CHAPTER ONE: OVERVIEW OF HUMAN RESOURCE MANAGEMENT

INTRODUCTION

Organizations achieve their mission by having resources like Material, Information, Financial
and Human resources. These resources are usually called factors of production /operation or
inputs.

Inpu Proces Output

t s

Human resources (operations) goods or services

Financial resources

Material resources

Information resources
Human resource is all people who work in an organization. It is one of the most crucial and most
vital resources of any organization, because without human resource other resources are useless
and idle.

Generally, all organizations whether government or non-government, public or private, military

or religious depend up on human resources for their operations. The costs incurred on human
resources are investments which increase an income of the organization.

Human Resources Management is defined as management activities designed to provide for and
coordinate the human resources of all organization.

Human resources management refers to the practices and policies needed to manage the people
at work.

Human resource management (HRM) is concerned with the effective management and
utilization of human resources in organizations. For most organizations, human resources are
their greatest assets and the optimal utilization of these resources is the key to competitive
advantage in today's increasingly harsh economic environment. Moreover, because effective
human resource management is now so crucial for success, many organizations regard HRM as
the responsibility of all managers, not just specialists in personnel management, as was often the
case in the past. From a strategic point of view, HRM policies and activities are designed to
support and reinforce more general business strategies and objectives. At an operational level,
HRM is concerned with the design and implementation of procedures to optimize the day-to-day
management of people in organizations.

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Therefore, Human Resource Management is one of Management disciplines that will equip
management students to get the necessary knowledge, skill and ability to manage human
resources.

MEANING AND DEFINITION

Human Resource Management is the process of recruitment, selection of employee, providing

proper orientation and induction, providing proper training and the developing skills, assessment
of employee (performance of appraisal), providing proper compensation and benefits,
motivating, maintaining proper relations with labor and with trade unions, maintaining
employee’s safety, welfare and health by complying with labor laws of concern state or country.

HRM is the process of achieving organizational objectives by anticipating, acquiring,

developing, retaining, and properly using the HRs in an Organization.

Edwin Flippo defines- HRM as “planning, organizing, directing, controlling of procurement,

development, compensation, integration, maintenance and separation of human resources to the
end that individual, organizational and social objectives are achieved.”

The National Institute of Personal Management (NIPM) of India has defined human resources
management as “that part of management which is concerned with people at work and with their
relationship within an enterprise. Its aim is to bring together and develop into an effective
organization of the men and women who make up enterprise and having regard for the well –
being of the individuals and of working groups, to enable them to make their best contribution to
its success”.

Many great scholars had defined human resource management in different ways and with
different words, but the core meaning of the human resource management deals with how to
manage people or employees in the organization.

EVOLUTION & DEVELOPMENT OF HRM

• The origin of HRM is unknown.

• Viewed as a generic activity involving the management of other people’s labor in
production, HRM goes back to the dawn of human history.
• Certain HR functions, even though informal in nature, were performed whenever people
came together for a common purpose.
• The buildings of ancient great structures including the great pyramids, rocky hewn
churches of Lalibela, the Axum Stele, the great wall of China etc. implies the HR
activities were performed in the past
• From 2000 B.C. up to 1500 B.C., the Chinese used employee screening techniques, & the
Greeks used an apprentice system.

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• These actions of our past recognized the need to select & train individuals for jobs
• Constructing such a building & monumental achievement, requires certain HR activities
like;
• HR planning,
• HR selection
• HR training
• HR monitoring and
• HR decision-making.
• There are also biblical evidences related with HR management… Jethro the father in law
of Moses taught Moses how to manage the people during the biblical exodus from Egypt
to Jerusalem
• The status of labor prior to industrial revolution was extremely low & the relationships
were characterized by slavery, seldom & guild system.
• The slaves performed manual tasks to agricultural, military & clerical responsibilities.
• The efficiency levels of workers were low due to over-dependence on negative incentives
& negligence of positive incentives.
• With the advent of Industrial Revolution, the cottage system got transformed to factory
system leading to enhanced specialization.
• But this period was dominated by many unhealthy practices like unhealthy work
environment, long working hours, increased fatigue rate, strains, likelihood of accidents
& poor work relationship.
• A major change was noticed in personnel practices after the World War I.
• After the war a number of studies were undertaken to analyze the fallacies in the
personnel field.
• Findings of behavioral science studies were used to enhance productivity. For the first
time, psychology was applied to management.
• The application of psychology brought a dramatic change in the work relationship &
productivity started increasing.
• Thereafter, organizations started offering fringe benefits to workers to motivate them to
work.
• Increasing number of organizations adopting manpower planning, techniques of people
management, etc.
• Organizations started to stress on management and individual employee relationships.
• This was followed by setting up of labors relations department to negotiate & administer
collective bargaining.
• By the 1970s a fairly consistent set of activities & roles had developed for people
management, which in most large organizations was perceived as a specialist
management function, usually termed Personnel Management & comprising the areas of
recruitment, selection, pay and conditions of service etc.

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 • The people management policies & practices which are usually termed ‘HRM’ originated
in manufacturing industry in the USA during the late 1970s and early 1980s.
• Beginning in the early 1980s, the modern version of HRM also quickly spread beyond
North America to Europe, Asia, and other parts of the world.
• The subject is now taught at universities in all parts of the globe and the term ‘human
resource management,’ is increasingly the name companies everywhere use to label their
people management function.
• Changes in labor force demographics, technology, & globalization since the 1980s have
had a major impact on the HRM function.
• The evolution of HRM is not without problem areas and shortcomings. Some of these
remain today.
• Compared to some other areas of management, such as finance, marketing, & accounting,
HRM has often ranked lower in strategic importance, corporate investment, &
professional status.
• Some companies view employees as organizational assets, & make HRM a strategic
driver of competitive advantage.
• Many others have either significantly cut their investment in HRM or continue to practice
people management in a largely tactical, administrative, and cost-focused manner.
Personnel Management (PM) And Human Resource Management (HRM)
Is there any difference between HRM and PM? Or are they similar?
• HRM derives its origin from the practices of the earlier personnel management, which
assisted in the management of people in an organization setup.
• The term human resource refers the total sum of all components (like skill, & creative
ability) possessed by all the people (employed, self-employed, un employed, owners,
employers, etc.) whereas the term personnel is limited to only employees of all
organizations.
• HRM is wider in scope and views employees as an important asset or resource in an
organization. PM is narrow in scope and views employees as a tool for the achievement
of the goal of the organization.
Personnel Management
• Personnel means persons employed. Personnel management is the management of people
employed.
• Employees in PM treated mostly as economic beings & they are exchanged for
wage/salary.
• Employees viewed as commodity or tool or equipment which can be purchased & used.
• Employees treated as cost center & therefore management controls the cost of labor.
• Employees are used mostly for organizational benefits only.
Human Resource Management
• HRM is the management of employees’, skills, knowledge, talents, abilities, aptitudes
etc.

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 • Employees in HRM not only treated as economic beings but also as social &
psychological beings.
• Employees treated as a resource not commodities.
• Employees treated as cost center & therefore invests capital for human resource
development & future utility.
• Employees are used for the multiple mutual benefit of the organization, employees &
their family members.
Scope of HRM
• The scope of HRM is indeed 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 the organizations
comes under the purview of HRM.
• Scope of HRM can be described based on the following activities of human resource
management
 HR Planning  Job Evaluation
 Job Analysis  Employee Remuneration
 Job Design  Motivation
 Recruitment & Selection  Communication
 Orientation  Welfare
 Training & Development  Safety & Health
 Performance Appraisal  Industrial Relations
OBJECTIVES OF HUMAN RESOURCE MANAGEMENT
Manager's and human resource department achieves their purpose by meeting objectives.
Objectives are benchmarks against which actions are evaluated. Human resource objectives
reflect the intention of senior management and must balance the challenges from the
organization. Hence, objectives of HRM are based on Organizational, Personal and Societal
objectives.

1. Personal Objective

 Human resource management strives to satisfy the personal objectives of the members
of an organization through monetary (provision of fair and consistent pay scales) and
non-monetary (like provision of conducive work environment) devices.

To assist employees in achieving their personal goals, at least in so far as these goals
enhance the individual’s contribution to the organization. This is necessary to maintain
employee performance & satisfaction for the purpose of maintaining, retaining &
motivating the employees in the organization.
2. Functional Objectives:
 To maintain department’s contribution & level of services at a level appropriate to the
organization’s needs.

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 3. Organizational Objective
 The goal of HRM is the creation of workforces that have proper ability and motivation
to accomplish the basic organizational objectives.
 To recognize the role of HRM in bringing about organizational effectiveness. HRM is
only means to achieve to assist the organization with its primary objectives.
4. Societal Objective
 To be ethically and socially responsible to the needs and challenges of the society
while minimizing the negative impact of such demands upon the organization.
 Human resource management relate to the satisfaction of social and community
objectives, such as
 serving the customers honestly,

 providing a higher standard of living in the community,

 bringing comfort and happiness to society,

 using resources to the society benefit,


Being responsive to the needs and challenges of the society, such as Equal
Employment Opportunity, employing the disadvantaged groups of the society, etc.).
IMPORTANCE OF HUMAN RESOURCE MANAGEMENT

Human resource management is important for various reasons. It is one of the most important
and most interesting courses in management. It is important because it deals with people and
people are:
 Very important but very difficult to manage
 All organizations of more than one person deal with people.
It is interesting because human nature is more complex and complicated than any other resource
in the organization.

Human Resource Management is related with effective utilization of human resources. The
importance of HRM can be discussed as:

1. Importance concerned with individual organization

Human Resource Management can help an organization to achieve to its objective more
efficiently and effectively in the following ways:

(a) Procurement of required talents through recruitment, selection, placement, inducting,

training, compensation and promotion policies.

(b) Secures co-operation of all employee of the organization for achieving goals.

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(c) Proper utilization of human resources for the success of the enterprise.

(d) Ensure a future team of efficient and competent workers required for the organization.

2. Professional Importance

Professional competency among employees can be achieved through the following ways.

(a) Human resource management provides maximum opportunities to employees for their
personnel development.

(b) Providing healthy relationship among employees

(c) Proper allocation of work among employees.

(d) Providing training facilities for the individual development of employees.

3. Social Importance
HRM is important in social perspective also. It includes the following aspects:

(a) Human resource management enhances the dignity of labor.

(b) Provides suitable job to suitable person and it will help to satisfy the psychological and social
satisfaction of employees.
(c) Helps to provide reasonable compensation to workers, which leads them to have a good
standard of living.
(d) Helps to maintain a balance between jobs and job seekers in terms of numbers, qualification,
aptitude (ability) etc.
(e) Takes health and safety measures which ensures physical and mental health of the employees.
4. National Importance
Effective management of human resources will speed up the economic growth of nation. This in
turn leads to better standard of living and more job opportunities.

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