment on human resource is very risky
3. Physical assets are property of company whereas employees
are not owned by it
4. If organization view investment on human resource necessary
for realizing strategic objectives they often develop strategy
to have ownership of employee services such as long term
employment, long term benefits, opportunities for personal
and professional development

Nature of Employee Skills

1. Employee skills that are specific and cannot be applied to
other organization are less risky
2. Customized software knowledge(UBL using Unisoft)
3. Marketable skills applicable and demand in other organizations
4. Need to apply retention strategy (ESOP)
Utilitarianism Approach
1 Cost Benefit Analysis(investment from utility perspective)
2 In this approach all costs and benefits are tried to quantify
3 For example: Development of Performance appraisal system
calculated based on direct cost and time spent on this
initiative
4 Generally investment on human resources and output are
difficult to quantify
5 Its very difficult to access level of services required to prevent
customers from moving to competitors/or maintain their
loyalty. Any additional service has no impact on financial
performance
6 Impact of employee moral program difficult to quantify,
therefore, organization reluctant to make investment
Ability to Outsource
1. If cost effective outsourcing facility is available
2. An investment oriented company make decision on investment
based on sustainable competitive advantage
3. Whether outsourcing provide more saving, efficiency, and
access to expertise

Conclusion
The organizations invest in resources where they will have
higher and visible return like investment in marketing,
advertising, product development, physical expansions and
mergers/acquisitions.
For example: McDonald put little emphasis on employee
development and more focus on product development,
advertisement, expansion.
An investment perspective approach is often avoided as
employee may not remain with the organization for longer time
period
Most organizations measure performance on short term
criteria
Investment on human resource/asset is long term

Organization need to develop effective strategy. Employee

stock ownership program
Employee stock ownership is beneficial for employee
commitment and stay with organization
When organization gains competitive advantage through its
employees when they invest on this important resource than
very difficult for competitors.
Investment on human asset is long term and risky but
obviously it is source of competitive advantage

LECTURE 6
THE EVOLVING STRATEGIC ROLE OF HUMAN RESOURCE
MANAGEMENT
Chapter from: Mello, J. A. (2001): Strategic Human Resource
Management, Cengage Learning, India Edition.
Strategic Human Resource Management

Involves development of consistent, aligned collection of

practices, programs, & policies to facilitate achievement of
strategic objectives (Mello, 2011, p. 156)
Mindset & practices away from personnel management &
focusing on strategic issues instead of operational issues
HR programs and policies are made and integrated in
perspective of mission, objectives, and strategy
Writing down HR strategy facilitates involvement & convincing
senior executives & other employees

Figure: MODEL OF STRATEGIC HR MANAGEMENT

Figure: CHANGING ROLES OF HR PROFESSIONALS

Source: Mello, 2011, p. 157

Strategic perspective focus more on strategic contribution of

employees than performing traditional HR functions. What HR
delivers not important what it does

1 Strategic Partner
Partner in strategy development
Identify areas where change is needed to execute strategy
2 Administrative Expert
In past focus remain on traditional roles, rule making and
policy development
Need to reinvent new way to perform such traditional
activities. For example: Benefit and compensation system,
Career development Plans
3 Employee Champion
Responsible to make sure that employees are committed and
motivated
Assist line managers to identify the causes of low morale and
employee motivation techniques
Advocate of employees
4 Change Agent
Assist build organization capability to identify and capitalize
on future opportunities

To ensure that change initiative are well define, understand,

and delivered
Overcome resistance to change (change in culture)

Lengnick Hall and Lengnick Hall Model

1 Human Capital Steward
Create environment where employee work with
commitment
2 Knowledge Facilitator
Knowledge sharing culture
Employee share information, teach and learn from
colleagues
Rewarding knowledge share behavior
3 Relationship Builder
Building Team work, Cross functional teams
4 Rapid development Specialist
Organizational culture and HR system that are flexible
enough to adapt to change

Society for Human Resource Management (SHRM) and

Global Consulting Alliance Model
1. Strategic Contribution - Strategy development and
implementation
2. Business Knowledge - understanding organization functions
3. Personal Credibility Values in programs & policies
4. HR Delivery - serving employee through effective & efficient
programs
5. HR Technology - using technology to improve organizations
people management strategy
Figure: LEPAK & SNELLS EMPLOYMENT Model

Source: Mello, 2001, p 160

Figure: TRADITIONAL HR VERSUS STRATEGIC HR

Source: Mello, 2001

Strategic HR as Organizational Learning

How HR management systems can contribute to development

of organizational knowledge?
To attract & select individuals with knowledge

Internal labor contribute to the development of firm

specific knowledge and learning
Cross-functional & inter-organizational teams can be
utilized
HR systems can support & enhance knowledge sharing and
development by
Apprenticeship & mentoring, Cross-functional teams, Stimulate
& reward information sharing, Provide free access to
information, Job rotations.

Walsh & Ungsons five storage bins in which organizational

memory can reside
Individuals (assumptions, beliefs, & cause maps)
Culture (stories, myths, & symbols)
Transformations (work design, processes, & routines)
Structure (organizational design)
Ecology (physical structure & information systems)
Systems view considers overall configuration and aggregation
of HRM practices
Strategic perspective aim to create fit between HRM
practices & organizations competitive strategy
HRM practices are associated with organization performance &
competitive advantage
Problems and Challenges of SHRM
In general, performance appraisal and compensation based on
current performance
HR managers lack of ability to understand challenges and
opportunities in other functional areas
Top management fail to realize the overall contribution HR can
make in overall organization strategy (HR is routine and
inflexible job)
Functional managers do not view themselves as HR manager
(concerned with technical aspects of job)
Fail to quantify HR cost and benefits (Team building)
Strategic HR need drastic changes in way of doing job,
practices, and culture etc (people tendency to resist to
change)
Outcome of Strategic HR
Increased performance
Customer and Employee
Satisfaction
Enhanced
Share Value
Management of Staffing, retention, and turnover through

selection of employees
Investment perspective of human asset and cost effective
utilization

Integrated HR policies and practices based on cooperate strategy

Facilitation of change
Focus on customer needs and quality

LECTURE 7
CHAPTER 4
HUMAN RESOURCE PLANNING
Aswathappa, K. (2008). Human Resource Management, Text and
Cases, 5th Edition, McGraw Hill Company
Learning Objectives:
Human Resource Planning
Importance of HRP
Factors Affecting HRP
The Planning Process
Human Resource Planning

HRP is process of forecasting firm's future demand and supply of

the right type of people in the right numbers
Importance of HRP can be highlighted by following points
1. Future Personnel Needs
Planning helps to determine future personnel needs
Surplus or shortage in staff is due to poor human resource
planning
Public sector organizations facing problem of over staffing
Public sector organizations offering voluntary retirement
scheme (VRS)
2 Part Of Strategic Planning
All activities of HRM like HRP, hiring, remuneration, training
must be matched with strategic management

HRP can facilitate strategic planning at two ends

At the start, it provides information for strategy formulation

like kind of skills, and numbers of people available to
organization to pursue organization strategy
At the end, it assist in making resource allocation decisions,
creating structure, process and determine human resource
need
3 Creating Highly Talented Personnel
Now a days organizations need knowledge workers and
professionals for intellectual jobs
Technical and knowledge worker most often switch their job
creating workforce shortages
Adoption of new technology creates demand for technical and
trained workers at the same time resulting into excess of non
technical staff
Management succession planning helps to decide who will
replace/substitute the chief executive/top management?
4. International Growth Strategies
Global expansion strategy relies on HRP. From where to recruit
employees (foreign, local, or reassignment) to fill key jobs
HRP integrate HR plan with organization external & internal
situations (cultural consideration, labor and employment laws)
HR department often need to fill key jobs with expatriates,
therefore, need to motivate, train, and compensate them.
5. Foundation for Personnel Functions
HRP provides essential information in development and
implementation of personnel functions like recruitment,

selection, transfer, postings, promotions, layoff, compensation,

and training
6. Increasing Investment in Human Resources
Investment perspective of human resource highlights the need
of proper HRP
Human Resources Planning help to make right investment
decision in company's human resources
7. Resistance to Change and Move
Employee resist to change and move
HRP assists to plan well ahead employees' transfer/posting
and movement from one place to other in smooth way
Dedication, commitment and loyalty of employees can be
assured
8. Unite the Perspective of Line and Staff Managers
HRP identify and harmonize the purpose of HR staff and line
managers
For HRP, HR staff require input from Line manager as unit
managers knows better the human resource need of their
department
Effective communication between line and HR managers
critical for successful HRP
OTHER BENEFITS
Top management has a better view of influence and impact of
business decisions on HR dimensions
HR cost can be lessen if human resource needs are known
before time
Enough time available to locate talent from market
Inclusion of women and minorities
Training and Development plans can be made well before time
FACTORS AFFECTING HRP
1 Type and strategy of an organization
Global expansion strategy mean hiring of employees whereas
mergers and acquisition strategy means downsizing/layoff
The decision whether to be proactive or reactive in HRP
2 Organizational growth cycle and planning
Small organization at the start of business may not have HRP
In growth stage focus is on recruitment
In declining phase HRP is reactive in nature and focus is on
retirement, and layoff

3 Environmental uncertainties
Degree of uncertainty determines focus and time span of HRP
4 Time horizon
Short term and long term personnel plans depend upon level
of uncertainty
5 Type and quality of forecasting information
HRIS and Job analysis information need to be in place that
provide accurate and timely data for HRP
6 Nature of job being filled
Job vacancies exist due to retirement, separation, job hoping,
promotion, and growth
Managerial and technical positions are difficult to fill in
Sufficient lead time is required to hire suitable candidates of
vacant position
7 Outsourcing
Sub contracting or outsourcing critical business activities
limits new hiring in this case HRP is not much required
Figure: HR PLANNING PROCESS

LECTURE 8

CHAPTER 4
HUMAN RESOURCE PLANNING
Aswathappa, K. (2008). Human Resource Management, Text and
Cases, 5th Edition, McGraw Hill Company
Learning Objective
The Planning Process
Forecasting Techniques
HR Plan Implementation
Downsizing Plan
Managerial Succession Planning
Requisite for HRP
Environmental Scanning
Analysis of external forces like socio-economic changes,
demographic changes, technological changes, government policies,
political situation
Organizational objectives determine objectives of HR plan
1. Are vacancies to be filled through promotions?
2. How to implement downsizing plan?
3. How to ensure availability of adaptive and flexible work
environment
HR Demand Forecast
The process of estimating organization's quantity and quality
of future workforce
In manufacturing concern estimated sale volume converted
into production plan that gives idea of working hours/number
of workers
HR demand forecast must consider both internal (budget
constraints, production level, new products and services,
employment policy etc.) and external factors (local and global
competition, economy, political and legal conditions etc.)
HR demand forecast help to
1) quantify the jobs required to produce number of goods or offering
service 2) identify desirable staff mix 3) determine appropriate level
of staff in each department 4) prevent shortages 5) monitor
compliance
Managerial Judgments
Managers brainstorm and decide the future demand
In bottom up approach line managers submit their future
demands

In top down approach top management decides company's

and departments future workforce demand

Ratio Trend Analysis

Quick and easy way to forecast demand
Past ratio between sales volume and number of workers are
reviewed to determine future demands
Regression Analysis
Statistical analysis technique that depicts the relationship
between sales volume and workforce size
Workforce Study Techniques
Calculation of amount of labour required by determining length
of operations and units of production
Planned output for next year
20,000 unit
Standard hours per unit
5
Planned hours for the year
100,000
Productive hours per man
2,000
(allowing normal overtime, absenteeism and idle time)

Number of direct labour required

50

Delphi Technique
Experts estimated HR needs
The responses are summarized and then send again to experts
for further processing
The process continues till consensus reach or opinion begins to
match
New Venture Analysis
Useful for new business ventures
Estimating HR needs based on analysis of existing companies
in same business
For example: Company starting coal mine operation can
predict future personnel needs by analyzing the
workforce demand of companies operating in industry
After demand forecast, next step is to consider the availability
and ability to procure the required number of
workers/employees
In supply forecast availability of kind and number of workers
from both inside and outside sources are measured
The benefits of supply forecast are
1) prevent shortages of employees 2) assess existing staffing
level 3) clarify staff mixes for future 4) quantify the positions
and people available in future

HR Audit
HR audit keep records of employee skills and abilities
HR audit of non management staff are called skill inventories
and those of managerial staff is called management
inventories
Skill Inventories
Skill inventories provide information about non managers and
used for making transfer and promotion decisions
The seven categories of information included in skill
inventories are
1) Personal data: Age, gender, marital status
2) Skills: Education level, job experience, training
3) Special Qualification: Professional bodies membership,
achievements
4) Salary and Job history: various job held, past and present pay
5) Company date: retirement date and seniority
6) Capacity of individual: health status, scores on psychological,
physical test, and IQ test
7) Special preference of individual: geographic location, type of
job
Management Inventories
The information on management inventories include following
details
Work history
Strength
Weakness
Promotion potential
Career goals
Personal data
Number and type of employee supervised
Total budget managed
Previous management duties
Techniques generally used for forecast internal supply
Inflows and outflows
current personnel level outflows + inflows =
internal supply
Turn over rate
turnover = total number of separations during one
year x 100
average number of employees during the
year
Conditions of work and absenteeism
Assessment of change in work conditions such as normal
weekly hours, retirement policy, overtime policy,

holidays, policy for employment of part time workers, and

shifts provides fair assessment of internal supply
Absenteeism when person supposed to work but does
not report for duty
absenteeism= number of persons- days lost
x 100
average number of persons x number of
working days
Productivity level
Change in productivity level affect the number of workers
required for per unit production
For example: Average sales per person is 50,000 thousands unit in a
year.
The productivity level increase at 10 percent per year.
Next year we are estimating sales target of 500,000 units.
We need 91 employees next instead of 100 since the per person
productivity for next year is 55,000

Movement among jobs

Some jobs provide supply for other jobs such as stenographer may
be fit for position of Secretary

External sources important for several reasons such as

1. New blood and new experience will be available
2. Organization needs to replenish lost personnel
3. Organization growth and diversification

HR Programming

After forecasting personnel demand and supply, the two must

be reconciled or balanced in order to fill vacancies by the right
people at the right
HR PLAN IMPLEMENTATION

Converting HR plan into actions

A series of actions are taken as HR plan implementation such as

recruitment, promotion, placement, training and development,
retention plan, downsizing plan, and succession plan

RECRUITMENT, SELECTION AND PLACEMENT

After the job vacancies are known effort must be made to

identify sources search for suitable candidates
The selection program should be professionally designated and
special care must be
taken to ensure complain ace with
policies of government

Hiring new employees would be unwise if there is likely hood

of the demand picking quickly and than return to a lower
Training and Development
The training and development should cover the number of
trainees required
Training and development is necessary for existing staff
Identification of resources personal for conducting
development program

Frequency of training and development and budget allocation

for such program

Retraining and Redeployment

New skills are to be imparted to existing staff when technology
changes
When a product line is discontinued its employees are to be
retrained or redeveloped to other where they could be
gainfully employed
Retention Plan
Retention plan covers action which would help, reduce
avoidable separation of employees
Important actions can be done
Compensation plan: increasing pay level, Improving pay
structure
Performance appraisal: asses performance periodically
Employees leaving in search of green pastures: Provide
better career development opportunities
Employees Leaving because of conflict: manage conflict
Induction crises: right person for right job
In case of surplus, downsizing is necessary
Downsizing plan should indicate
1 Who is to be made redundant and where and when?
2 Plan for redevelopment or retraining?
3 Steps to be taken to help redundant employees to find new jobs
4 Policy for declaring and making redundancy payments
5 Program for consulting with union or staff association and
informing those effected
Source: Aswathappa, 2008, p.96

Managerial succession plan include training programs at series

of job assignment leading to top positions
A typical succession planning involve following activities

1 Audit of existing executive, projection of likely future supply

from internal and external sources
2 Accelerated promotion
3 Performance related training and development prepare
individuals for future roles as well as current responsibilities
Requisites for successful HRP
1 HRP must be recognized as integral part of corporate planning
2 Backing of top management for HRP is absolutely essential

3 HRP responsibilities should be centralized

4 Personal records must be complete, up to date and available
5 The time horizon of the plan must be long enough to permit any
remedial action
6 Data collection and analysis techniques and plan needs to
constantly revised and improved

Source: Aswathappa, 2008, p.97