Lesson 1

PERSPECTIVES IN HUMAN RESOURCE MANAGEMENT

TOPICS
1. Perspectives and evolution in Human Resource Management, and
Importance/Significance of Human Factor
2. Challenges In HRM, inclusive Growth and Affirmative Action of HR in an Organization, and
role of Human Resource Manager

LEARNING OUTCOMES
At the end of the lesson, you should be able to:
1. discuss the perspective, evolution, and importance of Human Resource Management;
2. identify the challenges, inclusive growth and role of HR in organization; and

TOPIC 1: PERSPECTIVES AND EVOLUTION IN HUMAN RESOURCE

MANAGEMENT, AND IMPORTANCE/SIGNIFICANCE OF HUMAN FACTOR

PERSPECTIVE IN HUMAN RESOURCE MANAGEMENT

What is Human Resource Management?

HRM is the study of activities regarding people working in an organization. It is a
managerial function that tries to match an organization‘s needs to the skills and abilities
of its employees.

Definitions of HRM
Human resources management (HRM) is a management function concerned with
hiring, motivating and maintaining people in an organization. It focuses on people in
organizations. Human resource management is designing management systems to
ensure that human talent is used effectively and efficiently to accomplish organizational
goals.
HRM is the personnel function which is concerned with procurement,
development, compensation, integration and maintenance of the personnel of an
organization for the purpose of contributing towards the accomplishments of the
organization‘s objectives. Therefore, personnel management is the planning, organizing,
directing, and controlling of the performance of those operative functions (Edward B.
Philippo).

Features of HRM or characteristics or nature

 HRM involves management functions like planning, organizing, directing and
controlling.
 It involves procurement, development, maintenance of human resource.
 It helps to achieve individual, organizational and social objectives.
 HRM is a mighty disciplinary subject. It includes the study of management
psychology communication, economics and sociology.
 It involves team spirit and team work.

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Scope of HRM
The major HRM activities include HR
planning, job analysis, job design, employee hiring, employee and executive
remuneration, employee motivation, employee maintenance, industrial relations and
prospects of HRM.

The scope of Human Resources Management extends to:

All the decisions, strategies, factors, principles, operations, practices,
functions, activities and methods related to the management of people as employees in
any type of organization.
All the dimensions related to people in their employment
relationships, and all the dynamics that flow from it.
The scope of HRM is really vast. All major activities in the working life of a
worker – from the time of his or her entry into an organization until he or she leaves it
comes under the purview of HRM. American Society for Training and Development
(ASTD) conducted fairly an exhaustive study in this field and identified nine broad areas
of activities of HRM. These are given below:
 Human Resource Planning
 Design of the Organization and Job
 Selection and Staffing
 Training and Development
 Organizational Development
 Compensation and Benefits
 Employee Assistance
 Union/Labour Relations
 Personnel Research and Information System

Human Resource Planning : The objective of HR Planning is to ensure

that the organization has the right types of persons at the right time at the right place. It
prepares human resources inventory with a view to assess present and future needs,
availability and possible shortages in human resource.
Thereupon, HR Planning forecast demand and supplies and identify sources of
selection. HR Planning develops strategies both long-term and short-term, to meet the
man-power requirement.
Design of Organization and Job: This is the task of laying down organization
structure, authority, relationship and responsibilities. This will also mean definition of
work contents for each position in the organization. This is done by ―job description‖.
Another important step is ―Job specification. Job specification identifies the attributes
of persons who will be most suitable for each job which is defined by job description.
Selection and Staffing: This is the process of recruitment and selection of staff.
This involves matching people and their expectations with which the job specifications
and career path available within the organization.
Training and Development: This involves an organized attempt to find out
training needs of the individuals to meet the knowledge and skill which is needed not
only to perform current job but also to fulfil the future needs of the organization.
Organizational Development: This is an important aspect whereby ―Synergetic
effect‖ is generated in an organization i.e. healthy interpersonal and inter-group
relationship within the organization.
Compensation and Benefits: This is the area of wages and salaries
administration where wages and compensations are fixed scientifically to meet fairness

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and equity criteria. In addition labour welfare measures are involved which include
benefits and services.
Employee Assistance: Each employee is unique in character, personality,
expectation and temperament. By and large each one of them faces problems every
day. Some are personal some are official. In their case he or she remains worried. Such
worries must be removed to make him or her more productive and happy.
Union-Labour Relations: Healthy Industrial and Labour relations are very
important for enhancing peace and productivity in an organization. This is one of the
areas of HRM.
Personnel Research and Information System: Knowledge on behavioural science
and industrial psychology throws better insight into the workers expectations,
aspirations and behaviour. Advancement of technology of product and production
methods have created working environment which are much different from the past.
Globalization of economy has increased competition many fold. Science of ergonomics
gives better ideas of doing a work more conveniently by an employee. Thus, continuous
research in HR areas is an unavoidable requirement. It must also take special care for
improving exchange of information through effective communication systems on a
continuous basis especially on moral and motivation.

Functions of HRM
Human Resources management has an important role to play in
equipping organizations to meet the challenges of an expanding and increasingly
competitive sector. Increase in staff numbers, contractual diversification and changes in
demographic profile which compel the HR managers to reconfigure the role and
significance of human resources management. The functions are responsive to current
staffing needs, but can be proactive in reshaping organizational objectives. All the
functions of HRM are correlated with the core objectives of HRM. For example personal
objectives is sought to be realized through functions like remuneration, assessment etc

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 Figure 1: HR Functions

Functions of HRM
Strategic HR Management: As a part of maintaining organizational competitiveness,
strategic planning for HR effectiveness can be increased through the use of HR metrics
and HR technology. Human resource planning (HRP) function determine the number
and type of employees needed to accomplish organizational goals. HRP includes
creating venture teams wit h a balanced skill-mix, recruiting the right people, and
voluntary team assignment. This function analyses and determines personnel needs in
order to create effective innovation teams. The basic HRP strategy is staffing and
employee development.
Equal Employment Opportunity: Compliance with equal employment opportunity (EEO)
laws and regulations affects all other HR activities.
Staffing: The aim of staffing is to provide a sufficient supply of qualified individuals to fill
jobs in an organization. Job analysis, recruitment and selection are the main functions
under staffing. Workers job design and job analysis laid the foundation for staffing by
identifying what diverse people do in their jobs and how they are affected by them.
Job analysis is the process of describing the nature of a job and specifying the
human requirements such as knowledge, skills, and experience needed to perform the
job. The end result of job analysis is job description. Job description spells out work
duties and activities of employees. Through HR planning, managers anticipate the
future supply of and demand for employees and the nature of workforce issues,
including the retention of employees. So HRP precedes the actual selection of people for
organization.
These factors are used when recruiting applicants for job openings. The selection
process is concerned with choosing qualified individuals to fill those jobs. In the
selection function, the most qualified applicants are selected for hiring from among the
applicants based on the extent to which their abilities and skills are matching with the
job.
Talent Management and Development: Beginning with the orientation of new
employees, talent management and development includes different types of training.
Orientation is the first step towards helping a new employee to adjust himself to the
new job and the employer. It is a method to acquaint new employees with particular
aspects of their new job, including pay and benefit programmes, working hours and
company rules and expectations. Training and Development programs provide useful
means of assuring that the employees are capable of performing their jobs at
acceptable levels and also more th an that. All the organizations provide training for
new and in experienced employee. In addition, organization often provide both on the
job and off the job training programmes for those employees whose jobs are
undergoing change.
Likewise, HR development and succession planning of employees and managers
is necessary to prepare for future challenges. Career planning has developed as result of
the desire of many employees to grow in their jobs and to advance in their career.
Career planning activities include assessing an individual employee‘s potential for
growth and advancement in the organization. Performance appraisal includes
encouraging risk taking, demanding innovation, generating or adopting new tasks, peer
evaluation, frequent evaluations, and auditing innovation processes.
Total Rewards: Compensation in the form of pay, incentives and benefits are the
rewards given to the employees for performing organizational work. Compensation
management is the method for determining how much employees should be paid for
performing certain jobs.

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 Compensation affects staffing in that people are generally attracted to
organizations offering a higher level of pay in exchange for the work performed. To be
competitive, employers develop and refine their basic compensation systems and may
use variable pay programs such as incentive rewards, promotion from within the team,
recognition rewards, balancing team and individual rewards etc.
This function uses rewards to motivate personnel to achieve an organization‘s
goals of productivity, innovation and profitability. Compensation is also related to
employee development in that it provides an important incentive in motivating
employees to higher levels of job performance to higher paying jobs in the organization.
Benefits are another form of compensation to employees other than direct pay
for the work performed. Benefits include both legally required items and those offered
at employer‘s discretion. Benefits are primarily related to the area of employee
maintenance as they provide for many basic employee needs.
Risk Management and Worker Protection: HRM addresses various workplace risks to
ensure protection of workers by meeting legal requirements and being more responsive
to concerns for workplace health and safety along with disaster and recovery planning.
Employee and Labor Relations: The relationship between managers and their
employees must be handled legally and effectively. Employer and employee rights must
be addressed. It is important to develop, communicate, and update HR policies and
procedures so that managers and employees alike know what is expected. In some
organizations, union/management relations must be addressed as well.
The term LABOUR RELATION refers to the interaction with employees who are
represented by a trade union. UNIONS are organization of employees who join together
to obtain more voice in decisions affecting wages, benefits, working conditions and
other aspects of employment. With regard to labour relations the major function of HR
personnel includes negotiating with the unions regarding wages, service conditions and
resolving disputes and grievances.

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 TOPIC 2: CHALLENGES IN HRM, INCLUSIVE GROWTH AND
AFFIRMATIVE ACTION OF HR IN ORGANIZATION, AND ROLE OF HR
MANAGER

CHALLENGES IN HRM

The HR Managers of today may find it difficult because of the rapidly changing business
environment and therefore they should update their knowledge and skills by looking at
the organization ‘s need and objectives.

Managing the Vision: Vision of the organization provides the direction to business
strategy and helps managers to evaluate management practices and make decisions. So
vision management becomes the integral part of the process of Man management in
times to come.

Internal Environment: Creating an environment which is responsive to external

changes, providing satisfaction to the employees and sustaining through culture and
systems is a challenging task.

Changing Industrial Relations: Both the workers and managers have to be managed by
the same HRM Philosophy and this is going to be a difficult task for the managers of
tomorrow.

Building Organizational Capability: Even in the adverse circumstances the employees

have to be made to live in psychological state of readiness to continually change.

Job Design and Organization Structure: Instead of depending on foreign concepts we

need to focus on understanding the job, technology and the people involved in carrying
out the tasks.

Managing the Large Work Force: Management of large workforce poses the biggest
problem as the workers are conscious of their rights.

Employee Satisfaction: Managers should be aware of techniques to motivate their

employees so that their higher level needs can be satisfied.

Modern Technology: There will be unemployment due to modern technology and this
could be corrected by assessing manpower needs and finding alternate employment.

Computerized Information System: This is revolutionary in managerial decision making

and is having impact on coordination in the organization.

Managing Human Resource Relations: As the workforce comprises of both educated

and uneducated, managing the relations will be of great challenge. One of the
challenges HR managers face is issues of up gradation of the skill set through training
and development in the face of high attrition. Indian companies are recognizing their
responsibilities to enhance the employee‘s opportunity to develop skills and abilities for
full performance within the position and for career advancement.

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INCLUSIVE GROWTH AND AFFIRMATIVE ACTION OF HR IN AN ORGANIZATION

What is affirmative action?

It is a program or policy of a company that aims to eliminate discrimination by
providing equal opportunities and improving his /her profession. (Education).
Affirmative action refers to policies that take factors including "race, color,
religion, sex, or national origin" into consideration in order to benefit an
underrepresented group, usually as a means to counter the effects of a history of
discrimination.

Examples of affirmative action:

 Recruit a diverse manpower
 Generate amiable work environment
 Training and counselling
 Disciplinary action against discrimination of any kind

Purpose:

Figure 2: Affirmative Action

What is Inclusive Growth?

Inclusive growth approach takes a longer term perspective as the focus is on
productive employment.

Examples:
 More Productive jobs will be created
 Economic opportunity expanded for all
o Direct income redistribution
o Increasing incomes for excluded groups

Inclusive Growth and Affirmative Action of HR in an Organisation

Affirmative action should provide consistent, fair and ethical leadership to meet
present and future HR challenges.

New Trends in Human Resource Management

 Attitude Surveys
o Better Communication Channels
o Change in the Work-Life
o Job Redesign
o Job Enlargement

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 o New approaches to compensation and rewards
o Career Planning
o Performance Appraisal
o Decentralisation
o Breaking down the hierarchical structure
o Facilitating Empowerment
o Initiating and facilitating process of change
o Enlarging the knowledge base
 Developing team spirit
 Facilitating the employees desires of self-actualisation.

ROLE OF HUMAN RESOURCE MANAGER

The role of HRM is to plan, develop and administer policies and programs
designed to make optimum use of an organizations human resources. It is that part of
management which is concerned with the people at work and with their relationship
within enterprises. Its objectives are:
(a) Effective utilization of human resources,
(b) Desirable working relationships among all members of the organizations, and
(c) Maximum individual development.
Human resources function as primarily administrative and professional. HR staff
focused on administering benefits and other payroll and operational functions and
didn‘t think of themselves as playing a part in the firm‘s overall strategy.
HR professionals have an all-encompassing role. They are required to have a
thorough knowledge of the organization and its intricacies and complexities.
The ultimate goal of every HR person should be to develop a linkage between the
employee and organization because employee‘s commitment to the organization is
crucial.
The first and foremost role of HR personnel is to impart continuous education to
the employees about the changes and challenges facing the country in general and their
organization in particular. The employees should know about the balance sheet of the
company, sales progress, and diversification of plans, share price movements, turnover
and other details about the company. The HR professionals should impart such
knowledge to all employees through small booklets, video films and lectures.

The primary responsibilities of Human Resource managers are:

 To develop a thorough knowledge of corporate culture, plans and policies
 To act as an internal change agent and consultant
 To initiate change and act as an expert and facilitator To actively involved in
company‘s strategy formulation
 To keep communication line open between the HRD function and individuals
and groups both within and outside the organization
 To identify and evolve HRD strategies in consonance with overall business
strategy
 To facilitate the development of various organizational teams and their
working relationship with other teams and individuals
 To try and relate people and work so that the organization objectives are
achieved efficiently and effectively
 To diagnose problems and determine appropriate solution particularly in the
human resource areas.
 To provide co-ordination and support services for the delivery of HRD
programmes and services

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  To evaluate the impact of an HRD intervention or to conduct research so as
to identify, develop or test how HRD in general has improved individual and
organizational performance.
According to Dave Ulrich HR play ‘s four key roles.
Strategic Partner Role turning strategy into results by building organizations that
create value;
Change Agent Role making change happen, and in particular, help it happen
fast
Employees Champion Role managing the talent or the intellectual capital within a firm

Administrative Role trying to get things to happen

better, faster and cheaper.
The role HR in organizations has undergone an extensive change and many
organizations have gradually oriented themselves from the traditional personnel
management to a human resources management approach.
The basic approach of HRM is to perceive the organization as a whole. Its
emphasis is not only on production and productivity but also on the quality of life. It
seeks to achieve the paramount development of human resources and the utmost
possible socio-economic development.

Current Classification of HR Roles

According to R.L Mathis and J. H. Jackson (2010) several roles can be fulfilled by
HR management. The nature and extent of these roles depend on both what upper
management wants HR management to do and what competencies the HR staff have
demonstrated. Three roles are typically identified for HR.

ADMINISTRATIVE STRATEGIC HR
OPERATIONAL ACTIONS
* Personnel *Organizational/busienss
*Managing employee
practices * Legal *Strategies
*Relationship issues
compliance forms and *HR strategic or
*Employee advocate
paper works planning evaluation

Figure 3: Classifications of HR Roles

1. Administrative Role of HR
The administrative role of HR management has been heavily oriented to
administration and recordkeeping including essential legal paperwork and policy
implementation. Major changes have happened in the administrative role of HR during
the recent years. Two major shifts driving the transformation of the administrative role
are: Greater use of technology and Outsourcing.
Technology has been widely used to improve the administrative efficiency of HR
and the responsiveness of HR to employees and managers, more HR functions are
becoming available electronically or are being done on the Internet using Web-based
technology. Technology is being used in most HR activities, from employment
applications and employee benefits enrollments to e-learning using Internet-based
resources.
Increasingly, many HR administrative functions are being outsourced to vendors.
This outsourcing of HR administrative activities has grown dramatically in HR areas such
as employee assistance (counseling), retirement planning, benefits administration,
payroll services, and outplacement services.

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2. Operational and Employee Advocate Role for HR
HR managers manage most HR activities in line with the strategies and
operations that have been identified by management and serves as employee
―champion‖ for employee issues and concerns.
HR often has been viewed as the ―employee advocate‖ in organizations. They
act as the voice for employee concerns, and spend considerable time on HR ―crisis
management, ‖ dealing with employee problems that are both work-related and not
work-related. Employee advocacy helps to ensure fair and equitable treatment for
employees regardless of personal background or circumstances.
Sometimes the HR‘s advocate role may create conflict with operating managers.
However, without the HR advocate role, employers could face even more lawsuits and
regulatory complaints than they do now.
The operational role requires HR professionals to cooperate with various
departmental and operating managers and supervisors in order to identify and
implement needed programs and policies in the organization. Operational activities are
tactical in nature. Compliance with equal employment opportunity and other laws is
ensured, employment applications are processed, current openings are filled through
interviews, supervisors are trained, safety problems are resolved, and wage and benefit
questions are answered. For carrying out these activities HR manager matches HR
activities with the strategies of the organization.

3. Strategic Role for HR

The administrative role traditionally has been the dominant role for HR.
However, as Figure 1.4 indicates that a broader transformation in HR is needed so that
significantly less HR time and fewer HR staffs are used just for clerical work.
Differences between the operational and strategic roles exist in a number of HR
areas. The strategic HR role means that HR professionals are proactive in addressing
business realities and focusing on future business needs, such as strategic planning,
compensation strategies, the performance of HR, and measuring its results. However, in
some organizations, HR often does not play a key role in formulating the strategies for
the organization as a whole; instead it merely carries them out through HR activities.
Many executives, managers, and HR professionals are increasingly seeing the
need for HR management to become a greater strategic contributor to the ―business‖
success of organizations. HR should be responsible for knowing what the true cost of
human capital is for an employer. For example, it may cost two times key employees
‘annual salaries to replace them if they leave. Turnover can be controlled though HR
activities, and if it is successful in saving the company money with good retention and
talent management strategies, those may be important contributions to the bottom line
of organizational performance.
The role of HR as a strategic business partner is often described as ―having a
seat at the table, ‖ and contributing to the strategic directions and success of the
organization. That means HR is involved in devising strategy in addition to implementing
strategy. Part of HR‘s contribution is to have financial expertise and to produce financial
results, not just to boost employee morale or administrative efficiencies. Therefore, a
significant concern for chief financial officers (CFOs) is whether HR executives are
equipped to help them to plan and meet financial requirements.
However, even though this strategic role of HR is recognized, many organizations
still need to make significant progress toward fulfilling it. Some examples of areas where
strategic contributions can be made by HR are:
 Evaluating mergers and acquisitions for organizational ―compatibility, ‖
structural changes, and staffing needs
 Conducting workforce planning to anticipate the retirement of employees at
all levels and identify workforce expansion in organizational strategic plans
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  Leading site selection efforts for new facilities or transferring operations to
international outsourcing locations based on workforce needs
 Instituting HR management systems to reduce administrative time,
equipment, and staff by using HR technology
 Working with executives to develop a revised sales compensation and
incentives plan as new products

It is the era when for the competitive triumph of the organization there is a need
to involve HRM significantly in an integrated manner, which demands such capabilities
from the HR specialists.
The role of HR shifted from a facilitator to a functional peer with competencies in
other functions, and is acknowledged as an equal partner by others. The HR is motivated
to contribute to organizational objectives of profitability and customer satisfaction, and
is seen as a vehicle for realization of quality development. The department has a
responsibility for monitoring employee satisfaction, since it is seen as substitute to
customer satisfaction.
According to McKinsey ‘s 7-S framework model HR plays the role of a catalyst for
the organization. According to this framework, effective organizational change is a
complex relationship between seven S‘s. HRM is a total matching process between the
three Hard S‘s (Strategy, Structure and Systems) and the four Soft S‘s (Style, Staff, Skills
and Super-ordinate Goals). Clearly, all the S‘s have to complement each other and have
to be aligned towards a single corporate vision for the organization to be effective. It has
to be realized that most of the S‘s are determined directly or indirectly by the way
Human Resources are managed, and therefore, HRM must be a part of the total
business strategy.

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TOPIC 3: HUMAN RESOURCES POLICIES, COMPUTER APPLICATIONS
IN HRM AND HUMAN RESOURCE ACCOUNTING AND AUDIT
HUMAN RESOURCE POLICIES

Predetermined established guideline towards the attainted of accepted goals and

objectives.

Guidelines facilitate properly designed efforts to accomplish the strategic intent.

―A policy is a man-made rule of pre-determined course of action that is established to

guide the performance of work toward the organization objectives. It is a type of
standing plan that serves to guide subordinates in the execution of their tasks‖.

Objectives Programmes Procedure

Specific goals, aims, It is developed on polices – Procedure defines the
Quantitative terms which simply the decisions – manner or way of
the Individual or group leads to specific action accomplishing - It is
seeks to accomplish (Policy including practices and process or method.
is the guide to accomplish) procedures.
Policy Differentiated from Objectives, Programmes and Procedure

Flippo Definition of Policy

 is the man-made rule of pre-determined course of action that is established to
guide the performance of work toward the organization objectives ‖Yoder
 A policy is a pre-determined, selected course established as a guide towards
accepted goals and objectives. They establish the framework of guiding
principles that facilitate delegation to lower levels and permit individual
managers to select appropriate tactics or programmes.‖
 Personnel Polices are those that individual have developed to keep them on
track towards their personnel objectives. ‖

Personnel Polices refer to principles and rules to conduct which “Formulate, redefine,
break into details and decide a number of actions” that govern the relationship with
employees in the attainment of organizational objectives.

Personnel Polices are

 Key stone in the arch of the management
 Life blood for the successful functioning of the personnel management.
 Statement of intentions
 Positive declaration and command to an organization.

Need for a HR Policy

 Avoid unintended obligations
 Legal requirements
 Employment at will, contractual status
 Defense of claims
 Helps avoid union organizing
 Risk management
 Time saver

Features of a sound HR Policy

 Definite, positive, clear and easy to understand
 Written
 Reasonable stable

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  Supplementary to all other policies of the organization and the public policy
 Recognition and individual relationship between the management and the
employees
 Based on the facts
 Provide two-way communication
 Supported by the management, employees and the union
 Progressive
 Measurable
 Uniform for the entire organization
 Practically applicable

Aims and objective of Personnel polices

 Enable the organization to carry out the main objectives
 Awareness of items in policies and to secure the co operation
 Sense of unity with the enterprise
 Provide competent, adequate and trained personnel for all levels and types of
management
 To protect the common interest of all parties
 Recognize the role trade unions in the organization.
 Efficient consultative service.
 Management leadership
 Delegating the human relations
 Cooperative understanding
 Security of employment
 Opportunity for growth
 Payment of fair and adequate wages
 To recognize the work and accomplishments
 To create the sense of responsibility

Principles of HR policy
 Right man in the right place
 Train everyone for the job to be done
 Make the organization a coordinated team
 SS the right tools and right conditions of work
 Give security with opportunity, incentive, recognition
 Look ahead, plan head for more and better things.

Types of HR Policies
 Functional vs centralized policy
o Functional – Different categories of personnel
o Centralized – Common throughout the organization

 Minor vs Major
o Minor – Relationship in a segment of an organization, with considerable
emphasis on details and procedures.
o Major – Overall objectives, procedures and control which affect an
organization as whole.

Specific Policies
 Hiring – factors like reservation, marital status,

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  Terms and conditions – compensation policy, hours of work, overtime,
promotion, transfer, etc.
 Medical assistance - sickness benefits
 Housing, transport, and other allowances.
 Training and development
 Industrial relations

Coverage of HR Policies
 Travel Pay  Pay Advances
 Work Records  Sick Leave
 Temporary & Casual  Voting
 Appointments  Worker's Compensation
 Workweek & Pay  Labor Relations
Periods  Probation
 Compensation  Grievance Procedure
 Employee Discipline  Ethical Conduct
 Pay bands  Sick

 Salary Administration  Orientation

 Relocation Pay  Vacancies
 Payroll Deductions  Employment Offers
 Rates of Pay for New  References
Employees  Interviewing
 Terminating Employees  Candidate Testing
 Layoff  Transfers
 Performance  Consultants and
 Career Development Contractors
 Workshops and  Recruitment Advertising
Seminars  Continuous Service
 Family Health Leave  Retirement Plan
 Holidays  Accidental Insurance
 Vacation
o Leaves of Absence
Without Pay
o Personal Leave

Why to Adopt Policies?

Following are the benefits of adopting the policies by the organization

 Complete thought of the basic needs of both organization and employees
 Established policies ensure consistent treatment of all personnel treatment
throughout the organization
 Policy promotes stability – continuity of action
 It serves as a standard of performance
 Helps to build employee motivation and loyalty
 Helps to resolve interpersonal or intrapersonal and intergroup conflicts.

Formulating Policies

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Five principle sources for determining the content and meaning of policies
 Past practice
 Prevailing practice in the rival companies
 Attitudes and philosophies of the founders (Top level Management
 Attitudes and philosophies of middle level management
 Knowledge and experience from handling personnel problems

Steps in design the Policy

 Initiate a policy
 Uncovering the facts by personnel department
 Recommending a policy to top management
 Put the policy in writing
 Explaining and discussing the proposed policy with members
 Adopting and launching it
 Communicating it to employees to all levels
 Administering it
 Initiating a follow up
 Evaluating it
 Restating or Reformulating the policy

Figure 4: HRM Model

Elements of HR Policy
 History of Company’s Growth
 Employment practice and condition of employment
 Grievance of redressal procedure
 Safety rules and regulation
 Mutuality of interest and need for co operation
 Employee financial aids
 Educational Opportunities
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  Employees news sheet and house journal
 Company policy
 Collective bargaining
 Procedures of disseminating information on company policies
 Maintenance of discipline & Public Relations
 Employees news sheet and house journal

HUMAN RESOURCE ACCOUNTING AND AUDIT

Human Resource Accounting & Audit

Definition
―Accounting for people as an organizational resource. It involves measuring the costs
incurred by business firms and other organizations to recruit, select, hire, train and
develop human assets. It involves measuring the economic value of people to the
organization. ‖

Basic Information of HR
 Number of Employees
 Categories
 Grades
 Total Value of human resources
 Value per employee

HR Acquisition
 Number of employees acquired during the year
 Cost of Acquisition
 Levels for which they were acquired
 HR Development
 All information pertaining to HRD activities of the organization
 HR maintenance
 Cost related to HR maintenance.
 HR Separation
 Cost related to HR Separation, attribution rate.
 Details of benefits provided to the employees

Various Methods:
 Non- Monetary Measurement
 Monetary Measurement

On- Monetary Measurement

 Capitalization of Historical Cost
 Replacement Cost Method
 Opportunity Cost method
 Economic Value Method
 Present Value Method
 HR Accounting
 Developing skill inventory
 Performance Appraisal
 Assessing the individual capacity for development
 Attitude survey
 Subjective Appraisal

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