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HRM introduction notes one

Financial management (Mount Kenya University)

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HRM – TOPIC 1

INTRODUCTION TO PRINCIPLES OF HUMAN RESOURCE

MANAGEMENT

HUMAN RESOURCE MANAGEMENT- INTRODUCTION

Human resource management is a relatively modern concept, which involves arrange of ideas
and practices in managing people. Human resource is the most valuable resource in any
organization because it can function only through people. Human Resource Management has
come to be recognized as an inherent part of management, which is concerned with the human
resources of an organization. Its objective is the maintenance of better human relations in the
organization by the development, application and evaluation of policies, procedures and
programs relating to human resources to optimize their contribution towards the realization of
organizational objectives. .
In other words, HRM is concerned with getting better results with the collaboration of people. It
is an integral but distinctive part of management, concerned with people at work and their
relationships within the enterprise. HRM helps in attaining maximum individual development,
desirable working relationship between employees and employers, employees and employees,
and effective modeling of human resources as contrasted with physical resources. It is the
recruitment, selection, development, utilization, compensation and motivation of human
resources by the organization.

CONCEPT OF HUMAN RESOURCE MANAGEMENT

What exactly is human resource management? Many people find HRM to be an unclear and
strange concept. ‘This is not simply because of having variety of meanings to this term. This
confusion is mainly due to the different interpretations found in articles and books about human
resource management. HRM is the philosophy of people management based on the belief that
human resources are extremely important for sustained business success. An organization
acquires competitive advantage by using its people effectively and utilizing their expertise to
meet clearly defined objectives. HRM is aimed at recruiting capable, flexible and committed
people. Managing and rewarding their performance and developing key competencies.

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, School of Distance Education Human Resource Management 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. Many great scholars had defined human
resource management in different ways and with different words, but the core meaning of the

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human resource management deals with how to manage people or employees in the 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 –
personal 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”.

SCOPE OF HUMAN RESOURCE MANAGEMENT

1. Personnel Aspect
Human Resource Planning – It is the process by which the organization identifies the number of
jobs vacant.
Job Analysis and Job Design – Job analysis is the systematic process for gathering, documenting,
and analyzing data about the work required for a job. Job analysis is the procedure for
identifying those duties or behavior that defines a job.
Recruitment and Selection – Recruitment is the process of preparing advertisements on the basis
of information collected from job analysis and publishing it in newspaper. Selection is the
process of choosing the best candidate among the candidates applied for the job.
Orientation and Induction – Making the selected candidate informed about the organization’s
background, culture, values, and work ethics.
Training and Development – Training is provided to both new and existing employees to
improve their performance.
Performance Appraisal – Performance check is done of every employee by Human Resource
Management. Promotions, transfers, incentives, and salary increments are decided on the basis of
employee performance appraisal.
Compensation Planning and Remuneration – It is the job of Human Resource Management to
plan compensation and remunerate.
Motivation – Human Resource Management tries to keep employees motivated so that
employees put their maximum efforts in work.

2. Welfare Aspect
Human Resource Management have to follow certain health and safety regulations for the
benefit of employees. It deals with working conditions, and amenities like -canteens, crèches,
rest and lunch rooms, housing, transport, medical assistance, education, health and safety,
recreation facilities, etc.

3. Industrial Relation Aspect

HRM works to maintain co-ordinal relation with the union members to avoid strikes or lockouts
to ensure smooth functioning of the organization. It also covers - joint consultation, collective
bargaining, grievance and disciplinary procedures, and dispute settlement.

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IMPORTANCE OF HUMAN RESOURCE MANAGEMENT

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.
(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 labour.
(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 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.

OBJECTIVES OF HUMAN RESOURCE MANAGEMENT

• To help the organization reach its goals.

• To ensure effective utilization and maximum development of human resources.
• To ensure respect for human beings. To identify and satisfy the needs of individuals.
• To ensure reconciliation of individual goals with those of the organization.

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• To achieve and maintain high morale among employees.

• To provide the organization with well-trained and well-motivated employees.
• To increase to the fullest the employee’s job satisfaction and self-actualization.
• To develop and maintain a quality of work life.
• To be ethically and socially responsive to the needs of society.
• To develop overall personality of each employee in its multidimensional aspect.
• To enhance employee’s capabilities to perform the present job.
• To equip the employees with precision and clarity in transactions of business.
• To inculcate the sense of team spirit, teamwork and inter-team collaboration.

HUMAN RESOURCE ACTIVITIES

In order to achieve the above objectives, Human Resource Management undertakes the
following activities:
1. Human resource or manpower planning.
2. Recruitment, selection and placement of personnel.
3. Training and development of employees.
4. Appraisal of performance of employees.
5. Taking corrective steps such as transfer from one job to another.
6. Remuneration of employees.
7. Social security and welfare of employees.
8. Setting general and specific management policy for organizational relationship.
9. Collective bargaining, contract negotiation and grievance handling.
10. Staffing the organization.
11. Aiding in the self-development of employees at all levels.
12. Developing and maintaining motivation for workers by providing incentives.
13. Reviewing and auditing manpower management in the organization
14. Potential Appraisal Feedback Counseling.
15. Role Analysis for job occupants.
16. Job Rotation.
17. Quality Circle, Organization development and Quality of Working Life
Functions.

HUMAN RESOURCE MANAGEMENT FUNCTIONS

Managerial, Operative and Advisory Function
Some of the major functions of human resource management are as follows:
1. Managerial Functions
2. Operative Functions
3. Advisory Functions.
Human Resource or Personnel Department is established in most of the organizations, under the
charge of an executive known as Human Resource/Personnel Manager. This department plays an
important role in the efficient management of human resources. The personnel department gives
assistance and provides service to all other departments on personnel matters. Though personnel
or human resource manager is a staff officer in relation to other departments of the enterprise, he
has a line authority to get orders executed within his department.
(i) Managerial,

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(ii) Operative and

(iii) Advisory functions.
1. Managerial Functions:
The Human Resource Manager is a part of the organizational management. So he must perform
the basic managerial functions of planning, organizing, directing and controlling in relation to his
department.

There functions are briefly discussed below:

(a) Planning:
To get things done through the subordinates, a manager must plan ahead. Planning is necessary
to determine the goals of the organization and lay down policies and procedures to reach the
goals. For a human resource manager, planning means the determination of personnel programs
that will contribute to the goals of the enterprise, i.e., anticipating vacancies, planning job
requirements, job descriptions and determination of the sources of recruitment.
The process of personnel planning involves three essential steps.
Firstly, a supply and demand forecast for each job category is made. This step requires
knowledge to both labour market conditions and the strategic posture and goals of the
organization. Secondly, net shortage and excess of personnel by job category are projected for a
specific time horizon.
Finally, plans are developed to eliminate the forecast shortages and excess of particular
categories of human resources.

(b) Organizing:
Once the human resource manager has established objectives and developed plans and programs
to reach them, he must design and develop organization structure to carry out the various
operations.
The organization structure basically includes the following:
(i) Grouping of personnel activity logically into functions or positions;
(ii) Assignment of different functions to different individuals;
(iii) Delegation of authority according to the tasks assigned and responsibilities involved;
(iv) Co-ordination of activities of different individuals.

(c) Directing:
The plans are to be pure into effect by people. But how smoothly the plans are implemented
depends on the motivation of people. The direction function of the personnel manager involves
encouraging people to work willingly and effectively for the goals of the enterprise.
In other words, the direction function is meant to guide and motivate the people to accomplish
the personnel programs. The personnel manager can motivate the employees in an organization
through career planning, salary administration, ensuring employee morale, developing cordial
relationships and provision of safety requirements and welfare of employees.
The motivational function poses a great challenge for any manager. The personnel manager must
have the ability to identify the needs of employees and the means and methods of satisfy those
needs.
Motivation is a continuous process as new needs and expectations emerge among employees
when old ones are satisfied.

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(d) Controlling:
Controlling is concerned with the regulation of activities in accordance with the plans, which in
turn have been formulated on the basis of the objectives of the organization. Thus, controlling
completes the cycle and leads back to planning. It involves the observation and comparison of
results with the standards and correction of deviations that may occur.
Controlling helps the personnel manager to evaluate the control the performance of the personnel
department in terms of various operative functions. It involves performance appraisal, critical
examination of personnel records and statistics and personnel audit.

2. Operative Functions:
The operative functions are those tasks or duties which are specifically entrusted to the human
resource or personnel department. These are concerned with employment, development,
compensation, integration and maintenance of personnel of the organization.

The operative functions of human resource or personnel department are discussed below:

(a) Employment: The first operative function of the human resource of personnel department is
the employment of proper kind and number of persons necessary to achieve the objectives of the
organization. This involves recruitment, selection, placement, etc. of the personnel. Before these
processes are performed, it is better to determine the manpower requirements both in terms of
number and quality of the personnel. Recruitment and selection cover the sources of supply of
labour and the devices designed to select the right type of people for various jobs. Induction and
placement of personnel for their better performance also come under the employment or
procurement function.

(b) Development:
Training and development of personnel is a follow up of the employment function. It is a duty of
management to train each employee property to develop technical skills for the job for which he
has been employed and also to develop him for the higher jobs in the organization. Proper
development of Personnel is necessary to increase their skills in doing their jobs and in satisfying
their growth need. For this purpose, the personnel departments will device appropriate training
programs. There are several on- the-job and off-the-job methods available for training purposes.
A good training program should include a mixture of both types of methods. It is important to
point out that personnel department arranges for training not only of new employees but also of
old employees to update their knowledge in the use of latest techniques.

(c) Compensation:
This function is concerned with the determination of adequate and equitable remuneration of the
employees in the organization of their contribution to the organizational goals. The personnel can
be compensated both in terms of monetary as well as non-monetary rewards.
Factors which must be borne in mind while fixing the remuneration of personnel are their basic
needs, requirements of jobs, legal provisions regarding minimum wages, capacity of the
organization to pay, wage level afforded by competitors etc. For fixing the wage levels, the

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personnel department can make use of certain techniques like job evaluation and performance
appraisal.
(d) Maintenance (Working Conditions and Welfare):
Merely appointment and training of people is not sufficient; they must be provided with good
working, conditions so that they may like their work and workplace and maintain their
efficiency. Working conditions certainly influence the motivation and morale of the employees.
These include measures taken for health, safety, and comfort of the workforce. The personnel
department also provides for various welfare services which relate to the physical and social
wellbeing of the employees. These may include provision of cafeteria, rest rooms, counseling,
group insurance, education for children of employees, recreational facilities, etc.

(e) Motivation:
Employees work in the organization for the satisfaction of their needs. In many of the cases, it is
found that they do not contribute towards the organizational goals as much as they can. This
happens because employees are not adequately motivated. The human resource manager helps
the various departmental managers to design a system of financial and non-financial rewards to
motivate the employees.

(f) Personnel Records:

The human resource or personnel department maintains the records of the employees working in
the enterprise. It keeps full records of their training, achievements, transfer, promotion, etc. It
also preserves many other records relating to the behavior of personnel like absenteeism and
labour turnover and the personnel programs and policies of the organization

(g) Industrial Relations:

These days, the responsibility of maintaining good industrial relations is mainly discharged by
the human resource manager. The human resource manager can help in collective bargaining,
joint consultation and settlement of disputes, if the need arises. This is because of the fact that he
is in possession of full information relating to personnel and has the working knowledge of
various labour enactments.
The human resource manager can do a great deal in maintaining industrial peace in the
organization as he is deeply associated with various committees on discipline, labour welfare,
safety, grievance, etc. He helps in laying down the grievance procedure to redress the grievances
of the employees. He also gives authentic information to the trade union leaders and conveys
their views on various labour problems to the top management.

(h) Separation:
Since the first function of human resource management is to procure the employees, it is logical
that the last should be the separation and return of that person to society. Most people do not die
on the job. The organization is responsible for meeting certain requirements of due process in
separation, as well as assuring that the returned person is in as good shape as possible. The
personnel manager has to ensure the release of retirement benefits to the retiring personnel in
time.

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3. Advisory Functions:
Human resource manager has specialized education and training in managing human resources.
He is an expert in his area and so can give advice on matters relating to human resources of the
organization.

He offers his advice to:

Advised to Top Management:
Personnel manager advises the top management in formulation and evaluation of personnel
programs, policies and procedures. He also gives advice for achieving and maintaining good
human relations and high employee morale.
Advised to Departmental Heads:
Personnel manager offers advice to the heads of various departments on matters such as
manpower planning, job analysis and design, recruitment and selection, placement, training,
performance appraisal, etc.

PERSONNEL MANAGEMENT VS. HUMAN RESOURCE MANAGEMENT

Both the terms refer to the one and the same function of the management and that is managing
the people at work.
However, Human Resource Management is mainly focused on best utilizing the manpower by
understanding their strength and weaknesses and engaging them in different occupations so that
their productivity can be increased. Therefore, training and development and employee
engagements are part of it.
Personnel Management, on the other hand, is mainly concerned with maintaining good
employee- employer relationship and activities connected with it. Therefore, Personnel
Management mainly works around Industrial/ Employee/ Labour Relations and activities
connected with grievance handling, negotiations, enforcement of labour statute, looking after
welfare of employees and so on. Personnel Management is thus basically an administrative
record-keeping function, at the operational level. Personnel Management attempts to maintain
fair terms and conditions of employment, while at the same time, efficiently managing personnel
activities for individual departments etc. It is assumed that the outcomes from providing justice
and achieving efficiency in the management of personnel activities will result ultimately in
achieving organizational success.
Human resource management is the new version of personnel management. There is no any
difference between human resource management and personnel management.

However, there are some differences in the following matters.

1. Personnel management is a traditional approach of managing people in the organization.
Human resource management is a modern approach of managing people and their strengths in
the organization.
2. Personnel management focuses on personnel administration, employee welfare and labor
relation. Human resource management focuses on acquisition, development, motivation and
maintenance of human resources in the organization.

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3. Personnel management assumes people as a input for achieving desired output. Human
resource management assumes people as an important and valuable resource for achieving
desired output.
4. Under personnel management, personnel function is undertaken for employee's satisfaction.
Under human resource management, administrative function is undertaken for goal achievement.
5. Under personnel management, job design is done on the basis of division of labor. Under
human resource management, job design function is done on the basis of group work/team work.
6. Under personnel management, employees are provided with less training and development
opportunities. Under human resource management, employees are provided with more training
and development opportunities.
7. In personnel management, decisions are made by the top management as per the rules and
regulation of the organization. In human resource management, decisions are made collectively
after considering employee's participation, authority, decentralization, competitive environment
etc.
8. Personnel management focuses on increased production and satisfied employees. Human
resource management focuses on effectiveness, culture, productivity and employee's
participation.
9. Personnel management is concerned with personnel manager. Human resource management is
concerned with all level of managers from top to bottom.
10. Personnel management is a routine function. Human resource management is a strategic
function.

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